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The Wolf Of All Streets
Is Bitcoin Set To Explode? Crypto Volatility Is Going Up | Macro Monday
01:03:08
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- [00:01]
Scott Melker
Bitcoin is showing signs of life trading back above $87,000 on this beautiful macro Monday. All coins also looking a bit jumpy. All of this following copper looking at all time highs, which is red meat for Mike McGlone. We're going to talk about that and everything else. Macro here on macro Monday. Let's go.
- [00:24]
Mike McGlone
Let's do.
- [00:32]
James
Foreign.
- [00:39]
Scott Melker
What is up everybody? I'm Scott Melker, also known as the Wolf of all streets. Before we get started, please subscribe to the channel and hit that like button for $87,000.
- [00:47]
Dave Weisberger
Bitcoin.
- [00:48]
Scott Melker
That's what gets us excited now on a Monday morning. Gonna bring on the gentleman now we have Dave Weisberger, also known as Scott Melker last week. Good job. Thank you for hosting a crypto town hall every single day in my stead, Mike. And of course James. Good morning gentlemen. How are we doing, Mike? As I said, it's in the news, copper in the news right now, which I know is very exciting because we talk about copper here all the time. But we've got copper prices near all time high. I believe they actually made an all time high. Am I wrong? When copper once positively correlated to bitcoin nears record high while bitcoin follows suit. That was on the 20th. I checked copper chart. It looks like it just tapped a high today.
- [01:31]
Dave Weisberger
So it's very close to the high. And US traded copper from last year was $5.20. I think we're pretty, we're 516 right now. The problem is, I hate to use the word but it's more likely to be transitory. It's for the wrong reason. And I, and I had to do that because I knew Dave would get fired up on it because so US traded copper. Maybe you can show my screen. I'll show it real quick. Is US traded copper is leading all industrial metals but it's going up for the wrong reasons. That's what you see in or this is US traded copper versus London traded copper. The spread is 13%. It's the most ever. You go back 30 years in the data and then you look at US copper versus industrial metals index. It's part of that index but it's the highest ever. It's just unfortunately that's US traded copper. And the reason is that we have commerce. It's fears of tariffs. Now there's really been no substantial tariffs on imports of US copper. So here's the significance and differences. US has a deficit of copper production. We import maybe 50% of it. We have a massive surplus of Crude oil and grains, those prices are getting pressured lower. We know crude oil and copper is kind of going up a little because of the threat of tariffs. The point is, right now, copper is under the waiting for recommendations from the Commerce Department. So how much tariffs should be put on it and when, and that might take till the end of the year. So, yes, things are happening now, but the point is, market's just squeezing out all the shorts first. And the point is, this is what happens to commodities. It's typically their own worst enemy. So if you're the Trump administration, you see this, this, their goal is lower inflation, help reduce regulatory environment, help increase U.S. production of all type of goods. Pumping up the price of copper by 30% for artificial reasons will probably be pushed back a little bit, at least initially. You look at the rest of the world in terms of industrial metals, it's very much as a signal that, yeah, right now we're going to squeeze everybody out. The problem is it's not really showing up in futures. Last year, when copper put a pretty good high around 520, it was clearly a sell signal. We show that in futures now, there's like managed money, you know, hedge funds, the people who really trade specs are not involved. They're only in up to 9% net long. Last year, the peak was 25% of total open interest, net long. So I wanted to fire up Dave on that word transitory, because, yeah, this is going up. You see what's happening there? This is a Range Forever and US Copper vs London Copper, and this is what we're doing because of tariffs. And by the way, they're not happening yet and we don't know for sure if they'll come. But copper going up, it's probably an indication in Trump administration you probably should lay low on those tariffs.
- [03:59]
Scott Melker
Yeah, it seems like you've been really.
- [04:01]
Mike McGlone
Can I just ask a question? Because it's.
- [04:02]
Scott Melker
Yeah, sure. I was just going to say it seems even Coinbase got. I mean, coindesk got this right. It says copper's rise is likely led by Trump's tariffs, weakening its appeal as leading indicator for risk assets. Because you do have, like you look at a chart, copper and bitcoin have been very closely, they travel closely. I won't say they're correlated, but bitcoin often follows copper as a lead of risk assets. So you're saying. And so is going to scare. Not really the case this time, sort of a separate scenario. But go ahead, Dave.
- [04:26]
Mike McGlone
The simple question is, what does London Copper look like on the chart? How is it close to, how is it relative to it to the all time high?
- [04:35]
Dave Weisberger
It's very close. At $10,000 a ton. That's about it. Where it was last year, about the all time high. The difference is compared if you put it in US dollar base US dollar based copper is trading 515. If you convert London copper to that's more like 464 70. So it's, it's the disparity that's the significance. And if you really want to see what matters for bitcoin, ignore copper. I'll show you what really matters and show you showing in the chart. What really matters for Bitcoin is other cryptocurrencies and certain, certain things. And this is just bitcoin overlaid with the market cap of Dogecoin. That's the same chart. If you really want to look at the same chart. I know people don't love it. I just point out facts and then I want to point out other things that really matter for things like cryptos. This is a Bloomberg Galaxy crypto index. 200 day moving average is rolling over maybe to come right back up but it's rolling over from an all time high from actually didn't make an all time high. At the same time that VIX volatility is rolling upwards is bottoming from a six year low and that ETF total holdings in gold are rolling back upwards from a six year low. So I see that disparity and here the bottom line for crypto people, if you're bullish you need the stock market to go up and it's up today.
- [05:50]
Mike McGlone
So before I rant James, why don't you go next?
- [05:56]
James
Well, I mean I think the causation or correlation is a little bit mixed there Mike. I don't, I don't see Dogecoin going up causing Bitcoin to go up. I see it the other way around and vice versa. So again look, Bitcoin has had a tremendous run since the election of this new administration. There's no surprise we've had a pullback. It's no surprise we've had a pullback in risk assets. I mean you know they, we, we have talked about them getting ahead of themselves and is it the question was, was liquidity going to be pumped into the markets to catch up to them, to them or where the market's going to contract to mean correlate back, to mean revert back to the amount of, of, of liquidity that's out there. And so we're seeing that the Markets have been mean, reverting back to the amount of liquidity that's out there. And that's a lag, though we have to remember that it's a lag. So now what we're seeing is people speculating about where the 10 year treasury is going to be at the end of the year. How much is that going to affect risk assets? What is the Fed going to do, you know, over the course of this year? And we've seen, we've seen the wirp, right, which is your, it's in Bloomberg, it's your, it's your charts over there, it's your estimate over here of the interest rate probability that we've gone from the, the probability of having two cuts to three cuts to two cuts back to three cuts, you know, almost 2.6, 2.7 now at the end of this year. So, you know, there's a lot of speculation about how much liquidity is going to come into the market and how much the Fed is going to do. So last week, the most important thing that happened last week, and again, it's kind of symbolic in a way that Powell and the Fed decided to move their, their treasury qt down from $25 billion a month to 5 billion, that's it, $5 billion a month that they're gonna, they're gonna take liquidity out of the markets. And the Treasuries, they're still doing their mortgage backs. Maybe that, that's gonna, that's interesting that they're, they're still squeezing the, the long end of the curve here. But the, the reality is that there's really no more QT going on. And this symbolic QT of $5 billion, it's literally nothing is once that flips, that's going to be a pretty big signal to the market that the game is on, liquidity is coming back in and, and these risk assets are, are going to, to rise again. And the one that always leads it in the last couple of years has been Bitcoin. And we, we agree that on that 100 mike. I don't agree that it should be long term. I, I disagree that it's going, you know, back to 10 or 20,000. I do believe that people are starting to understand widespread, the understanding bitcoin is expanding and that there's still tremendous tailwinds for bitcoin in particular, not dogecoin, but bitcoin in particular in the coming years.
- [09:16]
Scott Melker
I think we agree now that Bitcoin's leading risk, but I think it's just a question of which direction it's leading it in. Maybe we debate him really quickly. Dave, just before you jump in, I just, I do want to just show this Arthur Hayes. I got the wrong screen. Arthur Hayes here. His grammar was off as he says in the second tweet. But he says, I bet Bitcoin hits 110k before it retests 76.5k. He was one calling for 70. He said his grammar is off. He means it never goes to 76. It goes to 110 and then flies. But exactly what James just said. The Fed is going from QT to QE for treasuries and tariffs don't matter because transitory inflation Jay Powell told me. So anyway, so Dave, we have a clear some signal and a lot of people starting to flip bullish here as I guess.
- [09:58]
Mike McGlone
Yeah, that always makes me a little annoy, a little worried. But it's still more fear out there and there's still more, more people worried. But look, when Arthur made that point, I brought it up and I said, I think that he's underestimating the passive buying from institutions which are accumulating and changing the supply demand dynamic. I was right, he was wrong. Got that. You know, it's public, thankfully, I'm doing these videos so you can go back and look and see that. Literally I said, when he said it was go below 70, I said probably not going to go below the 7877 range. That was that one wick down which I called a tradable bottom. And the reason I called it a tradable bottom is because Mike literally is making the single biggest mistake you can make in, in statistics, which is overfitting. You're assuming the past when you have a massively increased adoption curve in bitcoin. Yes. If you look at the bitcoin ether ratio, you're making the same mistake, by the way, in your generational bottom thesis, because there is none of that in Ethereum. And so what you're seeing is something that is happening underneath the current. It's like there's this great idea when you talk about market impact, of this idea of this analogy of the iceberg. And the notion is when you the orders you see in the market are only the tip of the iceberg and you really have to look to see what's underneath it. In the case of Bitcoin, there is an iceberg of demand, of institutions who trade differently than retail. Retail trades like a pack of lemmings, either to go off a clip or to keep running. And we always talk about it as fomo. We make these funny memes where you have, you know, the, the two booths, the one that says Bitcoin 100,000 and there's a huge line and the one that says Bitcoin 75,000, there's nobody there and the guy's like twiddling his thumbs and. Because that's how retail trades, institutions are the opposite. If an institution makes an allocation decision, then they start trying to accumulate. They don't chase the price because in fact traders who chase prices get fired. That is, it is career risk to do it. And so when Mike says, and correctly, that they're not going to chase these prices, they're going to remember it, they're going to do it, whatever that's happening. That, that said, there's another thing, it's called portfolio managers. And the PMs are saying, well, I need you to get me some. And so what they're doing is they're constantly bidding in the market, they're constantly trading quote in line with the market and they use algorithms such as coin routes or talos etc and. Yeah, exactly. And as a result, and we've seen that that has undeniably been true in the market through this entire period of the fall from 100,000, the institutions weren't chasing it at the all time highs. They watch these wicks up and they sit there and the algorithms just don't do anything. Talk to your friends from Arch Public who's done a phenomenal job over the last few months. If you look at their returns or way of buying, I'm sorry to shill one of your products, but it's proven. But Arch has been doing exactly the same thing. And the reason their algo works is because we have a bifurcated market. Institutions are passive buyers and retail are the ones that are running with their chickens with their heads cut off. Now the truth is it's not just retail, it's also the crypto community. So we have this other thing going on which is people in crypto believe bitcoin is boring and therefore they jump into altcoins at every sign of life. And when they look at their portfolio at the end of this, they have less bitcoin than they had before because they sold bitcoin to buy altcoins. The altcoins, as they chase on the way up, then the old coins, for all the reasons that Mike correctly points out, drop and then they end up with less bitcoin. And so you've had this great washing machine over the last basically it's been going on. It went on for a large part of the eight months that it was trading sideways of bitcoin being moved from the hands of the crypto community to the hands of people who look more like me and James and Mike. Right. You know, Tradfi people have been. Have a much higher percentage of bitcoin. Well, you're younger, right?
- [13:45]
Scott Melker
Slightly. Thank you. Thank you.
- [13:47]
Mike McGlone
Yeah, yeah. You know, but so, so that washing machine is happening, but the problem that I have is let's, let's talk about copper or any other metal or gold. Gold is price elastic. We don't like this. Supply is price elastic. The more the gold price goes up, the more miners are going to be able to put marginal mines into operation. There is nothing like that in bitcoin. And people need to understand. I don't, I don't want to hear 21 million cryptos, I don't want to hear 14,000 cryptos, I don't want to hear a thousand cryptos. Bitcoin is bitcoin within the crypto community. There are alternatives that people see are higher within crypto. We'll call those higher beta, where people are chasing lottery tickets. But the higher the percentage of institutional ownership of bitcoin gets, the less important that is. And that's a very important point. So my thesis, different than Mike's, is even if you look backwards in this chart, about dogecoin and Doge is special in a sense because it's the only meme that has a chance of becoming something real. Right now it's still Pinocchio, right? But if, for example, X decides to build a payment system, and for whatever reason, Elon thinks that it would be funny to use the Doge chain to build that payment system, then all of a sudden Pinocchio becomes a real boy. And that's why Doge might be something different. I personally don't own it. I'm not playing in that game. We all know my thought about memes. I think memes are interesting. Lottery tickets that are almost guaranteed to be worthless if you don't cash them in, you know, when they get to the high. But that's a different story. But the point is, bitcoin supply is inelastic completely. And every time Mike says something that disagrees with that, it sets my teeth on edge because the math is the math and, you know, that's a big part of it. And so to me that that matters. Now the other thing that matters about is, is monetary supply. James, question for you, sir. QT doesn't the end of QT means they're actually doing QE in order to keep up with the expiration or the maturation of the bonds they already own.
- [15:52]
James
Yeah, I mean, if they're gonna, if they're. Well, when, when bonds mature, the vast majority of them go, you know, they get, that money goes back into the bond market, you know, into the next issue.
- [16:03]
Mike McGlone
That's what I'm saying. So they, but, so in other words, when the bonds that are rolling off the balance sheet, for them to not have the balance sheet contract, they actually have to be buying bonds.
- [16:13]
James
Well, but they're, but remember, they're going to get cash back for that and then just put it back in. So it's a net, Net neutral. Right?
- [16:20]
Mike McGlone
I, I understand it's net neutral. I understand it's net neutral. But yeah, I deal all day long, you know, on Twitter or, excuse me, on X, with lawyers. So let's be, let's, let's do a little bit of sophistry. Is there any way to be net neutral without the Fed hitting the buy button?
- [16:38]
James
No, they've got to hit the buy button. But, but they're getting, remember, they're getting cash back to do that.
- [16:43]
Mike McGlone
Yeah, but they, theoretically, where'd that cash come from in the first place?
- [16:47]
James
Right, but it, I, I agree, but it's, but it was already out there. Right, so.
- [16:52]
Mike McGlone
Oh, I'm not talking about money supply now.
- [16:54]
Scott Melker
So they're not printing money, right?
- [16:56]
Mike McGlone
Yeah, they're not printing money, but they're. But the. Right, but they are continuing the qe.
- [17:01]
James
Non qe.
- [17:02]
Mike McGlone
Yeah, that's right.
- [17:03]
Scott Melker
Fed qe.
- [17:04]
Mike McGlone
Yeah, it is.
- [17:06]
Scott Melker
I know you got some, I, I know you got some responses there.
- [17:11]
Dave Weisberger
Yeah, I, I just, let's be careful with people who have a vested interest for things to go up and ignore the facts of what's happening. Bitcoin has an unlimited amount of competitors from other cryptocurrencies. In 2009, there was one. Since then, we've had the biggest money pump in history and a massive rally in all risk assets. Bitcoin's a leader now. There's 13 million of them. Okay, maybe there's more, maybe there's less, but there's tons of them. I need to show one chart, just the lessons of commodities. I know Dave's got a lot of experience and lessons, but the lessons I've learned in commodities that do not have fixed, do not have returns from gold is the institution's already done. I mean, this is in terms of ETFs, and this is A point I made last year. This is total institution holdings of big coin ETFs. Now it's down about 110. It peaked about a 140. And this is total institutional holdings of gold ETFs are going up. So gold ETFs going up, institutions buying it or if you consider institutions, but they're more buy and hold sell buyers versus Bitcoin ETFs are going down. They've learned the lesson of what they've been told about bitcoin. It's not true. It's leverage beta. We proved that. Now maybe this has been on the short term correction, but we're proving the whole crypto space is very much leveraged beta. And that's what I showed you earlier. It's rolling over. So maybe if we don't get that next 10% correction in the stock market make Bitcoin can stay above 90 and not go back to 50 or 10, which I expect. But let's remember where we are in the spaces and the things that Dave pointed out last time are very missing. What's happening is the asset that's in the mainstream and everybody loves typically five, ten years from now does not perform that well. Let's give the example. You used Amazon last time. Remember when there were analysts from Lehman put out an. I think it was 2001 that Amazon was go under. Who went under? That's the point is now bitcoin so much in the mainstream, so much people have. We've had the ETF's launch, we have the biggest pump in history that's you know, peaked around 100 grand to me, as we say in the trading pits in New York. In New York, you're done. The trades done for now we need to show proof. So here's what I think it's going to take for if we're going to be macro, we're going to focus only on bitcoin. Fine. What it's going to take for that to go up. Remember I've been the guy who's been quite bullish until last year and is stock market has to go up. Well, our chief economists and our chief equity people think it's going to go down. I think that sentiment is shift. People are getting it. People are getting that we're seeing a post world war shift in the way of things being happening in the world with us. The whole world is no longer able to depend on the US for, for exports too and for security. That's shifting and that means profits. That means the stock market's probably more of a bit of a correction. So to me the macro is very bearish and I'm just looking for indicators. So one key indicators. I use dogecoin because it's a joke but there's so many of them. And then I point to. Let's look at Ethereum. Ethereum finally at least it's holding 2,000. Now I, you know I've used this theory before when I was at 3,000. What stops it going from 2,000? Now it's bouncing at 2,000. If you're a trader, my fears it goes back down to 1000. It's still best performer. So I look at all the little indicators and to me the macro is that bitcoin is a great leading indicator and I mentioned it's not causation. But you also. And then I also lend. I want to end with one key question from this administration. We see what they're doing. It's a shift that none of us ever seen before. I Admit I'm only 60, but one thing we are seeing is we do have a best input. It's made very clear they want bond yields to go lower. The number one way to make the Fed ease and to reduce some of the wealth effect which was the highest ever last year ever, is just that, the stock market, correct 20%. That brings everything lower. Now if we can go down another 2010% and have Bitcoin go up, that would be a miracle. That would bring all the institution. But right now, what they've learned so far by the ETF launches, great. I'm long leveraged. Beta, beta is going down. I'm losing more.
- [20:52]
Scott Melker
I will say really quickly, Dave, just quickly. I just want to correct one thing and just for having the numbers straight, we did see net inflows this week into Bitcoin ETFs after the carry trade seemingly unwound. And it was the second largest this year at 744 million. That said Mike, that doesn't even recapture last week's. So it's fair to say they're going down. Obviously when you have a five week streak of outflows. But this is the first week back of inflows and it's at 744 million. Also. Did you say Bitcoin was going to 10,000?
- [21:27]
Dave Weisberger
No, I put that call out a few weeks ago. I expect a normal reversion correction in the stock market. Maybe we get that back to 1.5 times GDP. That is not profound. It's exact. Just look at the histories of the US in 1930s. Look at Japan in 1990s and China. Now, once you get to 2 times GDP, the stock market, the economy, and that's where we are right now, we're seeing that if it goes down, like it's only been, what, 5% so far, that just takes away people's wealth. And the thing is, we hit that switch. I sense it everywhere. I sense people like, thank you very much, Shutting off the spending until we get through this period with Trump's first hundred days, at least. But, yeah, I made the call. I put it out a couple weeks ago. Like I said, when I said 10,000, I thought it was going 100. I think it's just lop off of zero, Mike.
- [22:11]
James
So wait a minute. The S and P was up at 6150. Now it drew down to 5500. That's over a 10% correction. Are you calling for another 10% beyond that or.
- [22:22]
Dave Weisberger
No, Gina, Martin Adams is. I am, but when I have the rest of my team saying it, I go with, yeah, it's our, our senior equity strategist is looking for another 10 correction. The S&P 500. All the indications they have are bearish. Okay, so I've been bearish too early. It's been wrong about that. But when they go bullish, bearish. And I'm, you know, I just stick with that. So that's still all the sentiment indicators and the reversions are all hitting lower from their standpoint. And this morning.
- [22:46]
James
Go ahead. Yeah, and, and I, I. Okay, I hear you. And I wrote about, you know, the, the US Technically being a recession this weekend. You know, all the leading, the leading economic indicators has been showing it for years now that the Biden administration did not admit about it. And so they've been doing non QE QE this whole fucking time. And they've been hiding it by hiring so many government employees, by running massive government deficits, and by just shortening the duration on their issuance, the debt issuance all the way down to just a few days, for God's sakes. And so now you've got $10 trillion of debt that's coming due, and you're seeing pockets of recession all over the economy. So I totally, totally agree with that. And I totally agree that we are completely financialized in our economy. That is 100% true. I mean, what. There's nothing more obvious than looking at the, the chart of the Fed, and I'll bring it up in a second about how much the Fed is losing every single month itself in operations, just from all of the rrp, the reverse repo payouts that it's been, it's been running to the banks. Okay, so massive losses out of the Fed, that's QE that's been going on, but that's kind of stopped now. You know, there's no, there's no more money coming out of the rp. And so you know, those, those losses are now just running kind of, they're running stagnant. So the question is how the Fed sees this. In my opinion, they see it, that's why they stopped the QE or the qt. They see it, they know this is happening. They've gotta, they've got to pump the brakes here. The question is when do they stop the QT on the mortgage backs and when do they flip the switch to qe? That's the only question in my mind. I don't even care about the curve. Because you know, Mike, you know as well as I do that the Fed does not control the long end of the curve. And as much as Besant wants to control the 10 year, you know, they don't.
- [24:59]
Dave Weisberger
But they can if they want.
- [25:01]
Scott Melker
I have a crystal ball. I can predict what Mike's going to say when the stock market drops 20%.
- [25:05]
Dave Weisberger
Well, at least, I mean, okay, the fact is we, last year we created $12 trillion of stock market wealth creation. It's the most in the history of mankind ever. And we got the 2.2 times GDP. Like I said us in the 1930s, Japan in 1990s. I was trading JGBs and I remember that. I've seen that in CGBs.
- [25:25]
James
Now you're talking about the Buffett indicator. Indicator.
- [25:28]
Mike McGlone
Right.
- [25:29]
James
And so. But the question, Mike, is we're not in the same world. We were in 19.
- [25:34]
Dave Weisberger
Exactly. It's different this time.
- [25:35]
James
No, it's not this different this time. So much that structurally changed 1971 and just the sheer amount of money expansion that we have.
- [25:44]
Dave Weisberger
Exactly.
- [25:45]
James
It's different this time. It's that the entire, the whole structure changed. So what happened time the whole structure changed in 1971 it did.
- [25:53]
Dave Weisberger
So what happened? We had a hundred year event kick in in 20. 20, 20 plus Russians, invasion of Ukraine. That was like an. But what happened? We responded with the biggest money pump in history. Right. Larry wrote about the big pump. We've had it already. We've learned the lessons of inflation. Inflation's too high. And then we had the less and less. Well, okay, well we'll see.
- [26:13]
James
We know that we need inflation to pay down the debt. That's Absolutely, we know that.
- [26:18]
Dave Weisberger
Okay, so right now the Fed's on hold partly because inflation's sticking. Part of that is because the wealth effects too high. The same time, we're getting the most significant contraction in fiscal stimulus ever by Doge. And we're having tariffs, which is a major push on, on corporate earnings. All this is lose, lose for risk assets.
- [26:35]
Mike McGlone
My point is that fits with your own opinion, Mike. Mike, you're entitled to your own opinions, but you're not entitled to your own facts. So let's, let's talk some facts. Fact number one.
- [26:45]
Dave Weisberger
Okay.
- [26:46]
Mike McGlone
Matt Hogan, who runs one of the Bitcoin ETFs. Yeah.
- [26:49]
Dave Weisberger
He has a vested interest in. In selling Bitcoin ETFs. Yes.
- [26:52]
Mike McGlone
Yes, he has a vested interest. I think Matt is telling the truth. And from everything that I've observed, I think this is true. Said that between 30 and 40% of the Bitcoin ETF holdings at its peak were from arbitrageurs who were playing the game against the future. Let's understand, understand what happened. The futures were at a stupid premium. They were at a stupid premium for a bunch of reasons. The most important of which is that US Firms were not allowed to touch spot or do anything else. And it created, and there was almost certainly some structured products from some demand which were filled. And that premium went away. It was guaranteed to go away. I have seen this movie before. I have talked about this extensively. I saw it in the 80s in the US Stock index arbitrage market and how it went to quantitative firms. I could go through the whole history of that if you want. I saw it again in Japan in the 90s. Every single time you have an arbitrage that people think is an infinite money machine, it goes away. And when it goes away, there are structural things that need to rebalance the ETFs rebalanced. Fine. To say that institutions have pulled back. The actual institutions have been undeniably increasing the, you know, increasing their allocation. And that's what all of them are saying is saying it. All the people who are selling the Bitcoin ETFs are saying it.
- [28:10]
Dave Weisberger
I showed you there's outflows. I mean, the fact is there's. So if you're going to say that I'm not titled to my own facts. The fact is we're seeing outflows in Bitcoin ETFs in the last two months.
- [28:19]
Mike McGlone
Yes. And we, we have because 30 to 40% of the Bitcoin ETFs were unsustainable. And so now we're back to that level of sustainability.
- [28:27]
Dave Weisberger
Okay, so were the facts wrong?
- [28:29]
Mike McGlone
I did.
- [28:29]
Dave Weisberger
You said I'm not entitled my own facts. Which fact did you say that was misrepresented?
- [28:34]
Mike McGlone
You then rate the sentence you made after that was thus. You said this data. Bitcoin ETF down means institutions are done and it's going to go start reversing the other way. That was my everyone and everyone. Okay, so it's your fine. Your facts are fine. It's your opinion that's wrong. Okay, whatever.
- [28:51]
Dave Weisberger
That's what's happening. The current trajectory is the current trajectory. As I point out, last year we reached parity in terms of ETFs on a risk adjusted basis with Bitcoin ETFs and gold ETFs. And the lesson I'm trying to teach people who've been in commodities for decades, like me, is you don't get investors to get too much into gold ETFs over time historically, because there's no return. They can get Nvidia, they can get return on the equities. That's what's happening Bitcoin ETFs.
- [29:19]
Mike McGlone
And I've seen it's not. Most of the people who buy bitcoin believe It's. It's somewhere between 90 and 95 undervalued. And that's pretty nice return. Larry Fink is actually saying, he actually said the words. He said between 500, 000 and 700, 000 will be fair price in his opinion.
- [29:34]
Dave Weisberger
That's a good opinion and good luck with that one.
- [29:36]
James
I have.
- [29:37]
Mike McGlone
Yeah, but, okay, but let's get again.
- [29:40]
Dave Weisberger
But you keep mentioning people have a vested interest. Let's talk about John Paulson. It was his quote. Bitcoin is a limited supply of nothing. Okay, So I can. That's a fact. He said it.
- [29:49]
Mike McGlone
Yeah, that's right.
- [29:51]
James
Look, Mike, you said that there's there's thousands and thousands of competitors to bitcoin and there are thousands and thousands of competitors to, you know, to all of these companies here that, that are, that are looking to get market share of all the things that they're doing. But I mean, there's no other, there's no other cryptocurrencies up here. There's a reason for that. And you know, bitcoin is, is clearly it has an asset value that, that is, that people are attaching to it. And it's, it's in the top 10 largest assets in the world for a reason. And that's not, that's not going away, that's only going to keep growing. It's a good opinion in my opinion.
- [30:29]
Dave Weisberger
My view is it's gonna have a backup to 10,000 first.
- [30:32]
James
Okay, well there's another thing that we, we need to discuss is that when you said we had 100 year event in 2020, okay, I've been so in my, in my semi adult lifetime, I've seen 100 year in event in 1987, another one in 1998, another one in 2000, another one in 2001, another one in 2006, another one in 2020. So all of those events were 100 year events and they happen every couple months or every couple of years. But let's just focus on the ones that are financial. Right? 1987, you had Alan Greenspan tell the market, hey, don't worry, the Fed is here, we're not going to let it collapse. Okay? The market stabilized and they did nothing. They didn't do any qe, but they did tell the, the market they would flash forward to 1998. 1998, you have the long term capital management collapse, the absolute like this was the epitome of risk taking beyond risk taking. And it was so it was so concentrated in a certain number of investment banks that they were scared to death that Goldman was going to go under. So they had emergency meetings at the New York Fed and guess who had engineered a bailout for, for Goldman Sachs? Alan Greenspan. So he said he was going to do it and then he did it. That is qe. That is literally the Fed engineering this, the saving of financial institutions. So they don't have, they can, they can hold back or, or limit the economic fallout, right? The financial.
- [32:04]
Dave Weisberger
So here's my opinion.
- [32:05]
James
You can do exactly right, 2006. And you have Ben Bernanke, right, come in in 2006 and they print a trillion dollars to save the market. So it's been happening in stages. And the last stage was when, when we printed another, when Powell and, and company printed another $5 trillion. Okay, so it's been happening stages. We're going to save the market. We do save the market. We save the market with qe, then we save the market with massive qe. Where's the next print? Where's the next print?
- [32:37]
Dave Weisberger
Is it going to be after you got to have.
- [32:38]
James
Are they just going to step away and say, you know what?
- [32:40]
Dave Weisberger
No, they will, they will. But you're missing a prerequisite. Every single one of those had at least a bottom maybe 1/3 of 25 per correction in beta. Which means it's s and P500 first. Wait, the point is, we did that. We had that correction. The Fed saved us. Inflation's still sticking. They're telling us right now they're done. And we have the biggest shift in fiscal monetary discombobulation. So my point is, you're going to be right, but we're missing one iteration. 10% is not going to get. They even said 10% is not up. They don't care and they're not going to eat.
- [33:11]
James
So do you believe that we're going to go back to the 1940s, 1950s, where we take 20, 30 years, the market's recovery, recover? Because I don't think that this economy could sustain that.
- [33:19]
Dave Weisberger
And I think, well, that's the whole point in the lessons of history. This is a fact. Once you get to two times gdp, the stock market is the economy.
- [33:29]
James
Unless you print so much money at 2 times GDP just doesn't matter.
- [33:32]
Dave Weisberger
They have to. They exactly. But what happens is when you go down first, so maybe you go back to normal averages. Okay, we're not going to go to one. I point out maybe one and a half percent. Guess what? The low just a few years ago is 1.5 times GDP.
- [33:43]
James
Okay, I hear you. And I, and I, and I, and I. And I agree with so much that you say, Mike. I really do. I really do. But I think that the only problem that I see here is that if you. If you pull up the chart of. Of the S P. So let's pull up the chart of the S P of what happened back in 2020. And here's the problem is if you're trying to time this thing, good luck at timing this because you see this? Can you guys see this chart? Bring it up.
- [34:10]
Scott Melker
You got it? Perfect.
- [34:12]
James
Okay, you're gonna time this. Okay, great. Yeah. You had a massive drawdown, right? As you show on the same chart. Okay, you have a massive drawdown. And then what happened? Look at where we went from here, right? From 3, 300 to almost 6,300, almost a hundred percent return.
- [34:31]
Dave Weisberger
And the biggest money pump in history. We learned a lesson. Inflation went up.
- [34:35]
James
Correct. From the peak. Not.
- [34:38]
Dave Weisberger
Okay, so exactly. Past performance is indicative future returns is what you're telling us.
- [34:43]
James
This is. But the problem here, Mike, is this is just a matter of a few weeks. Look at this. How are you going to.
- [34:48]
Dave Weisberger
Okay, well, let me remember, you're comparing.
- [34:50]
James
To is that is.
- [34:51]
Dave Weisberger
I think. Here's.
- [34:52]
James
Here's my. Here's how. Here's what I tell my. My the people that I talk to on my newsletter and all that. Okay, you can stop presenting Scott. So here's what I. Here's I tell people in my newsletter and everything. I say it's smart to be diversified, right? I think that that's important to be diversified, but you do have to be exposed. I just don't. I don't want people to hear what we're saying and say, oh my God, I get it out of the. Get out of the market completely. Because that's where people get left behind when they're not exposed to risk assets. And it's because of our monetary system and our central banks that have created a situation where you have to be exposed, you have to take risk or else you're going to be left behind. You're going to get. You're going to get left behind on that. 20, 30, 40% of inflation happens in two years and suddenly houses are now $2 million instead of 600,000. And now how do you buy one? Because I wasn't exposed. I had cash and now my cash is worth literally half to a third.
- [35:49]
Mike McGlone
Of what it was.
- [35:50]
Dave Weisberger
Completely agree with you. No one disputed that. My point is you're supposed to be selling when you're young. Remember, I'm a strategist. I'm not. You focus on managing money and helping people get wealthy. I'm pointing out this is where I think markets are going. So let's not talk apples and apples or apples and oranges. This is where I think markets are going. How they get there and how it's up to them. And like, you know, remember I've been most. Scott knows most of my history with him. I've been quite bullish. Bitcoin, the world has changed. On November 11, it changed. And now I think most risk assets are going down. Still quite bullish. Gold. And I think that bitcoin to gold ratio is more likely to go to 10 and say back to the high around 40.
- [36:30]
Mike McGlone
Sounds like another bet coming. But look, there are three points here that I want to make. Number one, number one, correlation is not causation and data. When you say 10,000, it. Look, the reason that people look at it is, yeah, bitcoin could go to 10,000 if it's going to fail. If bitcoin's going to go to essentially zero and the entire crypto industry is going to crawl up and die, which is clearly a non zero probability event, then Bitcoin will go to 10,000. Absent that, is it a non zero.
- [36:59]
Dave Weisberger
Probability that dogecoin goes with it?
- [37:02]
Mike McGlone
Of course it's an in fact it's a higher non zero probability.
- [37:05]
Dave Weisberger
So that's my point is bitcoin has a much higher correlation to all the other cryptos than it does to most.
- [37:09]
Scott Melker
Other no actually goes to zero. I think there's a zero chance that those guys.
- [37:15]
Mike McGlone
Okay, but look, I, I, I don't want to focus on the left tail of the bad side. This is a left tail event that all crypto goes to zero to me is vanishingly small. It's non zero but vanishing.
- [37:28]
Dave Weisberger
Great.
- [37:28]
Mike McGlone
But, but let's but correlation causation. So you talk about beta all the time and it, and it always pisses me off. And the reason it pisses me off.
- [37:35]
Dave Weisberger
That's right.
- [37:35]
Mike McGlone
Is because averages in that period of time when the S and P doubled Bitcoin went up by a factor of what Scott? What was from the bottom to the.
- [37:47]
Scott Melker
Top 17x and 20 in March.
- [37:51]
Mike McGlone
So, so your, your 3x beta is partially because that when S and P doubled bitcoin went up 17 times. It it is just as explosive in fact more explosive on the upside than it is on the downside.
- [38:07]
James
Not forget that like literally 10 days out of the year is where you make all of your money in bitcoin.
- [38:13]
Mike McGlone
The point is you can't your 10,000 is based upon the stock market corrects by 20% and therefore Bitcoin is going to correct by 60%. That's what you're saying. And what I'm telling you is that is not the way that beta is not if you manage your portfolio based on that sort of beta and you're a market maker or a risk asset, you, you'd be fired. You, you literally can't do that. You have to understand what's happening. The bait. If you look, there have been times when bitcoin has been negatively correlated to the stock market too. It, it tended to go up because they're both correlated to liquidity. Second fact you said Doge is going to be the biggest fiscal contraction. What a load of happy horseshit. First of all, Elon himself said he thinks that it'll be lucky to get a billion dollars in cost savings. But he thinks he can dramatically cut regulation. You had besent on the entire circuit of all the places talking about they have changed their narrative. They people need to understand. Yes, there's a lot of waste. Yes, they think they can save some of it. But it's mostly despite all the protesters who are getting their asses kicked by shorting Tesla. And I'm glad to see It. But despite all the protests that they are looking to deregulate, that is the focus. And, and by the way, for those who watch the show a long time, what have I been saying would be their, their focus? Deregulation to free the private market. But there they know they can't cut that much from the fiscal deficit. He wants to bring long rates down and that would do it. But there's this thing called unfunded liabilities that James and I often talk about. We haven't in a while. So we have a $36 trillion deficit. We have, you know, debt. We have a deficit that maybe they could bring, get us to a balanced budget. That would be the most ambitious thing and that would require enormous growth. But that $36 trillion debt isn't going anywhere. Moreover, we have Social Security and Medicare, which they know they need to reform but don't want to touch it because it's a political firestorm. And that's at least another 130 billion or 130 trillion. Excuse me. It's just staggering numbers. If you go out enough years, there is monetary printing is going to have to happen. The only way out of this, the only way out is hypergrowth. And there is no way in a hypergrowth scenario that Bitcoin is going to that the beta won't increase as opposed to decrease until it gets to a level of gold. That's the point here. The denominator matters. Money is several billion dollars is going to go into the world of extra fiat money, including the US Pointing out.
- [40:43]
Dave Weisberger
In terms of gold, Bitcoin has already matched gold in terms of ETFs. And that's my point. You're comparing apples to oranges. Gold is. You can store it on your body. I mean, it's beautiful, women like it. And now you're talking about it's a pure, highly speculative digital asset. So please, I'm pointing out the facts that in ETFs, it's already reached parity. I showed that. I showed it last year. And since I've done it, it's been a great trade. If you got a hundred thousand, you sold it. Okay, Remember that's just. I'm a strategist. I don't give invest my bike. This is where markets are going. You handle the where what clients are going to do mine. Just pointing out there's been a few times in history it's better to be out of risk assets. Crisp cryptos are the riskiest. They're way overpriced. There's high correlation, there's Unchecked supply. And it reminds me of Fantasia's sorcerer's apprentice. It's just. Yeah, Bitcoin supposed to be different. I get it, but.
- [41:33]
Mike McGlone
I hear you but. Well, let's do. You said women like it and it's there. First of all, the reason the bitcoin ETF to the gold ETF is a terribly bad comparison.
- [41:42]
Dave Weisberger
And well, it's worked so far.
- [41:44]
Mike McGlone
No, no, no.
- [41:45]
Dave Weisberger
But it helped me solidify that view. That was peaked at 100 grand. I'm sorry, it only dropped 30%.
- [41:51]
Mike McGlone
What percent of the gold physical of the gold supply in the in the world is held by Bitcoin ETF is held by gold etf.
- [41:57]
Dave Weisberger
That's the point there.
- [41:58]
Mike McGlone
It's microscopic by comparison. In India they hold the physical gold. In Russia, in the central banks, they hold physical gold. We now know that people are worried that the physical gold isn't really there. It's different when you talk about jewelry. Remember, platinum is much rarer than gold and for our lifetime. Only in the last. Only in the last decade. Platinum used to be dramatically more expensive than gold. In fact, you know, we'd have the platinum tier above the gold tier. Except for now it's one third the price. Why? It has nothing to do with it being pretty. It has everything to do with its monetary value. And you can't keep ignoring that. The monetary value is there. And ETFs are not the only way to buy gold.
- [42:38]
Dave Weisberger
So here's what I'll point out. The 200 day moving average of the Bloomberg Galaxy crypto indexes rolled over. It's heading down, down. To me, that's a bear market. The 200 day moving average of Vix Alta Index is heading up. To me, that's a bull market. Good luck on risk assets in that environment when you have a paradigm shift in a government. To me what's happening with our government is we're being run by business sharks against the rest of the world who are bureaucratic autocratic leaders or let's look at. I mean they just don't get business like us, our leaders right now. Musk and less obviously Trump and Lutnick. This is, I'm reading in the latest book about it now. It's just this is a bear market right now. Just getting started early days and I wish anybody is overweight risk assets. Good luck to me. That's overall you're supposed to be selling rallies in risk assets like bitcoin and stocks and buying risk off assets and dips until proven wrong. That's the way that things have turned and there's a good reason for it to have turned.
- [43:35]
Mike McGlone
I suspect that come the fall I might actually agree with you in terms of what's going to happen with risk assets just because of seasonality, but we'll see. But all the hysteria, if you did nothing but took the other side of the mainstream media on their hysteria, you'd be very wealthy right now. And right now the mainstream media is saying what you're saying, which tells me I want to be a contrarian in terms of risk assets despite actually understanding what you're saying and believing it. I just think bitcoin is a very different thing. And I think that those very smart people that you just talked about who are going to alchemy the rest of the world are the ones who are conditioning people to understand that Bitcoin could 5x or 10x from here and nothing else needs to change. No, it didn't.
- [44:18]
Dave Weisberger
It's the best performing asset in history. It's the most widely known. It's printed on every screen. You see it everywhere. That's my point. It's a known known. Why was Amazon do so well after 2002? Because everybody hated Lehman said it was going to go under. Who went under that point is it's never happened in human history.
- [44:33]
Mike McGlone
Let's go there.
- [44:34]
Dave Weisberger
It's already had its outperformance.
- [44:35]
Mike McGlone
Pull up the chart of Amazon Someone since 2000.
- [44:38]
Dave Weisberger
It's not.
- [44:39]
Mike McGlone
You're going to see what happened.
- [44:40]
Dave Weisberger
That's my point. David. Mike, think about what happened in 2001. That's when Lehman suggests it was going to go under. That's my point is once it gets in the human nature that this is the best thing next sliced bread. It's trades over. That's where bitcoin is now. Amazon was widely hated 25 years ago.
- [44:58]
Mike McGlone
I'm aware. But now look what happened in the. In the succeeding 20 some odd years.
- [45:02]
Dave Weisberger
Okay, so here's the lesson. The trading bits I started in the trade pits in Chicago in the 80s and everybody wants to be a trader. The lesson I learned is only 1 out of 100 make it. But everybody wants it. It's just the way it works. It's not, it's. It's already priced in the human nature is completely against it. And then I pointed all the crypt. There's only, well, you know, you look at again, it's unchecked supply is definitely not a good, a good indication for the, the price of a space in bitcoins. Just. Yeah, it's the one. It's the leader, but it's one of.
- [45:30]
Mike McGlone
The many Amazon trying to find those market caps.
- [45:35]
Scott Melker
It says I what I'm chat GPT could be wrong, but it's saying Gold ETFs totals approximately 306 billion and Bitcoin ETFs topped at 129. So when did they reach parity?
- [45:45]
Dave Weisberger
So on a risk adjusted basis. So it was for this way, if you're buying three times. I pointed this a while ago, bitcoin.
- [45:51]
Scott Melker
Typically three times volatility of gold that you're saying.
- [45:55]
Dave Weisberger
And to anybody who buys it, obviously it's for the R. But if you're an investor, an ETF investor, if you're buying, you know, selling 100 units of gold to buy 100 units of Bitcoin, that's really adding to your risk. And that's not what you do. You'd sell 100 units of gold and maybe buy what, 30 units of Bitcoin for the same kind of risk.
- [46:13]
Scott Melker
And I guess the market cap of gold at the itself as a physical asset is nine or ten times that of bitcoin.
- [46:19]
Dave Weisberger
Yeah, Dave points it all the time.
- [46:21]
Mike McGlone
Okay, so you know, you guys didn't want to do this, but this is so obvious that it's, it's insane, right? Hold on a minute. Where are we?
- [46:30]
Dave Weisberger
So Dave, let's do this. Why don't you pick up a chart of AOL or Netscape. They were supposed to do great. That's my point. Pick up. You can't pick up the winner because it was the winner. It was one out of the thousand. Bitcoin's already been the winner.
- [46:47]
James
Had had major operational missteps. I mean 2000.
- [46:51]
Scott Melker
I would be relieved. Like I would see this tech. I would be. Not as an individual tech company. Yes.
- [46:58]
Mike McGlone
Okay. Okay, so Amazon Lehman says it's going down here. You see down here where my cursor is wagging around?
- [47:04]
Dave Weisberger
That was the time to buy.
- [47:05]
Mike McGlone
Yeah, it was a time to buy. And 10 years later it was here. It had a little bit more than doubled or like tripled. What's it done since then? Don't tell me that that was the time to sell because people didn't say.
- [47:19]
James
That.
- [47:22]
Mike McGlone
Feel really stupid. Right.
- [47:24]
Dave Weisberger
The time to buy something is when the professionals say to sell it. That's the point. You missed the point. But that was the time to make.
- [47:31]
Scott Melker
The argument, Dave, that, I mean every.
- [47:34]
Mike McGlone
So many professionals have been saying to sell bitcoin over the last few weeks. I, I've almost lost count.
- [47:38]
Scott Melker
Yeah, I like that. I like that. Argument. But I mean, to be fair, Amazon also was like a online book retailer that took for everything. So, like, it did change fundamentally, I think, which is the reason at that time, if you had a thesis that selling books alone online was not going to be the biggest business in the world, you could kind of call it a sell.
- [48:00]
Mike McGlone
Sure, I understand that. But even if you look at the chart of Amazon, which. What's particularly amusing is you see this massive drawdown in 2022. Right.
- [48:09]
Dave Weisberger
Yes.
- [48:10]
Mike McGlone
You know, to 2023. Which, which we've made it. Which all of it has been made back. I mean, it's, it's. It accentuated every time Mike talks about, you know, beta. This is beta, right? Amazon has massive beta. Yeah, that, that's. There are two different arguments here, right? You know, we can talk about the value argument or we can talk about the beta argument, but stop kind of, you know, you got to be pinned.
- [48:32]
Dave Weisberger
Down to stop pointing out facts. You're not entitled to your own facts.
- [48:35]
Mike McGlone
The beta of Amazon, they have profits.
- [48:39]
Dave Weisberger
Bitcoin is no profits.
- [48:40]
Mike McGlone
Darn. Bitcoin is no profits. It's just the world's greatest store of value. It's literally.
- [48:45]
Dave Weisberger
It has been. It's not a store of value when it trades three times the volatility of gold and Treasuries. That's a speculative digital asset.
- [48:52]
James
Here's where, here's where, here's where Amazon and Bitcoin are similar. Amazon. Nobody believed that people would put their credit cards online to buy from a company that they hadn't heard of.
- [49:02]
Scott Melker
Right?
- [49:02]
James
Okay. And then that was a. It was a sea change of, of, of people's understanding of technology and their belief in it. It's the same thing with Bitcoin. People do not believe that this, this Beanie Baby, this tulip, this Ponzi scheme is going to be worth anything, because it's not. You can't hold it. To quote Peter Schiff, you can't hold it like gold. My gold watch. She shows me on the stage, I.
- [49:29]
Dave Weisberger
Have a gold watch.
- [49:30]
James
I can wear it. I don't care. It doesn't matter to me. It can be seized at the border. It can be taken from you. Somebody can come up and just rip it off your wrist, especially because you're, you know, just little Peter Schiff. But the thing is, the thing is, you know, people are, Are starting to understand this better. And it's a. And it is a technology, like my wife likes to point out, it's not. It is. It is not a technology company. And so as people get to understand that better, then they're seeing how it is different than all the other cryptocurrencies that you're quoting now. I think if I understand correctly what you're saying, Mike, to be completely fair, and I don't want to put words in your mouth, but I want to understand what you're saying. And I think what you're saying is you understand bitcoin, you understand the technology, but it has all this competition from thousands and thousands and thousands of other cryptocurrencies that people don't understand, and that's taking market share away from them. Am I right on that? Or do you just believe that bitcoin is just one of them?
- [50:36]
Dave Weisberger
Well, it's all. It's Paul, it is one of them. We can't dispute that. There was bitcoin first and now there's 13 million similar type.
- [50:43]
James
I don't think it's any different from any of the other.
- [50:45]
Dave Weisberger
Of course. Of course it is. But every one of them that was created, some of them were supposed to be better. Remember litecoin and bitcoins? Gold, silver is to gold. But it's the point of is is.
- [50:56]
James
Remember how it was. Some of them do have use case. There's no question about it. Like, they have use case and they have, they, they. Their technology is important for what they're doing. But that's a different proposition than a digital asset. It's completely different. And digital asset can become currency.
- [51:19]
Scott Melker
But this before, just before Mike jumps in. But my view on the comparison to the tech bubble or any of the others is that bitcoin is the market and all of the other cryptos are the Pets.com or the Netscapes or the AOLs, but also the Amazons and the Googles. There will be a few massive winners, the Solana that come out of it. But bitcoin itself is not Amazon. Bitcoin is the market leading that dip down before raging on again. So bitcoin is the index. To me, that's the way I've always framed it in my mind, not specific to this conversation, which is why I think there's kind of everybody's on the same page, but it's just whether bitcoin is one of them or bitcoin is different. I mean, Mike, you were jumping in, but you know.
- [52:05]
Dave Weisberger
Well, I'm really enjoying the discourse and the conversation. The main reason we have in this discourse is McGlone got bearish. Okay, Sorry. Because remember, I'm the only one here has no vested interest. I'm A completely. I can't, I cannot allow to trade. Not a lot of positions. This is where I think markets are going. So I really appreciate your views, they helped hone mine. The key thing that really helps me is when in my whole history of having done this with clients since the 80s is when, like I said, when you pick up, you have a great idea and everybody says you're an idiot. That almost always works. When everybody agrees with you, don't. That's why I really am concerned about this whole space. It's the macro and I point out the facts. Here's the fact is when the crypto space goes down, bitcoin goes down. Is it leading or lagging? It doesn't matter. They all go down together. And I'm pointing out the crypto, crypto space has rolled over for good reason. It's heading lower. It's a bear market. You're supposed to sell rallies in bear markets. Maybe it's different this time, maybe something will shift it to go up. To me the macro is very bearish. Draw risk is to Kenya going lower. And it's not just my view, it's some of my colleagues who have been spot on in equities forever and that's why we're going to get the test. The key thing I've been pointing out forever is bitcoin is leveraged beta. It's a leveraged stock market and it's performing like that certainly for the last year on a one year basis it's up 32% goals up 39s and P5 hundreds, 10%.
- [53:26]
Mike McGlone
Okay, I just want to make two points. First, if you stop with the leverage beta stuff that you know and, and you basically said if you had said I'm bearish on Mike and here's my reasons, I think bitcoin could go between 50 and 60,000 on this down leg because we understand that when on, on the downside, the beta is not likely to continue to be as stable. Then James and I would probably disagree with you, but you wouldn't see the vitriol that we're saying because what you're talking about is if you look, all you have to do is look at the hash rate of the bitcoin network, which is one of the most parabolic things in ever and you understand that that is real, real money backing the bitcoin network, which is now 5 1/2 x where it was and real energy.
- [54:10]
James
I'm sorry, go ahead.
- [54:11]
Mike McGlone
So it's. So you have five and a half times where it was at the top. You have over 10 times the power in the network. When bitcoin was last at 10,000, Bitcoin didn't get down to 10,000 when FTX caused billions and billions in forced selling where people had to sell and there were still buyers back then pre etf, pre, you know, being in the strategic reserve, pre the gov, the federal government's treasury secretary supporting it. It's just, it's an insanely, it's an insane tail event scenario that assumes Trump loses in the midterm, gets impeached in two years, or the Republicans lose in the midterm, gets impeached in two years and you get a Elizabeth Warren presidency in four years. That's literally what Bitcoin 10,000 looks like. That is the only thing. So it is just that level of absurdity, which is why we're arguing. We could have this conversation where you can say, well, bitcoin, just like the rest of the stock market's going to correct 20% and the beta will probably be one at that point. We probably wouldn't argue. Well, I mean, I'd argue, but I wouldn't say that. But. So that's thing number one. Thing number two, you keep ignoring that.
- [55:13]
Scott Melker
Dr. Seuss thing number one, thing one.
- [55:16]
Mike McGlone
And thing two, you keep ignoring the, the fundamental reason why we're bullish on bitcoin, it has to do with the fact that it's underpriced relative to the money supply. And the fact is that denominator, everything we talk about, the denominator is going up. There is more dollars, more euros, more yen, more remn, more, you know, or Juan, or whatever we want, whatever you want to call it, there are more fiat dollars being printed and printed. And every time, and this is something that, you know, whether it's Lynn Alden or, or Lawrence or whoever, they will all tell you the notion of pushing on a string is coming to fruition. You need more debt created, more fiscal stimulus created to get every single dollar of gdp. And the only thing they can do is pump the stock market and create the wealth effect. The only thing that, that this debt is doing is creating the wealth effect to do it. And governments need it. So Trump and Bessette may say they don't care about the stock market, but believe me, they care if the wealth effect dries up and reverses and all of a sudden our stock receipts going down and we get into a vicious circle. So, yeah, they don't care about 10 here, 10 there. But look what happened. We had 10% down and what did they do? They, he sent them all out to the talk show circuits. All of them? Yeah. It's not, don't worry, don't worry.
- [56:35]
James
The target, they're going to be targeted tariffs. They're not going to be broad tariffs.
- [56:40]
Mike McGlone
The problem is that if you believe that they can kick the can down the road, which, you know, for, for another, you know, whatever years until we can actually get reform so that we might be able to get real business started and get rid of the bureaucracy, you know, then that's what they're trying to do. I mean, the best data that I've seen basically suggests somewhere around every dollar spent on federal employees cuts about A$25 from the, you know, from the, you know, from the overall GDP relative to what would happen in the private workforce. That number is probably higher right now, would be my guess, because that's, that's a, that's an, that's a blended average. And there are lots of federal employees that are actually necessary. Right. And so what you're seeing here in the media is if he cuts 10 people and one of them was doing something that was important, they scream about the 1 and they ignore the 9. And so you're going to see this play out. I mean, this stuff is crazy. You know, what's going on now? I mean, you're talking about Tesla dealerships being firebombed because Elon Musk, who is literally giving up his own time making less money and people are, you know, driving Teslas, are being targeted. This is the left.
- [57:44]
Dave Weisberger
So what do you think of BYD versus Tesla? If you're going to bring up Tesla, what do you think of BYD versus Tesla? It fits right into Jeff Booth's version of rapidly advancing technology.
- [57:51]
Mike McGlone
I think that what's going to happen is very simple. We're going to reverse repo the jab, the Chinese. I think the battery technology that BYD has, which is the five minute supercharger, is going to make itself into gigafactories that Tesla is going to be producing and will end up with a pretty damn good car. Here right now we are protect, we are actually being protectionist against superior technology because technology goes in a leapfrog. Tesla built the gigafactories on old lithium technology and the chargers are going to have to improve and they're going to. And BYD is leading that. And people in the US are delusional if they think they're the only ones who can innovate. You can, you know, there are things that will happen, but I do think that you're right there. I think it's important. And by the way that's actually very bullish for Tesla. Tesla. I mean I, I found out something that I thought was interesting. I have a why and I was talking to one of the Tesla sales guys who was a really interesting who told me oh don't buy the new one because there's no difference really. I mean yeah, there's 70 new parts and you could talk about it. But what he said to me, that's fascinating is the one thing that wears out in a Tesla is the battery. And so it was 20,000 to replace it battery pack in you know, at the time that I bought the car three years ago today it's 8,000 and Tesla's internal prediction it'll be 4,000 to replace the battery pack with a Superior1 in 4 years to think about that I might very well be able to have a brand new car or one that, because the car, you know, in four years for $4,000. And that's the thing about electric cars, they're getting better and better and better. Our grid needs to be, you're going to hear about more and more in the US over the next five years is how much we're going to need to spend on the grid. Oh by the way, guess how they're going to have to stabilize those that, that grid. What's going to be the single biggest thing that's going to be used to stabilize the grids that we're going to need to.
- [59:32]
James
Can I answer?
- [59:32]
Mike McGlone
It's going to be. Yeah, yeah please.
- [59:34]
James
Bitcoin.
- [59:35]
Mike McGlone
There you go. And so that's, that's my closing rant of the day. I, I, I think the thing is Mike, all I really want to say is I agree with a lot of what you're saying but that beta is not stable to the downside unless bitcoin.
- [59:48]
Dave Weisberger
Fails and I don't the bitcoin gold ratio is the same as it was four years ago. It said 29. I'm sticking with gold particularly as we head towards the recession which I think is going to happen. I think gold will outperform bitcoin, I don't know for the next, it's done for last year, maybe next two, three, maybe five years. But if we head towards this recession this highly speculative I think is going to underperform even in the money pump versus the old rock. And that's what's been happening. That's the current trends. Massive inflows and gold ETFs, massive outflows and Bitcoin ETFs not massive but just getting started potentially as people are realizing that what they bought was leveraged beta. I mean.
- [60:28]
Mike McGlone
Question. So today gold is slightly up while. I know but we see a lot of these days the reason gold is up on a day when risk assets are ripping is because a large part of what they're ripping is from liquidity and liquidity will ultimately go into gold also. So beta is unstable. That's all I want to say. Whether it's a day week. We could go back, we could do this under lots of time horizons. You know beta is unstable. That's all I want, I want, I want to say here it's that you need to worry about the causation as people believe there will be more liquidity. Everything goes up. It's the forever market.
- [61:02]
Dave Weisberger
Okay. So then again it's about titled your facts. That's an opinion. It's good to have that what people are going to believe. I'm telling the facts of when stock market corrects and goes down from the most expensive ever in US history. Everything goes down. Particularly risk assets that trade three times the volatility of the stock market. And I just use beta to refer to it. That's just lessons of history. Maybe it's different this time and maybe.
- [61:23]
James
Next week we can touch on the fact that we believe that we've been in recession and the stock market has been hitting all time highs despite that. Why. And it all comes back to liquidity. And we'll talk about that next week.
- [61:34]
Mike McGlone
I guess we are out of time.
- [61:38]
Scott Melker
Way over time. I can't believe we didn't even get to talk about the fact that MicroStrategy now owns over 500,000 Bitcoin. Bitcoin. There's a 500.
- [61:45]
Mike McGlone
I actually that actually is a bear indicator to me. I want to be clear.
- [61:48]
Scott Melker
So we're talking about that and. And the strife offering is a head scratcher to me too. So maybe we'll talk about that next week because it's literally called perpetual strife by the way which is just unbelievable. But that one, this one's leaving my head scratching and I do want to talk about some point when enough is enough. I also want to talk about that was one of the best hours of my show ever. Any show I I've done one of the best hours of my life. That was so much fun listening to you guys argue participating in it. This show should have. You know it's got 2000 people on YouTube watching of course more on audio but it should have 2 million.
- [62:22]
Dave Weisberger
It's.
- [62:22]
Scott Melker
You guys are the best. Absolutely incredible. I. I don't know how it's not 2 million, but maybe one day we'll be the all in podcast because I think it's well deserved with the three of you guys. Absolutely incredible. Thank you for always sharing your opinions and for being one of the few places on the planet where people can actually be adults and disagree on things and be civil and friends. So I think it's a good lesson for people everywhere. We gotta go, guys. Thank you so much. James, Mike, Dave, everybody. Give him a follow. See you guys soon. Next week, let's do.