← The Wolf Of All Streets
The Wolf Of All Streets
Massive ETH ETF Outflow Hits! Crypto Weakness Spreads | CryptoTownHall
00:58:41
Loading summary
Transcript98 lines
- [00:01]
A
Good morning everyone. Welcome to crypto town hall. 10:15 every day, even when there's very little happening in the market. You know, here we are and we're pretty much exactly where we were yesterday at this time when we basically talked about the fact that it's summer and there's not much happening. But the only thing that seems to be going on is more and more people getting hysterical on crypto Twitter about, about digital asset treasury companies. More talk about MSTR and others as Ponzi schemes. Despite fair clarity. A little bit of a freak out because Saylor is selling equity in order to tread water while the market isn't moving, et cetera, et cetera, et cetera. At the same time, Ethereum had some of the faithful shaken by ETF outflows and it's lagging a bit here. Curious what other people think about, but my personal thought is that Ethereum had a massive short squeeze rally and it needed to digest and we're in that digestion phase and we'll see what happens after that. So take that for what it's worth. I'm much less of an Ethereum bull than several other people here on stage. I question its fundamental value should it be a multi trillion dollar asset. The that we'll find out. But effectively that's what its price effectively signals that the faithful believe and we'll see. But you know, it wasn't as bad as it was a few months ago when it was trading at $1400. And it isn't as bullish as it is when Tom Lee basically beats the drum and says it's better than Bitcoin. At least that's my personal view. I'm curious. Others think, I mean Henrik, you're making. Or Hanok, excuse me, you're reacting. I mean, what are your thoughts?
- [01:54]
B
I think, I think it's. I'll be nice. I think it's a little too early to say that Ethereum is better than Bitcoin when Bitcoin consumes and represents the majority of the entire industry. But God bless everyone monetizing on that opportunity. I have nothing but love for everyone trying to legitimately build in this space and those who are financially benefiting off of statements like that. Yeah, am I bullish on eth? It's an institutional grade asset now. Yeah, of course. But like I'm not going to go out and say that it's, it's going to flip Bitcoin anytime. So I think it's a. I don't know, man. I just feel like statements like that, you Just lose more than you gain.
- [02:31]
A
You know what it is, to be fair.
- [02:32]
C
Didn't he say it's the next bitcoin? He didn't say it's better.
- [02:35]
A
Right.
- [02:35]
B
Oh, okay, I'm sorry, I missed that.
- [02:37]
A
No, no, no, you didn't know.
- [02:39]
C
That's kind of what we said. I'm just saying I think his original, and this was kind of what sparked the entire Ethereum rally, was when he went on TV and said, you know, Ethereum is the next Bitcoin. I think he was speaking of it more as a trade and fundamentally saying it was the same asset. But still quite a bold statement.
- [02:56]
A
Yeah. And I think he was talking about it from a potential point of view and the ETF and whatnot. But that's what Tom Lee said. But Joe Lubin, of course, comes out and says, well, Ethereum is better money than Bitcoin and repeating the tired arguments about staking and environmental FUD and blah.
- [03:12]
C
Blah, blah, and it's like ultrasound money. That's the stupidest narrative. I actually like eth, but I think that that's max massively minimizing for, like, Bitcoin and for the asset. And you can, you know, and I believe they're completely separate assets and effectively a separate asset class.
- [03:30]
D
Exactly.
- [03:31]
C
Talk about ETH or any other crypto, quote unquote, currency as money. You just lose the plot.
- [03:36]
A
Yeah. I mean, my view, Scott, is simple, is that when you hear those statements, it just pisses people off and it demeans the narrative. There is a narrative for Ether. That's not it. And it's. It's annoying to hear it, because when you hear it, all you do is you get ridiculous tribalism, stupidity, and lots of things going back and forth which confuses the hell out of anybody listening.
- [03:59]
E
And it's fundamentally a lack of understanding of the economic principles that underlie Bitcoin and that underlie Ethereum. Bitcoin has a fixed supply. Ethereum. Even if Ethereum were to have a quote unquote, fixed supply, which obviously it doesn't, Ethereum is an asset class which can be duplicated, and Bitcoin is an asset class which cannot be duplicated. So you can have clones of Ethereum, you have Solana, you have Sui, you have other blockchains which can fulfill the same fundamental role. Bitcoin is unique. Bitcoin is money. Bitcoin is the unit of account. Because it has such a massive network, it can never be replicated. So, you know, you can. You can fork Bitcoin and it's never going to gain traction. There is a unique asset class which is Bitcoin, and then there are all the other asset classes. And anybody who's saying Ethereum can flip Bitcoin, Ethereum could be the next, you know, the next. Bitcoin is a fundamental misunderstanding of how economics work, really. Ethereum can have competition and Bitcoin cannot have competition. And, and Ethereum and Bitcoin are not in the same space. They're not doing the same thing. So it's, you know, if you're looking in the short term, of course Ethereum can always go up faster than Bitcoin in the, in the short run. But in the long run, Ethereum is going to drop to the fundamental economics of how much revenue does it make. Bitcoin will never drop to a fundamental economic level of how much does it make because it's money, it's unit of account.
- [05:36]
A
Well, people who listen to me regularly know that I agree with pretty much all of what you just said. It's a question of the way it gets characterized. And the one thing that is true, it's not a competition, but the one thing that absolutely ties Bitcoin and Ethereum and other assets together is the way people trade them. So yes, they're on the blockchain, but that's not what I mean. I mean that momentum trading strategies dominate. And so when momentum stalls, you get interesting behaviors and emotional overreactions and people doing kind of dumb things. But that's true across. You could say the same thing about a lot of tech stocks and a lot of things in nasdaq. You know, we're seeing, we've seen probably more quote, irrational exuberance, unquote on IPOs of crypto companies that are equities than we have in, you know, crypto large cap coins over the, over the summer. Right. So it's, it's not a, this is not a crypto thing anyway, Mark, I'm sure you have opinions there. And then I'm ateo. And then, then Mr. Tawil. Hey, Dave.
- [06:44]
F
Yeah, thanks. Yeah, Brian, just talking about the, you know, bitcoin unit, unit of account and station and digital asset. Absolutely. That's where it is, has been and that's a long term view. And Dave, you're talking about August. You know, there's news and it's kind of quiet. We're in a funny little spot. So people are just bringing up, you know, old, old narratives about or trying to find problems with things that have run like Bitcoin treasury companies. So I just want to talk about Sort of the street level, something that we, we had the short coverings in in July, you know that the meme stocks and all that, that was the driver. And when you said Ethereum is the same asset as it was when it's 1400 it is. And Apple's the same stock when it was down 20% on the year. Apple's leading all of the Mag 7 now up 12%, still down 7. The next one's Tesla up 7. It's still down 18 on the year. I think August has been just like a portfolio, recycling across traditional and digital. And we're waiting for what normal comes out. Kind of along the lines. But Scott, you've been saying about FTT still has a wonderful $300 million of market cap, even though it's really not worth anything taking that sort of terminal value that's never able to be squeezed out of a dead cat. August has been a rotation, people looking for the next persistent theme. And that's what I've seen. Sort of like there's a lot of noise. Point point is turbulence and noise. That's all Dave I want to talk about.
- [08:30]
A
Whoops. I'. Mateo. Hey Dave.
- [08:33]
G
Hey Scott. Hey Mark. Yeah, I think the thing that stands out to me the most in this is that like these are old tired narratives for Ethereum. We've been hearing this for like five, seven plus years. It's actually what got me into crypto. My first purchase was eth and that was because I bought into this and it was because I didn't know any better. And so kind of what this shows me is that there's obviously some clear new buyers in the market and there's institutional buyers who likely don't know any better and are able to be gullible to these wash up narratives that have been circulating for so long and kind of pile in on them. It's that and or retail being stupid enough to go along with the trend. I think anyone who thinks Ethereum is going to surpass Bitcoin is just not thinking straight. But I think many of us have had our moments where we had. So you're saying there's a chance and I think that it's a clear signal that there was new entries into this market. Looking at this and looking at the people who were shilling this washed up narrative and willing to go along with it, I think it's pretty fascinating to see actually.
- [09:51]
A
Yeah, I think that's probably fair, David. Speaking of one of those people shilling the narrative on Ethereum for the longest time before there was Tom lee, there was Mr. Tooele. So, David, what do you think this in morning?
- [10:06]
H
Look, I'm not a maxi of any kind. I think it's way too early. But to say, I'll take the other side of the argument, to say that, you know, oil couldn't flip gold was an idiotic statement. Right, because oil clearly is flipped gold. And so until you figure out, I, I mean, not to say that Bitcoin is gold and not to say that eth is perfectly oil or electricity or any other source of power for that matter, but to make that narrow statement this early in this game, I think that that's a fool's move. And I'm not saying that you'll be proven wrong. I'm just saying you don't have enough data to make that statement at this point. And so we'll have to wait and see. There's a two, they're two very different commodities. They will be used for different things over time, potentially very different things. And so only time will tell. We are in super duper early innings. And I know you get tired of the narratives, but, you know, sometimes in investing universe, you got to just hang in there for a while. The world doesn't move as quickly as you'd like for the story to develop. A lot of things need to go ahead and change in order for the narrative to develop.
- [11:28]
A
Yeah, I think you're speaking. There's a lot of wisdom in what you just said, but there's one thing I want to be clear because we don't disagree on a lot. My statement isn't about value. My statement is about the type of asset. Bitcoin's terminal state, if it's successful, is as the barometer for all assets. Now, it may not be successful. It could easily stop at, at being where gold is, which is representing 15% of assets and being kind of a barometer for money, but stopping short of being the measuring stick for all assets. And Ethereum's ultimate state is being the backbone for an entire new financial system which, and I say financial system understanding that financial system is still needs to be value. You know, how art and music and other things transact. So it's not just, you know, Wall street per se, but you know, that that's its terminal place. Now I, I value those differently, admittedly. But no, it's not a definitive thing because neither one is even close to its potential. Right. Which I think is your point.
- [12:37]
E
I, I mean the, the question that I have for, for you, Dave, is what is the barrier to entry to A competitor for Ethereum. I mean the barrier for entry to Bitcoin at this point I think is infinite. There's the network. The hash rate is just too potent for a competitor ever to arise.
- [12:59]
A
I think, Brian, I think the bottom line is it's all about network effects. Right?
- [13:04]
E
Exactly.
- [13:05]
A
Bitcoin is not. I think that Bitcoin has gotten to where you would say, to where you're saying, but the price of Bitcoin is one tenth of what it would be if in fact the world believe you to be correct. So the world does not believe you and I are correct yet, which I think is a fundamental mispricing that creates a generational opportunity for people. That is true, but you have to acknowledge the fact that it is not priced at that same asset. Even to put it in stark terms, compared to the previous all time high in the 2021 time period, the hash rate of the Bitcoin network is seven times stronger than that. And the price is barely, you know, basically not quite double where it was. Meaning that we have nowhere close to the level of euphoria or optimism before all the various things happened that we know unfolded between 2021 and 2022.
- [14:02]
E
I would counter that argument by saying there is a point where hash rate becomes insurmountable anyway and incremental increases in the hash rate are essentially irrelevant. I mean, you know, whether, whether the hash rate goes up a hundred times from here or not, Bitcoin is already unstoppable as far as that asset class.
- [14:20]
A
Goes up your mouth, the God's ear, my friend, that's all I can say.
- [14:25]
E
But Ethereum, I mean anybody can create a blockchain and everybody that I know is creating a blockchain, right? And these blockchains have, you know, arguably superior capabilities for defi and all of that than, than Ethereum. So Ethereum runs the, the perpetual risk of competition. This is where I see fundamentally Ethereum is a short term play, it's a midterm play. Long term it will be out competed. It certainly will have to compete in the market in a way that Bitcoin doesn't.
- [14:56]
A
Well, but keep in mind that Ethereum, that's why I often, I often compare Ethereum to tech investing, when in tech investing network effects matter too. Does Apple have the best technology? Great question. Probably not. Does it have enormous network effects in its compute system? Sure, it absolutely does. Both in, you know, in music, in phones and lots of things. They do. I mean, you know, pretty much. I don't know a human being who, you know, reviews the tech of telephones and says the iPhone's a superior instrument. That's why I want to buy an iPhone. People do it because it's easy and because there's an ecosystem and there's a network effect. Right. And that's why it's a multi trillion dollar asset. Ethereum, that's the, that is the Tom Lee point, that institutions are going to trust it first. And it really is that. Now, I am not a big Ethereum bull. I've said that. Why don't we let others who are talk about it that way? But that is the other side of that argument.
- [15:55]
E
Right, right, right. I'm not saying that Ethereum is worthless. I'm just saying it's going to compete in the market with other know you have Apple, you have Google, you have, you know, with Android, you have other, you know, Huawei. So, but, but ultimately you have, I hate to use this analogy, but you have gold, which could be a fundamental money, but really there hasn't been a global fundamental money until Bitcoin. So when Bitcoin achieves, I guess that's, that's all I'm trying to ultimately accomplish with this line of reasoning is that Bitcoin is a separate asset class from all of these other blockchains which are going to be competing with each other like Apple, Google, you know, meta whatnot. They're going to have to compete in the market in a way that bitcoin ultimately dominates.
- [16:46]
A
Carlo, how are you this morning?
- [16:49]
D
Good morning, Dave. Good morning, Scott. I'm doing well.
- [16:52]
C
Morning.
- [16:53]
D
I know it's a slow market day, but I wanted to pivot if I could to something really interesting that happened.
- [17:00]
C
Is it Wyoming stablecoins or something else?
- [17:02]
D
It's both Wyoming stable coins, which is huge, that we have the first state chartered approval for a stable coin that's going to be Genius act compliant. I was hoping Texas was going to run this, this to the finish line first, but Wyoming has been leading on this for a long time, so it's no surprise. And second, in a brilliant strategic move, Paolo at Tether has brought on Bo Hines as a strategic advisor, which I think positions Tether now to make a very strong case for entry into the United States stablecoin market under the Genius Act. Cannot downplay the significance of that move. Well played, Paolo.
- [17:41]
C
And he had already gotten Lutnick on his side, by the way. So this playbook was already being written before when Tether obviously got in bed with Ganter Fitzgerald ahead of Lutnick becoming Commerce Secretary. So this is just adding Another notch on that. Very clear that tether is going to make a significant push into the United States.
- [18:01]
A
Yeah.
- [18:01]
C
In a compliant manner.
- [18:02]
D
Yeah. And it just further solidifies my thesis that I think stablecoins are going to be the, the mega play of this cycle. The fact that we now have a state that has chartered their stablecoin which they can use in certain many different ways, including state funding and payment Rails just reinforces that this is the future of fiat and I'm really excited to see where this is going to go.
- [18:30]
C
You had your hand up. I think.
- [18:35]
G
I was going to chime in on the traction discussion. So I'll let someone else chime in on what Carlo brought up because it is topical and interesting.
- [18:45]
C
Mark.
- [18:46]
F
Yeah, just on, on the stable coins as far as utility, I mean, I think it was too talking about Ethereum and the utility and how it's, you know, it's oil and all that. Stable coins have such a powerful use case and incentive structure for so many players. You know, the banking system that's dying for innovation and, and margin expansion and share, the federal government that it, we almost forget how powerful that is because it's going to take a while. It's going to take, you know, you got to get the Uniform Commercial Code, something I keep bringing up. All 50 states have to align on custody rules and you know, it's just going to, it will take a while. But God, there really is nothing that I've seen besides bitcoin that has such a powerful alignment of interests. And so that's what I think. I, I agree about stablecoins and I don't know what.
- [19:46]
D
Mark, I have to 100% agree with you on that. When I first saw the genius act and I first fully understood what's going to happen here, I had the same epiphany. I just felt that this was an absolute game changer and this is something, this is a, an innovation level that we haven't really seen since the introduction of blockchain technology because now we're putting fiat on blockchain in a fully regulated manner. And I just think I have to agree with you, the possibilities are endless.
- [20:16]
C
But that, by the way, gives us two fundamentally opposed killer apps for blockchain, which is ironic because bitcoin is the antithesis of fiat. And the other killer use besides bitcoin is digitized fiat, which is obviously going to increase the usage, speed and proliferation of the very things Bitcoin was created as a hedge against.
- [20:37]
A
Okay, wait, whoa, okay, let me take the other side of that one. Both of them involve the fact that there's this technology called blockchain that allows the world, it's, you know, to use a quote, Mark Yusko, the technology of truth versus the technology of trust, which effectively boils down to being able to efficiently transact or transfer value without having to use an intermediary. One of these technologies is limited supply, massive network to be the denominator of value, but isn't necessarily going to be used, in fact, probably will never be used despite, you know, I don't want to say never, but certainly not going to be in any short term going to replace the native currencies around the world. In fact, the reason tether is so big is because so many people use it as an on ramp to Bitcoin and the rest of crypto. But Bitcoin has that value use case as a denominator. Stablecoins on the other hand, are the ultimate expression of being able to transfer value within a country, within a currency incredibly fast, incredibly cheaply, because we have this world that is an analog world that is ridiculously slow. So fiat versus Bitcoin is undeniably a thing, and there's no question that you're right about that. But arguably, you know, stablecoins provide the ability for fiat to at least be digital. It doesn't change the fact that the government's printing enormous amounts of money, that we have a $37 trillion deficit on the dollar, that Japan has 200 plus percent of debt to GDP, you know, et cetera, and that lots of countries around the world, the entire fiat system since 71 are pushing harder and harder in terms of monetary debasement to keep their economies afloat. None of that changes. But stablecoins allow at least a velocity of money and an unlock in the banking system. And so there's a bit of difference. So I just, I don't like the oppositional thing. So many bitcoiners say, talk about, you know, the use of stable coins in crypto and I think that's wrong. And so many people in crypto, you know, look at and say, well, Bitcoin is anachronistic and slow and therefore it can't actually do what it's supposed to do. And I think that's wrong. And, and I just want, I just wanted to clarify that.
- [23:05]
E
Sorry for the rant, bang on the money. I mean the argument of, you know, short term versus long term, which is usually where conflicts arise, right? In the short term you have digitization of real world assets and what a perfect asset to digitize is fiat currency. I mean, that's obviously the first mover to be digitized as a real world asset. Whether Fiat currency lasts 100 years or not, because of bitcoin, certainly for the next five, 10, 15 years, those countries are going to have fiat currency. And so as a digitization of real world assets, it's perfect and it makes perfect sense. And, and my God, you know, what a, what a victory it will be when Visa, MasterCard and the banks all ultimately go the way of, you know, the record stores and, and, and bookstores. What a, what a bickery for humanity.
- [23:57]
A
Well, I don't know. I used to like, you know, going to a bookstore and sitting there, whatever. Never mind. Carlo?
- [24:04]
D
Yeah, I have to agree with you, Dave, because I think there is a symbiotic relationship between fully regulated stablecoins and bitcoin. First off, bitcoiners are very loath to ever spend their bitcoin. And I think that is so entrenched in the mindset of bitcoiners that where I think the symbiotic relationship will be is that bitcoiners will leverage their bitcoin, get credit on their bitcoin, and then convert that to stablecoins and use that as their, as their payment rail for living their life. I just don't see a scenario anytime soon where anyone's going to be comfortable actually spending their bitcoin because it is, again, I liken it to. And I know a lot of people take issue with this prime Manhattan real estate. Why would you liquidate it when you could leverage it?
- [24:52]
I
Didn't someone just sell $9 billion of their Bitcoin?
- [24:57]
D
Yeah, look, there's going to be outliers, no question about that.
- [24:59]
I
But people will spend. I mean, when you get to a certain level and you can borrow, I mean, you know, people are borrowing in their spending, right? Like, a lot of the people that I know that have been in the space since, you know, 2013, 2015, they're, they're hitting levels now that they never, I mean, it's so far beyond what we all thought and how quickly it came that they are, you know, there are private pools that you can sell your bitcoin in. And you know, it's not, you know, you know, whether people are borrowing and whether, whether or not, wherever they live, they've decided to move after all of these years and whatever the tax implications are, like selling, selling is happening, obviously they're still wanting to hold as much as humanly possible. But I mean, if they're selling 20, 30% of their stack.
- [25:45]
A
It.
- [25:46]
I
It's, you know, people, it. People want to live, they want to be in homes, they want to experience these things. And a lot of the people that I know started in their 20s or early 30s, they're now in their 40s, they now have families and they're like, maybe I do want that house in Hawaii.
- [26:01]
A
It's it.
- [26:02]
I
So it is happening.
- [26:03]
A
Joe, there's two points here. Point number one is everyone who talks about bitcoin being an inelastic to price commodity are just morons, right? It is completely elastic to price from the perspective of the holders who own it. And that's exactly what you're seeing. So look, I have a lot of knowledge about the way the, the 80,000 Bitcoin was sold with minimal impact and why and how and all of that. And we'll be talking about that sooner soon enough. But the, the reality is that that was a classic example. Inheritors found themselves with $80,000 worth of Bitcoin and would prefer to have, you know, $10 trillion. Right. You know, not $10 trillion. $10 billion.
- [26:51]
I
$10 trillion.
- [26:52]
C
I would definitely sell for 10 trillion.
- [26:54]
A
Yeah, I would too. I keep doing that billion trillion thing. It's kind of crazy. That just gives an idea of the law of large numbers. That's the debate. That's the problem with debasement of fiat. If you start talking, you do have information, you know, etc. But no, all kidding aside, I mean, yeah, there's, there's clearly everybody has their price at which more will come on the market. That is true from, from holders. But that doesn't change the fact that the same people who are selling, the ones who are cognizant of it or bought it in the first, first place, think it's undervalued and therefore they do what they do. From a life perspective, that makes sense, right? You know, what's the marginal value of being worth? I don't know. You pick numbers and at a certain point the marginal value is what's more important to me. Being able to have a house that my family can live in, being, you know, having, you know, changing my lifestyle completely or not. And people will make those decisions. That's not the argument. The argument is, is for it to be a free flowing currency for people to be willing to spend it for their coffee, their book, their car payment. At that point you need to think that it's less valuable or the same as the fiat that you could spend instead. And the answer to that is, well, there are a lot of People who are saving in Bitcoin because they think it's undervalued, those savers are not going to spend it because the tax implications of doing so are just silly. That's the point. And I, I, you know, I don't want to get into the argument, but I, it's, it's like everything else, it's always a question of degree. Right Mark, I'm sure you agree with that.
- [28:28]
F
Yeah, yeah. And I love how you went billion, trillion and someone brought up, you know, the Austin powers moment there, 10, you know, $1 million. And I, I want to talk about something that happened 082 instances in 08 that I think are relevant about when shifts in orders of magnitude happen. And we're playing catch up, right when people are on the steps of the treasury or the White House. Right before the bailout, our team, I was at a hedge fund and our, our team did some work and like, and we said we think it might be a trillion dollar workout. It's the first time I think I said that word in public, definitely in finance. And I was with a room of pretty senior managers in the business for a while and they all shook their heads. What do you mean? You know, they said the last bailout, you know, was 110 billion or something like that that happened. So it wasn't in our consciousness and it wasn't a trillion, it was 700 odd billion. But it was pretty close. And then the next instance about when things happen fast and we're playing catch up is in October. Someone said, remember when Bear Stearns went out of business last year? And we said no, that was this year. Things were happening so fast we couldn't catch up. And again, these are people in the industry for years and I think we're in that moment now where things are happening. And one thing to land, to bring it back to what we were talking about with spending or saving money used to be one thing. You know, it was, it was both something that you, that was a medium of exchange and a store of value. And now I'm going to pull from sailor not you sco like you did Dave and say, you know, money is now two things. There's, there's it's to be spent and it's capital and bitcoin is capital. It's not a, it's, it is not a medium of exchange yet and it may grow into that or have a layer on top of it. But I think because of the level of debt it's forced this, you know, currency is no longer Those three things, it isn't, it's been, it is not a store of value, the dollar now. So that's my five senses. The analog to 08 is that the 37 trillion in debt has forced the divergence of something that was integral and the dollar is not integral anymore. It is one thing, not three things.
- [30:53]
A
Fair point.
- [30:57]
I
Just to hop on, hop on some market talk real quick.
- [31:00]
A
Yep.
- [31:01]
I
You know, it's like you said, it's August, it's quiet and I think we're just, we're just hitting an early sell off. You know, Jackson Hole. Paul is supposed to speak on Friday and I think people are selling into that. You know, it's slated to speak. You know, it's their annual gathering of the central bankers that we all love. And you know, I think, I really think that he's trying to, you know, hold rates like he's going to signal like a 25bp cut or no cut. And the market's just reacting. Right. It's just a slow little bleed here. Middle of the month, you know, all of Europe is on vacation and you know, we're, we're here talking about what, what's happening with Bitcoin, but I think that's it. And he's just, he's being a stickler on it. And I think, you know, he, he thinks he has his place in history as the, you know, the person that when we look back in 80 years, you know, or our kids or whoever looks back in 80 years and they say, you know, we printed all this money, we printed, you know, triple the amount of money that was in circulation over the course of one year because of this quote unquote pandemic that happened. And this person saved money. I think he wants to be that person, but I just don't think it's gonna, I don't think it's gonna happen. And I think inflation's just gonna keep going, printing is just gonna keep going and there's nothing that he could do to stop it. But I think that that's what's in.
- [32:21]
E
His head, you know, just to dovetail on that and give sort of the 10,000foot perspective from people who have been in, or a person at least who's been in from the very beginning, watching these digital assets and Bitcoin right from the genesis for this to be a slow period and to see Bitcoin just basically, you know, I mean, if you zoom out on the chart, just treading water compared to all previous cycles where we would probably be down 60% right now this is phenomenal, the consolidation that's happening here where we're still in trend and, and you know, with what the couple of percent pullback from the all time high. This is a remarkable cycle. I think we may really be looking at kind of the end of the bitcoin and really crypto generally these huge, huge swings. I think we can attribute this to institutional and just general sense that bitcoin is not going to zero. That's never happening. The trend is always going to be up and it's just a question of how rapidly we get to true price discovery on bitcoin and what a different cycle when we're not dealing with days where it's off 20% and then you know, 50% and just seeing this sea of red and you know, what is, you know, what's really going to happen? Is this going to completely wash out? Is this going to go to nothing? So it's very, I'm, I'm for one very relieved to see this slow August where we're not seeing that kind of, that kind of price movement.
- [34:10]
A
Yeah, I mean I, I, I, I hesitate to say volatility is gone because it isn't.
- [34:18]
E
As soon as, as soon as I would actually say those words, it would, it would immediately drop 30, right?
- [34:23]
A
Yeah. No, no, I don't mean it that way. But I think that the way to phrase it, Brian, is much more as follows. Bitcoin could well drop 30 to 50% at the same time there is a global financial panic or route. True. But absent that, the relative volatility of bitcoin on the downside is definitely less than it used to be and even its volatility on the upside is less than it used to be. As the main flows into and out of bitcoin are coming from places that are, that kind of have circuit breakers and more methodical things happening. Now, of course things change, right? You know, if there was a, I don't want to talk about disaster scenarios that could cause it to plummet. I don't want to talk about, you know, the people front running just crazy news such as, you know, the US passes a strategic reserve bill that forces it to buy and they haven't bought any. I mean, I don't think either of those scenarios are going to happen. So there are things that could cause craziness. But the truth is that, you know, rallies that we might say are face melting rallies, you know, or people talking about Omega candles feel unlikely. But that doesn't change the fact that you could have a three month period that Bitcoin could triple like Nvidia basically almost did in, in its, its most, in its largest period. So it really is a question of will there be liquidation cascades? You know, will people play those games? It is important for, for everyone to understand that when Bitcoin as an asset had its price being led by derivatives, where derivatives were 5x the volume of spot, the spot books are relatively thin that you could put on trades that you would get long or short spot versus perpetuals and then move the spot to make money in the perpetuals. If you try to do that today when the markets are open, you could literally get crushed. What used to be a routinely easy moneymaker, now both, by the way, a lot of people, a lot of regulators would say what I just said is illegal, but it doesn't matter in Bitcoin. No one's been prosecuted for it. But think about what that means. It means that the way it used to trade routinely is now very dangerous and nowhere near as profitable for the people who would try to make that happen. So that doesn't mean that there won't be a liquidation cascade. It just means it won't be. It's less likely to be intentional, which of course increases volatility. Right.
- [37:03]
E
Brilliant. Really, really well summarized. You know, not derivative led. Of course Bitcoin as an asset can be moved by markets as the, as other assets move. And you know, you sell what you can not what you want to necessarily in a, in a collapse, as you say, there, there are upside risks that could lead to an Omega candle. But yeah, my, my point well taken I think and well summarized that you know, the, the volatility has been reduced under natural circumstances, which is a huge relief to me watching this market and say, you know, I, I'll take a stable price, a slowly declining price when there's no news in the market and things are soft as opposed to a. Well, there's no news in the market. So we're having a 20% down day.
- [37:53]
A
Yeah. Amateo, you've been patient as always.
- [37:59]
G
Yeah, so we saw two kind of headlines in the last 24 hours. Not that significant but like Ark21 sold 559 Bitcoin worth 64 million. BlackRock took some profits on ETH for 82 million. And I think what just this just shows is we've had this period of just monumental. We've seen profit taking, but like monumental inflows net positive from institutions and naturally we have to be able to as a maturing market digest net selling outflows. And I don't think that that has been fully reached in the market. I don't think the market's fully processed how to digest those things. And I think that we're sort of seeing it now. People don't know whether to panic or just realize that it's a part of doing business, which I think it much more deserves. And I think what we're seeing here is like things are just sort of leveling. And I do agree that the bigger the grow, the bigger the market grows, the less volume that we'll see as a result of it. Black swans will always migrate, they'll show up at some point. But I think that this is really healthy. I kind of go back to all the minor fud of of bitcoin's past five, seven years where people just saying that bitcoin will never be able to survive the sheer amount of miner selling and look where it's reached. So I think all of these things are just growing pains and natural movements and we're really seeing how this stuff can ingest the sheer volatility inwards and outwards.
- [39:47]
A
Yeah, I think that's right. I just brought you up, but you had some background noise coming from. Okay, muted that one because there's background noise coming in there. Yeah, I think that it's, look, there's different mechanics at play. And you know, you, you know, today is a soft day. Bitcoin's underway. 114 ether's under 4200. You know, what does this mean? You know, yada yada. You can read a lot of things into this. I'll continue to say that, that the 112 to 122 ish range for Bitcoin is intact. Ether is different. Ether had a huge run and digestion. You know, I don't think technicians would be terribly worried about. I mean it literally ran from, you know, 2000 to, you know, 4800. Right. You know, a 50 retracement of a run like that is completely normal and a 30 some odd percent retracement is almost expected. And so it's, people have to understand, you have to put everything in context. None of that invalidates a narrative. And you know, Henak, you agree? I mean, I assume that's, that's, that's how you're looking at it. It. And, and so we look at these markets and people are like, well, what's going to happen next? And the answer is because it's going to be something that. On Scott's show this morning, the guys from March public. I don't know if it was Tillman or Andrew that said it, but made the point that a lot of people are on vacation and if you look at the volatility in the stock market, there's almost none. The bond market's basically not moving. People are on the beach, and they're going to come back in September, towards October, and start really rejiggering their portfolio portfolios. And that's when we'll see where the trend will establish. Crypto does tend to march to its own drummer because there's so many, well, degens in the market wanting to gamble. And so it will push and pull around. But the real trend, remember this entire rally has been spotlit. And that's true for both Bitcoin and Ethereum. Right. So it's, it's, that's the thing to keep in mind. So when the spot buying is sort of like, like, okay, you don't have a lot of that, but you don't have a lot of selling either, then the derivative traders will do what they're going to do, which is whatever the direction is, play that direction until it proves them wrong. Which is, which is another way of saying momentum trade. And the momentum for the last few weeks or last last week or two is lower until something changes. Does anybody disagree with that take? Looks like everyone agrees.
- [42:21]
F
No, that's it. Everyone wants a little bit of, bit of a break. I remember a journalist friend of mine, David, said that August events declined because all the lawyers go on vacation and you need a lawyer to cause problems and file briefs functions, which I thought was pretty funny.
- [42:40]
A
Yeah, you know, it's funny. I mean, you know, Carlos, you didn't leave yet. Now you're still there. Yeah, you know, there are some lawyers who are trying to do the right thing. You know, like our friend Paul Atkinson at the, at the SEC is saying all the things that we want them to say, but I don't think a lot of people in the crypto world have the patience to actually work through the details that it will take to make them to, to actually change the markets. That's really the difference. Right. You know, what do you, what do you think, Carlo? And I know you agree with that sentiment because you, you deal with it every day.
- [43:10]
D
Yeah, I do. I think we went through an incredibly volatile legal landscape in the last administration that caused a lot of projects to frankly, elect to avoid talking to lawyers because they just didn't want to hear the answers they were going to get. And lawyers that were incredibly gun shy about doing Anything because of how it might, it might blow up in their face. So thanks to Paul and now a desire to have a sandbox approach and roundtables, I'm hoping to make it to the Dallas SEC roundtable. I'm excited to see the possibility of actually being able to have an open door policy and build transparently in the sector. And while I'm kind of in full on founder mode right now with my stablecoin consulting venture, I'm still open to advising startups because I still think there's a lot of value that can be added. And I would say this in closing, I think there's a lot of lawyers who parachute in and out of sectors when they see a lot of interest and this is not a sector that you could do that. You either understand this stuff and you're either deep in this culture and embedded in how this tech works and the ethos of it and then you can properly advise or you're not, you can't be a drive by crypto lawyer.
- [44:34]
A
Drive by crypto lawyer. That's interesting. Mark.
- [44:39]
F
I on the point about Vol. I don't know if anyone's else has taken a note of this. I think it's peculiar the move index, which, you know, I think is, is more dispositive in markets than the VIX is. It's a strip of the implied vowels of the curve of the futures of Treasuries. It dipped below 80 for the first time since rates rose in 22. So I don't know if that's because everyone trusts that we're going lower in rates and that'll reduce risks for the treasury. But if that spikes up again I would, I would say that's temporary. So that's one thing, Dave, I would, I don't know if you looked at it, you thought that might be a seasonal issue of the like what you're talking about with everything going to sleep here in August. But that, that's one thing that I'm keeping my eye on as far as will it pick up again when the lawyers come back and everyone starts making, making problems in markets.
- [45:40]
A
Well, I mean, look, the treasury markets are fascinating right now because there's this, it happened, there's a one time thing when he cut 50 basis points, you know, before the election to try to help get, you know, the Democrats elected. And anyone who thinks disagrees with that statement, fine, make your point. But I think at this point it's pretty damn clear, you know, what was going on. The long end went up. So it did the exact opposite of what they wanted to do. And there's all sorts of reasons, etc. So people have, the average economists think that if they cut aggressively, you hear certainly all the talking heads outside, you know, in almost all the networks and most of the, most of the financial publications think that the same thing will happen. It's not at all clear. At the same time, people are kind of like frozen on the long end at the same where we kind of where we are right now and looking at it. And so there's a lot of uncertainty in terms of what will happen. And I think the one thing that people really believe, and I think Hannah was saying it before, is that Powell's going to basically, or maybe it was you, Mark. Basically, you kind of try to downplay anything violent and say, firm hand on the tiller. I'm here and I'm not going anywhere. And we were worried about inflation, which by the way, the only worry about inflation is that there's not enough to inflate away the debt. And they just don't want to have consumers bear the brunt of it because it makes them look foolish. You know, it's, it's, it's really, it's really funny. Right when you think about it.
- [47:21]
E
And the, the there, there are so many counter narratives, but this one is one that I never hear and it probably would take me too long to explain than the amount of time left in the show. But cutting rates in the United States on the short end is deflationary these days. We've flipped that script. If you cut when we saw that rates were at zero or, you know, effectively negative is when we saw the lowest inflation. And that's because companies get funded with venture capital. The, the venture capital subsidizes the products. The products are sold below cost in order to gain market share. And this is where company stocks go up even though the profit margins go way down. That's what happens these days when, when the Fed cuts by keeping interest rates high, they're artificially actually increasing inflation. It's causing less investment in the market. So companies have to be profitable as opposed to having in order to get venture capital. And so they're pricing their products higher. It's ironic and, and essentially flips all of the economic stuff that I learned when I was in college. But it is empirically true. The thing that I'm keeping my eye on, because, you know, the United States obviously is an important market. But if you look at what's happening in the Japanese bond market and the fight that Japan is having to keep the, their economy solvent. I think that's where we're going to see the most disruption here is when Japan loses control of either their currency or the bond market. We've got money supply across the globe inflating because China's having a problem. And so, you know, Chinese money printing going off the hook. I think it's all ultimately very positive for crypto. But you know, the difference between what happens in theory and what happens in practice is in theory they're both the same in practice. Who knows when a government loses control or when the bond markets go, go nuts. But obviously Powell is, you know, doing everything they can to keep interest rates high, which I think personally what an, what an awful decision for so many reasons. But certainly if inflation is his argument, then he's got it asked backwards.
- [49:40]
A
Yeah, it's funny, Brian, I pointed out, I think on this show and a couple of others that just a really simple analysis, one that is substantially more valid than looking at one rate cut and seeing what happened, is the fact that of the last 25 years, five years we've had on average real interest rates being positive. Real interest rates being positive, meaning interest rates higher than the stated CPI inflation. Just forget whether you agree with CPI or not. Doesn't matter. It's just five years, it's positive. The rest of the 25 years was negative. The five years that it was positive was the year preceding the Internet bubble popping. The two years before the global financial crisis. And the last two years. Right, that's it. And which are the periods of the, of the, and most of that was a very low inflation scenario. 20 years of negative real interest rates not mattering for consumer inflation. At the same time, by the way, asset inflation was runaway. We've had massive asset inflation. And so you know, the question is what do you want? And if what you want is consumer inflation suppressed and asset inflation to run well, then you want low rates and. Right. It's really, really straightforward. And to be blunt, that is what the policymakers want. They may say other things, but that's what they want. Right, right.
- [51:07]
E
I mean, and, and it's absolutely mind boggling that, that it's so generally accepted that it's the opposite. I mean I, I, I can't wrap my head around it anymore. But I guess that's the upside down backwards world we live in.
- [51:20]
A
Yeah, we do live in bizarre world in a lot of places. I mean the other piece is owner's equivalent rent. By the way, 40% of the CPI is directly correlated to mortgage rates.
- [51:31]
E
Absolutely Bonkers and completely trailing indicator in a, I don't know, it's such a stupid component.
- [51:40]
A
Yeah. Mark?
- [51:43]
F
Yeah, Dave, you had a throw a lot, a throwaway line there about inflation a couple minutes ago where you said, you know, they want the inflation that's, that's low enough for the consumer but high enough to inflate away the debt. Like that should be a compass for anyone listening to any policy because it's impossible. There's, they're trying to do with tax free tips. You know, it's about Main street, not Wall street. All laudable and in my opinion, impossible. And that's why there's going to be failure and they'll lean on exactly what you said. Low rates let the assets go higher. And you know, credit card rates aren't going to come lower. They go to 30 to 25% maybe. So that's, that's why, you know, we're in Bitcoin and, and, and that's why unfortunately the guys are going to fail. Because that is an, think of that, think of that needle that they're trying to spread. And it's just tough stuff.
- [52:44]
A
Well, you know, it's, it you say that, but that's the needle that was threatened, that literally was the dominant policy for 20 years is, is pushing. I mean, you know, when you talk to people, they say, well, why are house prices so high? Well, house prices so high because houses are viewed as assets and assets have been pumped. You know, the stock market is, you know, assets are pumped. I mean, you know, debt. You know, Mike McGlone always points out that market cap to GDP is well beyond the level it was at, at the top of the Roaring Twenties, before the Great Depression. But that's, but at the same time, what I point out to him is in the Great Depression we were on a gold standard and there was no effing way to just inflate the value of assets, you know, willy nilly, which of course we've done by inflating the money supply and inflating what's going on. So comparing epochs is, is very difficult. But, but that actually is a needle that's been thread, right? I mean, I, I don't even call it a needle. I mean, they screwed up in the pandemic at the time. Supply chains were, they, they, they basically crushed supply chains at the same time they handed money to people to buy, buy shit. You know, what did you think was going to happen? And so that was just moronic. I said it at the time, so I don't feel this is a Monday morning quarterbacking here. But you know, other than that, that's that you take that out, take the pandemic out of the last 25 years, find me a period of time when asset inflation wasn't negatively correlated with relative cpi. You can't. That's Brian's point.
- [54:15]
F
Yeah.
- [54:16]
A
Yep. Right, Brian agreed.
- [54:19]
E
Yeah, bang on the money. I mean, and it's just shocking to me how the public and generally the economists that are the talking heads haven't been able to figure this out or look at the empirical data. I mean, you know, I tried to explain it very summarily, but it's really, you know, quite a, Ultimately, it's quite a simple principle. If money is cheap, investors will subsidize products to gain market share. And subsidizing products to gain market share means selling products below cost. And so consumers benefit. It brings down inflation, it, and it increases asset prices because the assets become valued stocks. You know, companies become valued based on their market share and eventually companies figure out how to monetize even in a, a low cost money environment. So we did see companies becoming profitable with low interest rates and, and products that they were selling below market. I mean it's, it's a fundamentally a different way of viewing economics than, you know, than what the Fed has for sure.
- [55:31]
A
Right.
- [55:32]
E
And empirically, as you point out, Dave, you know, this is just the way it's operated over the last 20 years and you go as you say, to a prior to prior epochs, it's not the same. So this is a shift. But economics, I guess, you know, they're written in stone and they teach the same garbage that they, they were teaching without realizing that it's a different era and particularly a different era since 71.
- [55:59]
A
Yep, there's no doubt. And you know, while we don't like to go crazy on macro, it obviously affects it. I mean, you know, we're sitting here with a market that is so obvious. Obviously the doldrums and the people and crypto is selling off more. I mean, you know, I look at it at these sorts of slow drips are, you know, reminiscent of August past. I mean in August past you would see this being set up for a liquidation cascade coming soon. I mean, I don't think that's going to happen, but that's certainly what it felt, what it feels like. And I think when people would start trading on how they feel is when they generally lose money. I, I tend. So we'll, we'll leave it at that. Any other comments on it on any of this stuff because I have a a last thing to read before we wrap up.
- [56:50]
E
Don't don't lose money is my comment. Hold tight August Doldrums. You know, I, I, I don't like to give short term advice on anything, but the money supply suggests that that everything is going up as soon as everybody returns to their desk. That's my last comment.
- [57:09]
A
Yeah, I suspect you're right. Anybody else with with final comments before I I read this so well. Hey folks, a quick disclaimer. This last segment is brought to you by a partner of Crypto Town Hall. Imagine front running Wall street in the world's fourth largest crypto a deflationary powerhouse that yields staking rewards and fuels one of the most active blockchains on the the planet. BNB has outpaced Bitcoin with 25 returns over five years. Yet it's been off limits to most U.S. investors until now. Enter CEA Industries ticker BNC on Nasdaq, the first publicly traded company to adopt BNB as its core treasury asset. Echoing Micro Strategies Bitcoin Playbook. Backed by institutions like 10X Capital and Yzi Labs, they've already raised 500 million positioning for massive inflows from ETFs, exchanges and sovereign funds. Sophisticated investors. This is your back door to BNB exposure via a single ticker. Start your due diligence on NASDAQ today, BNC today before institutions flood in and the edge vanishes. And with that I think we will sign off for today. We will talk to you all tomorrow and we'll see if the doldrums continue. Take care and thank you everybody.
- [58:18]
F
Thank you everybody. Thanks Jake.
- [58:19]
E
Take care. Thanks all.