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- [00:01]
A
Hey everyone, just a quick note before we start that. Last week in our stablecoin episode, Sam McPherson of Phoenix Labs talked about how Spark was one of the biggest depositors into Athena early on, but exited this past summer because starting in July or so, it seemed to them that Athena had maxed out on the capacity for the basis trade. He then said, furthermore, with the integration of say binance with a 12% guaranteed yield, this was funneling most of the yield into these deployments which was disadvantaging depositors into Susde. So since then Spark has exited entirely, end quote. We released this as a clip on social media where it gained some traction and Guy Young, the founder of Athena reached out and said that this was actually factually inaccurate. He said we paid for the 12% with the budget of cash the foundation has, not from taking yield from other users in susde. Thanks for setting the record straight, Guy. And now onto the show.
- [01:04]
B
I'm gonna go in a crazy way, I think that we, we do hit an all time high. The metrics are out there. I mean something we're seeing with just retail. You know we follow at Lunar Crush like how many people are talking about bitcoin? How many people are talking about crypto? Retail is like the lowest and bearish. Most bearish. It is like almost ever been since we started tracking. We're tracking 50 million posts every hour.
- [01:27]
C
I think what people need to understand is that the the likelihood of a blow off top is is is more the case than a rounded or kind of more prolonged just because of the fact that you've seen this. For those that haven't been around in previous cycles, this is normal. We've had these types of situations. I remember even in, in the run up of 2020 we had a 35% correction within two weeks before it actually went to Ultimize.
- [01:56]
A
Hey everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host Laura Shin Mantle is pioneering blockchain for banking a revolutionary new category at the intersection of TradFi and Web 3. Follow Mantel Official to learn more. Today's topic is the crypto markets. Here to discuss are Jan Alleman, co founder of Glassnode and Joe Vizzani, co found and CEO of LunarCrush. Welcome Jan and Joe.
- [02:25]
C
Thanks for having us.
- [02:26]
B
Yeah, thank you so much for having us.
- [02:29]
A
So you guys, we booked the show last week but we are recording now on a day when the bitcoin price has dropped from 104,000 this morning to 100, 1000 in just the last couple hours. So why don't we start with you, Joe. Why do you think this is happening?
- [02:49]
B
What's there to be to be bullish about right now? I guess I think we're going to fall below 100k. I think we're almost, almost there right now. And you know, I, I think we're in a, in an interesting spot in the market and I know we'll, we'll talk about a lot of those things today with regards to just, you know, I think some introspection on, you know, the market and utility and where we've come from. I mean, you know, following bitcoin now since 2014, it's pretty, I think, you know, I couldn't even imagine today, you know, how far we've come. You know, looking back, if I had to look forward 10 years from where we were back then with just adoption, institutional adoption, ETFs, you know, companies, DS. I know we'll get to it, but, you know, I think we're a little overcooked with the DAT trade right now. I think a lot of that stuff is unwinding. I think you're, you're kind of, you know, we're seeing some companies having to sell some bitcoin. I think we're seeing outflows from the ETFs. I just think you're seeing the market trade, you know, knowing that that's going to unwind a little bit more. I don't think we're going to see any sort of like major capitulation from, you know, people like strategy. But when you're looking at companies that are buying tens of thousands of bitcoin, you know, now their stock price is down 70, 80, 90%. Where do they, where do they get the leverage from to continue down that path? And so I just think, I think we're seeing that unwind right now.
- [04:18]
A
And when you said that you thought we're going to drop below 100, do you have a point in mind where you think bitcoin will bottom?
- [04:25]
B
It's tough to say. I mean, man, is this an epic opportunity though, if you save a little cash. I posted today that I was starting to take a couple nibbles. You know, I think we can fall 5% further. I think it's tough. It seems like what's the trade with bitcoin is, you know, stock market's moving up. Bitcoin doesn't seem to be kind of correlated in the same way with the big tech stocks that are just sucking up tons of capital and then you have down days in the overall broader market and then bitcoin gets pushed down further. And so when the market trades like that, that's not a good place to be. But we'll see 90s, we'll see mid-90s for sure. And then, you know, we'll see how long we kind of chop sideways. But you know, I, I would, I would say be prepared until you kind of see fed funds rates come down and you see the billions, you know, or trillions of dollars sitting in those money market accounts come back into the market. They have to find, they're going to find alpha in some way there, but it's not going to come in until those, those rates come down.
- [05:22]
A
And Jan, what are your thoughts on what is happening with the bitcoin price?
- [05:27]
C
Yeah, I think it's trading like the macro asset that it is. And I think what is interesting in terms of bitcoin today is that I think for the first time you've had US markets and I think global markets pricing in the actual effect of the government shutdown. So today there is actually the first release of the actual numbers, the actual impact. And if you look at some of the, let's say, the, let's say betting platforms and also things like polymarket, you're seeing a shift in expectations of a resolution that has now become more relevant. Right? So basically from 1st to mid December now being potentially a resolution being relevant even mid November. So I think there's a refactoring or repricing of that, let's say real world effect. I think now I saw as well that I think they were expecting a 200 basis point hit on Q4 GDP as one example. So now these things are becoming real. They're not just, you know, they're not just visceral things that people talk about. And I think that's obviously going to have to work its way through the, the way that risk has been priced into the system. When it comes to bitcoin specifically, we're not seeing any major structural shift. I mean, what we've seen today is, is a, what you would call a walk down. Somebody's walking down the price. You have quite a bit of demand or let's say a lot of limit orders that are moving in right below 100k. But to Joe's point, I could definitely see 94, 95. But this is in no way, at least from where we stand, this is not the end of the journey. Structurally speaking, if you look at onchain, there's a lot of very strong structural, I'd say indications that actually there's a lot of accumulation. I think the key point here is that, that the, the shift from old, old hands or let's say the OGs to the new GS is happening in a different way that you would expect. So OGs are probably more pressed to sell. New GS are not in any hurry to absorb that, that actual selling pressure. But there definitely is demand, there's underlying demand that you can see.
- [07:39]
A
And what did you mean when you said you're seeing certain things on chain that indicate, you know, we, we're not at the bottom yet.
- [07:47]
C
So for us we always look at liquidity. Right. So liquidity is the ability, let's say, to sell without moving the price. Right. To keep it very generic as an explanation. And we look at liquidity from two different vantage points. One is the velocity of money. So how fast does money change hands? And also the incoming new, let's say capital comes into the system that can come through ETFs, you know, indirect place like Treasuries. Right. Then have to buy, let's say the underlying to be able to meet obligations and also sell like Joe mentioned. And basically combining those two things, we actually see that there's a lot of movement underneath the surface that is not necessarily reflected in price. And there's probably a good point to be made that the risk reward given where equities are, where gold was a couple of weeks back, that Bitcoin wasn't as attractive, especially not all coins, where there were better ways to allocate capital, especially in tech stocks, that is probably starting to change. I think that risk reward, that opportunity cost is going to swing in a different direction. But for that to happen we need clarity. I think the government shutdown is a big question mark or basically open ended point that I think needs to get resolved as soon as that is out of the way. Given where we are in the macro situation, I think there's a good chance that we see more upside.
- [09:11]
A
And I don't even know if I fully understand what connection you were drawing between the government shutdown and the bitcoin price. So can you just be explicit about that?
- [09:19]
C
Yeah. So in terms of Bitcoin as a, as a macro asset, it's on the, let's say if you look at a risk curve, it's on the furthest part of that risk curve. Right. So you're not going to buy bitcoin if you don't expect a positive next three to six months. In terms of the economy where financial where the financial plumbing is, right. Liquidity, so on and so forth. And right now, with the government shutdown being not clear and the impact being actually very real and very, very extreme in some cases, it puts a large question mark in terms of how that impacts the underlying economy and also financial conditions, from what I understand. I think over the last 36 days that the government's been shut down. 35. They've borrowed around $600 billion. Right. So that now has some sort of net effect on the ability for also the treasury to potentially pay back interest rates on the outstanding debt, even as the TJ is fully refilled now that the repo has been drained. Right.
- [10:14]
A
Okay. And so when you look at all these factors that you're considering, how low do you think bitcoin could go?
- [10:22]
C
So I think structurally speaking, even if we go to 94, 95K, I wouldn't see that as a break in the structure. Now, that would be fairly extreme given obviously where we came from a couple of weeks back. But I can see 95k. But at the same time, I think there's a lot more demand that would come in at those levels.
- [10:43]
A
Well, first of all, I don't know if you guys saw, but Chris Berniske got a lot of hate right after the October 10th liquidations when he said that he thought bitcoin could drop as low as 75k. But despite that, I noticed that the Bitcoin Fear and Greed index is at 27, which is very much in fear territory. So, yeah, it looks like, you know, even if it does fall further, like, already, it's at a point where, you know, certain people might look at that and say, like, oh, this is a buying opportunity. But let's talk more about those October 10th liquidations, because obviously those. That day was the largest. Was the day of the largest liquidations in crypto history. So what impact do you think that's had on this market since then, and what impact do you think it will have, you know, for, I don't know, the next six months to a year?
- [11:36]
B
I, I think it had a pretty big impact to just people's psychology around what they're investing in. Any sort of kind of flash crash like that makes you look at, you know, the, the underlying structure of how people are trading, what leverage looks like. You know, I know we're in a pretty degenerate economy here in crypto sometimes, and people were very quick to put leverage back on after that. You know, you mentioned, like, going even lower than 95. Like, if a flash crash Hit right now, where would we, where would we be? Right? And you know, not that anyone, you know, could really buy at those levels. It was very tough to get in trades at those levels when that, when it was actually happening. But I think it shook people a little bit. I think people are especially, I would say in the altcoin market in the, you know, even some of the top layer ones, I think people are just a little, little sheepish right now. They're very cautious with where things are at the altcoin market specifically. You know, like stocks have been rallying. Some of these top tech stocks are hitting all time highs. You know, bitcoin's now, you know, 15, 20% off all time highs. So a lot of These altcoins are 20, 30, 40% off all time highs. So we're just seeing this, this, there's not as much correlation that's happening. And I think a lot of that or some of that money that otherwise would have maybe come to some of those altcoins is now going to other places and some of that money that was going to go to bitcoin is potentially going to other places just because they're like, I can't get flushed out like that. At least from a trading standpoint. I think the people that have kind of bought and hold or buy and just hodle like their lives away, I think those people are just going to stay forever and they're going to keep, you know, I'm getting the, the text messages from the friends right now. Hey, like I think is, is now a good time to buy, right? So I think some of those people are starting to kind of come back a little bit and saying like, okay, we're hitting some levels here that bitcoin's starting to feel cheaper. But to your original point, none of those like any of those events which are make that much of an impact. I mean that was like probably one of the like the craziest days we've ever had in this industry. That that's not good for us long term, definitely not good for us short term in people's confidence. And like Jan was saying about the government shutdown, there's just too much insecurity and there's, there's a little too much volatility. And having something even like the government shutdown kind of continue in the way that it is just creates more uncertainty. And that's the number one things that markets don't want.
- [14:03]
C
Yeah, and also blatant, I think to add to that as well, the blatant kind of realization Again, that from a plumbing infrastructure perspective, we're not really at the level that we need to be compared to traditional markets, right, where you have things like circuit breakers that kind of avoid this kind of snowballing effect, where kind of, to Joe's point, you are not even able to execute. Even if you get the price that you would actually want to execute at, you're not able to because there's a complete meltdown of the system. And we're obviously hearing the reverberations of that with allegedly some of the, let's say, the falling outs between Wintermute Binance and some of these other market makers that are now, you know, maybe becoming vocal in certain, certain areas or let's say in certain circles. And it's going to be interesting to see what the aftermath of that that is going to look like. But I think also from people that we know, there's definitely been quite a lot of carnage. And I think it's maybe done a. On, on the short to medium term, there's an immediate impact on the type of trader that is now vacated the premises, that has now maybe moved on to equities and other opportunities short term because there's more, potentially more stability and even similar types of upside like treasury companies, right. Something things that are more bitcoin linked that have some sort of utility value that underpin it. But I do think those types of traders will come back as soon as there's momentum again. There's nothing better, nothing that creates positive, let's say positive externality in terms of how people feel about the ecosystem than prices that move higher. Nothing better for sentiment than higher prices.
- [15:52]
A
And one thing that I wanted to ask you both is do you feel that what happened on the day of those liquidations is that a certain type of crypto believer or even, you know, a degen. Crypto believer was just sort of wiped out of the market. And that, that is like part of the reason also that we've seen, you know, this kind of very choppy and not. Yeah, well, we didn't see the October, October that people were expecting. So do you feel like there was some segment of the market that just got demolished, basically?
- [16:28]
B
They might. Yeah, a lot of people got wiped out and I think you hit some, you hit some level of exhaustion, you know, as a, as a trader where you, you decide, you know, I'm not going to succeed in this market and maybe a lot of people got wiped out there. You know, Jan and I probably as founders, you know, operating businesses in this space and you know, as A founder, you just, you could just keep going forever, right? You're never going to stop. It's different when you're a trader and you know, you have such a liquidation where maybe you're thinking, okay, there's somewhere else I'm going to restart somewhere else I'm going to go take a breath. And I think we're seeing that in the space. I mean, we're, you know, you're, you're seeing like Cadena, you know, basically say, throw their hands up in the air. They said, you know, we give up. I think you're going to see a lot of that from other, you know, the chain will just like continue to live if there's nodes like that. You know, that's the interesting thing about crypto community can revamp it. I mean, Terra Luna is still around like, you know, in a way, but those things can continue. But I think we're going to see more of that. We're going to see a lot of, you know, people that you've heard of that, you know, maybe you traded, you know, In DeFi Summer 2020, 2021, you know, whatever it is, a lot of those names will capitulate in some kind of major way and not go to actual zero, but effectively go to zero by teams not getting funding, teams giving up, teams saying, we can't continue to sell our token into oblivion. The price is. Price is so deflated. They have really crappy deals with the market makers that they've had over the years. The market makers have sucked pretty much all the margin away from a lot of these foundations. And so they either have to issue a large amount of token to continue or they have to find some sort of utility and some revenue somewhere. But even as we're kind of seeing with polymarket, which is by and far the most successful DAP in our ecosystem, it's done nothing for the matic ecosystem price. Everyone always used to say, like, oh, we need just this killer app. I can't wait for this killer app. Killer app does nothing for the actual underlying ecosystem. So what does it mean for all of these protocols? If the killer app is not going to save them, what's going to save them? And I think we're just kind of coming to that moment right now in the market.
- [18:49]
A
Well, I did also want to ask, you probably have heard, even before October 10th and all the stuff that happened, that there had been a lot of chatter about whether or not this cycle was going to be the first time that bitcoin breaks out of the four year cycle. I heard that so many times from different sources. Just anybody who watches the show regularly or listens regularly will have heard it from multiple people. And here we are at that, a year and a half out from the last bitcoin having. And I'm sure everybody knows the traditional pattern is that the bitcoin price would rise for you know, maybe roughly a year and a half, maybe a year or nine months after a bitcoin having. And traditionally the bitcoin price when it is in a bull market will rise quite a bit in Q4. But you know, we're looking right now at a situation in which the bitcoin price is pretty much, or at least, yeah, the market cap, I actually didn't check the price, but the market cap is at 3.5 trillion versus 3.4 trillion at the beginning of the year. So I just wonder, you know, do you think that we're going to see the same old four year cycle again and we just, you know, had our high already and now it'll be, you know, bear market time or do you, do you agree with, you know, a lot of these people that had been saying the past few months that actually they think this is the first time bitcoin will break out of that?
- [20:20]
C
Yeah, I think it's a more nuanced point, I think around the four year cycle, right. I think what we have to remember is that we are as bitcoin chugs along, we are becoming a macro asset, right? People are figuring out, or asset managers especially now, they're trying to figure out how to incorporate this into their, into their thesis, right into into their portfolio construction. And they're trying to figure out what it is that bitcoin actually is and what it actually does. Right? Bitcoin has been fairly schizophrenic over the last, let's say two years maybe since the ETF launch where it has traded sometimes more like gold, other times more like a tech stock. And I think that creates the foundations of a more kind of more of a longevity type of asset, right? Where you know, the volatility comes down the, it becomes more of a boring asset, so to say, right? It doesn't have the crazy implied volume that it used to have maybe three, four and five years ago in the last, the last major bull cycle. And I think that obviously is, is a positive thing. And I think that also means that we have to start looking at, at bitcoin from a different vantage point, right? Where it is a, is a, it is a macro cycle where macro factors are a lot More important also on the short term, not just on the medium to long term. And they have a bigger effect on how the underlying asset trades than let's say the net effect of a supply shortage caused by a reduction in bitcoin issuance or let's say a draining of bitcoins out of an exchange. Right. Which used to be kind of the major metrics of people or that investors would look at to get a gauge of when a potential kind of dislocation between supply and demand would actually happen. So I think we've just evolved as an asset and I think we're just going to have to look at it in a more holistic way. Right. Which is obviously some will be well equipped to do this, others that are not familiar with Tradfi, with macro and how gold trades against all of these different assets within their portfolio. They're going to have to get up to speed.
- [22:25]
B
Yeah, I agree with that. I, I, you know, we still have having, right every, every four years so or so where you know, for the same amount of effort people are going to get half the amount of bitcoin. So I think that, that, that will always, you know, there, there will be some positioning for the companies and a lot of the miners that are out there in that moment. I'd hate to be a minor, you know, right now with a stock being deflated, price moving down a little bit. I know a lot of them are, you know, obviously set up for, you know, the tolerances are pretty incredible of what they have and to stay in business. But again, you know, around the edges when things like this happen, you see blow ups and then it's just, you know, how deep does that go? You know, it's the same thing like with the mortgage crisis when things went down in 2008, it was like, oh, this one, you know, little lender over here went out of business. Oh, everything's going to be fine. But how, what is the cascading effect of that and where is the leverage and how much, you know, have maybe some of the top miners invested and some of the other smaller companies that are out there, you know, whether maybe we're getting like higher margin and that was, you know, bolstering up earnings and then suddenly earnings goes down and people don't want to own the stock. So I think there's going to be a lot of moving around. But I think we, we have matured as an industry at least within the bitcoin standard where, you know, Tesla, some of these big companies holding bitcoin, these are not Short term know bets on what's happening. These are long term infrastructure bets on what Bitcoin is. And you know, I don't see Sailor suddenly saying he's not going to buy the top forever. You know, I, I think he's going to continue to do what he's going to do. He's probably the most single most important person in, in, you know, that market right now in bitcoin. So leadership there. But again, you know, what does that stock look like right now? Down 30, 40%. Where do, where do some decisions have to start to be made? How much revenue is MicroStrategy actually making? That's why you're seeing a lot of the smaller companies get punished right now. That's why you're seeing NACA probably get punished a little bit. Is the strategy there around, you know, hey, we're going to have like a company in each market, you know, around the world. The market didn't reward them for that. Right. So you just have to kind of look in the mirror and say, what do we do next? So I just think there's a lot of things that are kind of shaking out right now. And you know, it's, it's tbd how low we go. I'm looking at the chart right here. It just keeps bouncing off of 1, 100K, 102. So we'll see if it diverges down below. We'll see 97 like that. So you just got to be prepared for, you know, those moments and hopefully, you know, you got your finger on the trigger and the buy button.
- [25:02]
A
Yeah. When I was researching in advance of this interview, I did see. So these are two kind of hypotheses I had for why the price dropped like right before we started recording. One was, I guess last week the odds of a rate cut by the Fed in December was at 95%. And this morning Reuters reported that expectations had dropped to 65%. But then the other thing, Joe, you know, you just mentioned the debts. So there is a bitcoin dad called Sequins which I actually hadn't heard of this one, there are so many now. But it announced that it had, that it had unloaded 970 bitcoin, making it the first bitcoin treasury company to sell bitcoin to pay off some of its convertible debt. There is another announcement that was made Yesterday which is MicroStrategy did a new capital raise for Str E Preferred, which is a euro denominated perpetual preferred security. And for the first time it included a clause that said if it didn't have enough money to pay the dividends on stre. It would dilute holders of its other securities to come up with the cash in 60 days. So, you know, we've already seen, like, the dat mania has been kind of coming down off of its highs. You mentioned naca. I mean, there's just so many of these where, yeah, the M navs are dropping below 1. There's a lot of chatter about what's going on there. So where do you think this dad trend is going? Like, do you think this is the beginning of the end? Are we going to, you know, are we in the verge of some big shakeout or, like, what do you see for that area of the market?
- [26:35]
B
I can take it. Yeah. If you want, you can pop in.
- [26:38]
A
Yeah, either. Both of you should answer this.
- [26:41]
C
It's complex. I think there's a lot of mechanisms at play here.
- [26:44]
A
Yeah, yeah. So either one of you can go first.
- [26:46]
B
Sure, I can. I can take it. I. Yes, it's overcooked. Like I said, you know, if you went to the bitcoin conference last year, you know, you basically just had to like, cover your eyes and hold your hand up. That said, you want to, like, launch us like a public company and you could probably find the people to do it, you know, and then there was like bidding wars for these shell companies and those shell companies thinking that they're worth, you know, 100 times what they were. Now they're probably wishing they would have taken a lot of the deals that they. They. They could have. I think there's going to be some winners, obviously there. You know, I think that there's actually. And some of the large ones like Solana, you know, there's some staking infrastructure that some of these companies have built, like Defi Dev Corp, you know, I think it's doing a good job and I think that there's this weird convergence of the kind of onchain world and tokenizing of stocks that's coming together. And, you know, all of these foundations and all these top L ones, they will probably need some sort of dat. They don't want it to probably be too distributed. You don't want, you know, 500 Solana dat. Right. But if you have three or four that have some slightly different strategies, like one might be more staking oriented, one might be some sort of kind of like accelerator acquisition, Berkshire type feel to it, where it's like, hey, where anyone that's building in Solana, we're going to kind of bring in outside capital markets and help kind of fund these companies. You might have one that's more like marketing oriented, that brings the community together in some ways, but it needs to all be very cohesive to that kind of on chain community. You saw Avax, you know, with the Scaramucci kind of working on something there. Like you're going to see one or two of these, which with each of these ecosystems. And I think it's a necessity, right? If someone wants some exposure and they're sitting on Robinhood and they're just like, I just want to invest like in the stock where there's like a person behind that, that, that probably will work. But to have 500 of them only focused on acquiring bitcoin, coming up with new metrics and imagining up new metrics which mean the stock should go up or down, right? Which I agree, like earnings per share is also just like imaginary in a way, right? Like if it goes up or down, there's a. There's a target, and if it meets that target or doesn't meet that target, it goes up or down, depending what's happening. But that's kind of the consensus for the way that the stock market, you know, moves. If the only way the stock moves is if you beat earnings consistently over time. But I think they were trying to invent too many metrics, and it looks like that's not going to pay off for the stock. People need to see revenues, and if you don't have revenues in some sort of way, you're not going to get funded in perpetuity. And so that's taken the wind out of the sails in the market. And they say, wow, look at all this bitcoin that was just acquired. How much of that is going to unwind over the next quarter or two or three, versus again, what's being mined? So the metrics are out there. I mean, something we're seeing with just retail. You know, we follow at Lunar Crush, like, how many people are talking about bitcoin? How many people are talking about crypto? Retail is like the lowest and bearish, most bearish. It is like almost ever been since we started tracking and we're tracking 50 million posts every hour. Like, we see what's out there. It's a very bearish time to be in, in this space. And so all of those things together and.
- [29:54]
A
Wait, I'm sorry, are you talking about just for bitcoin or what are you referring to?
- [29:59]
B
Everything? The entire market, we do bitcoin alone, everything. So we can look at bitcoin, we can look at the rest of the market. And it is quiet, the most quiet and most bearish we've ever seen it. And so that's, that's saying something with where we're at right now. And we're right about to drop below 100 in about 10 seconds. So we'll see what happens.
- [30:19]
A
And I'm sorry, what, so what time frame when you say that you've ever seen it, like, does that include like 20, 22 or what?
- [30:26]
B
Oh yeah, this is going back. I mean we started in 2018. So looking back even through that kind of 2019 level, it's just the, it's the relative to where we've seen things like the down, basically like we've decreased the most in sentiment the fastest over the last couple of months.
- [30:44]
C
I mean it's, it's been, it's been the most bearish bull market ever. Right. If you were not heavy in Ethereum and Bitcoin, you've been out underperforming in a major way. So it's not a surprise. But I think to your point, I think treasury companies are kind of the new ICO NFT type of situation where there's many flavors of the same thing, but there's no real cohesive value proposition that kind of underpins most of them beyond the classic variant like microstrategies, which I think has a fairly good alternative as a vehicle. Right. Where it makes sense to buy it versus holding Spot or an etf. But I think there's a lot of hidden risks there and if I had to give a kind of a guess on the probabilities, I would say that this is a precursor for what's to come. Because once you have the unwinding of these major positions when you are in an actual downtrend from a liquidity perspective, let's say in a credit crunch, in a solvency crisis, not just in terms of actual liquidity crisis, but actual solvency crisis, you would want to be very far from cryptos as much as possible. I don't think we're there yet, but that is definitely. The clouds are forming on the horizon. Right. If you look three, six months down the line. Yeah, a lot of things that are starting to look more concerning.
- [32:10]
A
Mantle leads the establishment of Blockchain for banking as the next frontier. UR is the access layer that transforms Mantle network into a purpose built vertical platform. The blockchain for banking that enables financial services on chain. UR unifies and vertically aligns Mantle's focus on payments, trading and assets. MI4emmeth Protocol functions FBTC supported by developer grants, ecosystem incentives and the industry leading distribution platform through the UR App Reward Station and BYBIT launch pool. All economic activity within UR will be captured by Mantle Network to further drive value to token holders and establish its significance in blockchain for banking. Follow Mantle Underscore official to learn more. Okay, so I just need to understand like why this is the most bearish bull market. Because roughly a year ago it became the most bullish or I don't know about most bullish, but as we all know, you know, post Trump being elected, suddenly the crypto markets were just up and up and up and up and everyone was just riding high on euphoria. And we have our first bill here in the US covering crypto which is the stablecoin law, the Genius act and we have a bunch of apps that have gone mainstream. Polymarket is and well yeah, I guess I was going to say Kalshi, but you know, I understand there's a dispute over whether or not Kalshi is actually crypto, but anyway, point is like, like there's a lot of ways you can slice and dice this where this is easily, you know, like just look at all these ETFs and like the Saul ETF that launched last week, you know, so there's just so many things you can point to that are really markers of success. So why is it that you guys think that this is the most bearish bull market?
- [34:04]
C
I think positioning, like if you look at people's portfolio composition, they were spread out over many, many different assets that were underperformed. I think that was one. Usually the from a portfolio construction perspective, it's better to have a couple of really high quality assets versus kind of a variety or pepper spray of different shapes and colors. Especially when you don't understand the underlying driver of the value add. Right. Or the narrative of the community. I think that's definitely one key one and the other one is just a shift in terms of how the market has been moving. If I look at early 24 and early 25, those are two different planets completely. You could still buy and hold in the early parts of 2024. Very different composition of market participant. If you look at 2025, even from a pure volatility respect, if you look at intraday and intraday volatility, it was a bit of a complete shift in how that dynamic happened. So it's been inherently much more range bound and very volatile. So it's just very difficult to have an opinion on momentum when most of the things that you're seeing are actually driven by volatility. So it's just energy of buying and selling, but no real definition of where the trend is going to. That's why we have shifted a lot more on the liquidity side of the equation for the medium to long term view. Because again, if you're not systematically trading like we are, it's better to consolidate and to just wait for opportunities. Right. I still think there is going to be upside just because of how other assets have been trading and how risk usually propagates through the system. From a macro perspective, cross asset, but it is really pushing people's convictions. For those that haven't been around in previous cycles, this is normal. We've had these types of situations. I remember even in the run up of 2020, we had a 35% correction within two weeks before it actually went to altimize. Right. So yeah, I think going all in makes no sense. I think it always makes sense to be opportunistic, to always have a reserve or cash on the side that you build up as you move higher, you take profits off of the table. Something that for instance, income sharks I think does a very good job at for the retail investor. Really forcing yourself to take 10%, 20% off of the table as price moves higher and to be able to be in an opportune position and to set deeper limit orders or to accumulate at these types of events.
- [36:34]
B
Yeah. Laura, you asked why is this the most bearish bull market ever? When Trump was getting elected and what we thought we were getting was strategic bitcoin reserve, we thought we were going to get better regulation for launching tokens here in the US or launching protocols. But really it all kind of stems from bitcoin and the concentration needed to be on bitcoin for I think a while before then it can kind of get out to the rest of the market. And you know, what we kind of got instead was like, if you guys remember, like the night before, like the inauguration, I believe it was like Trump Token was launched. And we were like, is this real? Is this not real? Like we were all freaking out, like is this a real thing? And so we were thought we were getting strategic bitcoin reserve. Instead we got Trump Token. Right. Which is fine. Right. That we, you know, the adoption and their plane in the market. But I think that that just sent a signal of, oh, it's not about bitcoin. It's about like just kind of going crazy in the market with everything.
- [37:43]
A
Yeah, I don't know if it's like fine.
- [37:47]
B
I mean it would have been fine if it was done, I think in a way of building and builders and like, how are we building Defi and how are we building Rails in a different way? And that's why even the genius act with stablecoins. Sure. You know, what is it actually about? It's like, so Coinbase and Shopify can then do a deal early on and they can suck up the 3% that visa is sucking up right now and say that you're going to get that 1% back, but they're really going to get 2%. Right. So that's the other part. It's great that there's going to be adoption there, but you're even seeing a lot of people that are like, oh, whatever, CBDC is fine now. And like, because most of the dollars are already digital and I think that that's where we. We're in a different place than I think a lot of people thought we were going to be. You know, when this all started, which is like just US government amassing bitcoins, like buying Bitcoin, ETFs continuing to buy, companies with revenues buying bitcoin. Adoption of the bitcoin standard in a way, you know, and instead, you know, now here we are and you know, there's still tokens being launched all over the place. Without any regulation, people can kind of do what they want. And now we're even moving further into the degen economy with. You can bet on anything, you know, with, with Polymark and Kalshi, which I again, I think open market is great. It's interesting. It's, you know, but it is people just betting. And you know, you saw Brian Armstrong on his earnings call the other day. There was a bet out there where it's like, would Brian Armstrong say these three words? And then he's like, he's like, hey, show me the sheet real quick. And he's like, at web three, this, this, this and those, like markets went to 100%. It's like, is anyone looking into that?
- [39:30]
A
I mean, he didn't say all of the words, but anyway, not.
- [39:33]
B
Yeah, I think kudos to him to kind of. I think it was like a small call out a little bit to like, what's happening, guys? Like, what's happening over here? Like, I can just go do this and affect the market. And I think that that was important for him to do and I hope it gets looked at because there need to be some sort of rails on what's happening over there as well.
- [39:52]
A
Yeah, I mean, yeah, I don't want to go down the whole Trump token. Yeah, but, but let's just say I.
- [40:00]
B
Think that's what I, I think that's why things are. We went like one degree direction this way where I thought we were going to go one this way. And if you go one degree in.
- [40:09]
A
The wrong, it's not even one degree. It's like, yeah, let's not talk about the number of degrees. But, but I do, like, to my mind that was the moment when a bunch of rabid Trump supporters during the run up to the election, I saw their first tweets being skeptical and sort of, yeah, like shocked and kind of a little bit questioning what was going on. So, yeah, I do think that was like the first hint that what they thought they voted for was not what they were going to get necessarily. And then when Melania happened, then I definitely saw like a big swing in sentiment from a lot of pro Trump people. But so, you know, we talked about, I can't remember what, what it was that one of you said, but I remember thinking this is the perfect segue to talk about. Also the fact that gold has been near all time highs. It reached an all time high like a few weeks ago at about $4,300. It's now just under $4,000. So why is it that you think that in this environment where, you know, I. So this is how I think about it in my head. It's kind of like people are looking at what's happening geopolitically and they understand there's like some sort of shifting going on. Right. And I understand. You know, I do think some portion of this demand for gold is being driven by China and you guys. I don't follow that part of the world very closely. So I'm not sure what's going on there, but I can just see that generally when you look at things geopolitically, it does feel like, oh, you know, the US dollar has fallen 10% this year. There's a lot of kind of weird things going on internationally. Trump is sort of an erratic person, even the way he's like trying to affect the Fed and the Fed's supposed to be independent, like all this stuff. So it makes sense that people are looking for alternatives. But why is it that you think that gold has really taken off and that bitcoin hasn't yet, even though it's supposed to be digital gold?
- [42:07]
C
Well, it's actually the marginal buyer of gold are central banks. So I would say that the second part that you mentioned about, let's say retail, I think that's not an insignificant, but it's a very small portion of a much wider situation or much broader point. And I think there has definitely been a geopolitical shift, right? We're at the pivot point between what we knew as globalization or the globalization of the world, right, that started, let's say, with the, the annexation or the incorporation of, of China into the, the World Trade Organization in the early 2000s. And I think we're now at a point where we're kind of seeing the atomization of that process in the opposite direction, which is inherently, if you think about that and you think about the medium term implications of the, the basic acceleration of people going to, or basically going to retirement, right? Globally speaking, in terms of the baby boomers, that is a inflationary scenario, short term. So taking away the deflationary impacts of technology like AI, the fact that the marginal, let's say, impact of a dropping birth rate and all of these things 10 to 20 years out are definitely deflationary. The immediate impact is definitely inflationary. And I think there's definitely parts of that. And on the other side, you also have the geopolitical tensions with the uncertainty that Trump brings to the equation, right, where the net safe haven effect that the treasury, or let's say the marginal treasury buy had 10 years ago is not the same as what you have today. So I think that's definitely part of it, but it is definitely central bank driven. I think it became a narrative as people were looking for the next best thing. And I think gold lent itself very well to that, especially in the buildup towards Trump's election in 2024.
- [44:00]
B
Yeah, a lot of uncertainty out there. Naturally, if something has a higher market cap, it should be less volatile. Gold is probably a safer, less volatile asset than something like Bitcoin. Obviously right now if you go back five, six years, if one of the top five stocks in the S&P moved 4 or 5%, that was like a monster move in the market, right? Go back even further. That would be like, you would be like calling everyone you know, letting them know like something moves 6%, like this is like you're taking screenshots. And now we live in a world where, you know, Amazon go up 17% as like one of the top companies are down 17% overnight, right over. And I don't think that there's a lot of people that are. People are just like, where do I go? Where it's just like 1 to 2% swings when like the worst thing on the earth happens, right? And If I don't want to be in cash. And you know, it's not bitcoin, it's not the top three stocks in the stock market. It's not the broader index. It ends up being something like gold, unless you want to just sit in cash and get deflated away, even if you're getting 3, 4%. And so I think you just saw like huge funds also. You can, it could just take so much capital with the market cap. And so I just think all those things combined, people were just like, I might opt out for a little bit and just hang out in gold.
- [45:25]
C
I mean, let's say the decoloration or the unwind on the correlation between gold and bitcoin in a big way, to Joe's point was also the marginal trader that then shifted over to basically trade or let's say to chase the gold price as well.
- [45:41]
A
Right.
- [45:42]
C
So there was a shift in the, I think the underlying composition in people's portfolios as this is all happening. But there really aren't that many things that you can buy. Right. If you look at traditional, even let's say if you're a large family officer, large, let's say directional allocator, and if you were using the endowment fund approach, that has basically gone out the window over the last two to three years as well. So who is the marginal buyer of these things? How do you actually look at portfolio composition in an environment where you have palantir at 300x revenues or earnings? Right. It's just absolutely wild.
- [46:22]
A
So we talked about bitcoin mining stocks briefly and AI and that, that is a whole thing, you guys. We wrote this article about that because basically the bitcoin miners are being kind of lured away to AI. We're actually having a separate show to discuss exactly that on Thursday at 2pm Eastern time. So please, you know, mark your calendars and tune in to that. There's many other topics I want to cover. I just wanted to reference that because I know, you know, that could be part of the conversation here, but we actually have so much else to cover that I'm just going to make this plug for that because if you're interested in that, that's going to be a great show. We did just write an article on this brief recently, like last week, I think. So you can find that on our website. But let's now talk about prediction markets because we have been referring to this throughout the show. So, Joe, you kind of seemed to say something like this before. Do you feel it's that almost like attention in the crypto world is splintering and shifting toward things like prediction markets. And that maybe is like sucking some of the air away from, you know, trading and crypto itself.
- [47:30]
B
Absolutely it is. And people are, you know, I was just at a pretty interesting data conference up in San Francisco and talking to a lot of different hedge funds. A lot of these hedge funds are investing in stocks, but then they, you know, they might dip into Bitcoin, Ethereum a little bit. And, you know, I would assume that I would see new hedge funds launching, investing in different crypto products. But what I was seeing was new hedge funds launching that are just working on predict prediction markets. And so not, you know, not looking at. They're like, hey, no, we're not going to invest in stocks. We're just going to, you know, use alternative data to figure out where the arbitrage opportunities are across some of these markets. And we're going to trade in prediction markets markets. And so I think, you know, it's a zero sum in a way where, you know, the prediction markets are either ending at some point, but they can. You can liquidate out of a trade. So, you know, like, the big thing right now is the New York City mayor mayoral race right now. And so there's like a 93% chance Mamdani wins. There's like a, you know, 7% chance wins. But as the day progresses, you know, if, you know, some news potentially is going to come out, or there's some information from one polling station or people are looking at lines in different parts of the city, there's interesting data that can come out of that that might swing, you know, Cuomo to 14% or 20%, which would be 100% return from where someone is at with just a little bit of information, which doesn't seem super risky in a way to people that know those markets and have the correct information and data. And so I think you're seeing that, you know, the, you know, if you go to, like a local gym and it's a bunch of gen zers, they're not talking about pump fun, right? They're not talking about any of that. They're talking about prediction markets. And so I think we're gonna, we're gonna see the rise of that. We're gonna see the rise of more. More decentralized prediction markets, more centralized prediction markets. You're gonna see what Robinhood is doing. You're gonna probably see people like ESPN and FanDuel and all these companies kind of try to figure out how to get into that. They do have the, it's the same thing. You can just see it on a chart with the prediction markets. But if you go to FanDuel and you're betting, you know, on the Dodgers to win the World Series, you can clear that bet at a point in time there's like a cash out button, right? So it's the same exact mechanism. So all they have to do is show that on a chart and people will start to use it on those as well. So I'd be a little worried if I was polymarket, but I'm again like all of these things and a lot of the stuff that we've talked about today is just sucking more air and more air out of these other markets where there's not a lot to be excited about, right. Like if you're looking at your run of the mill favorite L1 that you followed for a couple years and you're like, oh sweet, there's this Dex now move from V2 to V3, right. Like what is that doing for the underlying ecosystem for revenue, for that protocol, for that foundation? And so there's just not a lot to I think get excited about. And meanwhile you're sitting down 70, 80% just like holding on, you know, and now you're just kind of a bag holder and what do you do from there? So just a, you know, it's an interesting thing. And, and prediction markets are, you know, you've got Kalshi kind of going one way like they said that they're you know, regulated and, and more and centralized. And then you have Poly market which like can't have US citizens utilize it. But like where's the three times the volume coming from? I'd bet VPNs if, you know, if I had to. So we'll see kind of what happens there. But when you get a couple billion dollars from ICE or the New York Stock Exchange, that's a huge signal into like where our economy and where the degenerate economy is going. And we'll see what happens.
- [51:16]
C
There's also, I think a segue into more traditional venues with options. You're also seeing kind of a rise of a more kind of proliferated usage of options contracts, which is also very interesting even by more novice traders that are basically taking more directional, extreme bets with small sizes on different outcomes. So it seems to be a general, not a niche kind of localized effect, but more broad based effect across let's say all the different platforms that we trade through as well. On the point, I think though on altcoins, I Think you're definitely correct. I think it's definitely not as exciting anymore as it used to be back in the day in terms of opportunity. But I at the same time nothing begets price like higher prices, right? So what you do need for these types of resets and reloads is people to chase. And how does the chasing happen? You get this in, you know, you get disenfranchised with the situation, you get pissed off, you basically dump your bag and then a week later it goes up 30, 40, 50% and then you do nothing and then it goes up another 30, 40, 50% and then before you know it, you have kind of a trend again and people chasing the narrative, right? So these things are visceral. I think we are in an economy where people have very short term memory and it seems like it's always the next new thing and things are very cyclical, right. So people kind of revert back to the thing that they know. So I think there's a good chance that it's not a coincidence that things like zcash, Dash, et cetera kind of react, reigniting because it is a old narrative that is now resurfacing with a community that was into some extent has been disenfranchised with the ETF coming through, right? Kind of the OGs that were maybe much more hardcore or extreme about the way that they look at Bitcoin and Bitcoin's place within a larger community or within a larger kind of tradable asset universe. So it's definitely going to be interesting to see. But I think what people need to understand is that the, the likelihood of a blowoff top is, is, is more the case than a, a rounded or kind of more prolonged just because of the fact that you've seen this. Now if you look at Nifty, you look at the, even the Dax, you look at Gold, you look at some of the, let's say the, the tech stocks, right? They've all gone, they've all had a very similar pattern as people chase the narrative because they're looking for the next, the next big thing, which I think is a very interesting kind of pattern that we kind of see over and over again until you kind of get to that ultimate climax, right? And it still remains to be seen what that looks like. But it, it definitely will require a catalyst maybe in the way that we saw back last year with the presidential election, like something that is undeniable, that nobody can basically say isn't happening. It could be the government shutdown, maybe a resolution of that. I always remind people as well that we have a fully, basically a full tga. We have the largest money market fund buildup in history and there's been, if you look back at let's say macro history, even with a 3 to 5% move out from those markets into let's say the general financial system has created potential massive dislocations as well. So it doesn't take a lot at this point. There's a lot of pent up energy.
- [54:37]
A
Everywhere and I'm sorry, I didn't understand. So you were saying that you think that a blow off top is still likely.
- [54:43]
C
I think given, let's say if you have resolution on things like the government shutdown, it is, it seems to be the more likely pattern that has been consistent with this cycle. If you look at, you don't have to go further than, you know, nifty. So Indian stocks, any of the major tech stocks. Right. You look at the dax, you look at even gold Nikkei as well. If you look at the Nikkei's progression over the last three, four weeks, it's been fairly exponential. So yeah, there's something about the chasing narrative that kind of culminates with shifting wins in terms of how portfolio managers allocate. Right. Because to Joe's point, everything is elevated. Right. Everything is overvalued when you look at the mean, historical mean, let's say over the last 15, 20 years. Right. So what happens when you look at things that are overvalued? I think you go back to the same type of behavior that we saw in Covid where one rational decision by a single investor when everybody does that one or similar thing becomes irrational in the collective. And that's how you get these kind of exponential trend lines.
- [55:52]
A
Okay, so let's a talk now about privacy coins because you mentioned that I was going to move to Ether install before we touched on that. But let's talk about that right now. As we saw zcash suddenly became all the rage about starting in late September. It's up 630% so far this year, but really most of that just came starting in September. You know, people say things like, oh, it was influencers like Nal Ravicon, Mumtaz and Arthur Hayes tweeting about it. I'm not sure that really is the cause of the spike. So I would be curious to hear your thoughts on why we saw the sudden jump in price and what you think the future is for the whole.
- [56:39]
B
Privacy coin sector as someone that follows social media. And that's what we Do I? I would actually say that is why you saw things move when you have influencers or creators that otherwise haven't spoken loudly about something that was a slight. Like when you think naval, you might think like maybe he's got some bitcoin, right? And like maybe he's got a couple other things. But to go so heavily into that and then to defend those positions, that installs a ton of confidence in retail. So that's somewhere where we did see a spike in retail engagement happening like crazy across ecash. And when you have that, then you have this kind of cascading waterfall effect of hey, everyone that's got, you know, tweet notifications for naval on, they win. And then it keeps going down to those kind of circles of friends and those, you know, signal groups, then SMS, WhatsApp, you name it. And suddenly everyone's like, oh, Nvall's, you know, doing this. Like, I'm going to buy 10 bucks, I'm going to buy $100, I'm going to buy $1,000. And so that's actually how we see these kind of quick rises and falls of these tokens is when you have people posting about them, right? Like if Elon posted about Doge again, like suddenly we're going to see, you know, a three or four day run up 20, 30% of that. Like why is he posting about that? Are they going to add that to the Tesla treasury? So you know, again, as someone that has followed social media, our tagline is social media impacts markets, right? Like people impact markets. I think this was purely kind of driven by that. I will say there is a narrative like you see, you know, some different exchanges out there, like a Houdini swap which is like does some privacy swapping and you're seeing kind of the rise of that a little bit. But again, like this is all available because of the kind of more unregulated world that we're living in where you can have kind of privacy, like no one was touching like Monero for like the longest time, right? Everyone's like, it's just not going to work, it just gets beaten down. Or like they're going to get slammed with you know, all of these different subpoenas, you know, and people are just like super decentralized, like hiding who they are. I think that people are kind of coming a little bit more to the surface with, with this privacy side of things. And then it's also kind of a, a, a reaction to CBDCs and stable coins. And you know, what's happening there? And are people going to be able to track every single dollar that you spend, you know, with USDC or, you know, is usdt, you know, an extension of what's happening, you know, with the US Government? Like, there's just a lot there. So I think people are responding to that a little bit. But I think the surge was mainly driven because of the, the names that we're posting about it.
- [59:29]
C
I think it's. It's a side. It's a kind of a tale of two sides in a way. I think Joe, what Joe is explaining is kind of the tail end, say, the last piece that requires something to go exponential and explosive. Right. Let's say the last piece of the flywheel. But I think there's structural reasons as to why that is happening. And we've been tracking zcash actually for the last two to three months, where you've seen shifts in how it was traded. Let's say volatility shifts within the price structure. And I think a lot of it, let's say, from a narrative perspective, I think, also has to do with larger allocators on the bitcoin side that have been basically selling out of position. So we know for a fact in the research that we've done, the glassware send, some of the, let's say, deeper foundational research that we do that we have seen a massive rotation or let's say a change in the guard between OGs that have been rotating out of bitcoin into cash to diversify the portfolio. So let's say if you look at October by itself, there's been 30 billion, excluding the. The October 10th, let's say, event. And I think that kind of shows that there is, I think, of that cohort, let's say there's probably a faction that is much more extreme in terms of how they look at bitcoin. Maybe they're not as happy with how bitcoin has evolved as it has become institutionalized, where zcash all of a sudden becomes a relevant alternative not only from an investment perspective, but also in terms of what it stands for. So I think it's a combination of things. Right? We're dealing with complex systems. It's never one thing. Every catastrophe or basically exuberance always is a combination of factors that kind of converge together that lead to a basically irrational kind of endpoint. Right. That's why I go back, Laura, to the point. Yes, it takes a lot of things to kind of align but blow off. Tops are exactly that. That exuberance. Right. It's kind of the combination of irrationality that comes together from multiple different areas all at once. And it doesn't take a lot. Right. Even if you look at Bitcoin right now, we're super oversold right across the board. And it takes very little for these things to. To. To shift in the opposite direction.
- [61:40]
A
Yeah, honestly, the. That same week was the week that thread guy was complaining about his taxes. And in my head, it was linked. It was like he suddenly realized he had this big tax bill, and then all of a sudden, bitcoin just took off out of nowhere. And I was like, wait, are those connected? But, yeah, I never really looked into the timing on all that, but maybe I'll do that later. All right, let's talk about Ether and Sol. At least before we wrap, we could talk about a few other things. We'll see if we have time. So Ether was kind of a little bit left out of the party in 2024. Not that it didn't perform well, but compared to Bitcoin and Sol, you know, it kind of lagged behind. And as we all know, there was a little bit of consternation in the Ethereum community for that reason. This year, it kind of seemed to outperform. And yet at the time of the recording, it is currently where it started, the year. So I was wondering, where do you think Ether is going and what factors do you think will determine, you know, what happens to the price over, like, the next year or so?
- [62:46]
C
I think this, in this case, it's narrative. Joe, on the Ethereum, I would actually buy your premise that you need a narrative for people to rally behind. And I think ETH has kind of found that again, ever since Tom Lee kind of came forward and really kind of proposed kind of the concert that he proposed around, let's say, the ETH Treasury. So I think that was one of the things, stablecoin issuance and adoption as well, kind of really becoming the rails and having a reason to exist again. I think that's definitely a big part of it. And let's say the quant in me says it's also just the way that things mean revert around each other. It was just so oversold versus the benchmark of the baseline that is, let's say, Bitcoin, that there probably was going to be some sort of relief. But it just so happens that that was, again, multiple things that kind of tie into a kind of a explosive move. Right. So you had the utility element. You had a easy enough to understand narrative, and I think you had the Liquidity and the structural backdrop as well for that to become explosive with very little energy. Right. I think it took about $5 billion to move it from 1800 to roughly 4000.
- [63:57]
B
Yeah, I agree. I think Ethereum has come back a little bit. Obviously the Tom Lee dat conversation sparked that volatility back to it, which is good. It's bringing traders back, you know, and now it's correlated a little bit more with Solana which, you know, they're both down 20 on the seven day. Right. So since we started talking about this. But like that's actually means that probably a good thing for Ethereum because it means that it's trading like Solana was trading, which means that traders are back there. I think, you know, they're a little bit more kind of fundamental about Ethereum. You know, I'm advising a company called Human Attack and they're, you know, working on taking AI. What is real and what is not on social media is like a really big thing right now. And so they're trying to kind of memorialize like real things or find deep fakes and kind of go through that process and they're going to take that and bring that all on chain. And I think, you know, six, seven years ago if we talked about or less even, you know, you talk about governments choosing a chain even, right. Like it's kind of like a crazy thing. It's like is the, are governments going to settle these things on chain? Because, you know, are they turning into Kadena? Are they going to turn into some other chain that just goes away? I think we are finally hitting a precipice with, you know, Ethereum and then some of the other chains that settle down to Ethereum that, you know, obviously there's like for speed reasons, that's why they're doing that. But I do think we're finally potentially hitting an area where you can, you know, memorialize these things and, and use these smart contract platforms like Ethereum as this kind of truth layer. Obviously if you can use Bitcoin as that, ultimately that would be the best. That's the ultimate truth machine. 51% attack, whatever it may be. It's like, can't change it forever. But I think Ethereum is kind of hitting that level with all of the other infrastructure with base that's built around it. There's a lot that's there. So I do think that we are hitting. There's going to be some interesting things that happen in the next couple of years where Ethereum is just going to be this big base computer for society in a way, unless we can really figure out how to scale Bitcoin, which I think some of the Bitcoin L1s, like stacks, and some of these people are doing that. But I think that, you know that you need that volatility in that trading aspect of it. That's why a lot of times people are like, you know, whatever's happening with this chain, it doesn't make sense. Or it's like you need to have defi, you need to have deep liquidity and deep markets and you need to have trading activity, you need to have arbitrage, you need to have those things or traders and infrastructure is not going to be there. Right. And so I think that those things have kind of hit a level with Ethereum where it's kind of hard not to own it in a way. And then you actually do use it from time to time, where some of these other things you actually are never using. Right. If you're just sitting in your Robinhood account and you're not using anything, it's like that might be a signal a little bit that it's not going to outperform over time. And but the tough part about this is that, you know, say you own a small cap stock and you're like, hey, like small caps, maybe over time are more volatile, but at points in time they're going to be higher than the S P or whatever benchmark is out there. People, I think, kind of fold altcoins into that where it's like, I'm going to buy this Altcoin and eventually at some point it's going to be a little bit higher than Bitcoin, but then way lower. And it's going to. But they're going to kind of keep moving up together. That's not the case where Bitcoin ultimately was going to outperform everything on a long enough timescale. So just depends on how long you have. But I think we're seeing a world right now where some of these things aren't going to come back. And so being invested in Ethereum as a lot is probably much better than being invested in a lot of other things. But right now I would say just get as much Bitcoin as you can.
- [67:37]
C
It's kind of a vote of confidence for the maturity of the system, right? Where you have fragmentation, you have cloud, clear kind of differentiation between narratives. You can start to your point, you have utility and kind of the speculation starting to converge into something more sustainable. So 100%, that's definitely a big Part of it. And price. Price is not always a good indicator of value. Right, yeah.
- [68:01]
A
Let's quickly just talk about Sol before we wrap the bit. The bitwise Sol ETF B launched last week. It brought in $199 million in new inflows on top of 223 million in seed capital. It was the top crypto ETP by volume for the week, according to Bloomberg Intelligence's Eric Bis. It also traded in the top 20 of all ETFs at launch. So, you know, there, there's also like good news for Saul on the horizon in the sense that there's two other ETFs in the works for Sol, Solana from Grayscale and Franklin Templeton. And yet here we are one week after the Vesol launch and Solana is down 20%. So, you know, despite like, you know, these new inflows and this great ETF launch, you know, what do you think is happening with Solana and where do you think it goes from here?
- [68:53]
C
We're just not in the, in that part of the environment. It's just, there's no momentum. Right. So it's, it's volatility. So there's no reason to hold a speculative asset beyond Bitcoin Ethereum. And I think it is about just waiting for that momentum to come back. So what we say also on Twitter, I think we are in a situation where price is not reflecting the strength of the flows that we're seeing. And I think maybe ETFs and these things are going to help part of the plumbing. But when it comes to specifically trading and seeing kind of the net effects in price, you need to see momentum come back. Right. So that is trend and volatility moving in the same direction, creating a force. We are dealing with currencies right at the end. So you want that juggernaut of Bitcoin to actually start moving in a direction, breaking through, let's say, clear resistance levels. And that's going to really drag everything with it at that point. I think Solana is going to start reigniting and becoming its own thing for a while. But I think as long as Bitcoin stays range bound and suppresses, the rest of the markets will be very difficult to see that.
- [69:56]
B
Yeah, you also, if you believe the centralized exchanges and how much they say that there is actually trading on their exchanges, Solana is trading $10 billion every 24 hours. So 190 million. It's great, but I don't think it's like a needle mover to an extent of Some of the bitcoin ETF inflows that we saw, but I think again, structurally, again, if you look at this market structurally, with the ETFs and the like, there are some great companies buying bitcoin consistently. People moving, you know, to, to bitcoin, you know, as a. They, they are moving to it as a systematic hedge still in this world, even though it trades kind of macro big tech stock, like the adoption, the longevity, like, you know, it. Two months ago, you know, we were talking about this where it's like, it is kind of wild that bitcoin's not sitting at 250k. It does kind of blow your mind sometimes to think about where we were today relative to where we were even three years ago and wonder why. It's not a million dollars a coin, right? Which I think that it's. We will get there, it will happen. But we're, we're in a interesting, I think geopolitical time. There's uncertainty in different places. The AI side of everything, which we didn't talk about much here, is transforming the world in such an interesting way. That's like blowing holes in every single strategy for anything that's out there. That's why you're seeing, you know, the top seven five stocks in the S P holding 70% of the value.
- [71:23]
C
Right?
- [71:23]
B
It's not the S P 500. What does that even. What's the point?
- [71:25]
C
Right?
- [71:26]
B
It's the S6. And so that's just changing a lot. You're seeing billions of dollars in infrastructure and AI. You know, people are just kind of wondering how, what the impact is going to be like if. Is my iPhone even going to have apps on it? Right? Is it just going to be this like, interface that has like a antenna on it that gets, you know, data up and down and then the AI is just like predicting everything I want every second. And what does that mean for the world? What does that mean for Amazon laying off a ton of people, but then also the stocks moving up a ton because of the, in like improvements that they've made and efficiencies that they've made. I'm sure Jan sees it at his company too. It's like you can scale with way less people now, way less people, and you can scale fast. And so those, those forces are all being digested by the market right now. And it's, it's really tough to know where things are going, to be honest with you.
- [72:14]
C
There's also another, there's another point which I think is critical for non crypto investors is that we've kind of created an ecosystem with cryptocurrencies where you're taking a startup, putting it on a 247 marketplace and validating it based on how that fits within the global perspective of that asset class. Right. So it's a continuous, basically retesting of the thesis on a 247 basis. And that's I think, a crazy concept to begin with. And that obviously that's a very, you know, kind of a very complex environment to navigate. But to Joe's point, the longer it progresses, the more mature it becomes, the more that obviously becomes a force for good, not for bad within a portfolio.
- [73:00]
A
All right, so last, very quick question, short answer. Where do you think we end the year? And I'll focus it on bitcoin. Where do you think we end the year with bitcoin?
- [73:12]
B
Price prediction?
- [73:13]
A
Yeah.
- [73:16]
B
Normally I'm pretty good at this, but right now it is tough.
- [73:21]
C
You're falling for the sentiment.
- [73:25]
B
I'm going to go in a crazy way. I think that we, we do hit an all time high. Again. I don't think it's going to be a blow off but I, I think that you're going to see people starting to rotate and smart money is going to start buying and it's gonna, it's gonna kind of go range bound a little bit here, but it will, it will sneak to 130 some at some point in December and then kind of range up from there. You know, I'm not saying that in the next two weeks we might not be down much lower. The government shutdown could be a bunch of bad sentiment, but they're not going to let that happen through the holidays and then you're going to see this kind of like very fast reversal. So I don't know what's going to happen on like the actual end of the year, but some point in December we'll hit an all time high. That's my prediction.
- [74:12]
A
Okay, Yan?
- [74:13]
C
Yeah, I, I, I agree with the we, we'll get an all time high. I think the actual numbers is really not, not the point because I think it depends on what goes with it. Right. Is it, is it going to be led by bitcoin? Is Ethereum going to take the initiative? So I think it's definitely going to be an all time high. And smart money is already buying. Right. That's one of the interesting things from an on chain perspective. You are seeing that rotation. It's just not happening very quickly. So the selling pressure is more expedited than the actual buying. As soon as that flips, it can go very quickly. So don't be surprised if you see Bitcoin back at 116 118k within a couple of days once that momentum ignites.
- [74:53]
A
Okay, so for those of you who tuned in and didn't love how bearish this episode was at the very end, you got your Hopium. So I hope you enjoyed that. And thank you both so much to Jan and Joe for sharing your insights.
- [75:10]
B
Thank you.
- [75:10]
C
Thank you, Laura.
- [75:12]
A
Unchained is produced by Laura Shin, with help from Juan Aranovich, Margaret Curia, and Pam Majumdar. Thanks for listening.