Bankless - 115 - The Stagflation Mega-Trade | Dan Morehead

Episode Date: April 25, 2022

✨ DEBRIEF ✨ | Ryan & David's Unfiltered Thoughts on the Episode https://shows.banklesshq.com/p/debrief-the-stagflation-mega-trade  Dan Morehead is the Founder & CEO of Pantera Capital, a blockchain investment firm that’s up nearly 65,900% since inception. Dan has spent decades successfully managing global macro funds throughout countless cycles. We’ve said it before and we’ll say it again, macro plus crypto is a deadly combination. These two skills are some of the most important when it comes to navigating the remainder of this decade and beyond. Who better to share their expertise than Dan? In this episode, Dan peels back the layers of how inflation, the bond bubble, and other important crises became so extreme, how they compare to the late 1970s, what you should do to prepare for the craziness to come, and so much more. ------ 📣 THE GRAPH | Graph Day in San Francisco | June 2-5 https://bankless.cc/GraphDay  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido  🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 6:12 What’s Happening with Inflation 12:10 The Reality of Inflation 14:02 Bond Bubble & Money Printing 24:06 The $15T Bond Overcalculation 35:00 Comparing the 1970s & Today 45:00 How to Survive Stagflation 51:55 Position Yourself Wisely 55:40 Crypto’s Macro Response 1:04:35 Why We’re Decoupling 1:12:30 Is the Bear Market Over? 1:18:22 The Last 10 Years & Why Crypto 1:25:10 Institutional Conversations 1:30:50 Easy Button Portfolio 1:34:44 Dan’s 2022 & Beyond Focuses 1:39:30 Closing & Disclaimers ------ Resources: Dan on Twitter https://twitter.com/dan_pantera  Pantera Capital https://panteracapital.com/  Dan’s Letters from Pantera https://panteracapital.com/blockchain-letter/  https://panteracapital.com/blockchain-letter/the-year-ahead-in-crypto/  https://panteracapital.com/blockchain-letter/the-next-mega-trade/  https://panteracapital.com/blockchain-letter/its-called-the-70s/  Charts https://panteracapital.com/wp-content/uploads/2022/02/Screen-Shot-2022-02-15-at-5.31.17-PM-1536x862.png  https://imgur.com/ZY4ltqn  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have a fantastic episode with Dan Moorhead. We're talking about the year ahead for crypto, how to survive this bond bubble. We've got inflation at all-time highs. What do we make of this? Dan is the perfect combo of macro plus crypto-c crypto investor to help us.

navigate these uncharted waters. A few takeaways to look out for it. Number one, we actually talk about why inflation is 8.5% right now. Number two, we talk about this thing he calls the bond bubble and the coming great unwinding of that bond bubble. Figure out what that means as we do the episode. Also, are rising interest rates bad for crypto? Maybe not. Maybe not this time. That's what Dan makes the case for. How to structure your crypto portfolio in the midst of all this? And finally, a little bonus tidbit, somewhere mid-show, you'll have to look for it. How to short bonds? If you believe what Dan is saying, bonds are going to go down.

He talks about how to short them. David, this was a really fun podcast. I learned a lot, brought a lot of pieces together, I think, with what's going on in the current macro environment, which is hugely relevant to the crypto industry and the crypto story over the last decade. It's been in existence. And we'll continue to be massively relevant into the future. I mean, Dan was actually talking about when the nation states of the world, central banks would start purchasing crypto. He thinks that's coming in the future.

What were some of your thoughts? I think this moment in history is the moment that Dan himself, Dan specifically, was really meant for. Dan has been paying attention to just the macro markets, I think since he became an investor in general back in the 70s and 80s. And he started Pantera as a macro fund, but pivoted into a crypto fund in 2013 because he saw the writing on the walls that so many who were early in this industry saw and realized that crypto is macro, but he dropped this one line that I think explains it well.

Crypto is like buying gold, but back in the BC era, right? Back when people were trading just like apples for gold, right? Like imagine buying gold before it even had a dollar price. And that's what Dan saw in 2013. So a macro person who saw the writing on the wall and saw the crypto was eventually going to become a macro relevant crypto asset class. So pivoted entire fund to become a crypto fund. And this moment right now where inflation is at 8.5%.

The timing of this podcast couldn't be better because Dan has been paying attention to the bond markets, what the Federal Reserve is up to, and what he is calling the great unwinding of $9 trillion of the Federal Reserve balance sheet is going into the bond market, which usually would spell the death for a lot of risk on assets. But Dan's making the case that not this time. people are waking up to that perhaps it's time to vote with your dollars and exit the system. And while this is very similar to stagflation in the 70s, which is another topic that we got into, the main difference this time is we didn't have crypto in the 70s, Ryan.

Like we have the escape route. We have the escape hatch, and that is crypto. So how is this similar to the 70s is a big theme of this episode? But how is it different? Because crypto's here is also a big theme of this episode. And I just learned an absolute time with Dan here. Yeah, you guys are going to absolutely love it. Of course, after the show, David,

and I are getting ready to record our debrief where we talk about our thoughts on the show that we just recorded our thoughts with this Dan Moorhead episode. So if you're a premium subscriber, you can click into that on the bankless private premium RSS feed. Some bonus content for you guys. We're going to get right to the conversation with Dan. But before we do, we want to tell you about these fantastic tools for going bankless from our sponsors. The era of proof of stake is upon us. And Lido is bringing proof of stake to everyone. a decentralized staking protocol that allows users to stake their proof of stake assets using Lido's distributed network of nodes. Don't choose between staking your assets or using them as collateral

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to help you preserve your hard-earned money. Also, crypto IRA lets you invest in more than 150 coins and tokens with all the same tax advantages of an IRA. They make it easy to fund your alternative IRA or crypto IRA via your 401k or by contributing directly from your bank account. There is no setup or account fees and it's all you need to do to invest in crypto tax-free. Let me repeat that again. You can invest in crypto tax-free. Diversify like the pros and trade without tax headaches. Open an Alto Crypto IRA to invest in crypto-tax-free. Just go to alto-I-R-com slash bankless. That's A-L-T-O-I-R-A dot com slash bankless and start investing in crypto-tray today. Bankless Nation, we are super excited to introduce you to our next guest. Dan Moorhead has spent

25 years managing global macro funds. He had a career at Goldman, then he founded Pantera. Later, he pivoted into crypto, still early in 2013. He went all in on crypto at that time. And at Bankless, we just think macro plus crypto is such a deadly combination, particularly for navigating this next decade. And we think you need the skills to navigate this next decade because it's going to be different than all of the decades preceding it. That's why we're having Dan on to help equip us with some of the insight and skills. Dan, welcome to bankless. It's great to have you.

Hey, thanks for having me. Hey, man. We're going to cover like two things today, if that's cool. The first is sort of like what's happening, the big macro landscape, inflation, bonds, the Fed, that sort of thing. And the second is, once we understand what's happening, how to position for that. Does that sound good? Sounds great.

All right. Let's talk about what's happening then. Inflation bonds, the Fed. All right. So the big thing right now in the news this week is inflation. It's been in the news for the last months, but I think this is the highest inflation, something like 40 years, 50 years, something like this. 8.5% CPI.

What's happening here? Can he tell us what's going on? Yeah. So it's actually 35 years I've been doing this. So I've seen a lot of cycles. This is the craziest one ever. The Federal Reserve pumped up a bubble in bonds that is just really off the chart. It's got the bond market so far ahead of where it could or should be.

And the bond market is obviously what fuels the mortgage industry and a record number of Americans took out a mortgage last year and bought property. Not surprisingly, houses are up 19%. So if you are a homeowner, that's a good thing, but 35% of Americans are not. So I think it's a terrible thing. So the feds pumped up this massive bubble and it's created a massively overheated economy. And the chairman of the Fed about a year ago said it was a transitory blip in inflation. This is not transitory. This is a massive, massive problem.

Each month since Powell said it was transitory, it's printed a new record high. And as you said, we're back to inflation rates as measured as high as 1982. Here's the wild thing. The inflation rate really isn't a very good measure of the cost of housing. In 1982, coincidentally, the government decided to replace the cost of houses, which is a very obvious thing you'd use in housing inflation, with a very arcane formula called owner's equivalent rent. And if you use a normal index of house prices, you'll see a much higher inflation. So for example, right now, the urineer change in owners

equivalent rent is only 4.2%. And for anybody out there trying to buy a house and only trying to offer 4% more than last year, they know that doesn't work. And anybody trying to rent an apartment knows 4.2% does not work. So that if you used any kind of housing index, like Case Schiller, for example, which is a very widely respected index, the inflation rate's already 11% in kind of, I consider true terms. So we really are back to the craziest bit of the 70s. So this is kind of a question about the 8.5% figure. Do you think that's really the lower bound then? You're saying maybe the CPI, the metric that the Fed uses to quote unquote measure inflation. is somewhat off in some ways?

What do you think the actual range of inflation might be if that's the case? Yeah, so I have been doing this long time. There's all kinds of nuts talking about inflation. The government doesn't fairly measure things. And sometimes people make the argument for maybe an affluent consumer basket. It's higher and all that stuff. And so what my argument here is not to take any of those kind of little things. It's just to focus on 35% of people's expenditure, their biggest expenditure, is housing.

You have to rent a apartment. you have to buy a house. And so it's by far the most important thing in inflation. And the way the government currently calculates it with this owner's equivalent rent thing is very, very slow. It'll all come through over in the next two or three years. All that pressure will actually show up, but it resets very, very slowly. And so if you take the current core inflation rate because the Fed likes to exclude food and energy,

but again, those are very big expenses for us. So, you know, I think it is somewhat suspect to exclude this. But if you exclude food and energy and take the core inflation rate, but use Case Schiller's Index, which is currently running 19.2% year over year, you get a true core inflation rate of 10.7. And we have overnight Fed funds at 25 basis funds. That's the problem. The Fed is fueling a massive overheating of the market. And frankly, it's shocking how far behind they are on this, that they're talking about maybe getting to neutrality. The U.S. is clearly. overheated, like today's front page newspaper has the highest in place rate in 40 years. And they're talking about maybe over the next year or two and these little quarter point increments getting back to 2%. I mean, honestly, they're really shocking how far the Fed is away from reality. Dan, I think a lot of listeners are feeling this, right? It's one thing when you see the numbers. It's another when you actually feel them. And so grocery bills going up in price,

like gas and energy, you know, housing, cost of living, all of these things like, like America. I think not just the U.S., but people around the world are really starting to feel these numbers in a way, I think. A lot of people who have been alive have never experienced before. What do you make of this that we're starting to feel these numbers more? No, it is. It's totally true that, you know, when inflation's, you know, very, very low single digits, it's kind of easy to not notice it. But so many things now have a surcharge for whatever, you know, all these expenses. And in our, I think, November investor letter used a really cool index, I think, because people can relate to it.

The cost of Uber's has doubled. And that, to me, that's such a great indication of the tightness in the labor market. Because gig economy workers are obviously people that are kind of right on the edge of wanting to work, not wanting to work. And a few years ago, a lot of people wanted to do that in various government programs and the booming economy. You've taken a lot of people out of the gig economy. And so people are actually literally seeing it. You know, every time we go ride, it costs twice as much as it did two years ago. And, you know, like use cars now are higher price than when they were brand new.

That's super crazy. It's never happened in history. The price of a 2021 average model your car is more expensive today than when the person drove off the lot. And that one, there's a little bit of a supply chain issue there. But it's just there are things happening right now that literally never happened. happened before. And it's happening across the spectrum. You know, basically everything is on fire and more expensive. And this is the thing that everyone is experiencing for themselves, Dan. So we all know this to be true. We can see it in the gas prices. We can see it in like the milk prices and the grocery

prices. And so no one really questions that. Like everyone knows like, oh, yeah, we have inflation now. This is the paradigm that we live under. But for a lot of people, I think a lot of bankless listeners, including myself, who kind of got educated on money and finance through crypto, are kind of confused as to how we got here. Like, you started this conversation off saying there's a bubble in the bond market. And I actually don't really know what that means. Can you explain, like, how did we get a bubble in the bond market? How did this bubble just emerge? Where did it come from? Can you explain how we actually arrive to this point? Sure. So there's really two sides to the same coin here. First is Congress, essentially approving $9 trillion worth of spending. The U.S.'s deficits in the last

two years have literally been bigger than any year in World War II. World War II, we were fighting fascism. It was a big thing, right? And here, the amount of money that's been spent fighting this invisible virus is staggering and very inefficient. It's literally been 50 grand per family in the United States. I mean, it's just an enormous amount of money. And obviously, there were some policies that needed to happen, and there's some people that really needed help. But most of the people that got stimulus checks saved them. The savings rate went up in a recession. Again, something that's never happened in history. So nine trillion new pieces of paper dollars were printed and sent around to everybody. Again, some, a minority of whom really needed help and probably needed more help,

but most of the people didn't. So what they do with it, they bought stuff with it. They bought stocks. Stocks are at record highs. They bought, you know, gold. They bought bonds. So people invested all that free new printed money. And there's a great line from Milton Friedman in the 70s. Inflation is always and everywhere a monetary phenomenon. And I know there's some sticklers that say it's not totally always true. But in this case, if you print nine trillion new pieces of paper money, it takes more pieces of paper money to buy a 2021 car or a median home in the United States or a share of the S&P 500. It just really is that simple. And so if you print all this money, there's just more dollars running around to buy things.

And we put a cool graphic up on our Twitter feed a while ago, which really inverted the price of money, right? Normally we see the price of a bushel of corn in U.S. dollars. We see the price of an ounce of gold in U.S. dollars. You can flip that upside down and you can put the price of a U.S. dollar in ounces of gold or bushels of corn. It's the same story. It's the dollar that's being debased and going down in value.

And, you know, ironically, not. all the rest of those things are kind of constant. So, you know, it really is the value of paper money is being debased. Is there also some difference here in how we printed it? Because, I mean, you know, people will remember we've been printing a lot of money for a while in like 2008, the bailouts, quantitative easing. I imagine it was less. Maybe you might say in order of magnitude less, but you can kind of educate us on that. But have we done something different? We didn't experience inflation in those years. Yeah. So, you know, a couple of really important points there is we've tinkered with money printing since we went off the gold standard, right? And so we had a bout of a lot of money printing in the 70s and we had a ton of inflation. And then we kind of got everything under control for a while. And then in the 2008-9 great financial crisis, there was a bit of that. And the Fed started doing something then that had never done before. Not just managing the overnight cost of money, but actually starting to manipulate the bond market, which is a very, very interesting and strange thing to be doing.

And so the Fed did it, but they did it in much smaller sizes in it. As you said, it was an order of magnitude smaller. So we saw a little bit of an impact. This time, though, we've had a twin policy surge of printing enormous amounts of money and literally mailing it to every American, whether they needed it or not. In the old days, there used to be a term called bond vigilantes. It would be when the government kind of got out of control, bond investors would say, hey, I don't want to buy this debt at ludicrously low yield.

so we're going to wait until the yields rise to an appropriate level and they wouldn't buy it. This time, the Fed manipulated the market instead of allowing the free market to figure out where interest rates should be. And interest rates are not this kind of esoteric concept that don't impact anybody. They're where you can borrow a mortgage, right? Like they're really directly impacting, you know, the economy and construction and all that stuff. And the Fed decided to buy $9 trillion of long-dated bonds. Both government bonds and mortgage bonds, literally buying mortgage. So, I mean, there's only one little intermediary between the Federal Reserve and a guy, you know, getting a mortgage by a house, right?

The Fed really became the lender for our entire country. And, you know, people are rational, right? If the Fed manipulated the rate of mortgages down to at 1.2.5%, which, you know, is astronomically small. And the K. Schiller index right now is at 19.2. So if the Fed's going to loan you money at 2.5% and you think a house is going to go up 19%. They're basically daring you not to buy the house, right? Like they're just, they're making it hard, like to be responsible and reasonable or whatever, because they're providing money absurdly below its true value.

And that's creating a bubble. One of the consequences of the bubble is it's driving up the price of home. So they have a ton of work to do. You know, one of the issues I see is somehow the Fed has this kind of sense that there's some kind of kabuki theater about how they have to do forward guidance and tell everybody what they're going to do and steps that, you know, some kind of minuet that happens over the next two years or whatever. When I was a kid, the Fed reacted in real time to reality, right? Like if something happened, they just change rates. And now we have this thing that, oh, you can only do 25 basis points. You can only do it every six weeks at a FMC meeting.

And it's only going to add up to 2% of it. over the next two years, which is as well totally surreal. The rate should be at 5% right now. So, you know, this is a fascinating occurrence in 35 years of trading. I've never seen something both so extreme and so massive, right? I've seen some weird trades in small little corners of the world, some emerging market or some weird happening. But like the Federal Reserve is doing it $9 trillion sized.

I mean, this is, you know, this is the biggest bubble. And our December investor letter, you know, we said it is a bubble. And we weren't talking about Bitcoin, which is what most, you know, cynics are always saying is Bitcoin's a bubble. It's the U.S. mortgage and bond market. And it's the Federal Reserve that's manipulating. And they were literally buying bonds a month ago when, you know, everything's already obviously overheated and out of control. Dan, by the way, what's crazy about that mortgage trade that you're talking about where a two and a half percent, you know, 2.25% mortgage in return for an asset that's going to appreciate has 20% per year. like daring us not, daring the average American not to go buy a home and get a mortgage and lever up as much as they can, right? Basically, that's been the trade. And then also a backdrop of,

let's say you take a $100,000 mortgage out. If you anticipate inflation is going to be high in their future, 8.5%, it's all denominated in dollars, right? Well, now the amount you have to pay back, at least in real terms, is just decreased according to whatever inflation is. So it really is just like for, again, the 35% of people who aren't in that. that position can't do it. But for the remainder of America, it's just like, why the hell wouldn't I go get debt from the federal government? It's like more free money on top of stimulus checks, on top of all of the other things that they've pumped into the economy. It is. It's a massive subsidy from one group renters to another group homeowners, right? And it really is crazy because it's totally

disadvantaging people that don't own a home. And yes, it is, you know, for the people to have the circumstances to be able to buy a home or own a home is free money, right? Like the Fed is subsidizing home ownership at a time when, you know, construction delays, you know, are, we're maxed out. There's no rational reason to want to, you know, induce more housing construction. Here's my favorite stat on how crazy the Fed got the housing market is. There's a stat on the median time between when a house is listed and is sold. And in the old days, that was months, right? Because, you know, you put your house in the market, you know, it takes a lot. you finally sell it. A few months ago, that hit the bottom bound. They only measure it in weeks and it

hit one week across the entire United States and not just like super hot, you know, Phoenix or whatever, Kansas everywhere. The median time to sell a house is one week. And the really crazy irony is home sales are now declining literally because they're not any more homes, not because there aren't more people that want to buy home, is the inventory is now so small that even if there's 100 people run around a neighborhood trying to buy a house, there's only like five houses available. So the actual number of housing sales is declining literally because we're running out of homes to buy. And capitalism works. That means price of homes is going to go up, right? Yeah, this is all quite unprecedented. Dan, in your investor letter in December, you had this graphic

calculating a $15 trillion overvaluation in the bond market and forecasting a very steep. drop off from like the $40 trillion back down to below $30 trillion. I'm wondering if you can kind of walk us through that math of that $15 trillion overvaluation. And then what happens next when the Federal Reserve tries to reduce the size of their balance sheet? Can you kind of walk us through what you think happens next with all of this? Yeah. So the main way to evaluate the value of a bond is to think about how much interest you're being paid above the rate of inflation, right? Because as you said, if you give somebody $100 and there's 10% inflation every year, you know, you got to make more than 10% to break even. And so the term's called real rate. So it's the rate above the inflation rate. And it makes a lot of sense.

And, you know, that's why it's called the real rate because it's actually the true rate you earn. And that historically has been about 2% positive. So you normally get about 2% points more than inflation. And, you know, over a 50 year period, it's average 2%. And that's what people think. is relatively fair. That only works when there's arm's length economic actors in a market. We don't have it right now. We have a non-economic actor, the Fed manipulating the bond market. And so they drove rates down to, gosh, now they're minus 600 basis points. So there are 800 basis points below its long-term historical average. And so the graphic we did that shows the bubble and the $15 trillion overvaluation is the value of the entire bond market, both treasuries and mortgages, if the market were priced at its normal 2% real rate. And right now, well, when we first said it was $15 trillion over value, I think it's about $12 trillion now.

And we said, hey, you know, maybe the past doesn't totally predict the future, so maybe it doesn't go exactly back. But what if we went halfway back? that's $8 trillion of market cap that's going to evaporate. And I mean, I think that's like a 90% chance of happening. You know, it's very, very likely. And the analog that we used, you know, for the old time is out, there's a Wiley-E-Coyote moment. And I think that's what it is,

is financial gravity doesn't work when someone as big as the Fed can manipulate it. And so they're hanging out there with bonds completely disconnected from where any rational, independent actor would buy them. And then they just stopped buying them. And then I think the Fed is soon going to realize they have to start selling bonds and get rates way back up. And so, you know, we're in that moment where you're levitating above the chasm. And I think in about two months, probably the Fed's going to realize, you know, hey, this thing's really getting out of control. Instead of just kind of waiting around these bonds to slowly mature, which is going to take a long time because the majority of their bonds are like 20-year maturity, you know, they're going to have to start selling bonds.

And so when you go from the Fed buying billions and billions of bonds every month to now selling tens of billions, the bonds are going to get crushed. You know, it's I said in our letter it's the first non-blockchain trade have done in eight years because it's so asymmetric. It's just like Bitcoin or blockchain. So I think it's like a 90% chance rates go way up. And I think 10 year rates are going to quadruple from where they were when we first started this, which I mean, that's, you know, that doesn't happen very often. And the punchline of bonds is, you know, if you're a homeowner and you're borrowing it at two and a half or, you know, you're short, say you get short a 10-year treasury note at 2% right. In 10 years, you can only be down 20 points, right? Like, that's absolutely the worst.

And I think bonds could drop 20 points in the next four or five months, you know. So it's one of those trades where it really has so much more upside than downside. And again, with the tiny exception in 2008-9, when the Fed did do a little bit of manipulation in the bond market, They've never done it before. And frankly, I just don't know why they're doing it. It's like it's not their mandate, you know. And so I think this is getting badly, unfortunately. And then you can imagine congressional hearings, blah, blah, blah.

And, you know, people just realizing, hey, that was a one and done experiment, right? And so I don't think if it's ever going to buy another bond again, but they might be kind of compelled or somehow decide they need to sell their portfolio. And until rates get way above 5%. I think they have to keep encouraging rates to rise in since they own nine trillion of bonds, they could certainly do it. Right. Okay. So one of the reasons why there's a big bubble in the bond market is because the Fed has been buying

the bonds, right? Like raising the floor, you know, just a fake economic actor buying bonds. So that's adding to the bubble. But you said you just had $9 trillion on the Fed balance sheet and bonds. But I think that's like only one third of the total market cap of bonds. So who else is owning all of these bonds? And why aren't they scared? If I was owning bonds and I saw the Fed turn from a buyer to a seller, I'd get really scared.

So like, who's about to be holding the bag right now? Well, the largest owner is called the People's Republic of China. So, you know, the biggest owners of U.S. bonds, other than the Federal Reserve, are other central banks who themselves are manipulating their currency price, right? So China and others accumulate reserves because they're trying to keep their currency from floating in a free market rate, which would be, you know, higher or more valuable. So it is a funny situation where, you know, the Fed is obviously manipulating in Baumark, which so is People's Republic of China and other large holders. And that's a whole other topic that, you know, with the Russian invasion of the Ukraine and sanctions, you know,

can't imagine there's going to be a marginal increase in the number of nation states that want to own, you know, bonds that can be forfeited, locked, whatever, which, you know, we'll get to crypto at some point, but, you know, I think that's net positive, you know, for crypto. But the punchline is there aren't many, like you probably don't own a lot of treasuries. You know, there aren't many like kind of normal people, normal investors that do. You know, when I was growing up, there was the whole kind of 60, 40, normal asset allocation mix, 60% stocks, 40% bonds. I can't imagine, you know, I'm sure there's pension plans and insurance companies that have kind of legacy. see portfolios that still have a decent amount of bonds. But if you're looking at all the facts that

we can see today as a normal free market investor, it just is so hard to say, hey, you know, at 2.7% for the next 10 years with inflation, you know, reported 8.5, but really at like 10.7, I'm going to buy a 2.7% 10 year note. Like it's just, I really can't imagine how anyone would do that. And I think the penny is dropping, but it's dropping very slowly. And I think, Brian, you mentioned a line that's very important. There is no working age American that has invested in a rising rate environment. I mean, that is so important to keep in our heads that I'm 56. And it was already six years in the bull market when I got to Wall Street, right? And the tenure note was at 10% when I got to Wall Street, right? Like, so it could easily be five or 10 again, right? But most people, you know,

your age has literally never even come close to seeing a 10% tenure note, right? And I think we're just all used to, you know, the Fed just bails you out. Like, oh, you bought a little too much real estate or, oh, you know, you invest in something. It's not great. Well, we'll just keep lowering rates. And as you lower rates, it just, you know, decreases the discount factor and just everything just kind of has been going up for 40 years because, you know, rates just keep going down and down and down. In July of last year, 10-year rates hit 54 basis points. That's it. That was the end of the bull market. Like rates certainly aren't going any lower than that. And then I just think we're in like a five-year, you know, bare market on bonds. And we all have to get our head around that. I'm still

trying to figure out what that means, you know, in our portfolios. But I just think, like you said, that most people are investing today. Never even thought about inflation and probably couldn't care less about the Fed and, you know, don't really have never had to. I have never had to. to think about any of these things. And I think, fortunately, it's going to be thrust upon us. We're all going to have to deal with, like, well, what do we do with persistent, you know, double-digit real inflation? What do we do with rising Fed rates? And then I actually think the Fed's inserting a lot of uncertainty by being so far behind the ball and still talking about trying to get to neutrality when it's patently obvious that, you know, we're way overheated.

We haven't even talked about the labor market. Like the labor market is the thing that's totally impacted here. So all those things are going to take a long time, like, you know, years to deal with. And then the last one added this whole list of things that, you know, are changing the way we're investing is for hundreds of years, we've been globalizing. And we've been just in time manufacturing and all these trends, all of whom, like the peace dividend, you know. And at the end of the Cold War, two billion people came into the labor. You know, so all these things are wonderful for the secular decline of both inflation and yields, right? They're all reversing right now.

Hopefully, it's all temporary. Hopefully the world kind of gets back to normal. But, like, there's some trends where, you know, we're talking about localization and reshoring. And, you know, supposedly the way America is going to get out of all this is, like, you know, building more manufacturing in the U.S. or whatever. Like, none of those things are good for lowering inflation and lowering yields. And again, hopefully that bit is kind of a temporary blip. But many of these other things are very permanent. And I think that's the thing that we all have to get our heads around.

A lot of big things are changing. And most are for higher yields and higher inflation for a well. Okay. So just maybe to kind of recap, because we've talked about a lot so far, right? But we have these unprecedented inflation rates. The Fed, for whatever reason, has seemed surprised by this, caught flat-footed, are like post facto sort of reacting about this. And they've also been buying bonds since COVID started like massive amounts. And so now we have this big bond bubble and a Fed balance sheet to unwind. And

that's what's maybe beginning to happen. That's starting to sink in that no longer purchasing bonds, but maybe the Fed will actually have to unwind its balance sheet. And also interest rates are increasing. So the Fed is trying to increase interest rates. And to your point, like Fed rates have been basically down only for the past, I don't know how many decades for very long time, probably for most people's lifetime who are listening to this. So that's all happening right now. And I'm wondering like how unprecedented this actually is because I think the Fed chair recently said this was unprecedented, right? Sort of like a different time. But haven't we seen something like this before in U.S. history? And I know you were hearkening back to like World War II

spending. Certainly there's some of that with COVID. But also, Also the 1970s, that was an era of a very high inflation. And I noticed in one of your recent letters, which are fantastic, by the way, Dan, really enjoy reading those whenever I receive them, is Pantera did a comparison of like the 1970s versus today. And there were some eerie similarities between that decade, I think February 1979 and where we are today. I'm wondering if you could talk about this. Is this unprecedented? or have we seen elements of this in the decade that was the 1970s? Yeah, it's such a great question.

And I've been shocked at how slow the Fed has been to see what's happening in real time. I mean, statistics have been very clear for at least six months, you know, maybe longer. And so their original line was it's transitory and it's a supply shock. And I think that perception was always wrong. Like the problem isn't there's like a couple of ships stuck outside Long Beach Harbor. right? The supply shock is there are two million less Americans working than before the pandemic started, right? And that's by choice. The unemployment rates is low as it's ever been, right? It's, there's policies that have induced a lot of people that just leave the workforce. So that's

the problem. Man, that can't be solved by just waiting for transitory, you know, time to go by. So, you know, I do think the Fed's been, you know, really, really slow in seeing this. And then they've just said that it's unprecedented. And I don't know, it looks just like the 70s to me. And so that's what we tied out our last investor layer. It's called the 70s. The precedent is the 1970s. And basically all the stats are spot on the 70s.

And it's honestly, and maybe it's, you know, most of the Fed governors, they're, you know, my age or older. They should have some sense that this is pretty similar. And so many things are the same, you know. The amount of money printing is the same. We even have wars and oil crises, which are unfortunately exactly the same as the 70s. So, you know, if you look at the stats, GDP growth is exactly 5.5 where it was in 1979. You know, everything is the same.

Inflation core CPI at the time was 11.3 in 1979. You know, if you take the real housing price, it's 10.7. So all these stats are similar, wage inflation, very high, all that. the difference is Fed funds at the time were 10% and there are 25 basis points now. That is the disconnect. That's the thing that's just so hard to understand. There's literally never been a time. The gap between the inflation rate and the overnight federal funds rate has been this wide.

Like, that's the only unprecedented thing is that the Fed's so far behind the curve. Yeah, what's crazy. So we'll include a link to this chart. And I think this is for homework, bankless listeners, go take a look at this chart from Pantara on February 1979 versus. today. And you'll notice there are two columns comparing all of these metrics that Dan was just saying, like CPI, for instance. Then it was 11.3% now, 7.9%, maybe 8.5% at this point in time. Core CPI, again, comparable to the 1970s. Go down this list, and you'll see a ton of comparisons

to the 1970s except three different rows. The first is the Fed balance sheet. 1979, it was 3.6%. Now we have a real. of 115% all-time highs by far. Okay. Fed fund rates in the 1970s, it was more reflective maybe of the real market reality at 10%. And now it's 0.25%. Okay. And then 10-year bond yield. Again, that was more reflective of the reality of rewarding investors for the risk they're exposed to and taking a bond. It was 9.1% in 1979. Now it's 2.4%. So we have the inflation of the 1970s, but we have a much less healthy Fed balance sheet and a massive amount of manipulation that we didn't have in the 1970s. That's the picture you're painting, right? Oh, it is.

I think back, if you would ask an economist at that point, you know, should the Fed be the only net buyer of bonds, people would say, oh, that sounds super banana republic, right? So the central government prints all this money and then the other side of the government buys all that printed money and they just kind of keep doing this. There's no impact anywhere. That's the big difference. I think people would have freaked if you would have said, hey, why doesn't the Fed take the free market interest rate of 10 and ram it down to two and a half? You know, why don't we try that? People would have said, oh, that's the world. That's such a banana republic thing to do. And, you know, the way we're behaving is total banana republic stuff. Well, what happened? Did the Overton

window just shifts like 2008. We're like, oh, we printed some money and everything turned out fine. There's no inflation. And so society kind of accepted that this is the way things are. And we do have this get out of jail free cards. And we can use this at any time we want. Yeah. So I actually don't totally know what shifted. But one of the things is I think we've all collectively gotten so used to, oh, well, if rates just always keep going down, it doesn't actually matter how much debt we accumulate, right? Because if rates keep going down and down and down, even if you have $100,000, 40% of GDP in debt, if you're only paying 25 bases, when it's kind of almost zero anyway, so it doesn't matter.

And I just think somebody forgot to kind of take a step back and realize, huh, well, maybe if rates do go up, you know, all this positive spiral actually starts cranking in the opposite direction, it becomes a very negative spiral. And that's the tricky math that, you know, back in the 70s, the debt to GDP was probably in the 50s, maybe, something like that, and it's 140 now. You can kind of do anything with debt at a 50% of GDP because, you know, it's not that impactful. At 140%, it's hard, right? Well, the numbers get there.

And so I just don't know what happened with the Fed that I think they got so into this forward guidance kind of thing that, you know, talking about, you know, when they're going to taper. Like, a couple months I'm going to talk about tapering the amount of bond manipulation they would do. Like, you know, it should have been taper. It should have been selling. It should have been, like, crushing the bond. It would have been way healthier for America if the Fed started selling bonds six months ago rather than tapering. So I don't know why they've been so slow at it. But honestly, I think there's going to be a lot of PhD thesis written about this, right?

They're so far behind. Unfortunately, I think the damage is going to be greater than had they, you know, done this at the appropriate time six or nine months ago, gotten rates to a, you know, more appropriate level. because, you know, we're now swinging at such extremes. You know, 19.2% you know, housing inflation, that's got everybody keyed up. And they're all running to buy a house, right? Like, you know, humans are Pavlovian, man. You give them a little treat and they just keep doing it.

And so if you keep giving people, you know, 19% appreciation of a house, they want to buy another one or they want to buy a bigger one. And it's going to take a lot more to unwind that, right? Because we've gotten this thing so frothed up. And one of the great lines that we put in an investor, letter is there's a line that encapsulates all the arcane logic of central banking by a old school Fed governor, William, I think, Machezny Martin in the 50s. And he said the role of the Fed is akin to a chaperone at a party that as soon as the party gets going has to take the punch bowl away. So it doesn't, you know, really get out of hand. And what the Fed's been doing here is like

an F1 racer with the champagne spray. Like they are the opposite of taking the punch bowl away. there just like spraying champagne on everybody and you know a lot of people get it like if the fed's going to loan you money right now still the fed's loaning money at 5% to mortgages like you can get a mortgage at 5 you know and houses are going off at 19 you know I don't know why I'm sitting here on this call I should go out and get a mortgage to buy house right like it's you feel like you're missing out if you're not if you're not doing it and so that's why I am afraid it's going to take a lot more to slow this down it's like a rhinoceros you know that's The housing market is like a rhinoceros, and they get this little like peace shooter.

They're trying to stop it with 25 basis points not stopping the housing market, right? Like, and I originally said six months ago they were going to have to raise rates to at least 5%. Even if that were happening today, I don't know if that's enough, right? There's so much pent up, you know, power in the economy right now. So using that metaphor of just like the champagne just being flowing everywhere, it feels like the hangover is coming, but the hangover doesn't necessarily have to be felt by the same parts of the economy, right? So if we're going into stagflation, Dan, you've said that, you know, this isn't unprecedented.

We've seen this all before. But me personally, I was born in the 90s and Ryan was born in the 80s. And that's going to encompass like 90% of bank with listeners. And so like for us, that is unprecedented. We've never had to navigate through stagflation before. A lot of people don't even know what stagflation means, by the way, Dan. Yeah. So what parts of the economy are going to feel the hangover the most?

And how should people look towards the 70s for guidance here? Like, how can we survive stagflation? Yeah, it's a great question. And that's why, you know, I certainly don't think most of your listeners should know anything about this. But the Fed governors, they're around for the 80s and the 70s. And they also have PhDs in economics. So even if they're not that old, they should know. And so to say it's unprecedented, I think it's kind of a cop out.

Right. So, yeah, so I think, you know, the stagflation thing is coming. That's a portmanteau of the word stagnation and inflation together. And it's a tricky problem when you have, you know, not much growth. lots of inflation. And there is an index in the 70s, which is potentially going to come back, called the Misery Index, which is an addition of the unemployment rate and the inflation rate. And luckily, I think we're probably going to be close to full employment for a while. So that's not the biggest problem. It really is the inflation side of it. But to combat that, you know,

the Fed's really going to have to get engaged and not just stop buying bonds, but, you know, essentially let the market determine. I mean, America's supposed to be this big free market economy, right, and we have a totally manipulated. The largest market in the United States is manipulated. I mean, it's really a weird place for us to be. A member of Congress just said something about, you know, we got these twin issues to deal with the COVID hangover and inflation. And I'm like, they're actually the same thing.

Is the policy response to COVID is why we have inflation, right? Like, they are the same thing. And I think that's what is frustrating for me as a taxpayer and, you know, supporter of our economy here. It's just, it still doesn't seem like Congress is getting it. They're still talking about more stimulus and the economy's totally overheated. So I think the unfortunate reality is it is going to have a very disproportionate impact on people. And the kind of sad irony is the Fed has actually spent a lot of time talking about the kind of inclusiveness of their policies and to help lower and middle income Americans. And frankly, their policies have

been terrible for those people. And they're great. If you own stocks and a house, you love the Fed, right? The majority of Americans don't directly own stocks and 35% of Americans don't on a house. So I actually think the Fed's policy has really been quite terrible for the majority of Americans, or young people, right? You're coming out of college, you don't have a house. So you don't want the Fed artificially inflating the value of the housing market. So the reality is it's definitely beneficial to anybody that owns stocks or crypto or a house. And it's essentially disadvantaging people that either don't own all those types of assets or on normal wages. And so while the government has tried to tout the wage gains and the ECI wage index is 5.7%,

which is the best measure of wages in the United States and benefits and everything people get. Which sounds great. Like wouldn't you love to get a 5.7% raise? That would be totally awesome. if everything didn't cost 8.5% more. And so your net negative 250 basis points. And again, they're not surprising real wages, which is wages above inflation, used to be positive. It used to be positive 1%.

And so it really is tricky. You know, this policy mix, which is unprecedented and totally extreme, is disadvantaging people. And, you know, I would say that, you know, the Fed, you know, we did talk about their word just now, neutrality. I mean, you know, do no harm, right? Just get back to doing less. Like, Fed's doing too much. And again, you know, there are some segments of our society that are loving it. It's been great. And actually, a record number of people have retired, right? So there's a lot of people. There's a million Americans, you know, have a house, have their retirement plan set up. They got to retire. So they think this is great, right? You know, so it's certainly good for some people. But for our country as a whole, I just don't think it's good. And it's definitely disadvantaging huge.

segments of our society. Yeah, I think the millennials and Gen Zs are listening, watching Baby Bumers retire and realizing they can't even afford rent and they'll never be able to buy a home artist. No, honestly, I hope you guys help make this be a kind of a generational issue. Well, here's the thing, Dan. I think so many of us, like, definitely need to get involved in politics and kind of shape things. But at the same time, so much of this just feels like we're all bound up on the wheel of fate. Like, what could we possibly do? Go, like, stand outside somewhere in Washington, D.C. and just protest what Jerome Powell is doing, an unelected bureaucrat and, you know, the other powers that be. I think there's some systemic issues that feel so much out of our control

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established what's going on, what's happening, let's talk about what we can do individually, how to prepare. Again, it would be really nice if we had a plan in this conversation and how to fix Fed monetary policy. But like, it's too broken. I don't even know if Powell or any, you know, Paul Volker of the 2020s, we'll be able to actually fix all of this shit that's going on. Okay. So now it's back to kind of the individual. What do we do as individuals to try to save ourselves and those around us? So how do we position for all of this, Dan? What's going to happen in the Great Unwind? What should we be buying? What should we not be buying? How should we position ourselves in life? Do you have any thoughts for us? Yeah, that's an important statement and question. That is one of my

lines. It's like, nobody asked me to vote on whether to spend 50 grand per family fighting an invisible virus. Like, that, I would probably definitely have said, no, that's not very efficient. But with crypto, you get to vote with your wallet. And so that is the advice. It's like if you're frustrated with policies that the Fed is doing, one is you can definitely vote for candidates for elected office that share whatever views you have. So although you can't influence the Fed, you can influence Congress and your governor or your president. So you can definitely do that. But a practical way to do that is to opt out of debasement of paper money and opt into, you know, hard assets like crypto, right?

And that's why it's been so popular. My favorite stat to show how popular crypto is is at the beginning of 2021, if you got a bunch of investors and economists in a room, and you told them all those stats that we've just been over. the inflation rate, the, you know, wage inflation, you know, the house price is going up, all those stats. And you said, you just have to pick which direction gold's going to go up or down. There's no one in the room that would have said down. And gold went down in 2021. It was down 4% because everybody's buying digital gold, right? Like everybody's gone past the old school gold gold gold and bought digital gold and Ethereum, Poked out, whatever. So that is the right

answer, right? It's to opt out of the old system, opt into the future, you know, payment rail of the world. And so blockchain, and that's why everyone loves it so much, honestly, and that they're so positive and hopeful, is blockchain A, from a financial standpoint, allows you to, you know, manage your finances better and invest in things that won't be to base. But then ultimately, obviously, you know, collectively governed protocols way better than the kind of representative government ones that we currently have. So, and that's going to take 20 or 30 years. I'm not saying, you know, Dows are going to replace Congress, you know, tomorrow. But in like 20 to 30 years, I think the world's going to be

way better. There's so many things about either centrally owned data monopolies or even governments that aren't really great for all the people, which will be better when it's done in a blockchain-based decentralized version. And that's why blockchain keeps growing. It just the more people that realize that it's empowering and you're opting out of a system that you don't have any control over and it hasn't worked very well. And we're just at the beginning of that, right? And I think we have a couple more decades of people moving into blockchain. So looking externally from the macro situation of the Fed and the U.S. dollar,

there's other like macro events that are going on that are relevant to crypto, like the Ukraine war and all the fallout from that with regards to wheat production, food production and oil production, energy production is also part of this overall macro picture that's impacting the crypto markets. But that story has been pretty well digested, I would say, over the last three weeks. Like, people have come to terms with what's going on. And the general sentiment that I've gathered is that the crypto markets are holding up far better than people expected them over the last two to three weeks. And we've also at the same time digested and accepted the unwinding of the Federal Reserve Treasury, right?

We're trying to unwind $9 billion interest rates are going to go up. And again, the crypto markets, after internalizing and digesting these news, you know, we're trying to unwinding. We are still at 3,000 ether. We are still in the $40,000 Bitcoin level. And so what do you make of the crypto market response to what seems to be just a huge one, two, three, four punch of macro to the crypto to the crypto markets. And the crypto markets are, I mean, they're not, they're not, you know, doing anything like they were doing in 2021 right now.

But they are also not going down in the same way that they went down in 2018. What do you make at the crypto markets and how the crypto markets are digesting all of this macro news? Yeah, it's a great question. And it just shows everybody has, you know, their own perspective. I would actually say crypto has done a lot worse than I would have expected, given all this. And so it's cool that you think is the opposite. And the take I would have on this is, you know, we called the bond bubble of Ponzi scheme on December 7th, I think, which was the high print of the bonds.

Spot on, couldn't have called it better. It was awesome. But I had no idea that everything was going down 27%. Like in the crypto industry. And so that's, you know, when you're trading. it doesn't work, you have to think about whether you're wrong or the markets are wrong and they're going to revert. And I really think that I'm massively bullish on crypto right now. And I think that the reason I am, partly is because, you know, hey, every two years for the last 10 years,

an order of magnitude of more people come into crypto. So I think that steady flow of just smart people read about it is coming. But the other asset class is being destroyed, I think, is going to sink in. And it's basically there's almost nowhere to hide. hide, right? And that's why we called it the Great Unwind. Everything except crypto, I think, is really going to be impacted. And if we're even partly right that bond yields are going to go to five percent or higher, you know, obviously crushes bond prices, but it has to impact stocks and real estate and anything else that has a discounted cash flow. And so I think for a normal investors looking at all the kind of normal asset classes like stocks, bonds, you know, real estate,

whatever, and cryptocurrencies, you know, and it might take. And it might take. take another few months maybe, they're going to just say, hey, if we have money to put to work, you know, we just, it's hard to imagine putting it to work and any of these other things. And crypto should be completely disconnected from interest rates, right? There really isn't any reason that, you know, a utility token like Bitcoin should really care if rates are 0, 5, 10%, we're like, I don't see why it should matter. So I do think they will decouple, which is, you know, a story we've been. all talking about for a decade. And the reality is Bitcoin's typically not correlated with everything

else, but it does get really correlated in these stress moments when the S&P comes off, you know, a big bunch. So I think that the macro story ultimately would be seen as hugely positive for crypto. And again, I'll admit, I've been very surprised that crypto hasn't done as well so far this year, as I would have imagined. And even, you know, one of the points you raised, which is a, you know, It's an important one. It's a confusing one is the Russian invasion of the Ukraine. And then all of the policy responses, you know, it's hard to really know how everything's going to play out. And obviously, it's a huge international humanitarian catastrophe. But it seems like when the dust clears, it's probably going to make more people want to use crypto. And I'm not saying that just

from both sides, basically, individual citizens who, like, they didn't get to vote on whether Russian citizens didn't get to vote on whether to invade Ukraine. And so there's going to be a lot more people around the world that are going to insulate themselves from their own dictators, you know, bad decisions. So individual citizens are going to want to own more crypto. And then governments are going to want to own assets that are not controlled by kind of central, you know, payment rails like any kind of treasury would be or U.S. dollar. And so, you know, in the old days, they buy gold, right? Because the, you know, the Nazis try to put a bunch of gold bricks on a Japanese sub and send it's Argentina and stuff.

Real old school things like gold, you know, are obviously not connected to the payment rails of the West. But, man, crypto is living in the cloud, right? Like, it's a way. And so I would have said before the war that it'd probably take maybe five more years for a central bank to buy Bitcoin. I think it's going to be the next couple years, you know. And once. the first one does, I think a lot are going to do it. And I'm not saying everybody's going to sell all their dollars and go 100% Bitcoin. But, you know, global FX reserves being 5% Bitcoin in 10 years, I mean, I think that could easily happen. And again, those are big numbers. And that's why blockchain is such an amazing trade. All the TAMs, you know, the total addressable markets are all so stupidly big. So I do think, you know, it's probably going to be, in hindsight, when we look back,

is probably going to have been seen as a catalyst for more people, you know, kind of thinking through the concept of the separation of money and state, right? Like, we're just all used to, oh, money has to be issued by a government. And not really, you know, like computer programs can issue money too. And, you know, Bitcoin's only been around for 13 years and Ethereum for, you know, 7 or whatever, you know, so it's not forever. And gold's been around for 5,000. So, you know, gold's got a long track record.

but I think the tide's changing. Yeah, the tide is certainly changing. And one of the lines that we frequently say on bank lists is as the world becomes more and more chaotic, the volatility and chaos of the crypto world just seems less by comparison. And all of a sudden, like, just the use cases just are illuminated when the Federal Reserve and a bunch of money printing happens. Or like you said, no Russian citizen voted for the invasion of Ukraine causing a collapse in the ruble, the money that they store their value.

And so all of a sudden, the threshold for, a lot of the people of the world for understanding why they might be interested in crypto becomes a lot lower. And that's bullish in of itself. But I want to go back and just double click on the decoupling between the interest rates and the crypto assets because I didn't totally fully wrap my head around that. And so I want to just ask that question one more time. Because everyone that I've heard previously is that rising interest rates is bad for risk on assets. And what is a risk on asset, if not for the whole entire crypto industry? I think I can go without saying that when the Crypto markets are coupled to the equities markets or the macro markets, it's generally to

the bearish side. And when it's decoupled, it's to the bullish side. Why do you think we are decoupled now when we weren't previously, if you do agree that we weren't previously? Like, why are we decoupling? And why can we have rising interest rates, which we all see are coming, yet still be bullish crypto? Yeah. So it did just remind me, I first visited the Soviet Union in 1990, right when Gorbachev was doing his opening, his glass nose. And I want to buy some books in the Kremlin bookstore and tried to hand him roubles. And they said, no, only U.S. dollars. And I'm like, you guys are fucked. Do you want to even accept your own currency? The Soviet Union is over. And like a year later, they were toast. So, you know, so the decoupling story is historically,

in the last 11 years that we have data, Bitcoin has had a very high correlation with the S&P 500 in six big down spikes of the S&P, historically for 71 days on average. And so that's my framework, is that there's this kind of instinctual desire to, like you say, risk on, risk off asset drop. And it has historically worked in very short time periods. But the reason I don't believe it has to work over long time periods is the whole concept of risk on, risk off, which I even heard Chairman Bernanke once use in his speech, which is very wild that a very educated PhD in economics is talking about risk on, risk off, is the reason that happens is not because certain assets have any underlying reason to be correlated. It's because the same people

own the same stuff. And I started out when hedge funds were called alps, alternatives. They're not alternative anymore. Everybody owns the same stuff, right? And so, you know, when somebody wants to sell bonds, they also have to sell stocks, they have to sell gold, they have to sell, you know, if an institutional investor is told by the boss, you've got to reduce risk by four percent or whatever. They just sell stuff across the board. And that's why things are correlated, not because there's any economic reality to be. The reason I'm still convinced that blockchain can have a very low correlation with everything else is most people don't own any of it, right? Like most institutional investors really don't own a material amount of cryptocurrency asset. So some of the

biggest endowments, maybe have one or two or three percent in blockchain. There's a lot that still own zero. You know, most major insurance companies basically own zero. And so, So that's how they can stay uncorrelated, I think, for the next, say, five years. If we're right, and blockchain is a really important thing, and in time it becomes an asset class, you know, I think everyone will have like 8% of their portfolio on blockchain. So in 10 years, you know, blockchain will be as correlated with the S&P as anything else, commodities or bonds or whatever. But for now, I really think it can be uncorrelated.

And one of my other thoughts that we did just put in the last investor letter is, I think, think the cycles are going to be much more muted than they used to be. So in my nine years of trading, we've seen six bear markets, I think, and they averaged earlier, 83%, which, you know, that test you're convicts you, you know. So that's the thing I don't think we're going to have anymore. I don't think we're going to have any more 83% bear markets, right? I think that as more and more institutions come into the industry, and very importantly, invest for a much longer time frame than kind of, you know, most retail type people is I think we're now going to see bare markets that are something like 50%, which in the real world would be cash-dustrophic, but in Bitcoin, that's shallow and

that'd be really nice. So I think that the bringing in institutions will ultimately over time increase the correlation with the rest of the asset classes, but will mute the amplitude of these swings. And then the big thing is, like you said, about the uncertainty and the chaos in the world, I think we've been so used to just dampening volatility, dampening uncertainty. And even the Fed predicts where they're going to be two years from now. I don't know where I'll be next week, right? Like, it's so crazy to be trying to say what your policy is going to be two years from now.

That literally is going to be all blown up. The whole forward guidance thing, six months for now, you'll never hear that word again. That's over. That's such a crazy concept. And so, unfortunately, I think they've injected a lot of uncertainty. And if rates have to rise to 5% or more, like I think, wow, I don't even know what all the impacts are going to be. There's going to be a lot of weird things happen. And that's why we call it the Great Unwind.

Like, as you do a rate move that hasn't happened in 40 years, you're going to expose strange leverages that people didn't know about. So I think there's going to be a lot of volatility. And like you said, as crypto becomes less volatile and everything else gets crazy volatile, crypto's not going to look as weird anymore. Like, it used to look really scary because, you know, hey, there was a year, I think it was 2020. The biggest drawdown on the SEP 500 was 2.3%. Like literally peak to trough, it never went down by more than 2.3%. So why not just keep putting more money in equities, right? Like if you're a retail person or institution and you just

put your money in and the worst time you ever have is you're down 2.3% and on average you go up 20% every year, you just keep buying more of it. And the same thing with houses, right? they always go up and they're going up 19% you buy more of it. If stuff starts getting squirrely here, which I think it will, people realize that, you know, crypto is not that scary. And here's a cool factoid for your listeners. Although Bitcoin's had all those crazy bear markets, there's only one calendar year it printed anew though in the last 11 years.

Like even though it went down to 83%, it ended up higher than it started. And so even though crypto has this vision of being so crazy and so many bare markets, and nuclear winners and all this stuff. There's only one calendar year where it printed a new low. And so crypto isn't as wild as some of these other things in reality. And then I think the other things are going to get kind of strange. It's kind of crazy. It's like it's only volatile if you sell.

Come on, guys. Right. So it's just buy and holds. And dollar cost average in if you need to across all of these years. And it's basically been up only. And so, Dan, just to zoom in on that, though, I think you said in your most recent letter is, I think we're done with the bear market, negative 50%, and we're on to a new rally. And you're talking about the bear market in crypto.

The next six to 12 months are likely to see massive rallies, investors flee, stocks, bonds, and real estate for blockchain. So that's what you've just been describing. But are you calling the bear market over? I mean, some people, this is their first cycle in crypto. And they're like, oh, my God, it's a bear market and it's going to be down. Do you think the bear market is over? I do.

I really do that, you know, we've gone through these cycles. where, you know, it's typically like 150 days or so of bear market, and then the bull markets have been like 300 days. So the bare markets are half as long as the bull markets. And this one's been 107 days or something to the low. We often hit lows kind of after big rally years and before tax day. And so all those things are just intuitions that it feels like we've done as much. And like David said, we've had some big news, you know,

Fed going from crazy accommodative to now tightening. you know, a war, some big things have happened. And we've kind of digested that. I don't know what else could come out that's crazier than that, right? Like the Fed going from 40 years of cutting rates to five years or whatever of increasing this big news. And now that we've digested that, I think we have seen a base. Also, you know, to the extent there's leverage in the system, it gets cleaned out after a down 50% move. So, you know, anybody that needs to sell has sold. and so I do think the low we had in February, I guess, is it. And it's time to get going.

A couple of other points on the stability of crypto, anybody that's held Bitcoin for just over three years has always made money. And, you know, past doesn't guarantee to predict the future, but like I'm willing to bet it'll keep going for a while. So, you know, crypto's less scary than people think. And yeah, I really want to emphasize to your new investors out there really just. put as much in as you can hold down like 80% and still like have your spouse like you is what you should put in crypto. And then just hold it. And it's going to go up, it's going to go down. But yeah, you got to have like a five to 10 review and you can't be like day trading crypto. You never want to be a forced seller. That's for sure. Yeah. So, okay, so we've talked

about what's happening and now we're just kind of concluding how to prepare. But it feels like Dan, the answer to this is definitely like, don't be buying bonds. Be worried about bonds. If you have those in your portfolio, it would be very worried. It sounds like you're actually doing some trading where I don't know if you're shorting bonds or sort of what. But then the other answer is buy crypto. And so listeners are going to be like, oh, a crypto podcast telling you like crypto is a fantastic asset class. But like honestly, Dan, is it really that simple? Is that what like we should do to prepare?

Again, none of this is financial advice, of course. But like your perspective on this, is it really that simple? Or asked alternatively, is this what crypto has been? been preparing for its entire life. Yeah. So here's one last little tip in case anybody wants it. I did invest in by a ETF called TBT that is two times short the 20-year bond market. And so if anybody actually does want to get short, that is a very convenient way to do it. So in the crypto market, yeah, it's a crypto podcast and I'm a crypto investor. So yeah, buy crypto is what you would think

somebody would say, and I want to put some perspective in that, is that, you know, I have been doing this for nine years. And there have been some kind of dangerous times to buy crypto and some great times to buy crypto. And so I would say there's way more the great time to buy crypto rather than a dangerous time. And so some of the yardsticks I would use is on average crypto, I'll use Bitcoin as a proxy for the industry just because everybody knows those prices. On average, Bitcoin has gone up 10x every two years for 11 years. right? And so it has a log growth rate of 145% a year. So it goes up 2.5x every year and goes up 10x every two years. So if you take that as kind of something that always, at least for a while, can keep

happening, we're way behind that pace. And to put it in perspective is, you know, Bitcoin's basically double where it was four and a half years ago, which rarely ever happens where you can buy Bitcoin and only twice where it was, you know, a long, long time ago. And then the price of Bitcoin today is about, I think it's 55% right now, cheap to that long-term trend. And again, these are just yardsticks for, you know, value. It doesn't prove it's going to go up in the next 27 minutes or whatever. But it just feels like today is definitely not a stupid time to buy crypto because it's relatively cheap. It's half of where it was, you know, a few months ago, which was right on its trend. And, you know, so it feels like it's a better time than most.

But again, I think people should be buying and holding and only putting in an amount they could afford to lose most of if it all goes sideways for a while. Can I ask if you agree with this? Because like, you know, I guess maybe, you know, a crypto podcast, we're talking about crypto and how it's an amazing asset class, right? But it's not like we've only been doing this for like two years. Okay, so I feel like the crypto community has largely called what is happening now for the last decade, at least. And you've been in this space for approaching a decade. I know you pivoted Pantara. It was not a crypto fund, but you pivoted completely to crypto in 2013, I believe, because you were seeing what was happening, what was going to happen in the future. Now it's the 2020s where crypto people are calling for like, hey, this might be.

Money printing is not going to end well, everyone, and it's not showing up inflation, but we're seeing inflation and asset prices, and now we're showing it. Like, you know, maybe people wouldn't ever criticize the crypto community for being humble, but I think we can, like, be confident about this, right? We've called it right for the past 10 years, haven't we? And so it's not like a bunch of crypto guys who have no track record. Can you tell us a little bit about that, about like the last 10 years and kind of your calls and maybe back to your original decision of, why you decided to pivot Pantara into crypto in the first place. Is this what you expected would happen? You know, I have to say that as an industry, we should be proud of ourselves. It's pretty much what we were calling the whole time. And it keeps happening. And all the skeptics are always like

saying that, you know, the negative stuff. I'm just like, you know, I don't know. I think I've seen this movie before. I think I know where it's going. And Web 3 is like the most obvious trade I've ever seen. It will definitely happen. Like there's no doubt. And so my history was prior to this, I was at Tiger Management and focused on very asymmetric trades around the world looking at interesting things. And like I said, I went to the Soviet Union in early 90s to invest in Gazprom and, you know, some other privatizations and things. And so every few years a trade like that would come up, you know, Argentine farmland

or Middle East equities or whatever. And the key is always looking for trades where the upside's way more than the downside. And I just put in our last investor later that the prior trade we did to Bitcoin was investing in Tesla Motors. I had dinner with one of the founders of Tesla, and he told me about this electric car, and I was so jazzed up about it for a lot of reasons. I thought it would be very successful. And then Pantera's chief economist has got named Ron Glantz, and he was a partner of mine at Tiger. And he used to be the number one auto analyst in the United States.

And so I got him to help me on it. He was super negative, and he was talking about all these Tesla fanboys and blah, blah, blah, why it's a dumb idea. And his line, which is pretty amazing, and it's true, he's like, hey, the last car company to go public is Ford Motor Company. I'm like, oh, that's bad, right? All the other ones have gone bankrupt. Every, you know, DeLorean, you know, D. Tomaso with their Pantera. And, you know, all these guys have tried to build car cars always failed. And so he was super negative.

We did a ton of work on it. And I just came to the conclusion that, you know, the auto industry and even the dealership model, all that's just super crazy how that. that it's built. In the future, obviously, is electric and solar and everything. And so we did that trade. And the reason I mentioned is the cool irony is in the early part, we're all of 2013. Both Bitcoin and Tesla traded the same dollar price per share. So when Bitcoin is 40 bucks is share, Tesla's 40 bucks when Bitcoin is 90. And so during that period, I was investigating Bitcoin. My friends, Pete Berger and Mike Novograt's a fortress, you know, asked me to help him think about it. And I had a bit of knowledge because my brother, who's an aerospace engineer, he had gotten some free

bitcoins from the Bitcoin faucet, which your young viewers wouldn't understand this. They were giving away free Bitcoins because nobody knew about it and nobody cared. That's an air drop for everyone. That's what they call these now. You're doing the first air drop. So funny. And so he told me about it and I kind of have a little bit of libertarian streak. So I read about it. And there wasn't much you could read. But I read about it. I was like, you know, that'd be awesome. I hope it happens, but I didn't really do anything about it. And then when Pete Mike asked me to help think about it, I came in for coffee and it lasted like six hours. I was like, oh, man, there's something huge going on. And it took about four or five months to really, you know, think it through. But I came to believe

that it was going to be one of those asymmetric trades, right? Obviously, a lot of ways it could go wrong. But if it worked, you know, you can make not four or five times your money, but like 10 times your money, maybe 100 times your money, or maybe a thousand times your money. And actually, that's the funny thing is the first price forecast in our first memo was a thousand X, you know, that I thought I'd go to $5,000 per Bitcoin. And so it is fun to go back and read those old memos because they're still right. Like I was just, I did a interview with Bill Miller, famous value investor. And he was talking about how, you know, sometimes people say, hey, you know, Bitcoin's stupid. It's just like buying gold. And like, and this was.

a line from that first memo nine years ago. It's like, no, it's like buying gold in a thousand BC is what it's like. Gold was great for a while, but now everybody has it. And still not that many people have Bitcoin. So Bitcoin's still early. And then it's going to transform almost everything. There's some things that won't transform. But blockchain, you know, is going to transfer most businesses. Definitely everything financial, you know, is going to be done on some kind of blockchain. Voting rights, you know, refugee aid, like just, so many things are going to transition to a decentralized digital version that the upside is still just enormous.

Although the industry is done well, it's still tiny compared to the rest of the world. Defi is great because it's $250 billion now. There's $120 trillion bonds, right? So there's $500 to go. And one of the cool ways to think about it is like new technologies don't just kind of replace the market cap of the previous thing. Like, the value of Amazon is greater than the value of every little mom and pop bookstore in 1995, right? So Bitcoin and blockchain, D5, still being one 500th of the bond market, like, it could easily do all that 500X plus more or whatever.

So, you know, that's why I'm still so bullish that it's still so, so early. Can I ask you this because you probably hang out in these circles much more than David and myself and most bankless listeners? What about the institutional appetite, all right? Are they finally understanding this? Are they starting to see, like, crypto? Like, what are the conversations that we never get to hear in these, like, institutional corners where they're debating crypto and debating this asset class? Are they on board yet?

Or they still think it's, like, you know, drug money and, you know, the Ponzi schemes? Yeah, so that's a great question that people want to ask for a long time. The answer is I think right now it's changing, like literally right now. And if you think back in the early days, I went and pitched all the biggest endowments. And you'd get the CIO and like 20 people in a room. And you'd go in and, you know, you do the show. But in retrospect, it was a total waste of time, right? Because there was only one fund manager in the industry.

We only had one fund. And that fund only had one asset, Bitcoin. That is a terrible thing for an asset allocated, right? Like putting all the downside on them. And I was honest at the time. I was like, hey, you could lose all your money. But, you know, you might make like 50 times your money. And that doesn't sell.

That doesn't sell. at all. So no one took you up on that? No endowment at all. Like, not at all. And the funny thing is it went up 600 X, right? Like, so it would have been an insane trade to put just a tiny, tiny fraction of their assets in there. But it's terrible from like a career management standpoint, like, you know, because it could have gone a zero. And I was, you know, very frank that it could have. But the funny bit would be you get kind of the end of the meeting and you're just, you're feeling nothing happening. Like, is there nobody that's going to invest in your fund. But, you know, they're walking out to the elevator and everybody's like, what's the minimum?

You know, because they all want to invest personally, but there's no way they would put, you know, XYZ universities endowment in it. And so a lot of them did invest personally, and now, you know, many are invested professionally. But what I would say is even up until a couple of years ago, there was a long list of fake reasons to not invest. You know, oh, it's, didn't a silk or a guy use Bitcoin?

You know, so there was a bunch of those. And we did put a list last year in a letter of all the reasons to people used to say no. There's no custodian. It's a fraud, you know, all this. And so luckily, almost all those, you know, got crossed out. And really the only one I would say left is regulatory risk. And it's really almost uniquely the SEC in the United States. So there's only really one kind of unknowable anymore in that, I think is a small one. But the point of the story is there used to be, you know, like custody was a very, you know, obvious excuse or reason to not invest. You know, But now we have fidelity and Coinbase and BITCO and all these big custodians.

So most of those have gone away. You still hear some of the kind of negative, you know, occasionally people. In my heart, I always think it's an excuse for why they're not yet long. I don't think it's a very deeply held intellectual belief. And that's one challenge for your listeners is if anybody knows of a well-written paper that's negative on crypto, I would love to read it. And I'm not talking about like just Warren Buffer going, oh, it's rat poison or something. I'm talking about somebody actually writes down.

a couple paragraphs and, you know. Oh, and I think, look, that's a call that if there's a good negative crypto critic, we'd love to have them on the podcast as well. Yeah, I'd like to hear that because I'm drinking the Kool-Aid. And I'd love to hear the other side, right? Like if a smart person wants to argue the other side, I'd love to hear it. The crypto bull case for that is anyone who can articulate a negative opinion or a negative case for crypto can't really do it because they just become bullish instead.

Yeah, they own some. No, they just pill themselves. I had a fun conversation with one of the rarest animals on Earth, a person who's supposedly smart and negative on crypto. And there's only a handful out there. And this guy's a professor at Johns Hopkins. And it was on C and in back when you actually went to studios. And it was real. So on the way of the studio, I was reading one of his research pieces.

And he said, Bitcoin, the pets.com of our era. And I'm like, oh, that's hysterical. And so when we got on the show, you know, I asked him a trivia question. that almost nobody ever knows the answer to is who's the dope who is the majority owner of Pets.com, the poster boy of terrible investments in the dot-com boom, nobody ever knows that. But it's this guy who thought the internet was going to be disruptive and that maybe you'd be able to sell canned pet food on the internet, which we all know that was a dumb idea. But books worked and Jeff Bezos is doing fine, even though he was the owner of Pets.com.

And so as I said to this guy, he's the last name of Wadwani. that Bitcoin and all these cryptos are like that. I don't know, I wouldn't bet 100% of my life savings on one particular cryptocurrency. You should own a basket of 30, 40 different really interesting projects. And if one goes to zero, that's going to happen, right? Like, that's totally cool. But as long as you're in, you know, a basket of these really important protocols, you're going to do great.

And so even a person who's supposedly smart in writing papers that's negative on crypto, even got his whole model wrong that like it is like pets.com. You should be buying a bunch of different crypto protocols and, you know, some are going to be very important. By the way, is that your overall take? Just like the easy button is like sort of like a Bitcoin Eath and then an index of a bunch of other crypto assets is kind of the easy button portfolio or how would you describe an easy button portfolio for exposure here?

Yeah, unfortunately, it's not as easy as it used to be, really. It's the sad answer if we wanted a quick answer is obviously Bitcoin is everything for a long time and it's great. Just tell people, you know, buy some Bitcoin. And then for a long time, I was like, hey, buy half Eith, half Bitcoin and you're going to be fine. The world's way more complicated than that now. And so the kind of theoretical answer, and obviously it's not super pragmatic for all your listeners, but is to be investing in a lot of different things.

And we probably invested 200 different things across all of our funds. So that is the reality is that there are going to be probably 10 or so, really important layer one, blockchains. And then, you know, all this, as your listeners know, but the SEC chairman doesn't, all the other things actually just kind of companies basically built on top of other protocols. And there is a great line that the chairman of the SEC said four or five months ago that we don't need five thousand new private monies, you know, and use some examples about the continental era of the U.S. where we had different colonial dollars and, you know, and then we got one dollar and it was all great. And I think he and lots of people misunderstand it. There aren't 5,000 layer one blockchains, right?

Like, there just aren't. There's 10 or so that are important. And then almost all the rest of those are just applications built on somebody else's protocol. And the U.S. has 4,500 public companies. So I have no problem with 4,500 tokens, right? We're not there yet. There aren't 4,500 real tokens yet.

But in 10 years, there will be. And so the punchline of all that is a portfolio should be, you know, many things, you know, more than just one or two things. And, you know, one of the things I think about when I talk to institutional investors is I sometimes find myself in these meetings where they just keep kind of drilling it like but which protocols can be the winner, you know, and is it going to be pogodized and be Ethereum, you know, just really, really just can't kind of can't just accept that I actually don't know, you know, there's a lot of interesting ones, right? There's going to be there.

And the analog I try and use with them is like when they're interviewing an equity manager, they don't sit there and say, hey, I'm not going to invest a dime until you convince me which one company is going to take over the entire world because that's how I want to invest in stocks. And that's not the way people should invest in crypto. It's like, you know, you invest in a portfolio and the manager, you know, buys a bunch of different things. And so the theoretical answer is to invest in a broad portfolio of things because there are a lot of things going on. Like, for example, last year, Bitcoin was up 70% and our liquid token fund was up 325%. You know, there's just a lot of things going on, one of which is Bitcoin, but there's, you know, 30 other important things in the liquid side and there's, you know, 80 or whatever in the private token side of our portfolio. So for those that can, investing in a fund manager like ourselves, there's a bunch of great, you know, managers in the space is probably now better than the old days when I say, hey, just buy some Bitcoin and $8, you're probably fine.

These days, I think you do need, you know, a broader exposure. Oh, there's a ticker, I think it's called DPI that has the DFI, you know, like 10 top defy, you know, something like that is a great way to get more than just one thing. Certainly, certainly, yeah. Because you certainly hate to have gotten crypto right, invested some money, crypto happens, and then you're in the my space of crypto or whatever. You're all in on pulse chain. Yeah.

Dan, we've been focusing this conversation generally, mostly from the outside in about about crypto, the macro side of crypto and the broad strokes. But as we just wrap this up, and I want to ask you kind of just the internal side, what themes are you paying attention to in the crypto industry moving forward in 2022 and beyond? Like what really captures your attention? Is it layer two ecosystems? Is it Dow's, it DeFi? Like, is it the NFT side of things? Like, what are the many, many themes that have emerged in the last 12 months or so that have really captivated your attention? Yes. And that's why I'm so excited by crypto. Is there so many super important things. Everything you mentioned there is something that is very important and that we're

working hard on and investing in. And so although that sounds overwhelming, that's totally different than two years ago. Like half the things you just mentioned didn't even exist two years ago. And so that's why I like crypto that it's always changing. So definitely layer two's roll-up, scalability is coming on now. Like there's a lot of projects like Arbitron and Starkware that are really important and obviously have to happen. You know, when there was only a couple of crypto enthusiasts using Bitcoin or Ethereum, it didn't matter that it only did 10 transactions for a second. But if a billion of us all want to do some video gaming at the same time, it's not going to work, right? So scaling is massively important. So for a long time,

we were pretty much focused on just two blockchains, three, Bitcoin, ETH, and then we're investors, equity investors, and Ripple. So we were focused on those three, and that kind of did cover it for a long time. But now there's a lot of... interesting layer ones out there. Salana, Tara, near, there's a bunch of things out there that are important

for their own use cases because there are different use cases now, not just storing digital gold, right? You know, Bitcoin's really good at that. The other one I just, honestly, I said is before Web 3, it's the most obvious trade I've ever seen in my life. And we might mess up

and invest in the wrong projects or whatever, but like 10 years from now, we're not going to have these big centralized data monopolies sucking all the value out of our lives, right? And the other thing, they're not going to be doing is governing our lives. That's so important. I don't think probably people talk enough about it that there's a lot of bad stuff after these very centralized data monopolies that just won't happen in the long run. And again, it's going to take 10 years

or whatever. So Web3 massively important. And I think probably it's going to have the biggest impact on our lives, right? Like kind of the number of people out there. And then NFTs is a fascinating sector that a new art form is being created, just like each of the last 50 years has had its new art form. And then the whole concept of daos of letting people actually govern themselves is superior to the representative of democracy and definitely superior to monarchies and dictators, right? So I'm a huge fan of the Constitution doubt and people say, oh, it failed. I'm like, no, no, it's massively successful. In the end, King Griffin had a few. more dollars than they had, and so he won that particular bidding. But it took Ken Griffin 30 years

to accumulate that money. It took the Constitution down like a week. That's massive. And they went out with the best tweet ever. Their last tweet was how much for Citadel. And to my mind, that is such a great way to encapsulate how the world's changing. It's like we used to have centralized things like Citadel, which I have nothing against Ken Griffin or any of those people, but centralized things where one or two humans controls an enormous amount of power. And, you know, 10 years from now, we're going to have, you know, entities that democracy's going to control and the citizens are going to actually get to do things. So I'm really excited about that.

I think, and another thing that I don't see people think enough about is Satoshi gifted to the world, one of the most important things of all time, right? Like, in 20 years when we look back, it's going to blow people's minds that Satoshi just handed this thing, no patents, didn't take, any money. It's pretty wild. And I think within five years a billion people use Bitcoin or, you know, crypto, and maybe even three years, honestly, it's happening so fast. And that's really cool to be involved in something. It's going to touch a billion people's lives. It is really cool. We are, I think, the right place, the right time in history. And even though there's a bond bubble

and a great unwinding ahead, I think with crypto, there's maybe a light at the end of the tunnel here and how a civilization and society reorganizes on the other side of this. And that's certainly reason for optimism. So, Dan, you've led us through some dark corners, some, I guess, obscure things that not a lot of people understand. And you've painted the picture of how to position ourselves through these to the other side. So thank you so much for joining us on bankless. We really appreciate it. Hey, thanks.

It's been a blast. Bankless listener, some action items for you today. One thing I recommend you subscribe to is Pantara's letter, their blockchain letter that they send out. will include a link to the show notes. Also, the latest letters from Dan has a hand in writing them himself. It's called the 70s is one of them, includes some of the links to the charts that we talked about today and also the next mega trade. So take a look at that. Of course, as always, risk and disclaimers, guys, none of this has been financial advice. It never is on bankless. Bitcoin, Eath are risky. So are the other crypto assets. You could definitely lose what you put

in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.