Bankless - Why This Cycle Feels Broken, Memecoins & Macro | Ben Cowen

Episode Date: February 24, 2025

Ben Cowen, founder of Into the Cryptoverse, breaks down why the current crypto cycle feels different from past ones.  We explore the Advanced Decline Index and how it reveals why Bitcoin is thriving while most altcoins struggle. Ben also discusses the impact of quantitative tightening, the ETH/BTC ratio, and why meme coin speculation is distorting market dynamics.  A must-listen for anyone navigating crypto’s shifting landscape and seeking deeper market insights! ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24  https://bankless.cc/spotify-premium  ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax  🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain  ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🌐CELO | BUILD TOGETHER AND PROSPER https://bankless.cc/Celo  🦋MORPHO | CRYPTO-BACKED LOANS  https://bankless.cc/Morpho  🏦ONDO | INSTITUTIONAL GRADE FINANCE https://bankless.cc/Ondo   ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/37?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS 00:00 Intro 04:37 Advance Decline Index (ADI) 08:45 Crypto Vibes & Economy 10:26 ETH & BTC Dollar Relation 15:04 Has ETH Gone Home? 20:38 FED & Memecoins 23:58 Take on SOL/BTC Ratio 28:51 Rise of Meme & Alt Coins 31:45 Where the Value Lies in the Market? 39:11 Trump’s Plans with Tenures & Dollar 44:00 Crypto's Bullish Setup vs. Market Vibes 47:35 Meme Coins vs. VC Giants 53:36 Did We Just Skip a Cycle? 59:08 Closing & Disclaimers ------ RESOURCES Ben Cowen https://x.com/intocryptoverse  Into the Cryptoverse https://intothecryptoverse.com/  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠  

I really do feel like this cycle, we've kind of lost our way as an industry. I mean, Bitcoin's doing fine. I mean, you know, Bitcoin is doing what it always does. But everything other than Bitcoin, I think the industry kind of like lost its way for a little while because investors just decided to flock to the get-rich-quick stuff rather than like, let's actually try to do something. Welcome to Bankless, where we explore the frontier of internet money and internet finance. Ladies and gentlemen, Bitcoiners and Eath holders, memecoiner manlets and Celestia mammoths, champagne VCs, and retail trench diggers.

This episode is for you. Ben Cowan from Into the Cryptoverse is on the episode today discussing what the hell happened to this cycle. Bitcoin dominance is on a monster run further than anyone expected. The ETH-BTC ratio continues to suck eggs. Memecoins are sucking liquidity out of the market, and the meme coin meta looks like is on the verge of wrapping up. And what about the sole Bitcoin ratio? who's got their eyes on the sole Bitcoin ratio? We are talking about broad crypto markets today on the podcast

with immeasurably valuable guidance from Ben Cohen, who is known as the guy who, years ago, started calling for ETH to go home, back to dollar and Bitcoin denominated lows. Did it go home? We had Ben on the show about five months ago, back when the window for Eth going home was just about opening, but now towards the middle of February,

did it go home or is there more to go? And while there are hundreds of different questions I could ask Ben about the state of thousands of different crypto assets, maybe none of that matters when everything relies on either quantitative tightening from the Fed or fiscally managed inflation and jobs from the Trump administration. So, hmm, what do? Really good episode with Ben. If you liked his stuff that you hear today on the podcast, there is a link in the show notes to get 10% off his Into the Cryptoverse program where you can get premium Ben content,

just like when you do, when you sign up for bankless premium and get ad-free bankless premium content too. Both links are in the show notes. So let's go ahead and hear from Ben right now. But first, I'm going to talk about some of these fantastic sponsors that make this show possible. Ondo finance is leading the way in the tokenization of real world assets with a mission to accelerate the transition to an open economy by building the platforms, assets, and infrastructure that bring financial markets on chain. With Ondo, institutions get seamless access to tokenize finance, while on-chain users gain access to institutional-grade real-es. world assets like never before. By bridging traditional finance and the blockchain economy,

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across the Arbitrum ecosystem with limited time campaigns from your favorite projects. Empower your future with Arbitrum. Visit portal.arbitrum.io to find out what's next on your web-free journey. Bankless Nation, I'm here with Ben Cowan. He is the founder of Into the Cryptoverse, where he gives deeply analytical takes about the state of the crypto markets using long-term planning and pattern matching to create educated guesses about what the future holds for the crypto markets. Ben, welcome back to Bankless.

Thanks, John. Me, pleasure to be here as always. Ben, this tweet that I have pulled up here was the impetus for me reaching out to you because I really just enjoyed what clarity that this tweet provided for me. And I wanted to just get you on the show just to talk to you about it directly. This tweet talks about something that I hadn't seen before called the Advanced Decline Index. And you tweet out, the reason the vibe is off, despite $100,000 Bitcoin, is because the advanced decline index of the top 100 cryptocurrencies has been in a downtrend since 20.

To compare that to 2020 to 2021 when the ADI was going up. That's why this cycle feels different. Really enjoyed this tweet, but maybe just to really set the foundation here, can you define ADI and why the ADA for the top 100 crypto is going down, what that really means for the industry? Yeah, the ADI basically, so in the stock market, a lot of people talk about the breadth of the move, right? You'll hear a lot of analysts say, well, like, the breadth is good or the breadth is bad, right? maybe it's only a few stocks going up, like over the last few years. It's mainly been like the Magnificate 7 going up that's allowed the index to go up. And you could kind of think about that and apply it to cryptocurrency. So we just created the same idea for crypto. And we've seen

total market cap go up a lot. And it's primarily because of Bitcoin, right? And if we think about it, a lot of other cryptocurrencies are still below their 2021 all-time highs. So the ADI, let me describe how we think about it. So an asset is said to have advanced over a certain period if the closing price is higher than the opening price. Right. So if from daily open to daily close, the price goes up, then that asset has advanced. If on the other hand, it goes down during that period, then that asset has declined. So the ADI specifically is calculated by taking the number of daily advances and then subtracting out the number of daily declines and then adding the prior index value.

So that's essentially how it's calculated. And as that chart shows, what you can see is, you know, really from the very beginning of 2020, when QE, quantitative easing, had just kind of come back into the market, September of 2019. The ADI bottomed in December of 2019, January 2020, right?

And then it started just going up. Which was a great time. The vibes were great when that was happening. It was. Everyone was having a great time. Yeah, I mean, every, because, I mean, you could basically, like, put a thousand different sticky notes on a dart and just throw a dart and then buy that cryptocurrency. And there was a good chance it was going to go up, right? It was a good vibe.

And I think a lot of people actually, I know you guys were here before 2021 and 2020, but a lot of people got introduced to crypto in 2020 and 2021. Right. Everyone was at home. And we were just looking at the markets, right? So I think a lot of people were searching for that. And I think everyone's wondering, well, why is the vibe so different? today than it was back then. And I think the answer is because there's only been a few assets really lifting the space higher. We've seen Bitcoin dominance go up a ton over the last three years. It

actually just spiked like 64%. And we've seen the ADI go down. Now, I was thinking like, well, what caused the ADI to go up last cycle? And I think it was caused by, you know, really loose monetary policy and quantitative easing. And we have not seen a pivot from the Fed. away from quantitative tightening yet. So when you think about it, it kind of makes sense, right? I mean, we're still arguably, as crazy as it sounds, right? We're still arguably in that 2019 phase where Bitcoin goes up, it lifts the asset class with it.

But because there hasn't really been a great reason for QE to start, a lot of the rest of the asset class isn't really moving. So if you've had Bitcoin, you're feeling pretty good. But a lot of cryptocurrencies just haven't really done that well. And I think this chart really highlights why the Vod. is off. And really to drive that point home between the ADI of the top 100 cryptos and the vibe is because everything downstream of Bitcoin is where a lot of crypto natives have their jobs. And so the top 100 cryptocurrencies have foundations, they have lab teams, they have development teams. This is highly related to

like the job sector of the crypto industry. And so this relates to like whether or not crypto companies are paying more, whether they're hiring more, whether they're laying people off. And when only Bitcoin is representative of the lion's share of the growth of the total crypto market cap, but nonetheless, everything downstream of Bitcoin, except for a few outliers, Dogecoin going up does not actually create any jobs. Solana going up does create jobs. So that's an outlier. But everything else is like the budget, the economic energy that represents a lot of the just like job security and industry investment of everything that we consider like crypto native outside of Bitcoin. So it's, it's directly related to vibes. It's not indirectly related to vibes.

Yeah. Well, I think, too, there's a lot of people that don't actually own any Bitcoin, you know, so like it's gone up 6x, but if you just were, you know, playing in the alt-coin casino and buying microcaps that just kind of keep bleeding back to the blue chips, then, you know, the vibes off, right? Because, I mean, you know, if your portfolio isn't doing well, then it's easy for the vibe to fill off. And you're right. A lot of investors have a lot of auk coins, and there's a lot of jobs in the octane market. And if that stuff isn't performing, then yeah, like the vibe feels off. I want to connect this, the decline of the top 100 cryptocurrencies, to the ETH dollar and ETH BTC ratios. What would you say about the connection between these two concepts?

Like the relationship between ETHBTC and the valuation of the middle of the market coins? Yeah, I mean, I think that in order to get alt season, which is what people want, ETH Bitcoin has to bottom, right? It has to convincingly bottom. And, you know, in 2022, I said it could go as low as 0.03. And here we are at 0.027. Right. We touched lower, too.

Right. We went to 0.023. And I don't know exactly where the bottom is on it. I do know that last cycle, it bottomed when QT ended, right? When quantitative ending ended, that's when ETH Bitcoin bottomed. I had speculated previously that we might get some type of capitulation event around the time that the supply of ETH reaches the pre-merged supply. What it sort of symbolizes to me is that some of that liquidity that we had for the last

couple of years, starting to dry up some. The demand's just not there like it was. We saw what ETH was doing when the demand was really high around the merge. It was absolutely deflationary. And you can see just how deflationary was back then, but the demand has been drying up. I think people are getting exhausted from, you know, I think people are tired and they want to see other things do well. And obviously the Bitcoin heavyway is good, but when does it change?

And so I think that it's all tied together, right? The ADI doesn't really start going up until quantitative tightening ends, more than likely. And quantitative tightening doesn't end until there's a good reason to end quantitative tightening. And so it's just been like a brutal market, right? We're like, if Bitcoin goes up, it'll lift the asset class with it. I mean, if Bitcoin goes up, you know, it'll take Ethereum with it. It's just that until there's a change in policy, it doesn't mean that ETH Bitcoin can't go lower. Now, again, you know me.

I mean, I was very bearish on Eith Bitcoin in 2022, 23, and 2024. But it's like my mind tells me, like, I know it's like I can comprehend that it could go lower because quantitative tightening hasn't ended. But it also feels like 0.023 is just extremely low, right? I mean, it's kind of similar to 2019 when ETHBitcoin went to 0.1.7, right? It went to 0.1.7 back in 2019. And that was when I made my first video on my channel, I was like, guys, this is insanely low. And, you know, just like the market can be irrational at extremes to the upside. It can also be irrational to extremes to the downside.

And I think we've entered into that phase. Again, I don't know exactly how much lower it's going to go. But actually, one chart, ETH divided by BTC. So we're looking at the market cap of ETH divided by the market cap of Bitcoin. And if you look at this, you can see that it's getting pretty close to where it was, you know, back in 2019. So to me, it makes sense to think it's probably going to turn around sometime. Yeah.

There's only been one year of total time in which the ratio of market caps has been lower than it is today. Usually, this is an anomaly. It's like something like five or six years of Ethereum's time. The market cap of Ethereum, the ratio of market cap to Ethereum has been. higher than it is today and only one, maybe one and a half years has been lower. Right. If you ignore that one big candle in like early 2018, basically the market cap ratio tops out at around 50%. Right. Anytime the market cap of Eath is around 50% of that of Bitcoin, that's where it tops on its Bitcoin pair. Right. And then it looks like it might bottom around like 10% to 15% or so, maybe 11%. I don't know.

I think from what I remember was like 10 to 15%. And it's already gone to 14%. And look, I don't how much lower it's going to go. I know that, you know, until quantitative tightening ends, it could always theoretically go lower, but, you know, I can't with a clear conscience, like, call for lower, even though, like, my mind tells me like it could. I just think it makes sense mentally to start thinking about it, finding support at some point, and then starting to go back up. And I would look towards quantitative tightening, the end of that. Whenever that ends, I would be much more confident in saying the low is in. There's been this ancient Ben Cowan meme of Heath going home, which is what you've been talking about. Maybe if you were to zoom back out to the early days of the genesis

of the ETH go home meme, at this current price, would you say that ETH has gone home? It's only wicked into the regression ban. I think the issue for me is that it's one of those things we're like, it's absolutely a meme. Because like I wish it would have happened in 2022. I wish it would have. Because I feel like if it had, maybe Eith Bitcoin could have just bottomed back then, you know, like if there had been like a reason for changes in monetary policy to occur. So it's kind of like we're stuck in this place where like if it doesn't go lower into the regression ban, then is there really a reason for the Fed to end quantitative tightening, right? You would think there has to be a scare in the market to end quantitative tightening.

And that hasn't, it sort of happened. I mean, look, technically speaking, and I always say being technically correct is the best way to be correct. Technically, it did go into the regression ban, right? It did wick into it just a few weeks ago after the Bank of Japan raised rates. That was the last several times. That was when ETH went into the regression ban. So technically it has. Right.

Technically it has. It could go lower into the regression amount. I think if it did, it would definitely signal the end of quantitative tightening. So the way I think out of the market right now is this. I think that if Bitcoin goes up from here, then ETH probably won't go any lower in the short term. It'll probably just bounce again off of another higher low. It could go up again, maybe even go to all-time highs. But if there's no change in monetary policy, while ETH Bitcoin could bounce,

it could still just be a lower high. If ETH struggles for a few months on its U.S.D pair, I mean, it could even just go sideways, and the regression ban would catch up to it, right? If ETH could struggle for a little bit longer and causing the Fed to, the Fed doesn't care about ETH, but I do think ETH gives us insight into conditions in the market, right? I think that it would cause that pivot, and then ETH Bitcoin would really start to go up. So it's been this hard thing because, like, you know, I keep saying, well, ETH is going to go home, and then it doesn't go home, and then ETH Bitcoin keeps going low.

So it's like, in order to get what everyone wants, which is alt season, you have to have ETH Bitcoin bottom. But in order for ETH Bitcoin to bottom, you have to have a reason for the Fed to pivot. And we just haven't had that reason yet. So it's almost like to get what we want, we have to go where we don't want to go. Right. You have to force it. Right.

And as long as we're going through hell, you've got to keep going. Right. And as long as we don't go there, it is fine. Right. As long as we don't go there, the market's okay. But it just means that Bitcoin dominance is likely going to go higher. So I think you have to have an event to cause Bitcoin dominance to really macro top out. And maybe you don't really have any crystal ball about the nature of said event.

But I think what you're saying is, like, we are approaching a period of time in which the likelihood of a possible event that would create the end of QT is getting higher as we go forward. Right. But the crazy thing is that, you know, we're in February of 2025 at this point. You know, like, how long is the Bitcoin dominance really going to go on? I mean, it's exceeded my expectations. Yeah. I mean, I did think it would go until QT ended, but I didn't think QT was going to last this long either. And you know what I think is more difficult for the markets right now is not the Eth Bitcoin pair. I mean, the Eth Bitcoin pair, as far as I'm concerned, is already extremely low. I think what still needs to make that same move is the rest of the Ockcoin market on their Bitcoin. So like if you look at a chart, if you just look at total three minus U.S.CT divided by Bitcoin. So like in this case, you see, they are still off of their lows. and I wonder if ETH Bitcoin continuing to struggle is sort of signaling that the Altcoin market will eventually follow suit. Because if you think about like ETH Bitcoin,

market cap ratio is pretty close to where it bottoms, right? It's not like it's that far off. It last cycle had bottomed at like 10 to 15%. It already went to 14. But alt Bitcoin pairs last cycle bottomed at around 25%, 0.25 of Bitcoin's market cap. And they're still at like, you know, a lot higher than that. Now, I think they did wick down to 33%, but I just wonder if that's sort of the missing piece of the puzzle is the devaluation of all Bitcoin pairs. And I think that one of the reasons why Eth has struggled so much is because there's been a lot of malinvestment this cycle, right? People keep throwing their money into a lot of useless meme coins that keep just asymptotically going to zero to Bitcoin. And so it's basically like either people are either buying Bitcoin or they're

buying meme coins and there's not a lot of investment going into things in between. So I think the industry needs to mature. It needs to grow up. It needs to figure out where the value truly is. And then once that happens, then I think, you know, things like the Eith Bitcoin pair will start doing better. But how long, you know, I don't know exactly when it's going to be. I think on the crypto Twitter timeline that I'm reading, the people are growing more and more resentful of the current meme coin mania and people have always been resentful towards meme coins, but that's been buffered by a very willing and interested market cohort of participants that are very into meme coins. But I'm seeing meme coins really grow out of fashion these days, especially with this Dave Portnoy meta,

where people are making comments about how like meme coin charts can't sustain a pump more than eight hours, which like just indicates the fact that like even the people who are left to gamble are just really doing it for the most short term like time preferences. Maybe it's too early to call, like, a closing of the meme coin casino. But I do notice just, like, negative sentiment towards the concept and industry of meme coins. And this also goes along with the idea, like, pump. Dot Fun is draining the hotball of money from crypto Twitter, from crypto in general. You tweeted this out. The market sucks because grifters keep shilling meme coins, which leads to malinvestment and the misallocation of capital. The Fed can't pivot away from quantitative tightening until investors learn to stop pouring money into useless shit coins. The beating will continue. continue until morale improves. I really love these very loose, distant connections between federal reserve monetary policy and the actions of meme coin, the meme coin casino. Like, you're not actually, the federal reserve, you don't think the actual federal reserve is looking at the meme coin. But maybe it's indicative of like the market generally, both inside of crypto and outside of

crypto of those like smart capital allocation. And maybe in some like distant way, the federal reserve is making monetary policy based off of that vibe. Is that kind of what you're doing? Yeah. Like, I'll try to joke sometimes, like, at the FOMC briefings and be like, Powell quotes. And I'll put in a quote right there and I'll be like, you know, Powell will say that Eith Bitcoin can bottom when people stop buying, you know, all these meme coins and stuff. Yeah, I think the idea is this. Like, you know, if there's so many people that have all this extra money to throw them into all these like newly launched meme coins, it's the same pumps for weeks and weeks and weeks or months and months and months, then it just means there's a lot of liquidity and they don't really have a reason to end quantitative tightening. But as you noted, the meme coin pumps are actually getting smaller and smaller, and they're not lasting nearly as long as what we saw back in like 2023 and even 2024. It seems like they're kind of dying over a weekend now, you know, where it kind of goes up for a day or two, and then it just goes right back down. I mean, even the president of the United States launched a meme coin, and it didn't really last that long before it just kind of went back down. So I think that you're right.

Like Powell doesn't care about, you know, the crypto markets is certainly not as far determined monetary policy about it. I just think that the crypto markets, one of the interesting cases for it is I think that it allows us to get some insight into liquidity conditions and what the Federal Reserve might do just based on what the valuation of high-risk assets in the cryptiverse are doing against lower-risk assets in the cryptiverse, right? So like meme coins against Bitcoin. Same idea, right? If you like to get the Russell against the NASDAQ, you can see the same things, even like silver against gold, right? In every asset class, you have sort of the blue chips outperforming the microcaps.

And that doesn't change until monetary policy changes. One of the big outperformers this cycle has been Solana. It has been the exception out of the advanced decline index. Other than Bitcoin, if you held some of your money in Solana, you're happy. You're not really experiencing the negative vibes that the rest of the industry is. Although, if you're a Solana holder, you're probably also a meme coin trader. Those things are probably pretty correlated. You put out a tweet that I thought was pretty interesting comparing the sole Bitcoin market cap ratio to the ETH Bitcoin.

market cap ratio and made this comparison that the sole Bitcoin market cap ratio just looks like ETH Bitcoin was just two to three years ago before it did this like two to three year long decline. What's your general sentiment or take about this old Bitcoin ratio? Yeah, I mean, it kind of reminds me of like what I remember back in 2021 with Eith Bitcoin. You know, I was super bullish on Eith Bitcoin back in like 2019, 2020, 2021 and even early 2022. But then, you know, after a full year of all the craziness and whatnot, it just seemed like it was time for it to go back down. And You know, I think as investors, we lose our way, right? Like, we focus on what we think matters, right?

Like, we focus on Bitcoin, you focus on ETH, and then you focus on Salana. And I have nothing against Solana. But what ends up happening is that people that use those chains, they end up putting their capital into other things that are not as valuable, I think. So, like, could be, you know, EF people then sort of changing it and then putting their money into a lot of meme coins or NFTs, right? NFTs were pretty crazy back then. And then today, it's Solana and the meme coin craze.

Right. And so you can see that when that website launched, by the way, the meme coin website that everyone's using, that's basically when the sole Bitcoin market cap ratio kind of topped out, I think. Like, it hasn't really gone higher since then. And you have to wonder if it's just because of this misallocation of capital once again, where instead of focusing on Solana, people focus on all the meme coins on Solana. And then one of the conversations is that people with Pump. Fund, which is producing 50,000 meme coins a day that measure the Solana economy. is investing into, that pump. Dot fund is generating a ton of Solana in revenue. And then they're just not really having the best relations with the public meme coin casino traders because they're sending all that sold a crack in to, you know, in theory, sell it. And so that's that energy just like coming straight out of the market. Maybe that's exactly what you're referring to. Right. And by the way, the sole Bitcoin market cap ratio, I mean, it could still stay at the highs for a while, especially if QB returns, right? If QB returns, then it's possible that all Bitcoin pairs do well for a little while. So I just think that, you know, when we're looking at...

at the sole Bitcoin chart in 2026, like, there's a decent chance it's back down near the lows. I mean, remember ETH Bitcoin back at the merge? It was so hard to think about it going back to the lows, and now it's here. And now it feels like the same thing for the sole Bitcoin market cap ratio. Like, it just seems impossible for it to do that. I just wonder if when we look at this and say two years, are we just going to find it having followed the same path? In fact, I mean, you don't need to do this, but if someone just overlays the ETH Bitcoin chart, Eith Bitcoin and then sole Bitcoin, they basically did the same thing. They had their major, their first bull market, and then they

both dropped 89%. That's what ETH Bitcoin dropped in 2018. Soll Bitcoin dropped 89% in 2022. Then they had their rally back up, and then ETH Bitcoin then slowly bled back down. So you have to wonder, it kind of seems like Eith Bitcoin could be completing that process. Sooner around the-Bitcoin. So ETH Bitcoin could be completing the bleeding process. Oh, I see.

Oh, I see. Yeah. Yeah. But I just wonder if sole Bitcoin still has to go through that process. And again, I mean, I think, you know, there's people that value different chains and obviously there's a lot of Ethereum maxis. There's also a lot of sole maxis. I'm not here to really say, you know, I don't really want to like point fingers. I'm just saying that like, you know, everyone loses their way at some point, right? Every chain loses its way at some point. They focus on what doesn't matter. It doesn't mean the chain is dead, right? I don't think Ethereum is dying. Just like if Solana Bitcoin goes back down to the range lows, it doesn't mean that it's dying. It might just mean they need to focus on what matters again

and not just focus on meme coins. Because I think the meme coin market, it's getting to be a fairly tired narrative. I saw a tweet the other day where it said that I think like 50,000 meme coins were created in a single day. And what I find interesting about that is that there were more mean coins

created in that one day than were created from 2009 to 2021, right? So it's just getting harder and harder for even the people in the trenches, as they say, to do well. Because there's just so many different meme coins to choose from. And so how do you choose?

Yeah. Yeah, here's that tweet. 52,543 tokens were launched on Pump. Dot Fund yesterday. Now, granted, this doesn't mean any of them are capturing any amount of market cap. Right. But only a few of them really has to do even just like a smidgen of good performance to really actually, like, accrue a bunch of value on an aggregate basis day and day out.

Yeah. Yeah, no, it's that whole thing is just, it's too much, I think, for the market. And you can see that the Salana Bitcoin valuation is kind of reflecting. Right. I think it's not happy with the same. state of things, and that's probably the reason why it's struggled to go higher. With over $1.5 billion in TVL, the M.Eath protocol is home to M.Eath, the fourth largest ETH liquid staking token, offering one of the highest APRs among the top 10 LFTs.

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defy lending experience, it's time to check out the brand new app at app.morpho.org and experience the future of on-chain lending today. So, Ben, if you think that the ETH Bitcoin ratio is not going to go up until QT ends, and the Salana Bitcoin ratio is looking pricey, Bitcoin itself is pricey because it's the one thing that has meaningfully outperformed all of everything else in addition to Solana, then, like, where do you see value in this market? Or do you just see value in stable coins and stable coin yield?

Like, it doesn't really seem like anything in this market is really particularly cheap. Maybe ETH is cheap just because it hasn't done any sort of, of price appreciation in two years? Yeah. I think that it depends on what you value your portfolio then, right? If you value it in Sats, if you value it in terms of ETH, right? Way or whatever. If you value it in terms of U.S. dollars, right? What do you value it in terms of Sats? If you value it in terms of U.S. dollars, I mean, ETH is so relatively low, relative to Bitcoin. I mean, if you think about like Bitcoin's at 100K and ETH is not even above

3K right now, like that's kind of crazy, right? I mean, but there could be, I mean, again, there could be another flush down. I know, I came on your channel, what, like, late last year. Four months ago, yeah. Yeah, four months ago. And I remember saying that, like, I thought Eath would get another capitulation. And it could happen as early as Q4. And it didn't, right?

And the reason it didn't was because Bitcoin went up and lifted ETH with it. And then the minute Bitcoin stopped out, ETH, you know, it crashed again. So I do think that ETH is relatively cheap with respect to Bitcoin. If you run a modern portfolio theory simulation, like a Monte Carlo simulation for, like, a portfolio of like Bitcoin, ETH and U.S. dollars. Right now it says the optimal portfolio that maximizes your sharp ratio is like 58% Bitcoin, 12% ETH, and 30% U.S. dollars. So that basically allows you to like, you have Bitcoin in case dominance keeps going up,

right? And if ETH Bitcoin just keeps going down because QT hasn't ended, you have Eith in case QT doesn't at any point. Or if ETH Bitcoin gets a nice bounce, then you have that. It's relatively low. It'll probably go back up at some point. And then you have U.S. dollars in case, eat goes home. I mean, I think you could look at it and say that it already has. Like, I think you could make that case, but like, it doesn't always necessarily feel the fairest to say that because it's like it's still at like 2,500. Like, it's not, it hasn't really gone that much lower. If you think about it, I mean, it's still kind of at the same price. So I would kind of think about the market like that. I mean, as far as, like, I don't really find any value in the meme coin market.

I'm not saying they can't go up, but if you look at like the others divided by Bitcoin chart, I mean, it just keeps going lower. Right. People call this like the meme coin super cycle. But if you ask any meme coin supercycle guru to explain the others divided by Bitcoin chart, what are they going to say? It just keeps going lower every few months. And that's also reflected by the ADI going lower every few months. We started this video about. So, I mean, there's other ways you can invest in the market, right? If you're looking beyond Bitcoin and Eath and you want to look other places where there's low expense ratio of index funds, right? You can hedge with that, like the stock market, right? Because I mean,

the stock market generally does better in crashes than crypto. And it does generally go up over time. There's also other things like precious metals, but the downside with precious metals is that they tend to underperform risk assets over a long enough period of time, right? They can outperform during certain times, but they underperform over long period of times. If you're a pessimist, obviously, you can buy bonds, right? As the saying goes, optimist buy stocks, pessimists buy bonds. So there's definitely ways that you can diversify. I do think ETH is relatively at low valuations against Bitcoin. And by the way, I don't want to say definitively that QT has.

to end for ETH Bitcoin to bottom because sold Bitcoin bottomed and QT never ended, right? Like, I don't want to say that it has to be that. But sold Bitcoin bottomed maybe in part because of just the oversold nature gross FTX. So there you could count that to be just an anomaly. Exactly. I think it pulled forward its Bitcoin losses. And the rest of the crypto market did not. I think the FTX collapse.

I think you said it. I couldn't say about it than what you just said. I mean, that's exactly what happened. But again, I mean, there's other things that have done similar things, right? I mean, even there's other altcoins that have had really good rallies recently. They had like a nice bottom on Bitcoin and then they got a really big rally. So I don't want to imply that it has to wait until that. I do remember in 2017, Eith Bitcoin bottomed actually December 2016, but Eith Bitcoin was still weak until March of that year.

Right. The Eith Bitcoin valuation did not get above its 20-week SMA until March of 2017. So it's important to remember that like even though 2017 was really bullish for Eith Bitcoin, it didn't even start moving really until March. So again, there's a lot of ways to think about it. I feel like if we're doing this video in, let's say, a year, I feel like there's a good chance eat Bitcoin will be a lot higher than today. If we're doing it in a month, it's like a toss-up, right? I don't really know. But that's the way I think about the market. And one last thing, it kind of goes back to the whole Bitcoin dominant stuff, right? Like Bitcoin seems expensive, right? Because it's been the

one going up. But there is a reality that, and I think a lot of people have learned this the hard way. I've learned it the hard way many many times in the past is that oftentimes assets that are going up are more likely to go up than assets that are not, right? So a lot of people will like trade the thing that's going up for something that's going down because they think that the thing's going down is going to catch up. And then it just keeps not catching up. And then you keep seeing things like, you know, like how many years now have we seen Nvidia outperform the Russell, right? People keep thinking Nvidia looks expensive and it just keeps on going higher and the wrestle keeps bleeding to in video. So I think that's kind of the dilemma that we've been in. Again, all we have to have, I think, is a big pivot in monetary policy to give that change. And one more thing. I know I'm rambling. This is great. No, I'm loving it. Last cycle, there's more monetary policy than just QE and QT, right?

There's also rate cuts. We did get some rate cuts. So last cycle, Eiff Bitcoin did bottom shortly after, like, the first rate cut. But then it double bottomed after the second rate cut. But what I think was important back then was the ratio of rate cut. So if you look at when it truly started going up, Eith Bitcoin is started going up after 75 basis points of rate cuts. But the terminal rate back then was 250 basis points. If you apply that same ratio to the terminal rate today, that would imply that you need about 165 basis points of rate cuts. So far, we've had 100. So that could be another thing. Maybe we just need a couple more rate cuts to get there. Look, I don't know exactly where the bottom is. Calling the bottom is a fool's errand because who knows, right? But I think Eith

Bitcoin is undervalued. And I think it's because quantitative tightening is the last far longer than any of us imagined it would when it began in 2022. So what do you think about Lynn Alden's concept of fiscal dominance, where, yes, QE and QT definitely matter, interest rates definitely matter, but also what Donald Trump really wants also matters quite a lot. And since fiscal debt and fiscal spending is such a larger part of the market today than it was historically, then really what Donald Trump does with fiscal spending more than monetary policies really matters here. And so I've done a couple of macro shows lately. And both macro commentators said that what Donald Trump wants is lower long-term yields,

so a low 10-year treasury, a low 30-year treasury, and also a low dollar. And why does he want this? Well, Donald Trump, he is a real estate investor. What does real estate investors want the most? They want low long-term yields because that allows them to get leverage on their real estate. And then also, he's the president of the United States. He wants to bring jobs back home. He wants to make America great again.

and having a low dollar, in contrast to other currencies, helps dollar exports, because it allows foreign countries to buy more of the United States locally manufactured goods. So, therefore, we don't know how he's going to do it, but we trust in Donald Trump's incentives that by the end of his term, he will have figured out how to make the 10-year yields low, and he will have figured out how to make the dollar low. Is this aligned with your macro analysis, and how do you think this might impact the crypto markets?

Yeah, you could absolutely argue with fiscal dominance. I mean, like, fiscal dominance, even like the money supply, right, overall, but just spending it in general, you could argue that that's a better reflection of where valuations go on their USD pairs, right? ETH Bitcoin has sucked for a while, but ETHUSD has been trending up since 2022, right? So that stuff, I think, has been tracking that a lot closer. It's the QTQE that helps us figure out where all Bitcoin pairs go. I almost wonder if what Trump is doing right now, I mean, he's a smart guy, right? He's like a business guy. He knows how the business cycle works.

I mean, he's been in real estate, right, forever. He knows how the business cycle works. You have to wonder if, to some degree, I mean, you know, he's obviously trying to curtail spending here in the short term. We keep seeing headline after headline after headline as to they're cutting something in the government somewhere. I do wonder if he's just trying to make sure that inflation is not the same narrative for his presidency as it was for the last one. And he even said just like a few days ago that he wants to increase the labor supply and reduce aggregate demand. and that will help, and that's the reality, right? That's how you do it, is you have to reduce demand.

But how do you reduce demand? Asset prices have to go down, right? And that's what has to happen. So, look, I think the sooner that that kind of stuff happens in his presidency, the easier it would be to just blame it on the prior administration, right? You know, like they handed him in an unemployment rate that's been going up for a while, or we had an inverted yield career for two years. It's not like it's out of left field if you have, you know, a quick downturn

the economy. In fact, when Reagan took office in 1981, the economy went into a downturn for a few months, and then it picked back up and went up for years after that. Nixon, when he took office, the markets went down for a little while, right? So it's not like it's not unheard of for that stuff to happen. Sometimes you have to have a little bit of pain to then set yourself up for the next decade, right? So, yeah, I think the fiscal dominance has played a very important role this cycle. I mean, I'll defer to Lynn Audit on that. I know she's been a lot more vocal about it. than I have. But I do think that Trump does want lower 10-year, like you said, lower dollar. All that's really important. And I mean, who doesn't want that, right? I mean, that would help a lot of people

if we could get to that. The problem is that the Fed does not control the long end of the yield curve, right? They don't control it. And if they pivoted too soon, it can actually send the long-in higher, which is exactly what happened after they pivoted in September. So I think actually Trump is correct. You have to increase the labor supply, reduce wage inflation, and lower aggregate demand. If he can do that, and you could theoretically do that without a recession, right, if you just can slow things down to make it so that things are just screaming higher constantly. Or if you just slow things down for a little bit, I think it could help get things into a better balance, and then we could hopefully pick back up where we left off. But I think right now we'll have to see what it is,

because he's also been talking a lot about tariffs and stuff too. And tariffs, unfortunately, are theoretically, they are inflationary, right, if all that's just passed off to the consumer. One of the conversations that's going around in the crypto space is despite the bad vibes, there seems to be just an incredible fundamentals set up for the crypto industry at large. One being we have the most pro-crypto administration that we've ever been able to even dream of in office. It's more pro-crypto than our wildest dreams like two, four, six years ago. So that's happening. Exactly. The macro environment, while the stars have not yet aligned, there does seem to be stars that are.

aligning in the future. And then also there's just some fundamental real growth technologically wise inside of the crypto industry. And so some investors are noticing this dislocation between the vibes of crypto and the fundamental setup, the bullish setup for the environment that crypto lives inside of. Do you align with this kind of like belief about the dislocation or do you have a different take? It's kind of like the markets do what you don't expect, right? Like, I mean, in 2023 and 2024, we had nothing but regulation, clamp downs, right? the SEC suing everybody, and the markets just went up during that time. Now it's almost like the opposite. Now it seems like we have the perfect environment, and the markets aren't really

reflecting that, right? Bitcoin topped at 109. I'm not saying it's the top, but it mean, it hit that top at 109 literally hours before Trump took office. And it hasn't actually taken out that high yet. And what I think happened is basically like everything good got priced in under the sun before he took office. And now the market's waiting and trying to figure out do we actually get a strategic Bitcoin reserve, right? And if we don't, then I think there was a little bit of de-risking ahead of that because people are like, well, is it going to be a strategic Bitcoin reserve? If we do get one, are there going to be other things in the stockpile as well?

Obviously, later this year, if it turns out they do a reserve, and then it turns out there's other cryptocurrencies in the reserve as well. That could be a good narrative for why Bitcoin dominance could go down. But I also think that you have to have monetary policy aligned with it, right? If you get QE, then it's easy to find the narrative. It's just that until quantitative tightening ends, like the narrative is kind of stuck, right? It doesn't really have legs

until the monetary policy supports it. So, yeah, I mean, hopefully we can get out of the slump that we're in as the year goes on, and crypto can, especially everything that's been bogged down for the last few years, can start picking back up. But I think in order to get that, you have to have exactly what trumps that, right? You have to have lower demand and higher labor supply.

And, I mean, honestly, I think that would overall be a really good thing. I think we kind of go really far in the extremes, right? If you have really high inflation and you have really low unemployment rate, really high wage inflation, you know, if people feel like they can just go get rich, I'm not saying they can. But if they feel like they can get rich by trading mean coins in the trenches, then it's harder to find workers for like jobs that provide real utility and not fake utility. So I think sometimes we just got to get rid of the excess, like the extremes. And then it actually is a good thing for the industry because then the useful projects can then grow.

and not just Bitcoin or occasionally meme coins, but then they still go, they still just bleed back down. Maybe one last conversation for you, but back on the crypto-native side, we talked about the just sheer amount of dispersion due to meme coins, right? 52,000 meme coins printed by pumped off on one single day. How can there be any sort of just like price go up,

number go up for the whole entire industry when so many meme coins? There's just so much supply, so many supply of assets. But also, not many meme coins actually do make it to the top 100 list of coins. And so the total crypto market cap, even if a meme coin is successful, and it goes to like a $1,10, $100 million market cap, it's still not breaking like the top 500 of crypto tokens. And so the actual market cap of the industry is really defined by the size of the top 100 coins. And the new introduction of coins into that part of the market are a lot of these very well-funded VC-backed protocol tokens, like barra chain.

just launched. Move just launched. Monad is launching soon. Celestia launched a little bit over a year ago, like this category, right? New tokens, which as far as the average crypto investor goes might just be perceived as like another game at the casino. If you're a financial nihilist and you think crypto is just a casino. But nonetheless, like, this is actually where a lot of real new capital is coming in or being created is because of the market cap of these new coins. And there's also a bunch of supply of those. Like the whole, like, I'm going to build. the chain, the meme of not another layer two, so many like VC back startups, right? And so there's different kinds of dispersion. There's 52,000 new coins being minted a day by Pumpdot fund, but very,

very low market caps. And there's like, you know, some very large multi-billion dollar protocol being launched at least once a month, maybe once every two weeks. And that actually is representative a lot more total market cap coming into the industry, but also a lot of sell pressure, right? Because VCs want to make their exit. How do you think about it? How do you think about it? about this part of the barbell of the market, the more of the high market cap introduction of new coins. How do you think this impacts market structure? I mean, I think there's, correct me if I'm wrong, because I haven't followed it nearly as close as you have, but I don't get the sense that there's been nearly as much interest in that part of the market as there was last cycle at this time.

Yeah, I totally agree. Yeah. Which results in sell pressure into the market where there's just not a lot of buyers. Right. So like people that are trying to create some type of utility or that, look, I mean, you have Bitcoin maxis that will just say that it's Bitcoin or nothing and that everything is going to zero, right? And then you have people on the other end of the spectrum that are just kind of in the trenches, trading meme coins. It kind of feels like we moved away from anything in between, you know? And there are people out there that are trying to actually build value in the crypto space. And it's got to be hard for them, honestly. Like, I don't envy them because it's got to be hard because you pour your blood, sweat, and tears potentially into developing something. And, some meme coin that launched on pumped out fun just outperforms you on a Tuesday, you know, that your entire lifetime gains, of course, pumped off on it and it gives it back, but it's got to be just demoralizing as a developer to see that kind of stuff. And so it, frankly, it really discourages innovation in the industry because it's not being rewarded in the way that it was rewarded in prior cycles.

And so I really do feel like this cycle, we've kind of lost our way as an industry as I mean, Bitcoin's doing fine. I mean, you know, Bitcoin is doing what it always does. But everything other than Bitcoin, I think the industry kind of like lost its way for a little while because investors just decided to flock to the get rich quick stuff rather than like let's actually try to do something. And again, like there's a lot of projects that say they're actually trying to provide value, but they're not really providing value.

It's like they're finding a solution first and then they're creating the problem. Like they're finding the problem that, you know, goes with the solution they found. But I do think that the industry is bigger than Bitcoin. is definitely easy to be in the Bitcoin maxi movement with Bitcoin dominance just in this macro uptrent for several years. But it's important to remember you did the same thing last cycle during similar types of monetary policy

and the market conditions will change eventually. I think that for the people sort of in the middle of that barbell, I think that they would probably benefit the most, actually, from lower asset prices, honestly, because that would then allow the froth and the excess stuff to die. And then it would allow us to focus on what truly matters. But it's kind of hard because as long as the asset class just keeps going higher,

those things can still underperform. So hopefully, I guess the issue is that if the four-year cycle holds and we have another bear market, let's say, in 2026, kind of like, you know, 2014, 2018, 2022, then it's just, it's not leaving us with as much time as we normally would have. So I hope that the cycle can sort of figure itself out before 2025 is over. But also, I have high hopes that maybe next cycle will sort of revert back to more important things. And I can be hopeful that the meme coin market won't be the only

narrative. Who knows? Maybe it will be the narrative next cycle too. And I'm sure you would love to see it more than I would, honestly. I mean, just the focus on, you know, what actually matters and building the industry up, I think you're a lot more well-versed and educated on all these projects that have been popping up than I am. And I'm guessing it pains you to see a lot of these projects pop up and not really gain any traction because everyone just wants to focus on meme coins instead. Yeah, yeah, I'm working on an agenda for a podcast that I may or may not schedule.

I haven't figured it out yet, but the first question to the theoretical panel of people that I put together is about how the discourse on crypto Twitter is how crypto has lost its way, which is exactly the verbiage that you just used, like to focus on the meme coin casino. Many people, especially in the Ethereum community,

is like, well, the cypherpunk movement is dead. We are no longer building cypherpunk values. We're doing something else, which is definitely saddening, but also this is also just what evolution into public mainstream looks like. As the revolution grows, it also gets a little bit dampened. It gets moderated. You talk about, like, well, maybe this cycle wasn't it, and maybe we can try again next cycle. But when people talk about this cycle, I have mixed feelings about that because to me, especially as an eth holder, it feels like this cycle just never really happened.

The cycle definitely has, is ongoing for Bitcoin. But you can really. really cite it towards the Donald Trump election. Granted, maybe 2020 was all about, you know, the fact that we did print a bunch of money. So maybe the cycle happened for Bitcoin, but for downstream of Bitcoin, and as the ADI index illustrates, this cycle just didn't really happen. And I don't really have a question here, but maybe the question was really just like, did that one count? Does that count as a cycle? Like, are we in a cycle or are we just waiting for the next one to start? Well, one thing that's important to remember is that, like, in 2017, the true alt season that people remember from 2017 didn't start until November.

like all Bitcoin pairs that chart that we were looking at earlier like total three minus US T divided by Bitcoin it was at point two five in November of 2017 and so you could argue that it could still happen like all that people have dreamed about and everything you know for a theory on this cycle it's not like it's impossible for it to happen there's still but you know nine months 10 months left in the year it's just that if it does happen it could be a lot more compact than what people were thinking it was going to be. You know, I mean, when Eith Bitcoin moves, if you look at the chart, it's just vertical. You know, I mean, last cycle, it did kind of slowly go up. But, like, if you look at like 2017, when it really went up, it just goes up over two to three months and it

leaves everyone behind when it goes up. And we've seen a lot of Alkcoins do that recently. I mean, I don't want to go through them, but we've seen some altcoins go through a similar type of pattern. So I get what you're saying, right? Like, it feels like it just never really happened. what I could see happening, one potential outcome. I'm not married to this outcome, but one potential outcome I could see is that, you know, Trump gets what he wants, he increases the supply of labor, he reduces demand, it causes lower asset prices sometime later this year, everyone gives up, then QE starts, then you get your, you know, the rallies in kind of the stuff that's been burdened for so long by QT. And then, I mean, again,

it could easily take things. Eve could still go to new all-time, high, but then you could still easily have sort of like a bear market in 26 when we normally get bare markets. That's why I was saying, like, I mean, I think when all this stuff started, even if you believed in the QT narrative back in 2022, I don't think a lot of people thought it was going to last this long, right? You know, I thought Bitcoin dominance could have topped as early or as late as January of 2025, but I also would have assumed that QT would have stopped by them. Because QT hasn't stopped, I'm like, all right, well, it could go higher. So I get the sentiment that's been my concern too, is like the longer that it goes on for,

it just doesn't really leave as much time for the rest of the industry to get that move, especially if we're going to operate deterministically, which maybe we shouldn't do. But if we are going to operate deterministically and say there's going to be a bare market in 2026, then it just doesn't leave as much time to do that. So something similar happened actually in 1980, 1981, there was sort of like a brief drop in a recession, actually. It was a recession, a very brief one.

The market didn't really drop down much. It was like 20% or something. And then there was a big spike up. to a new high, and then there was another recession. I was like back-to-back recessions. That's what Volker did to get inflation under control. But the low in the second drop was still a higher low compared to the first one, right? So like it could be ETH going to its regression ban, getting a pop up to a higher level at some point, hopefully this year.

It could even be in 2026. I mean, in 2018, the all-time high for Eith was actually in the bare market year, right? And then maybe it bleeds back down, but it just goes back to the regression ban. and then continues to put in higher lows and then builds off of that into the next cycle, right, into the 2027, 2028, 2029 cycle. But yeah, it's been a brutal cycle

for E-P Bitcoin. I do think if you look at the chart, objectively, it seems like it's getting pretty low. I don't want to call a bottom, but, I mean, it seems like it's getting pretty low. Ben, this has been incredibly insightful and I feel very well-informed post this. You give analysis like this quite frequently

with your company into the Cryptoverse. So if people thought that this was particularly helpful, if they like the sound of your voice and they want to hear more of it. Where should they go? Tell them where they can find you. Yeah, into the cryptobverse.com. We've got a ton of charts. And the cool thing is we got a lot of ETH charts, right? I think a lot of people look at like the on-chain stuff for Bitcoin. We have all that stuff for Eith and a lot of all coins as well. Ben, really appreciate you spending time with me today. I appreciate it. Thanks for having me. Bankless station, you guys know the deal. Crypto is risky. Eith, BTC is risky. We don't know what happens next. We like to talk about it, but none of this was financial advice.

We are glad you're with us on the bankless journey. Thanks a lot.