The Breakdown - The Shorter Cycle Theory With Larry Cermak

Episode Date: June 19, 2021

The idea of a multiyear supercycle is fading as shorter cycles take their place. In this episode, NLW and guest Larry Cermak, director of research at The Block, discuss the transformation of the supercycle timeline as the crypto space evolves. The discussion includes:   An analysis of the macro-narrative and the current “wait-and-see” mode   Shorter cycles taking hold as the crypto space matures The larger institutional narrative promised a bevy of substantial allocators to contribute to the market. That narrative, however, has weakened over time as the promise falls short. Add on the uncertainty from China’s partial ban on mining and Tesla’s environmental concerns, and the narrative continues to lose momentum. What narrative will take over next? When will this “wait-and-see” mode end? Historically, crypto was perceived to fall into semi-stable cycles. For a couple of years, prices would rise, and for the next two or three years after, prices crash. However, with longer-term investors and a broader focus on usability over speculation, is there now a foundation for a more stable market with shorter cycles?  -- Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins & more. Get started at nexo.io -- Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW   The Breakdown is produced and distributed by CoinDesk.com

You know, it becomes harder to argue that it is a Ponzi scheme and a massive bubble. When time and time again, it has gone up and gone up more. And the people that keep holding long term are the ones that are better off than before. So I just find it very unlikely that it's going to take another two, three years for people to be convinced to jump in again. And mainly because a lot of these macro investors and long-term investors, they're holding long-term. They're not interested in just flipping.

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexus.a.o and BitStamp and produced and distributed by CoinDes. What's going on, guys? It is Friday, June 18th, and today I am super excited to share a conversation with Larry Sermak. Larry is the director of research at The Block and is just one. one of the most thoughtful observers of the space out there. One of the things that has been on everyone's mind is, is this bull market actually done? And part of why it's been on people's minds is that they had some idea that we were in a super cycle. Now, I've talked about the super cycle

before and what I think is a misperception or mischaracterization of it as meaning up only. Today's show talks about what I actually think the super cycle theory is, which is really about shorter cycles. The idea is that there has been a break from the long, multi-year bear market followed by a bull market prompted by the halving sort of cycle that we've observed the last couple times. Instead, we may be moving into something where there are multiple different types of catalysts where bear and bull markets rotate on a matter of months rather than a matter of years. Larry and I get into why that might be, and in general where he thinks the market is right now, and what makes it different than the last cycle.

It's a really fun little conversation for your Friday, so I hope you enjoy it. Larry, welcome to The Breakdown. I'm super excited to have you here. I'm really excited to be here as well. Hopefully it's going to be fun. Nah, it's going to be fun for sure. So, okay, so what we're here today to talk about

is cycle theories, super cycles, shorter cycles, I don't know, whatever type of cycles we want to name and give a catchy name to. But let's start, I guess, with just, you know, You've been tweeting a little bit about people asking you where we are in the markets. And you basically throwing up your hands and saying, I don't really know, but here are some observation. So let's start there. I mean, where are we in the market cycle?

What have you observed? Like kind of what is your mental model of what's happening right now? Yeah. So, I mean, you kind of nailed it. Really, I have no idea. And I think this is like a first time in a really long time where I have, I really admit that I have no idea. Sometimes I think I know and I'm totally wrong. But now I actually think I don't know.

which I think is somewhat unusual, but basically the way I see markets right now is that there's a lot of uncertainty and a lot of things that haven't been figured out. And because of that, I can see markets going both ways or just staying the same kind of thing that they've been what they've been doing for the last couple of weeks. And the reason is, you know, basically there started to be some sort of weakness, right? Like the entire run last year started on the institutional narrative. You had micro strategy start allocate some money. Initially, people didn't think that was such a big deal. And now, you know, then that evolved into Square as well. And then Tesla.

And when Tesla finally allocated, the markets just exploded. And that made sense. You know, it was a significant company. Didn't really dabble in crypto and Bitcoin before. And ever since then, we've been kind of like waiting on the sidelines. And we've been talking to, you know, Coinbase, Nidik, the largest allocators. And they've been telling us, you know, their companies on the sidelines, they're going to come. It's a lot of them.

It just takes a long time. And everyone has kind of been waiting for the last six months and nothing has really come out of it. And so that narrative has gotten, you know, slightly weaker. And then on top of that, like basically all the retail indicators that we've been watching, ever since Tesla news, every retail indicator in the world has gone up. And it has continued to go up until about, you know, three or four weeks ago. And then now it's started to go down again. And it's decreasing. And, you know, it's just showing that people are obviously leaving the regular retail people.

And so now we're in this weird market where there's a lot of uncertainty about, you know, more companies allocating. Retail people are leaving. And just because there's less, you know, less demand to buy, it seems like, you know, the market is kind of like going up and down. And then on top of that, you add this uncertainty from China, then you add this like mystery of what will happen with El Salvador. And it's just a market where, you know, Elon can tweet something and Bitcoin will go up by 5%. Another country in Central America can, you know, do something similar to El Salvador, and we go up 15%. Then China can, you know, announce that they're completely cracking down a mining, which they've kind of been doing. And then they're cracking down a leverage and trading.

and we can go down again. So I just don't know. I think there can be a lot of things that can happen. And I think everyone who's right now using a lot of leverage and betting on either side is kind of silly because I really, really believe that no one really knows. I feel like the sort of inarguable thing is that we have a total momentum stallout. And no one is willing to step into the void with like even if it's just some sort of, of attempt at a narrative. You know what I mean? Like there's no one who's saying, this is the reason that new people are going to come in right now. I mean, El Salvador sort of creates the beginnings

of a possible narrative, but there isn't, there isn't, I mean, you know, companies like Nidig to like to your previous reference, like Coinbase, they're not out there screaming, just wait another three weeks and we've got more crazy things happening, right? It's kind of just like, there's not a reason for people to jump in right now. And so everyone's kind of in wait and see mode. Exactly. I think that's totally right. And I think it was kind of similar with micro strategy early on last year when people were like, you know, maybe this is just one crazy guy, you know, and then it evolved into something more. And I think that similar can happen with El Salvador. But for now, you're totally right. I mean, there really isn't anything that's kind of pushing the market up as it was before. And the strongest narratives are right now, I think, at the weakest, especially when Elon is kind of going around and screaming about, you know, the environmental issue. and then a bunch of other things. So I think that's totally right. And I think we're probably not going to find out for some time.

And that's why a lot of traders are just taking breaks now because they're just expecting this to take some time. But yeah, we'll see. So you are obviously one of the best out there at watching the signals inside the crypto markets. But how much do you think this has to do with larger macro unknowingness too? It feels like there's also kind of simultaneously this weight in C mode as it relates to Fed policy, to monetary policy, and questions of how long they can sustain zero interest rates and asset buys

and things like that. Do you think that's factoring into it at all? Oh, absolutely. And we've seen that with gold, like basically breaking down over the last couple of days, slightly, silver has gone down. A lot of commodities are crashing over the last couple of weeks. So it's not just Bitcoin in this weird state of things. And then, You know, I really believe that over the last two months, it was a lot of retail pushing the prices up, which wasn't the case before, you know, last year and then early this year. And now because the retail has started to kind of leave and then, you know, macro is in a lot of uncertainty. There's a lot of volatility in equity markets as well. Yeah, I think you're totally right.

We're probably going to find out at some point in the next few months. But for now, everything is kind of an uncertainty. and it's no different for Bitcoin and the crypto markets. Yeah, I mean, there's also the much more basic it's summer and everyone just wants to be outside again, a thing going on too. But so one of the things that I wanted to, you know, I saw a bunch of your tweets and this is something that you and I kind of chatted about. But I want to talk about what this cycle is, how this cycle is challenging our perception or our thinking about the cyclical nature of these crypto markets. So I guess just for a little bit of setup, you know, how would you describe for someone who hasn't been here long, maybe who got in over the last, you know, six months, nine months or something like that, how would you describe kind of the previous perception of what the larger crypto market cycle was? And then from there, we can talk a little bit about how this cycle has challenged that. Yeah, absolutely. So, I mean, previously, even before this year, you know, crypto has been in, has been kind of performing in cyclical nature. And what that means is that, you know, for a period of time, usually like year and a half, prices tend to go up. And then there's a correction that usually crashes prices by, you know, 70, 80% for the next two, three years. And then we go again. And there's this notion that, you know, as more people join,

and as more people find out about cryptocurrency and Bitcoin, especially, you know, some of them stay, but some of them kind of get discouraged by the volatility. And then we just keep going in these cycles where for a couple of years we go up and then for two, three years, we go down. And my theory for this market, for what we're seeing right now, is that it's not going to be, the cycles are not going to be as long as they have been. Like, you know, basically the drawdown that we've had from early 2018, until basically, you know, last year, it was basically three years.

And that seems quite unlikely right now for multiple reasons for me. The main one being that the infrastructure and the space has just gone much more mainstream than it has before, now you have these markets. They're incredibly liquid. You have a lot of institutional buy-in. And these are not people, at least as far as I can tell, these are not investors that are investing with short-term mindsets. These are investors investing with long-term macro mindsets. And, you know, so you have a buy-in from them. Now you have a country that has

made this a legal tender. And, you know, everything has gone so much forward since the last two years. And it seems like, you know, now Bitcoin and crypto overall, it's just much more focused on actual usability versus just speculation. And it just seems very unlikely to me that all of a sudden, you know, we're going to forget everything that has been done over the last two, three years, all the new, you know, all the new derivative markets, all the new liquidity that has come in, and all the new infrastructure. And we're going to take another three years to hibernate and, you know, build new stuff and attract new people.

And another thing that I think is worth like mentioning is that when we look back to 2017, the notion of that, you know, Bitcoin basically was a scam or there was a Ponzi scheme was so strong. And a lot of people thought it was a massive bubble. And, you know, it becomes harder to argue that it is a Ponzi scheme and a massive bubble when, you know, time and time again, it has gone up and gone up more. And the people that keep holding long term are the ones they're, you know, better off than before. So I just find it very unlikely that it's going to take out two, three years for people to be convinced to jump in again. And mainly because a lot of these macro investors and long-term investors, they're holding long-term. They're not really interested

that much in just flipping. And so I think that's the main reason. But I'm curious what you think as well. Well, so I think that you're right to like actually go back and look at comparison points to 2017, 2018 in terms of where the last bull run ended. A couple of things that stand out to me. And broadly speaking, I completely agree with you. It's why I wanted to have you on the show. So first, I think that we, because Bitcoin had such a major run-up before, I think that we perhaps misremember why there were obviously lots of people who were coming to Bitcoin specifically and getting excited about Bitcoin specifically. But there were also a shi-load of people who were just buying Bitcoin so they could get in on crappy ICOs. You know what I mean? A big part of the

bid up of the price of Bitcoin was that there wasn't $100 billion of stablecoins out there that you could use to enter these shitcoins. You know what I mean? Like you had to buy Bitcoin more or less to, I mean, you could buy Ether 2, but Bitcoin was the trading pair. And so that was a huge force. And so a lot of those hands who held Bitcoin, they weren't convicted about it, right? They didn't have the same sort of theories or whatever. Certainly not exclusively. I mean, tons of people came in during that cycle and got really into Bitcoin. But I think one, to your point, there is, is a much stronger raise on debt, right, for Bitcoin. And the people who have come in have a stronger conviction about it. So that's one part. Part two is just capital left in the system,

right? When ICOs crashed, it was a total wipeout of absolute vapor. You know what I mean? And there is certainly some of that, I mean, a lot of that in, you know, the dog coins and things like that that I think will be similar dynamics. But you really can't look at the crypto landscape in terms of where capital has been allocated. And, see it the same way. So many, like, meaningful projects have raised a ton of money to build teams, their longer term. Also, a lot of those teams have the experience of having lived through that, and they're doing treasury management differently, right? Like, that first time, I remember being around in 2017, 2018, and, like, everyone felt like, like the most brilliant Warren Buffett

investor ever for how, you know, how rich they had gotten so fast. And they didn't think about moving to less volatile assets for their treasury. They didn't, you know, know what I mean? Like that I remember treasury management conversations just barely starting in like May of 2018 when the it was already way over. You know, so the thing is I think that how that contributes to this sort of idea of shorter cycles is if you have more more kind of intention, like the money that has moved into the space, the people who have been around a long time have higher long-term conviction, one, that's going to buffer things because it sets price floors and all that sort of good stuff. But two, you know, if you have teams who are building things, particularly in like the

DFI space, you know, around layer two in Bitcoin, whatever, whatever it is that they're building on that have capital to weather storms, they create the next round of reasons to be excited to bring new people in. You know what I mean? And if they don't get wiped out, which I don't think that they are, you just have, you know, so much more actual capital to kind of drive into the next thing. I mean, there was really a very long-term. dearth of capital. You know, it was just watching hedge funds fall. So I think, yeah. So that kind of broadly, I think those two things are really different this time. Looking for the best way to unlock your crypto's liquidity, nexo.io is exactly what you need. Borrow against your digital assets at just

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Visit bitstamp.net to learn more. BitStamp for all the ways we crypto. We talked to a lot of institutional investors at the block, right? Like our main product is to, is the block research. And we talk to a lot of traditional companies, you know, traditional VC firms, traditional private equity firms, hedge funds. And, I mean, everyone would be quite surprised about how much capital there is on the sidelines still waiting to be allocated like right now.

And that includes even the crypto VC firms right now. Like I remember 2018 early on, the crypto VC firms like almost went out of business. Like they ran out of money really quickly and then had to do raises. Right now, everyone still has a lot of flat of capital. All the VC firms and all the raises that I've seen recently over the last like month or something, they're not having trouble raising at all. So I mean, that I think is also a massive difference. And I'm glad you brought it up that there's just.

so much capital and so many teams building, and those teams will, like you said, start these new waves of interest. And I think, you know, one of them will be the L2's only theorem. I think that it's going to be an important development. And then, you know, now it seems like there's also some wind blowing for the Lightning Network as well with El Salvador. So I'm curious what will happen there as well. But there's clearly a lot of development and a lot more focus on actual usability versus in 2017. It was all vapor, like you said. And now, of course, there are the dog coins and the meme coins, but no one really took that seriously. No one really thought that that was going to lead anywhere, whereas now you actually have legit projects like building and a lot of

talent coming in as well. That's another thing that I've noticed over the last like six months. the talent that we're just getting just ourselves to apply for positions is absolutely ridiculous. And I did not see that in 2017 and 2018. Everyone was still skeptical. But now all of a sudden, everyone's like, well, this might as well be the new paradigm. I'm like, I don't want to miss it. A lot of really smart people are drawn to it. And I don't remember that to be the case last time.

No, I think that that's right. In fact, it was hilarious. I'm sure you had the same feeling of, you know, as things started to heat up this time, It's like, oh, look, people that I haven't heard from in three years who like magically decided that legal cannabis was their actual focus and that's their true passion in 2018 are now back because it's crypto finance. It's their true focus. These are all reasons why, you know, why a bear market now is unlikely to last the same duration, right? There's all these sort of things, things waiting right in the wings on the other side that are potential sources for renewed momentum. him. I think in general, you know, so obviously there's been a lot of talk of a super cycle,

which I think has been kind of misunderstood as a concept to mean up only forever. And I think actually maybe this like, you know, I jokingly called it a shorter cycle theory on Twitter or whatever. But like I think that this is actually, they're kind of the same theory. It's just a different definition, right? I mean, so what is like, what is your sense? So this cycle, obviously, you've kind of articulated why it's unlikely to be kind of a multi-year bear market. But in general, I think, you obviously have, or it sounds like you have conviction that we're unlikely to see that type of long duration bear market just in general. Do you think that that's just a, when markets mature, they're not likely to have three-year bear periods and, you know, or what is it about the market

that makes you think that over the long term, we're likely to see shorter cycles as well? Yeah, that's exactly right. I think as markets mature and as you kind of spread your bets a little bit more, it becomes just so much more unlikely that we're going to be here for three-year periods and 80% of all the people leave and then we'll have the same thing again. I think what's just much more likely is that there is going to be a period of pain. There's going to be a period of, you know, let's figure out where the new money will be coming from. And as that kind of gets fixed and as the macro environment gets a little bit clearer, I'm just very convinced that, yeah, we might be a able to see something like six or seven months of true pain and we can even go much lower than

we are right now. But I mean, if we're here again in two or three years talking about how we're just starting a new bull market, I would be very disappointed. I think I tweeted that as well saying something like, you know, it's either shorter term bear markets or it's just like it's going to go to zero. And I really don't believe it's going to go to zero. There's just so much going on. So, yeah, I mean, my guess would be that we have a period of like less than a year. of kind of like uncertainty and not knowing where anything will go, but I would be quite surprised if we're here another two, three years and just kind of chopping. Well, I think maybe the flip side, too, you know, obviously because we were now watching,

you know, red lines and the number go down, we're talking a lot about the implications of, on the, on the bare side for kind of shorter cycles. But I think that you could probably argue, and I'm interested in your take on this too, that like, we've already started. to see the difference in the top of the kind of shorter cycles, right? In the sense that I think everyone had a perception that if this cycle followed past cycles as it related to the top, we would have to see some crazy parabolic move up over the course of a couple weeks. And we would only be at the highs for, you know, a matter of a couple days. I think I saw someone who went back and looked and it was like the average time in previous cycle highs for Bitcoin was like,

three days, and then it was more than 10% down. And obviously, we were, we were at pretty sustained levels around, you know, 55 to 65 for a very long time. And so everyone was like, oh, well, it can't be done, right? Because it's like, it hasn't had that pattern. Do you think that like on the, on the reverse side, on the bull side, that we're also likely to see, you know, less of the crazy runups and more kind of mature. I mean, it's still, listen, it was still a big rise, but, you know, it wasn't 2017's December, right? Yeah. I think, I think that's totally right. I remember like 2017 when the top was hit. I mean, you couldn't even find a consensus number for what the top was because the differences were like 300, 400, 500, 500, 500, bucks. And that, you know, even back then it was, there was a few percent. So, you know, back then it was just really crazy. And I think you nailed it. It's like right now, everyone is trying to still compare it to the last cycle, which was basically only retail driven. And it was driven by complete mania over getting rich from. from my COs and from everything.

And now we're not in this market. And I think you're totally right. Like we are probably going to see slower rises going up. I don't think even what we saw over the last six or eight months, that was basically a parabolic rise. Yeah, you're right. Like, yeah, I was there for a few months. But eventually it's just going to be slower and it's going to be kind of like pricing

in things they're coming in versus just one massive repricing that we have once every three years. I think that's unlikely. And I think it doesn't make too much sense to compare everything to what it was before. Like, yeah, there are definitely parallels, but the dynamic is so different. The investors are so different. You know, the banks are invested now. Before they were saying it's a scam, pretty much unanimously. So, yeah, I would just take everyone who does that with the grain of salt. One of the questions I wanted to ask is around DFI. I think one of the things that people felt almost robbed by is like, you know, Bitcoin hit its top, Eith hit its top for like a minute. And then, but Defi never had a chance to like really hit its top. At least that was the kind

of broad public perception. But I wonder if actually, if we like, when we have some distance from it, we'll actually start the clock on this bull market more around, you know, April 2020, right? Like post-COVID and see the full run-up, you know, Defy Summer 1.0 into kind of Bitcoin's institutional narrative and rise as like that that was the bull market versus kind of, you know, pinning it around the entrance of micro strategy and, you know, December when we actually hit that 20,000 number. I mean, what's your take on that? Were you surprised that DeFi didn't have, you know, kind of a chance to shine, you know, from a market pricing, perspective post Bitcoin all time high. I just am interested in how you see that. Yeah. I wasn't

actually that surprised. I think the thing that drove a lot of the prices other than Bitcoin, even Ethereum, in my opinion, was just retail participation and retail kind of anticipation. And it was, it's relatively hard to sell defy to someone who doesn't really, who isn't interested in finance and like who's just a normal person like trying to invest in. something. Like, I think there are few things that people like to invest in. One is memes. And DFI really didn't have good memes at all. Second one thing is like actually, you have to have some sort of narrative, right? Like, if the narrative for DFI is that it's a productive asset and you can use it to like lend money, that didn't work for retail because, you know, transaction costs like

$150 for one at the top. You know, I couldn't tell my friend who invested a couple thousand dollars to go use uniswap because he would burn 10% of the entire amount that he invested in one transaction. And I think that was really the biggest problem is that it was, you know, it was not communicated clearly and also it was just not ready for retail participation. And also the memes were just really bad. So you just saw a lot of people, you know, go and rather buy a Shiba token because it has a nice dog there versus buying something that actually could produce, you know, some sort of productive thing, like whether that be dividends or, you know, whatever it is, like burns based on how much

activity there is. So I think that was the biggest reason. And I think that could change in the future where, you know, a lot of defy protocols that have become, you know, valuable last summer, they will learn from this. For example, one thing I don't understand is, like, retail is clearly attracted to really low units, right? And in defy, like everything, like you have something like Wi-Fi and you know, at the top, it costs $60,000, $70,000. Like, obviously people are not going to invest. And then obviously, you're seeing all these meme tokens with, you know, basically trillions in tokens in supply just to trick people into investing.

I'm not saying, like, Dief hypercultural should trick people, but they should communicate and they should kind of get the narratives a little bit better than just saying, oh, it's a productive asset. It acts like equity. You should invest. Like, you know, 20-year-olds don't care. They care about what's going to, you know, make them some money. They care about the narrative about the meme. So I think that was the biggest

reason. But I mean, you're totally right. Like last summer, it was basically a defy bull market. It was absolutely crazy how many people got rich just on buying early and then, you know, holding for some time. But yeah, a lot of people were wrong. A lot of people thought that after Bitcoin runs up, you know, there's going to be basically the capital will move from there to be fine. That hasn't happened. do you think actually it's this is something that I've thought about a lot like defy has weirdly through its inaccessibility through its barriers to entry kind of allowed itself to grow in this crazy sandbox without a lot of pain to people like retail hasn't gotten burned on defy largely because

they haven't come in but it means that it's pretty much only people who understand the risks and I think you know to the extent that you see regulatory risk in around defyy or anything like that, one of the strongest arguments probably, I think, against that is like, look, you know, there's nothing approximate to ICOs where, you know, Korean pensioners are getting burned on crappy tokens that were out showing them. Like, it feels like it's probably, you know, like net net, much better for defy in the long run that it has had this long incubation period with, you know, sophisticated investors. Yeah, I agree.

And I think, you know, I think this is going to be like a little bit similar to infrastructure. for Bitcoin and for other cryptocurrencies where it's quite likely to me that some FinTech and some financial businesses will actually implement Defi passively for users. And for example, let them collect the yield that they normally wouldn't be able to get in a traditional financial system. I think that's more likely where you'll have some sort of like a guarded system where you have passive and active strategies in Defi kind of done for you without you having to understand what's going on in the background.

But there's clearly a problem in kind of communication problem in just letting more people to try this thing. And I think we'll get there with L2s and with more L1s kind of trying to compete with the theorem. It's super interesting. I mean, I feel like we need to come back to this in a few months and see how it's put out. But I guess one last question for you is kind of, you know, as you survey the risks out there, right, things that could make bear markets more. prolonged, things that could drive the markets lower, you know, all the different types of fud. What do you perceive as the actual most, is there anything that actually concerns you versus is just another fud to get through?

It's a good question. I think the environmental kind of whatever you want to call, environmental concerns, I think it's more serious than people think. And not necessarily because I agree with it, but because it's just very simple to understand. It's like a super simple thing to sell to people. that Bitcoin is destroying the environment. Bitcoin is helping, you know, contribute to the global warming. And we start seeing politicians and people that normally are against Bitcoin

just start using that argument more strongly. And I think like someone like Elon Musk, like allocating more than a billion dollars and then questioning this himself, that hasn't helped a lot. And so I think that could be a strong thing that could potentially like start more regulation and start more things that wouldn't necessarily like reflect like favorably on the prices. So I think that that would still be my biggest concern is that this is something that's still relatively misunderstood

and that people don't really actually spend time on understanding this in more depth. And I think it's kind of silly that there actually really isn't any kind of like serious research that has looked into this exactly, like how many renewables right now are being used. Like what's the minor makeup? Like everything is outdated and all the numbers that I see cited,

constantly like the 40% number that 40% is coming from renewable energy, I would guess it's much lower than that. And so I think that that would be my biggest concern is that this is going to be something that politicians kind of really grab and try to like regulate mining and regulate Bitcoin in a way just because they kind of misunderstand the issues. I mean, testament to that argument is how aggressive the rejection. of NFTs from some circles were because of proof of work. Exactly. Like that was, that was surprised.

Like, I did not have on my bingo card, you know, activists shitting on the first thing to actually pay artists in about ever because of environmental concerns. You know, that was crazy to me. Exactly. I have the same exact reaction. And then people like misquoting some of the numbers, like saying that one NFT transaction costs this much and whatever, right? like this much, it destroys environment this much if you just buy one an FD.

Like it's just crazy how easy it is to spread information that is not based in facts. And people clearly get emotional around environmental concerns. So I think I would still be worried the most about that. And just about someone overreacting to an issue that really would be hard to regulate honestly. All right. Larry, awesome to chat, shorter cycle theory. We're going to come back in a couple months and see where we are. hopefully we're all getting rich again and we can triumphantly say we were right.

It was a shorter cycle. But I guess that necessarily means that the top will also be shorter. But either way, I appreciate you hanging out. Always great to chat to you, man. Yeah, thanks a lot. And yeah, I'll definitely be happy to revisit this. The four most dangerous words in investing are this time it's different. Still, I think when it comes to crypto markets and this bull cycle, this time

it's different. There are new sets of actors, new catalyst for people joining, higher conviction around the assets that exist, more reasons, in other words, for bearish downturns to be less pronounced, less long-lived. The flip side, as we discussed in the show, is that the tops might also not look the same way that they used to. Ultimately, only time will tell, but I hope this show gave you a different way to look at what's been happening and where we are. And like I said in the conversation with Larry. We'll check back in in a couple months to see if shorter cycle theory is really a thing. For now, guys, I hope you have a great weekend. Until tomorrow, be safe and take care of each other. Peace.