The Breakdown - What the Market Crash Means for Bitcoin, Feat. Delphi's Kevin Kelly

Episode Date: March 9, 2020

Bitcoin’s price has cratered, but it’s nothing compared to the broader market havoc. From the Coronavirus scare to an oil price war, a confluence of factors is aligning to make it a very rough Monday.  On this episode of The Breakdown, @nlw is joined by Delphi Digital’s Kevin Kelly to discuss: Why the stock market is just catching up to what the bond markets have been saying Why the bond markets have been a better reflection of potential economic pain  Why we need to pay attention to what happens in the credit markets  The role of the oil price war in today’s market drop  What the declining bitcoin price means for the safe haven and uncorrelated asset narratives Which assets are actually acting like safe havens

Welcome back to the breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto and beyond with your host, NLW. The breakdown is distributed by CoinDisc. Welcome back to the breakdown. It is Monday, March 9th, and it is a black Monday. Yesterday I got the dreaded blockfolio. Bitcoin is down 3% in the last hour text,

and it has just gone worse and worse and worse from there. We're experiencing right now a huge confluence of problematic events. The markets are catching up to themselves with regards to coronavirus and the potential dislocations from everything being closed, people stopping travel. All of these sort of second and third order effects are coming home to roost a little bit, while at the same time we're also seeing other challenges like a global oil price war that ignited last night. Now, one of the things that I love about crypto and Bitcoin is that it attracts people from all walks

of life and background, right? Not everyone in this space was in traditional markets before. Because of that, however, when there are these large-scale global macro events that have an impact on the price of Bitcoin that have an impact on actions in our industry, it can be hard to figure out exactly what's going on and where you should go to get information. So to help with that, I've brought on Kevin Kelly from Delphi Digital. Delphi are one of the best research houses in the crypto space. Kevin has a background in traditional markets. And basically what we do for the next half hour is like a primer effectively on everything that's going on. Right. So we talk about the difference between stock markets and bond markets and what bond markets have been telling us that stock

markets seem to finally be agreeing with. We talk about the safe haven narrative and what we might expect from different types of safe havens, and why gold even isn't performing as well as you might think because we treat safe haven so monolithically. We talk about what other signals we should be watching for over the coming days to better understand what's likely to transpire. Hopefully this interview is a helpful, useful primer for you on what is a fast-moving, fast-evolving situation. Two quick notes before we get into the interview. The first is that this interview has been very lightly edited. I like having the feel and flow of the conversation more natural. So hear that. If you hear the ums or the, you know, whatever the pauses, it's because we're doing a

much lighter edit. And secondly, I need to be very clear that nothing in this podcast should be taken as financial advice. These represent the opinions of myself and our guest only and should not be used as the basis for any financial decision. All right, that out of the way, let's dive into this interview. All right, I am here with Kevin Kelly. Kevin, thank you so much for joining today. Appreciate it. Thanks for having me. So we were originally going to do this podcast on Friday. And then we were like, you know what? It seems like we maybe want to wait and see what actually happens. And I'm glad we did. A lot has taken place over the last, well, 24 hours, I guess. Yeah, I'm glad we waited too. It's kind of funny.

We initially push it back because of volatility. And now we've seen even more volatility creep into market. So, no, definitely, definitely very timely for sure. So I guess what I want to do is basically there are so many, there's such a confluence of events happening right now. Right. And I think there are plenty of people in the crypto industry who have, you know, background and experience in other traditional markets. You obviously have experience in other parts or other sectors. but there also are a lot of people who are really just trying to make sense of all this stuff, right? You know, crypto doesn't always react to global challenges, but it is certainly reacting now.

So I guess let's start on a high level. What have we been seeing in the last couple weeks in the markets? Because obviously, you know, for a long time, there was no reaction to coronavirus and then it seems to have all hit. Yeah, no, absolutely. So if you kind of rewind the clock back to, you know, let's say the beginning of this year, beginning of 2020. I mean, we were just coming off of 2019 is what we deemed as something, you know, I consider the everything rally where you had this kind of pivot among global central banks led by the Federal Reserve and Jerome Powell and Co. And basically, you know, pivoting back towards a more accommodated monetary policy. And what that did was really ignited, you know, asset prices across the board, whether it was stocks.

You know, you had the SP 500 up, you know, 30 percent last year. you had treasury bonds, right, which typically, you know, people look at as diversifiers. Those were up, you know, double digits. Gold was up double digits. So you really kind of, you looked across asset classes. You know, it's kind of why we'd be the everything rally is because everything was pretty much up, right? You could have thrown at a dartboard of different asset classes and you probably would have made money. And so the beginning of this year started off, you know, somewhat similar in that you did have, you know, a rally, still a rally in risk assets.

And as you started to see coronavirus and news start to break, right, initially, obviously in China, and then there was certainly some discrepancy or some questions around or people being skeptical around what was actually being released. And as people started to kind of put two and two together and really understand the magnitude of this, you kind of saw, as you mentioned, a big kind of confluence of incidents that really led to, you know, I think, where we are today. And to your point earlier, you know, we saw a pretty big divergence in the weeks leading up to, you know, the stock markets peak right there on February 19th, where you had the stock

market saying, one thing, you had the bond market saying something else. And so what we've seen now is that obviously risk assets like stocks have certainly caught up to the severity and the bond market narrative, what the bond market was trying to tell people. But I think, you know, it's largely a factor of what you think expectations are going forward, right? And for a while there, you saw stocks again continue to climb even as bonds are rallying and yield were falling because I think people weren't taking, you know, the coronavirus outbreak threat as seriously as they probably should have. And it was very, it's very difficult to really assess the economic impact of something like this because it's one of those unique events where you're,

you're hitting both, you know, kind of aggregate supply and demand at the same time, right? So there's so many different variables and, and, and parameters you're trying to understand, you're trying to get a good picture of. And again, you know, when it comes to something like this and you're getting, you know, different media outlets with different types of news coming out and one's a little bit more optimistic. One's more pessimistic. I think it was, it was tough for the market to really kind of, you know, disseminate that. And then finally, as things really started to escalate, and it became almost impossible to ignore, you know, the potential effects of this and the severity of it. That's when you really kind of saw, you know, equity investors, a crater of it to, to,

what the bond market had been telling them, you know, for for weeks, weeks at that point. Okay. So I want to, I want to touch on something important that you're kind of, of bringing up in passing, but I think it's worth maybe focusing on, right? Most of our coverage of the economy looks at just kind of the top line stock market numbers as the main indicator, right? But obviously the economies are much more complex than that. So what are the different markets that are relevant for people to be paying attention to? And how have, you know, you're kind of saying that they maybe have been telling different stories over the last couple weeks. What have you been seeing? Yeah, no, it's a great question. And different markets are going to react, you know, oftentimes in real time, but but to different, to different extends to certain macro events, right? And so when you look at the bond market, for example, I keep bringing up, and when I mention the bond market, I mean, right now what I'm talking about is U.S. Treasuries, right? Those are highly regarded as, you know, kind of the safest asset that's out there, even, you know, safer than gold. And we can get into why, you know, gold hasn't really kind of exploded higher as well on some of this news, because this is more.

of a bit of a liquidity event and a real kind of near-term shock that you would actually not expect something like gold, like a hard-scarer asset to actually perform well in. But I can get in that in a minute. But when I'm talking about the bond market and treasuries, you know, that's oftentimes viewed as kind of like the purest play on what you think or what the market thinks, the economic outlook is going to be going forward. And so when you see, you know, treasury yields, which move inversely the prices, so when I say, you know, treasury yields are falling, that basically means that treasury bonds, the prices themselves are rallying, right? So if you're holding treasuries, you're in treasuries, you're making money. The reason why, you know, we've seen such drastic

moves and such downward pressure on the U.S. Treasury yield is because, for one, again, the safe haven kind of flight to safety risk where people aren't necessarily under sure how severe this is going to get what the economic fall. It's going to be. Again, it's a perfect kind of safe haven to go to, to try and wait out the storm. I guess you could say. But the flip side of that is that the longer dated Treasury, so the ones that have longer maturity, is typically respond more to inflation expectations and kind of what the economic growth outlook is.

And so you've got this, again, perfect storm of, you know, something like coronavirus that hits caused a lot of uncertainty. People flood into treasuries just because that's, that's, that's an asset allocation or rebalancing type strategy. And at the same time, you've also got, you know, expectations for economic growth falling, which, which in turn has pushed inflation expectations. is longer term down, which again, kind of pushes more pressure on bond yields because inflation, when inflation is expected to rise or is relatively high, that actually is kind of one of a bond

investors kind of worst nightmares, right? It's their worst enemy. And so you've got, again, you know, a confluence of factors that are really kind of pushing yields to to unprecedented levels, really record low levels. You've got the 10-year U.S. Treasury yield that broke below, you know, 50 basis points, you know, overnight here. And what I think is, is also important is at this point at this juncture, it's really critical. One, I mean, if you're an investor and you just have kind of an average portfolio, you know, not making any drastic or crazy changes, things like that, because again, it's very, very difficult to tie markets, especially ones that are this volatile. But it's also a good time to take a step back and this something we're doing

right now, you know, here at Delphi is, it's kind of reassessing what we think the economic outlook is and trying to understand what market consensus expectations are and what we think, you know, the potential fallout from this will be compared to market expectations. And it's not to say that the markets are necessarily completely pricing in some type of doomsday scenario, but they're certainly getting close, especially when you look at the bond market. And so that's why you've started to see, you know, stocks have cratered a bit. They're down, you know, 18%. I think now as of when the market reopened because we had a trading halt this morning because stocks fell so much, down 18% from that February 19th high, I keep mentioning. So you're right within kind of what the media considers,

you know, correction territory of that 20%, 20% drawdown. And so, again, there's a lot of different markets you can look at to try and figure out what is going on. But the bond market is one of kind of the purest ways in which you can get an idea of what kind of market consensus is for or how bleak the outlook is, you know, among market participants. So this is a good juncture, I guess, you know, It sounds like your answer is in part. It's too early to know. But how bleak is the market outlook right now as compared to what we're actually seeing? Like, is this a – and then obviously, this is just your opinion and, you know, disclaimer, financial advice, et cetera, et cetera.

But do you see this as the markets finally catching up with themselves and pricing in a lot of uncertainty? certainty or do you see them pricing in an expectation of, of further problems and dislocations? Yeah, I think it's a great question. And I think it's not to say that we can't see yields go lower. And certainly, I mean, I think stocks, to your point about that catch-up trade, I think stocks are now catching up to, again, what the bond market was saying and where people are kind of repricing, you know, risk at this point because there is so much uncertainty surrounding this. But when you do look at kind of the bond market, you look at even the, the, the,

shorter end of the curve. What you're seeing, too, is expectations for, you know, a lot more accommodative and easier monetary policy, right? What I mean by that is you saw the Federal Reserve with an emergency rate cut to their benchmark rate by about 50 basis points last week. And initially, you know, you saw a bit of a reaction in stocks, a very small kind of bounce within the first couple of minutes. And then you really saw the market continue to fall, right? And I think what last week to rate cut did, if anything, was confirmed to, you know, equity investors and market participants in general what they had had, had, had, didn't want to admit to themselves. And that was that this was actually a real risk and something that, you know, the Federal Reserve was, was now watching and monitoring

as a threat to, you know, economic activity. And up until that point, again, you know, every day we get new information and every day, the severity of this becomes more and more clear to people. But again, it's one of those things where a lot of people, have had, obviously, this has been an incredible bull run over the last 10, 11 years in the U.S. equity market. And so people, you know, didn't necessarily probably want to believe what the severity of this, this potential impact could be. And I think that's what the Fed rate cut last week kind of signal was this emergency

rate cut that took a lot of people by surprise. I mean, the market had been pricing in at least, you know, 50 basis points of rate cuts from the Fed at their March FOMC meeting, which is set to take place next week. But again, you know, the fact that the Fed could. wait two weeks to actually, you know, put that into place. Certainly it was a signaling effect. And now if you look at, you know, what the market's pricing in for future, you know, Fed policy, they're calling for another, you know, two rate cuts or 50 base points worth of rate cuts, you know, by the March meeting, by year end. At this point, we've got, you know, above a 33% chance

of the Fed actually taking rates all the way to zero, right, which is what a lot of people have been calling for for some time now. And so I think where this gets into the uncertainty aspect and it's tough to say what's priced in is, do you have the Fed, you know, if the economy dips in or really rolls over, turns into a global recession, which you're already starting to see across a number of kind of advanced economies that are certainly standing on fragile ground. If the global economy and the U.S. economy do, you know, dip into recession, the Fed's likely going to take rates to zero anyway, right? So the question right now is, do they get ahead of that, try and cut and really get ahead of

doing whatever it is that they can do from a monetary policy standpoint? point to curb some of this, or do they wait it out, see how it actually ends up taking effect, and then cutting rates to zero if we do see, you know, the economic conditions worsen, right? And there's obviously a debate on both sides of what, you know, you think they should do or what they will do. But I personally sit in the camp, you know, that the federal probably wait a little bit here. You'll get more color on the March FMC meeting. I mean, they could, if things continue, If stocks continue to, you know, crater this week, you could certainly see another emergency rate cut that's not out of the question.

But I think the Fed's in a very delicate position because the flip side of this entire argument, right, which again, it's, I view now is not the base case. It's definitely a lower risk of probability outcome. But let's say hypothetically, you know, things aren't not necessarily good, but not as bad as the market has started to price in. And we do see this as more shifting of the demand curve out a few quarters. and it's not something that really permanently pushes, you know, the global economy into a recession. Well, the risk the Fed faces if they cut rates to zero, right, and they start up, let's say,

even, you know, revamping quantitative easing and asset purchases, if they start pumping that much stimulus into the economy and it actually turns out to be more of a transitory event, well, then they're going to be on the hook on the flip side of potentially stimulating or igniting, you know, consumer inflation and things of that and almost pumping stimulus into a market that doesn't necessarily need it right now. So the risk is to the downside in terms of, you know, what inflation expectations could pick up that obviously would hit, you know, Treasury bonds that I've talked about have done really well recently.

And a lot of people have a lot of exposure to, especially older retirees. And so, again, the Fed sits between this rock and a hard place that they're often found in. Because, again, there's two sides to every argument. And there's certainly some tradeoff of facts or potential consequences that they have to weigh when they make these types of decisions. Lots going on. Let's add more to the mix. Oil.

So obviously, this is another shock to the system. How do you think that's playing into the market's reaction this morning? Is it just one more thing? Is it or is it more significant than that? Yeah, it's certainly coming at a pretty poor time, right? Just based on everything we were just talking about, especially as, you know, coronavirus concerns escalated. again, you know, day by day. Throwing oil into the mix, it's kind of like adding fuel, you know,

to this proverbial dumpster fire this become markets because, you know, on one hand, you can make the argument that lower oil prices aren't necessarily bad depending on, you know, what, what stakeholder you're looking at, right? For let's say the U.S. consumer, you know, if gas prices end up falling, obviously that can be a bit of a windfall at a time when, you know, a lot of people may be coming under pressure. The flip side, and I think this is where the market's more so sitting is, you know, you have this 30% decline in oil overnight.

I'm looking at oil prices right now. I mean, crudes hover around $34 a barrel, which is very low compared to, you know, where we've been for most of this cycle. And what I think that's the market's starting to price into is kind of the downstream effects of oil at these levels, right? And I talked a little bit about, you know, what could tip, you know, potentially having coronavirus be the catalyst to tip us into a recession. And what I look at and what I'm really focused on is more so kind of the financial and credit conditions that exist today.

And so what I mean by that is when you look at kind of a debt-based economy like the U.S., it's heavily reliant on credit, the ability for companies, individuals to be able to gain access to cheap credit. And so what you're starting to see is the high-yield corporate debt market is made up of, it has a significant portion made up of energy and oil. and gas companies, right, that are issuing corporate debt that's rated, you know, high yielder or junk. As a lot of people like to refer to it. And so if you have oil prices at this level, obviously cuts into profit revenues, profitability, cash flow for some of these companies that are already pretty strapped with debt, that can start to cause some real kind of funding and credit dislocations within the high

yield market, which again can have, you know, these kind of downstream and direct effects on the rest of the economy because of credit conditions tighten, oftentimes credit conditions will tighten, they'll tighten quickly, and they'll tighten, you know, all the way across the board. And so now everyone from your small and medium-sized enterprises or businesses, you know, are having a more difficult time where it's more expensive for them to borrow to fund short-term needs. The funding markets potentially can dry up in terms of liquidity. And again, these downstream effects can really, really affect companies that are not necessarily even directly tied to oil prices or are these kind of big behemists that are sitting in, you know, the S&P 500. So, again, it's tough to say exactly where the market's going to shake out right here. And again, you know, this drop in the S&P 500, for example, could be something where, you know,

you have these trading halts in place specifically because oftentimes panic selling, be gets more panic selling, and you'd like to think that cooler heads will prevail and somebody will come in and mortgage systems will come in, digest the information, have more time to digest it, and start to make more informed decisions that aren't just hitting the panic sell button because they're trying to get out at the same time, everyone else is trying to get out. But, you know, the shock and oil prices. And again, what the geopolitical potential implications are of this kind of oil price war

that's now starting to take place, certainly weighing on markets at a time like we've been talking about. I mean, could not be, you know, a less ideal time for this to happen. Okay. So let's shift a little and talk safe havens. So you mentioned treasuries and you mentioned gold. So I guess first is what's happening with gold and then maybe you can expand a little bit on your kind of point about what we would expect to see gold do in this type of scenario. Yeah.

So gold obviously falls in that safe haven bucket over the longer term right there with treasuries. It's a little bit different in terms that it's not necessarily a cash flow producing or income producing asset. Like treasuries, you clip a coupon or you get a cash flow. flow right from actually holding the treasuries themselves. You capture that yield, whereas gold is more looked at as kind of like a portfolio hedge against especially, you know, central bank policies or monetary policies, but a lot of people will watch for. They'll look at things like real yields and make that type of comparison. But the point I wanted to make about gold versus treasuries as a safe haven is that during times like this, and you actually, you actually saw this, not to this extent, but you saw something similar in terms of the, in 2000, 2008, where gold initially actually, you know, dropped by about 30 percent between, I think it was March, 2008 to October that year as volatility share to pick up and as you started to see stocks, you know, roll over and essentially fall off a cliff because it was more of a liquidity type event, not necessarily people just, you know, rebalancing into gold because they thought economic conditions were deteriorating. And so in situations like this, and we've started to see it, you know, within the last couple of weeks in that, you know, gold initially rallied, but then, you know, gold sold off a bit. And really the only thing that's been, that's been surging higher has been, you know, long-dated, you know, U.S. treasuries, I think a lot of that is because people are

essentially trying to sell whatever is that they have, right? And gold's actually a relatively liquid market compared to a lot of other assets and asset classes. And so in a situation like this, again, you know, having a position in gold to fight, you know, the broad-based risk of currency devaluation, all these things we talk about with central bank policy and rate cuts, over the long term certainly makes sense. But in these short term kind of windows, you know, it's also subject to these liquidity events where people are, again, trying to sell whatever is that they can. And so I think that's why you've seen gold still, you know, fail to break above, you know, 1,700, you know, up until really, I mean, this week, and we'll see how this week

continues to play out. But it's a little bit more of kind of a liquidity event where everyone's, you know, selling pretty much everything they can get their hands on to get into something like U.S. Treasury, which again, is kind of the gold standard of, you know, the safe haven assets out there. So the point I think that is very basic, but also incredibly important and is missed a lot in the Bitcoin narrative conversation that we have on crypto Twitter is that it's not like there's just one monolithic thing called, you know, safe havens, right? That there are, that that timeframe matters, that context matters, right? So I guess with that, how do you see the state of the Bitcoin narrative in this context, right? I mean, I think for the last two weeks, that's what everyone has been

discussing. Two weeks ago, when the markets first started to react, or at least the stock market, rather, finally started to react to Corona, Bitcoin was moving in total lockstep. Last week, it seemed like it was trying to reclaim its uncorrelated crowd, and it, you know, it hung real tight for a while. But then obviously it took a total dump over the weekend that just seems to be continuing. Yeah, no. I mean, it's a great question. Obviously, something we focused a lot of our time on too. And certainly fall long term into the camp that Bitcoin will find its way into more of that kind of safe haven bucket alongside something like gold, again, longer term.

But in order for it to get there, I mean, it has to accrue trillions of dollars worth of value. Because again, that'll suppress volatility. And it'll allow a more institutional crowd to come in. And once you have this market be a bit more institutionalized, that's when you would expect it to trade more and lockstep with some of these other safe havens, right? And I think that's one of the big reasons why, you know, Bitcoin goes back and forth. And it is uncorrelated, you know, for the most part, over the longer term to any asset class, including both, you know, your safe havens and, you know, your risk assets is because the incremental buyer of, you just think about, you know, at a basic level, the incremental buyer or seller of Bitcoin versus gold, for example, it's still very, very different. right. We talk all the time about how this market's much more retail driven. And yes, we are starting to see institutions come in and more sophisticated investors come into the Bitcoin and crypto

markets. But again, you know, the gold market is much, much more institutionalized and you would expect to react more so in real time to some of these events. What I think is going on too is that, again, still in nascent technology, you know, the track record isn't, you know, close to what gold or treasuries is. And so this idea that in these types of times, especially when you have really, really, you know, quick spikes in volatility, you know, a liquidity event that I've been referring to. You know, it's obviously Bitcoin catching a bid or performing well in that because, again, the narrative's not quite, it's not quite big enough of a market yet. And the narrative's not quite there yet on a global scale to really solidify it. It's a use case in something like a scenario

like this as a safe haven. And I think it's suffering again from kind of the way in which people are viewing it in terms of a risk asset versus or further out the risk curve, I should say, then something like a treasury or gold, right? I don't necessarily think the macro narrative for Bitcoin has that long-term safe haven or uncorelated kind of hedge on everything, really on everything going awry, which is what we're starting to see. I don't think that's necessarily dead yet. I, for one, to be honest, would have expected, I wouldn't have expected Bitcoin to be below 8,000, given where we were even, you know, two or three weeks ago and what's developed. So it has been a bit surprising to me.

But at the same time, I don't think it necessarily kills the narrative because, again, if you look at something like gold and you watch the way in which it's reacted so far, you would expect gold to be up higher as well if it was more of a kind of slow moving deterioration of events. and it wasn't these kind of quick volatility spikes, which historically, you know, if you look over Bitcoin's limited track record, but really the cycle, anytime you've seen really big spikes in equity market volatility, expectations for market volatility, Bitcoin is failed to perform well, right? Usually it sells off of stocks because, again, you know, it's not that gold standard, you know, U.S. Treasury type of safe haven asset are viewed like that for the most part, quite yet, right? So again, not necessarily in the macro narrative's dead, but it is certainly in a very interesting point. place right now because again, you'd expect Bitcoin. And that's not to say that Bitcoin, this isn't, you know, an attractive, you know, entry price point for certain institutions that are now looking at this and saying, digesting all the information, digesting, you know, how potentially bad things could get from a global macro and an economic standpoint and saying this might be a good point for us to allocate a little bit to Bitcoin because, again, it is that, you know, potential ultimate hedge on things really, really going awry. And you really starting to see both fiscal and monetary

stimulus, you know, ramp up. So it's an interesting position. Certainly wouldn't be expected to be here yet. But I don't think that that macro narrative is dead necessarily. Yeah. I mean, I think your point to dramatically simplify it is that when things happen this fast, people sell whatever they can sell to be able to move into the safest possible thing. Yeah, exactly. Which, yeah, I think that's really interesting and a really important point. What do you make, if anything, of the almost, it seems to me, at least, wishful thinking narrative that this is just a plus token scale and are selling off? Yeah, I mean, there's, again, there's probably certainly a bit of credibility to the argument. This is also, I mean, what's something that we track pretty often is looking at obviously the amount of leverage is being used.

And again, it's still a bit of a trader's market. So again, to the average kind of big corner out there or a person who's even just put it in to the, investment portfolio because again, they want to diversify a bit. You know, certainly not anything we, you know, pay a ton of attention to. If anything, it's more so. What do you think the longer term outlook is? It all depends on your time horizon, right? If you're looking out the next two weeks, you know, to be honest with you, anybody says

they know where Bitcoin's going to be in the next two weeks is probably lying to you. But if you look out, you know, a year, three years, five years, 10 years, you know, we can certainly give you a pretty, pretty good argument, especially at these levels. to be bullish on something like Bitcoin, just again, because of even from a macro perspective, you know, what it presents. And you're starting to see, it's important. I know you're starting to see a lot of the more kind of global macro focused individuals, traders, fund managers, start to actually wake up to you the potential of Bitcoin.

And then you see them now advocating for it, you know, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on Twitter and things like that. So the narrative is certainly growing for Bitcoin, especially in kind of a global macro sense. But again, you know, trying to trade this market and then looking at, you know, different factors that potentially could be applying, you know, selling or immediate buying pressure. You know, again, you could probably craft at least five or six different narratives. Maybe ask five or six different people why Bitcoin's at this level. You'll probably have five or six different answers. I couldn't agree more. Okay. I won't ask you for predictions because I think that's kind of would be insane right now.

But I will ask this to wrap up. What are you watching over the next couple days? What do you think are the important signals? Or maybe just what do you think that the market is waiting for? Yeah, I mean, I think just general markets right now, what I'm watching pretty closely is financial and credit conditions. I think what you're starting to see and you had the Fed actually come out and tell the market that they're going to be increasing the amount,

that they're willing to repurchase the whole repo intervention that's been going on. They've actually increased those limits because, again, you're starting to see some pressure in the funding markets, the real, like, shorter term funding markets. So what I'm watching for is credit conditions because, again, you know, a lot of these financial crises that we've had in the past, yes, the catalyst that got us there was certainly not anything to laugh about. But at the same time, the severity of those crises oftentimes happened because, there's a chain reaction. And eventually when credit markets, you know,

tighten or worst case freeze up, I mean, you can literally watch the global economy come almost to a screeching halt. And right now at a time when, you know, demand is obviously in question to say the least, it's really, really a time in which, you know, the market needs credit conditions and financial conditions to remain loose. And for, you know, small, medium-sized businesses, to be able to have access to capital,

to be able to kind of weather this hopefully, potential short-term storm because it's going to hit, you know, bottom lines. It's going to hit revenues. It's going to hit profitability. It's going to hit cash flow. And it's going to affect the way in which, you know, an already kind of debt-driven economy is able to service those debts, right, on multiple different levels. So long story short, what I'm looking for is credit conditions because if those credit

spreads start to widen and then you see lending standards really start to tighten up and even potentially credit markets freezing, that's when you get a really kind of doomsday scenario. And I think, you know, you'd be in for a lot more pain here in markets going forward. All right, Kevin, crazy times. Thank you so much for spending some time with us today. Absolutely. I appreciate it. Thanks for having me on. So a huge amount to digest from Kevin there. I think one of the reflections that I have is that this is really perhaps the first time that Bitcoin and crypto more broadly have been on display as a macro industry, as a macro asset that is impacted by and interacts with the larger movements of

traditional markets. What that means in the short term is basically by definition impossible to tell. We don't have historical precedent, which means we're on uncharted territories. Uncharted territories can be really, really scary and everyone needs to do whatever they need to do to stay safe first and foremost, but uncharted territories can also be very valuable and very lucrative. So here's hoping that the markets don't go into total free fall, that stocks don't fall off a cliff, that credit doesn't contract everywhere, and that we don't plunge into a global recession or even depression. For my part, I'm going to try to keep breaking down everything going on. I'm going to bring a lot of different perspectives throughout the week onto the show to talk about all these issues. So

hopefully this is helpful. Hopefully this brings a little bit more of a sense of at least understanding to what's going on. But for now, stay safe, everybody. Peace.