The Wolf Of All Streets - 3% Inflation Surprise, Crypto's Big Move | Crypto Town Hall With Raoul Pal & Others

Episode Date: July 12, 2023

Crypto Town Hall is a new daily Twitter Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in the crypto and bring the biggest names in the crypto space to share their opinions. ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000! 👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ Follow Scott Melker: Twitter: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sel l," or "Hold" an investment.

Alright, I sent out the invite. Scott, how are you? I'm doing good. How are you? Oh shit, my audio's all done. I've got a bit of background noise. I'll have some background noise. Yeah, we know you're biohacking. Everybody knows by now. No, I'll say I'll be done in literally one minute. Mario's actually sleeping by his feet in an ice cold chamber with wires attached to his chest. How are you, man? You slept two hours.

Yeah, I'm biohacking. You're barely getting it. Jetlag, you know, for everybody else is really bad going east. For some reason, every time I go west, I get crushed for the first two days. I don't know. I had no jetlag going east, but really bad coming back. Man, you should be pretty pumped. We saw the CPI data come out, and I think the time to hate on the Fed is behind us. Do you agree? I disagree with that because they're going to continue to raise. The time to hate on the Fed is always now.

All right, let me give a quick update for the audience. I know we're waiting for Rand to join. We've got a few more speakers coming in. Mr. Powell, good to have you. We've got Peter, Eleanor. Eleanor, I want to talk about the ruling that you broke yesterday about cream finance. I started digging into it. That's actually really interesting. I know it just broke and we mentioned it in yesterday's space, but I want to dig deeper into that as well.

But for the big news of the day, Scott, do you want me to kick it off with the news? Yeah, go ahead, for sure. So the big news is CPI. So inflation falls to 3 percent which is below expectations core cpi falls to 4.8 percent as the first time since i think december 2021 that we hit below five percent and um you know for me like if you want to hate on the fed you can june 2022 inflation was at 9.1 percent and then every single month it went down all the way to 3% and we're talking about structural inflation. Well, we're one percentage point away from the 2% target that the feds has given us. So why do you think the fed will continue to raise interest rates?

I think we should probably discuss this with the guests to be honest, but I mean, I think that they've been very clear in their language and they've not misled people when they've given clear guidance this entire time and they say don't fight the Fed the Fed continues to say we're probably going to raise we're probably going to raise yeah but the guidance but the guidance but the the guidance changes based on the on the data the data is anything like lagging data so that that's the problem is that you're giving them credit for you know things they've done in the past few months when this data would probably be the same if they had stopped six or nine months ago. Raul, I want to go to you because Scott has always been the pessimist and I know we'll end up fighting. So for me, the Fed looks like they've done the right thing.

Inflation is at 3%, which many people remember the debates on whether that's even possible. We're at 3% now, 12 months since the battle, more, I think it's like 20, how long has it been battling inflation? How many months has it been? Well, since the battle begun, we're sitting at 3%, 1% is your way, and then we've got equities pumping, crypto's lagging, we'll talk about this in a bit, but I'd love to get your initial thoughts on this, Raoul. Yeah, look, I have been of the view using all of the kind of forward-looking indicators that I've built over the years for Global Macro Investor, that inflation is just going to be elevator up, elevator down. So it's kind of a mirror image of its rise. It just falls. And I think it eventually settles back down to a low range. I don't buy and

have not bought for a long time that the inflation is going to be higher over time forecast. Now, what's interesting is firstly, if you look at the true inflation data, which gives you where you are currently, the on-chain data, that's about 2.5%. It got down to a low as about 2.3%, 2.2% last week. So that's suggesting that inflation continues to fall. My forward-looking indicators suggest that there is a reasonable chance headline cpi goes negative um in the next few months um which i don't think people are prepared for then people will go yeah but what about core cpi it's sticky well no shit sherlock it lags so uh rents and wages always lag the cycle so as they start falling and they're all starting to fall now, then that will continue to come down

over a period of time and keep inflation relatively sanguine. So look, I've been of the opinion for a while that the Fed have gone too far and way too far. And I think that there is no real reason to raise again. Scott might be right.

They might try to get in one more raise. The game now is what rate level of rates can we get to because we know in the down cycle we have to cut them and if they don't want to cut them to zero and usually in a recession you've got at least 300 basis points of rate cuts to come that's pretty standard um over the last 50 years or so well if they cut it from here 300 basis points get gets 2%, which would be, I think, more preferable to them than zero. But who knows? I still think rates go pretty much back to zero. Okay.

What I – go ahead, Ron. I'm saying I'm not saying I agree with Ron. I think that the negative inflation is something that most people aren't factoring in yet. Just the one thing about the Fed's interest rate increase, I was very much against the Fed interest rate increase. I said there wouldn't be one more. I'm now of the count that there definitely is going to be one more and maybe even two more. And the reason why I say that is because I see that Fed interest rate increases

as bullets in the gun, in the magazine of a gun. The more they can load without doing a lot of damage the better and now that the economy is i mean the economy right now is still pretty strong the jobs are pretty strong it doesn't really hurt the fed a lot to keep raising and have those things because it's much easier then for them to reduce after it so i think they will they will keep raising i've actually swung from saying there will be no more rate increase they're saying there'll definitely be one. I don't get it.

So, Ryan, I'm just confused. You were saying that there will be, you know, one or none earlier. Now that you're saying there's going to definitely be two. I don't get it. So when CPI drops more than expected, do you think they're going to raise interest rates?

I think they're going to increase interest rates now in July. I think the probabilities are 92%. And I don't see any reason for them to stop increasing. I think the probability is at 92%. And I don't see any reason for them to stop increasing. I think in order for them... What do you mean by that? How isn't there a reason? Are you just talking about...

Because they're talking about negative 2%. Because they say they want to go to 2% and they're still pretty far off of that. According to Trueflation, the inflation is at about 2.5%. They don't look at Trueflation now. No, I know. But one thing they do look at is inflation break-even rates.

One-year inflation break-even is pricing inflation in one year's time at 1.4%. Five-year break-even inflation is pricing it at 2.2%. So the market expectation of inflation has been entirely and totally crushed. And they're both trending lower. So they know that. I mean, the Fed are not stupid. They also know that they're both trending lower so they know that i mean the fed are not stupid they also know that they're lagging the cycle um so the the question really that matters everything else is noise is even if they do let's say scott is right rand's right they raise another 25 and another 25 what happens well the market knows it's the end of the cycle the moment the market

knows it's the end of the cycle the market sniffed this out a while ago the market start rallying like crazy because they know that the next phase is easing that's the key thing to remember don't trade today we've talked about this on the show before never trade today trade the future but how much how much how much has already been factored into the markets well well so so don't forget two-year rates hit you know five odd percent recently but they've been backing off because the the markets are starting to price that sure wherever they get to they're going to reverse so all of it the entire bond market is now trading at a discount to the fed funds rate that's telling you

is the market's like whatever you do we don't care because you are going to cut and you're going to have to cut and that's what drives asset prices it's not how where the fed funds rate is it's the future expectations of where it will go so if you ask anybody in a macro perspective what you need to do is live between 6 and 18 months in the future so in 6 or 18 months in the future where is inflation lower where are interest rates lower that's what we said so one more question to you Raoul and and then we'll open up to the panel is looking at equities the S&P is up 1% Nasdaq's up 1.4% but then you look at Bitcoin let me check what it's at now but it's it barely went up and started, obviously, reversing because of the news with the Silk Road Bitcoin that moved earlier today. But Bitcoin's at 0.3%. It's been lagging across the board it's outperformed equities

significantly but if i look at the chart most of this stuff it's been sideways for a while so normally after a consolidation pattern you've got the positive news you've got the momentum of the equity markets um you know we're then moving into obviously the etf so everything is there to say well the next leg is to come the next leg usually these things are very violent uh and you don't you don't get much of a chance to get in so it feels that that setup is setting up yet again so massive run consolidation massive run consolidation uh that was very prevalent in the 2016 to 18 cycle uh which feels very similar to this one in terms of the structure of the markets so it's just patience because the next thing you'll know is you'll have another god cycle, which feels very similar to this one in terms of the structure of the markets.

So it's just patience, because the next thing you'll know is you'll have another god candle and everyone's going to go, oh, my God. Yeah, Raoul, I want to ask you a question. I spoke about something on my show today, and I'm really keen to get your point of view. I noticed that, or the team actually noticed that if you look at any crypto-related stock, all the crypto- related stocks are up. So MicroStrategy, Coinbase up 200% this year, MicroStrategy up 187% this year, Riot, which is a mining company up, I don't know, 500% this year. And so the list goes on. And if you look at the mining stocks, any crypto related stocks, we categorize them into mining and

financial services. Essentially they're up a hell of a lot this year much much much much more than the market now what i deduce from that is that institutions and and bigger investors want to get in want to get into crypto and are looking for returns that are um almost like we look for altcoin returns, which are geared against the Bitcoin returns. Do you think that there might be something in that? They're kind of saying, look, we know this Bitcoin thing. It's quite hard for us to buy this Bitcoin thing because we're not really, you can't really buy GBTC because we're playing the discount to net asset value as well as the price of Bitcoin at the same time,

which is quite a tricky thing to navigate for a fund manager. But we can get exposure using MicroEnergy, Coinbase, Riot, and all the other mining companies. Do you think that that's their play to give their clients exposure to crypto? Is that almost like their old season, so to speak? Yeah, I did a piece on Real Vision on Monday as part of this crypto gathering, which is free if anybody wants to check it out, realvision.com forward slash slash gathering i did the whole piece there and talked about the risk curve now what's fascinating ran is what you're talking about um how some of these stocks are all starting to perform what's amazing is you can put the chart of coinbase against the chart of arc against the

chart of kr1 in the uk which is a crypto company all of them are identical um and as is solana so all of these are just expressions of risk and the market is starting to seek further risk inflation is falling so as inflation falls people go out the risk curve so people are going out the risk curve these are actually none of these have esoteric risk priced in chart of coinbase is identical to the chart of arc which is identical to the chart of solana so that it's all basically a risk curve so as people start making money in the space again and particularly the equity market it starts flowing further out the risk curve as people seek returns so yes you're right institutions and others probably more retail start going further out the risk curve and looking at some of these kind of stocks to think okay well

crypto's next how can i get exposure and that's you know back down to the same issue is there's no etf there's no simple exposure so you have to buy the equities but you know i'm very bullish on all of those because they're basically driven by liquidity and risk-seeking. And on a forward-looking basis over the next six months, 12 months, 18 months, the market should be extremely risk-seeking. So there's a lot of returns to come from those kind of stocks. I mean, if you look at Coinbase, they have an SEC action against them only weeks ago and are 3x off the lows. Talk about a stock that was trading at $30 at the beginning of the year that's now effectively 9. And Coinbase is fascinating because really it's the purest expression. Somebody called it like an ETF on the entire

crypto market. Basically, if volumes go up, Coinbase goes up. If the ETF gets launched, Coinbase goes up. If the market has become risk-seeking, Coinbase goes up. If the markets become risk-seeking, Coinbase goes up. If crypto goes up, Coinbase goes up. So once you priced in a 95% decline, which we did last year, it actually maps very well with Amazon after 2001, 2002, and the NASDAQ over that same period. So you've had the crash, and now you've got the recovery point. And usually, it just goes up relentlessly now the crypto market because we will see more activity coming over time as liquidity comes back coinbase just collects fees every time that happens so it's it's in a prime position to do this even with

the kind of overhang of regulatory stuff that's going on i think the market i think the markets are also telling you that legal experts believe that Coinbase has a fighting chance of actually either beating the SEC or settling with the SEC. Again, Ran, I'd like to believe that, but that's a narrative. Because if so, it wouldn't look like the same chart as ARK, which is in a different sector, or Solana, or everything else. They're all almost identical. So it's not like the market's pricing in any esoteric risk to Coinbase whatsoever. They're just pricing it in as they are everything else in the same kind of risk bucket. I mean, I think Coinbase is getting some additional benefit. I mean, Coinbase is up 90% over the last month. Solana is up about 30, Coinbase is up 90% over the last month.

Solana is up about 30% or so or 40% over the last month. So there is some additional return, which is this belief or this view that the ETF issuers choosing to use Coinbase is a benefit. And I think also something to consider as well as you look at Coinbase is that they're just going to see a growing market share. I mean, FTX is no longer in business. Binance has a lot of issues. People are concerned about using offshore exchanges. As you think about regulated U.S. institutions or U.S. institutions broadly, rather, looking at coming into crypto and they look at, OK, well, I need to choose my service providers. I'm managing external capital.

Where can I feel comfortable? Right now, I speak to dozens of these guys on a weekly basis. The only answer that I hear consistently is Coinbase. So I think Coinbase is obviously going to perform like the rest of the crypto market, but I do think it has some upside that potentially other assets don't have just in the positioning that it has as well. And I think, yeah, go for it. Yeah. Also, my good friend peter brandt is on the call peter was pointing out the chart the other day the chart looks spectacular um you know there's a nice setup here in many of these things and they're all starting to break out after this long period of consolidation and you know i think that's very interesting peter maybe give us some insight on the coinbase chart i was looking at

coinbase today and i'm thinking to myself and but've got a great entry. I've got an entry under $40 or $38 or something like that. I kind of want to hold it for the long term because that's what I've been doing. But now I'm looking at how far it's gone up, how fast it's gone up. I'm looking at this thing and I'm going, I don't know, my experience is as much of an investor as I am, when something goes up this fast, this high, usually it's a good time to maybe take some profits. Well, yeah, let me just comment on a couple of charts because there are just some incredibly interesting things taking place. Now, the rest of your guests are wonderful at explaining

kind of the whys of what might be going on, and great comments from Errol always. I'm just kind of focused on the what now. And, you know, I put out a tweet earlier in the week about Coinbase completing a pretty significant head and shoulders bottom. And I think that's what it's in the process of doing. And we really need to get a close by Coin up over 95 or so to really confirm it.

But it's a powerful chart. It indicates to me that we've got a major bottom going into place. On treasuries, really interesting. You know, the treasury yields could not take out the November high, the March high. And so we took a run at it and failed. Now we got the news today. We got a reversal back down toward lower rates, which I think is significant because Raoul pointed out lower rates in the future. You look at sulfur futures and September sulfur futures around 5.5% yield.

You go on to June 25 on the sulfur and we're 3.5% yield. So we're already building in lower rates in the futures market, looking at the three-month, six-month rate. So I think that's pretty much online with Raul's comments. But if you look at the stocks, we've got major breakouts taking place in the Dow potentially, in the S&Ps, in the NASDAQ.

The Russell is extremely strong, which indicates great growth. But let me just point out what I think is the all-star chart. I put out a Twitter chart yesterday or the day before saying, this is the chart that nobody's looking at. And it is the chart that everyone's going to be talking about. That's the Swiss franc.

Swiss franc is making a high today that it has not seen in 12 years. And so we've got a 12 year high going on in Swiss franc. US dollar index is going to head down. Peter, look, it seems that you, Raoul, especially Ryan, all indicators are pointing to a reversal. Is there anybody on stage that is more bearish than all of us? Because all indicators

are looking... I don't want to say anything. I don't want to say anything, but I can't see Gareth in the crowd. I don't want to say anything. I don't want to label people as bears, but I do see my friend Gareth in the crowd. I was trying to be less direct than you, but Gareth, since the figure is pointed right at you. Based on the, and of course you can change your mind from previous spaces, but based on the inflation rate we saw now and the market response, do you think a reversal, at least for crypto, is incoming?

Yeah, so I mean, in regards to crypto, it's really interesting because on this CPI data, you have the NASDAQ ripping, the S&P ripping, and what's Bitcoin doing? Up 0.6%, lackluster. But to give them 20% in a week, four weeks ago. Yeah. And just to point out, but also just want to point out that the Silk Road, I think there was 9K worth of Bitcoin that was moved into a wallet, and generally the market's responding. The reason doesn't matter. The output is down.

You know, what you're trying to do is you're trying to mix fundamentals with charting. And, you know, to Gareth's character... No, but I think, no. Yeah, okay. Go ahead, Gareth. Well, no. All I'm saying, and you're right. So it had that big run up of 20% when we got that news about BlackRock and the spot ETF. But let's keep in mind that we are at the same level we were at back in April. So in early April, it hit 31,000, and here we are at 30,800.

So as a price action, for me, I'm still struggling with, okay, all these risk assets are going nuts. I mean, Nvidia is at all time highs and Microsoft's moving up there and Apple's up there. What the heck is wrong with Bitcoin, right? I mean, it's like, what's that deal? And so for me, it's still watching that 31,000 level. In fact, I think a week ago, we were talking about this same thing. It's like 30 to 31,000 is the range. It's been consolidating now for three to four weeks. It has to break out. Now, if it breaks out, I think a week ago, we were talking about this same thing. It's like 30 to 31,000 is the range. It's been consolidating now for three to four weeks. It has to break out. Now, if it breaks out, I think it goes within days to 35,000.

I think it'll be a supercharged breakout. But again, that's the level. And until it breaks that point, then it doesn't matter what's going on everywhere else. It's just that's the level. I think it's really important to note that Bitcoin being uncorrelated is really good for crypto. It's the exact same thing. It's just not correlated, and that's great. It's great.

I mean, look, Bitcoin's correlation with gold is non-existent. Coalite pushed FNC over the last, it's a lot of this side. NASDAQ is non-existent. And that's a huge deal, right? I mean, institutions are not going to be excited about Bitcoin if it's correlated to the NASDAQ, right? They can just buy the NASDAQ. But Josh, moving away from correlation, it's just based on the news. The response to most CPI data should be any risk assets, and crypto is obviously a risk asset, should be responding positively.

So if we're not seeing that, isn't that, you know, could that be as a warning sign that maybe the market is not as bullish as we'd like it to be? And just to jump in on that too, is like, all right, so let's say it's not a risk asset. Let's say it's more like gold. Well, gold's ripping today too because the dollar's getting crushed and Bitcoin's up 0.6%, right? So again, it's like, okay, well, is it a risk asset? Is it not a risk asset? Well, either way, right, at least price action today is not robust. Now, could it all of a sudden get a supercharged rally later? Maybe, maybe, right? But again, right now, I'm not impressed with the price action. The market is usually wrong when it

reacts to these events, though. So judging it in the morning, I think, is hard when we want to see what happens throughout the rest of the day. But I do agree with you that if everything else is up, I just really think that it's great that Bitcoin has been so uncorrelated for such a long time now. And if you look at SPX, I mean, what was the low on SPX of the entire market here around, what was it, 3,500, 3,490 or something? It's at 44. Bitcoin is double off its lows. Bitcoin is much higher risk. What are you looking at and how are you comparing? I mean, Bitcoin on a risk-adjusting basis may be slightly different, Scott.

You're looking at it as a net percentage. Looking at a risk-adjusting basis, I think Gareth's got a very good point to say. Like, if you consider where we are with the S&P, I mean, the Nasdaq's almost back at all-time highs, you know what I mean? And if you look at Bitcoin, Bitcoin is still 50% down from its all-time high. So I think Gareth does have a point here that

Bitcoin, as much as it has performed well this year, maybe hasn't got as much. So Gareth, all we have to look for is that 31K mark. Is that the most important indicator for you? Yeah. Yeah. First of all, I'm going to go play the lottery because I don't remember the last time Rand was in my corner there. This is great. Number two, yes, 31,000. We get above there and we can actually hold it because we've had pierces of 31,000, right? But you really haven't been able to hold it. If you can do that, I think number one, short start to cover. Number two, you'll get new buyers that are seeing that breakout, seeing that range breakout and they'll pile on. And then I think honestly, you shoot up. The longer you consolidate sideways, it's like winding a spring, right? So the spring

now is so tight that whichever direction it breaks, people need to be ready for a big move. So that goes on the downside too. On the off chance, it does break below 30 and start trading down. It could go to 26 and change very quickly as well. Just a heads up for everyone, Twitter is down at the moment, which is- Yeah, it's in our practice. Yeah, I thought you guys were just messing around. No, I was serious. I went to try to find Peter's tweet to pin it so that we could look at the charts.

And when I go on anyone's profile, I can't see it. But spaces is spaces. So sometimes when Twitter breaks, people can't tweet, spaces tend to do really well because people can't use Twitter itself. So they just go into spaces. Happened last time.

So we'll see unless spaces start to crash as well. Caleb, we'd love to get your take before we move on from the CPI discussion. Thanks, Mario. Good to be here. Look, I just wanted to kind of chime in on the conversation that we're having right now because I think it's just really important to recognize and appreciate Bitcoin's up like 80% or 85% year to date amidst this disinflationary environment. So we have seen Bitcoin as a risk asset significantly outpace other risk assets

in this disinflationary environment, if you just look broadly at the index level in the equities markets. And so I just wanted to put that context there. And in fact, I did a post yesterday saying, or I think it was earlier this morning, sorry, but MicroStrategy hitting new all-time year-to-date highs yesterday. Same with Coinbase, same with Riot, same with a couple other miners. And miners have been hitting... Let me mention, Caleb, let me give you some numbers and I'll let you continue. I was going to interrupt Ryan and give the numbers, but i didn't have them open and so bit digital is up 648 percent year to date marathon 430 percent riot 430 percent high date for almost 400 high so the list goes on obviously coinbase is up 192 percent and micro strategy is up 184 percent so so it's just like

everything is pointing in the direction and remember that's institutional buyers mainly and and that's why the the narrative of maybe institutions know that an ETF is going to get approved and they're prepping. That's their way to get exposure to the market, as Rand called it, the, what do you call it? The institutional outpoints. But yeah, Caleb, I just want to kind of highlight those numbers. What I saw them when the team sent them to me, I was pretty shocked. Yeah. I mean, 100%. I've been trading the miners to the upside pretty much all year

since Bitcoin broke above the short-term holder realized price in mid-January. I'm currently long Riot and DGHI right now, both positions significantly in profit. I'm not planning on selling them at least until we see evidence of them starting to roll over. I think the point that I want to make here is particularly for these Bitcoin mining stocks, these are essentially a derivative of Bitcoin itself. When we think about equities and asset prices in general being a forward-looking pricing mechanism, the fact that these derivatives of Bitcoin are trading at year-to-date highs, if anything, just gives me more confidence that Bitcoin still has room to move further in this market, right? Look at the dollar continuing to trend lower. Look at the two year getting rejected on those cycle highs, if you will. I think from that

perspective, right, this is giving me kind of more fuel to the fire that Bitcoin can still keep moving higher in this market. And I mean, look, these miners have ripped higher over the course of the past two or three weeks, while Bitcoin has been threading water between 30 and 31,000. So for me, that's also very interesting. And all of the technical and on-chain data points for Bitcoin are just looking extremely impressive. I mean, this rally that's gotten us here to basically 30, 31,000 occurred when? Right when Bitcoin retested the 200-week moving average and the 200-day moving average and the short-term holder realized price. There's so much confluence for all my chart junkies out there that Bitcoin is likely to keep trending higher. So I think you just have to be leaning bullish here. Raoul, I've got a question for you.

What would change your mind? I want to ask you and Joshua, what could happen that changes that entire sentiment and turns you from being bullish to being bearish? Listen, I'm generally based around my structural work on the business cycle and forward-looking indicators for economies and liquidity. So I don't have anything in the next two years that gives me any major cause for concern.

And those kind of indicators, the business cycle indicators, have worked extremely well over the last, you know, I've been analyzing this data for 30 years myself, and then prior to that, it works really well so I know it sounds ridiculous but it would have to be a black swan to make me change my mind that something has happened because again most of the data whether it's the CPI whether it's the economy is all already in the forward-looking data so I don't see anything that that changes that can we get more noise for sure but again my time horizon is longer than many people i don't trade so i'm looking is what is your before going to joshua um something you've been talking a lot about is the everything

code thesis can you tell us about that yeah the everything code thesis is the understanding that the great reset happened in 2008 i know everybody's waiting for the great reset it happened in 2008 and it became a debt jubilee essentially everybody cut all interest rates to zero and that meant that nobody had to pay the interest on their debts okay so that was a big event for the world everybody every major country in the world and most large companies all reset their debts at the same time. Those debts, they reset at three to five years. And the economy ever since then, completely in line with the Bitcoin halving cycle, has been entirely cyclical. So rates go up a bit when the economy gets better. And then once you

come later on in the cycle and those debts need to be refied, what you find is that the economy slows down because of the interest payments. And then eventually they get monetized by the central bank. So the central bank is monetizing the interest payments from the prior cycle. So we're about to monetize in 2024 all of the interest payments from the massive rise in debt from the pandemic. Okay so that and what I can do is prove out a number of ways in the everything code to show that forward-looking indicators that I use can predict the liquidity cycles and the economic cycle and because asset prices are so correlated like 97 correlated to these cycles that we've built some models on that we think and this is a hypothesis that we can forecast asset prices

out two and a half years from today which sounds ludicrous and crazy which is why it's called the everything code it's a bit tongue-in-cheek because it's like really if this is what is happening then we've got a forward look on markets from crypto to nasdaq to s&p going out to 2026 which is which is something quite extraordinary so it needs to be tested as a hypothesis it's obviously back test it works well but we need to see do the central banks start printing money to pay for the interest from the previous cycle now we know that the central banks start printing money to pay for the interest from the previous cycle now we know that the central banks now with interest rates at five percent those interest payments are gigantic and if they have to pay the interest well then it robs the economy of that too

because the u.s government for example is a hundred percent of gdp in debt and if they were to pay five percent interest then you've got negative 5% economic growth just because of what the central bank has done, because trend rate of GDP is low, 1.5%, 1.75%. So there's a big, big, big picture game. And once you kind of see it, you can't unsee it. Yeah, we're going to continue, Josh, I guess, with the same questions for Al, which I believe was what would make you bearish at this point. Yeah, I want to go back really quickly to miners. I think miners are structurally a little bit different. And we spoke about this this morning on your show, Scott.

Right. Like miners were losing money below 25 grand. Right. And they were basically going to zero and they had borrowed a tremendous amount of money. They were super levered up. And so mining stocks got totally destroyed, right? But then when Bitcoin kind of turned, the market started recovering. And then on top of that, you started to see all of the activity happening on the Bitcoin blockchain with Ordinals and with BRC20s, right? Miners were actually just generating a ton more revenue than they were generating before. And they were actually in profit. So I think structurally, it's a little bit different than Bitcoin. Obviously,

it's going to be incredibly correlated to Bitcoin, but I think there's obviously a lot of downside risk there. But what would kind of change how I view Bitcoin? I mean, I think the thing that we have to remember, and one of the things that Raoul mentioned was like absent a black swan event. I mean, on know, on the other side of the equation, right, like the market was getting absolutely nuked before we had the BlackRock ETF filing news too, right, which kind of was that event on the upside. So I think it's I think there's really two things to look out for three things, right? One is the ongoing stupidity of crypto, right, which is, you know, the FTX collapse, the BlockFi, terrible loans, 3AC, all of the stuff that we just see all the time in crypto. There's always some stupidity that happens in the market. Hopefully,

that stupidity is not material. That's the first thing. The second thing that I'm really looking out for, and while it's not specifically Bitcoin related, because Bitcoin is a commodity, if we see any sort of decision in the Ripple case, I know we've been saying this for years and years and years, and it's been dragging on, but that's a huge deal, right? Because if either there's some sort of settlement that happens with the SEC, or Ripple happens to win the case and is not a security, that's a huge deal for crypto and Bitcoin rips the upside. And the obvious thing is the ETF decision, right? And whether that decision is delayed or not, because I think if nothing happens and the decision is delayed, maybe we

get a little tiny sell-off, but then we kind of are just... I mean, right now, Bitcoin realized volatility is basically at its lowest level in years, right? So I don't know, we could continue to be channel bound if none of those things really happen. Yeah, I mean, it sounds like everyone sort of agrees. We could see downside based on news or some sort of fundamental event, but it would be very, very surprising to see the lows taken out. Right. So even if we see a drop, I don't think there's anyone here. Maybe correct me. Maybe, Gareth, you disagree. I don't know that we could actually see new lows on Bitcoin, meaning really trading below like 16,000. Gareth, what do you think?

Before, while waiting for Gareth, the question I wanted to ask, and I'm glad Dave is here as well. And Raoul, you gave us a bit of an update last time. I asked you what you think about alts and NFTs. With the new CPI data and risk assets doing well outside of crypto. Does that mean that we could start seeing finally some movement in the alts and other crypto assets like NFTs? So my view on this is, again, it's all part of the risk curve. NFTs are assets in the ETH economy or the Solana economy, depending which NFTs you're using. And that economy has been in recession. It's in recovery out of recession. Most people aren't

sitting on gains. They're sitting still on losses that underwater. So once you start to see gains or prices moving, then people move out the risk curve. And eventually when people are making real money, they'll start by NFTft so i think alts move first nfts are probably bottoming with this whole blur shenanigans and then um so out alts move next which i think is kind of august september uh we start igniting that space and then nfts come after that as people recycle profits into nfts people start buying punks again that kind of stuff. And then it starts to become more speculative

and people go down the risk curve in the NFT market as well. So it's setting up and it's very much like traditional financial markets. There's a lag. It's a really bullish space. JPEG's going to zero, sir. JPEG's going to zero. Look, Dave, it seems to be a pretty bullish space um do you do you want to ride the train with us are you on you know the same wavelength after seeing the cpi data and everything we've seen over the last few days and weeks um are you bullish my friend well yeah i

mean the funniest thing that i think what's going on that people aren't talking about is remember the last rally when altudor jones made his famous fastest horse comment that everyone piled on. And the reason is because the thought, you know, the speculators kind of got all worked up, lots of FOMO, et cetera. I would say that Larry Fink's interview on Fox News was 10x or more important than Paul Tudor Jones, who, by the way, Paul Tudor Jones has reiterated his stance on Bitcoin as well. But the difference is, is the type of people who are likely to try to buy and are buying are much more patient and not prone to FOMO. They're the kind of people who average in, who are providing a bid when the market you would think would sell off. And we've had a few of those times where people scratch their heads saying, wait a minute, why isn't it selling off? And the answer is, it's institutional buying. We all have to remember

that Bitcoin trades like an option. The market is pricing basically 4% or 5%-ish probability of becoming digital gold or beyond. And if you read, I loved, by the way, Arthur Hayes' last missive, where he talks about Bitcoin being almost certainly the currency of choice for AI, and there's more to come there. There is a lot of reason to believe that Bitcoin will have a much higher percentage than ever before in its history

of reaching that threshold, which is at least 20x. So these squiggles on the line that we're focusing on are happening for a reason. The reason the tight spring is coiling is because institutions are more patient until they're proven that they have to be more aggressive. So as long as speculators chase up to 31, nobody buys and immediately falls back, the institutions are happy to buy on the way back down. And so you're seeing this constant grinding transition from what I would call weak speculative hands to strong hands. Eventually the supply, the lack of supply will win out. And so that's the thing that we have to watch for. Those inflection points can happen really fast.

I mean, it would take almost nothing to have Bitcoin bounce into the two trading ranges that got collapsed in 2022. I mean, my thesis has been 23 is going to erase 22. And so if that's true, we'll see a run into the 40s at some point and then a run toward the all-time highs at a later point. And that's what I still think we're on target for that. And the narrative is certainly stronger now than ever. Is your feeling that that run to the all-time highs comes with the normal four-year cycle and the halving? That's kind of what I expect, but it seems that that's pretty crowded. Yeah. I mean, look, the normal four-year cycle isn't normal. I mean, people get excited and they start pushing up toward the halving and the follow-through buying doesn't

materialize because miners aren't stupid. Everyone assumes miners are morons. These are some smart people. They're planning on the supply curve. They're planning on the stuff. I mean, the truth of the matter is it's been out of cycle. It's been either before it or after it, et cetera. I mean, look, Bitcoin, one of the things that is amazing about Bitcoin is a monetary policy that for those science fiction fans, I always compare Satoshi, whoever they were, because I suspect it was more than one, to Harry Seldon and Foundation because they basically picked a monetary policy that's working and looks to be well-established and looks to be constraining supply in the right way and balancing that with incentives to build the network. I do think a lack of supply is relevant, but the far bigger answer is demand. To the extent that we start

seeing traditional financial players starting to put half a percent or a percent or more in standard portfolios, there just isn't enough supply to accommodate that at these levels. And you'll start seeing those jumps. Scott, I want to talk about something else. I want to see if David Silver could join, because I know we were meant to focus on the CPI data today in the market's response. But have you looked at, has anyone actually, Eleanor, you're here. Eleanor, I was here. You should get back up.

Yeah, perfect. Yeah. And David Silver, is he still in the audience? I'll try to bring him in. I invited him. But Eleanor, perfect. Yeah, bring him in. is he still in the audience? I'll try to bring him in. I invited him. But Eleanor, perfect. Yeah, bring him in. So guys, there's a ruling

that Eleanor mentioned yesterday and she knows it better than I. I'm just going through a tweet that Orlando BTC, which I'll try to bring in tomorrow to discuss. But Eleanor, can you tell us more about the ruling,

not the ruling, sorry, the charges by U.S. Attorney's Office? Because anything that targets hackers, and that's why I really like yesterday's project, what was it called? Arcom or something. I really like that project. Oh, David, are you there as well, David?

David, are you there? Mr. Silver? Before going to Eleanor, I just want to make sure if you're there. I'll wait for David to come on. But Eleanor, can you tell us more about the charges? Because it's anything that targets hackers and scammers

kind of lights me up and I'm glad that regulators are taking action. But tell us more what happened yesterday and why this is so important. Hey, yeah, thanks so much. So I think I tweeted this yesterday

kind of on the tail end of our spaces with Arkham, which was pretty, the timing was pretty cool. But yeah, I mean, this kind of in a nutshell, I haven't gone over all the charges. I do need to read the full indictment, but just as an overview, this guy who was a senior software engineer at an unnamed company hacked a decentralized exchange that ran on the Solana blockchain and was able to kind of

exploit the code, right? So there was weaknesses in the code and he was able to produce what's called a flash loan and basically kind of just fooled the code, I guess, into thinking that he was making these deposits and then he got all this money back kind of like on those loans, but they're uncollateralized and it made him around, I think it was around 9 million.

I want to say 8.8 million, right? So he basically fooled this technology into thinking that he was a real person, a real person with funds. And he was able to get all this money, which is, you know, I mean, 9 million is not a lot at the end of the day. It's not like talking like 900 million, but it's a good kind of point. I don't know. There's more to it. There's more to it, though. He actually returned 7.5 million out of the 9 million. So he did a deal with the exchange,

and he only kept 1.5 million in order for the exchange not to refer this to law enforcement and to allow him to keep some of the money. So he kept 1.5 million and told them about the vulnerabilities, and still it's only 1.5 million, and only is obviously relative to other scams. And yet the regulators, the attorney's office took action nonetheless. And I'll talk in a bit about how they managed to find him, which is really fascinating.

But the amount is even smaller than nine million, Eleanor. Yeah, yeah. And I thought that was pretty funny. Actually, when I read that, I was like, oh, we have like an honest guy here who's willing to return, you know, 75% of the funds. But in return, he wanted them not to turn him over to the feds, right, which they ended up doing. And I believe there was something similar that happened on another Solana exchange. I think it's called Mango Markets. They were hit last year. And the attacker also asked them not to press charges, you know, if he returned some of the funds. So you've got kind of these like negotiations with criminals

going on here. But I thought it tied in nicely to the conversation yesterday, because, you know, Zach XBT was actually, you know, he, he put out there, he was able to track this on, you know, through his blockchain data tracking, however, he does it, it's pretty cool. And he actually was the first one to report it, I think, what happened last July. So using on-chain data to catch these criminals is, you know, obviously that's been going on. People like Zach have been doing it for a while. But now you see the U.S. Attorney's Office also making inroads with that. So, you know, seeing the value of blockchain technology and being able to catch cyber criminals using on-chain data, you know,

this could be kind of a turning point. It is. And like Orlando said the following, I'll read out one thing he said. What this indictment tells me is that the DOJ will pursue criminal charges if a person intentionally uses a protocol in a way that is not intended to be used. That means if you find a loophole and, you know, we've talked earlier that code is law. That was kind of the narrative a few years ago well that narrative is gone now and regulators are not accepting that narrative even if something's coded wrong if you don't use it the way it's intended to use we saw the DOJ did take action and Orlando says the following that's pretty big it's also difficult

to draw a line here between benign non-intended use of code and fraud. People use code all the time in a way that's not intended. When does it amount to fraud? Which is really interesting. David, I'm not sure if you've seen, have you seen those charges, David? I have, and it reminds me of a case out of Nevada a couple of years ago where someone hacked,

and I forget which decentralized exchange it was, but he hacked for about $30 million. And he said, well, it's not really a hack. I simply used the code as written. That was more than that. How am I being told that what I did was wrong here? If the argument is code is law, I used the code for as it was written in its intended purpose.

And it's still actually going on. But I think that, you know, it's a really odd conversation because I'm literally on the side that code is not law. I don't believe in that mantra. But here we're having this conversation where all of a sudden, if you use the code as written, you're doing something wrong. And I think legally speaking, that's going to be a problem. And what they did yesterday, and we talk about this a lot with the SEC and enforcement actions, you're looking at low-hanging fruit. They're going to try and make law on low-hanging fruit. This isn't a guy who has a lot of money to defend himself, and all of a sudden, all guns

are blazing at him. And it's low-hanging fruit that says, if you go into an exchange and you do something, and Mario, I think these were your words, not the intended use of the decentralized exchange or the protocol, then you've done something wrong. How is that possible for the people whose mantra is code is law? That matches the statement.

Sorry, Mario, I was saying, how do you determine what the intended use was? That matches the statement. a loophole, but was the intended purpose, right? Within the realm of that. So it becomes as usual with the law, I think, and David, I think you're right. They're going to go off the low hanging fruit. It becomes a very, very slippery slope. Exactly. I mean, how can you argue that the guy does something wrong if he's simply applying the algorithmic code and using the code to his benefit? This is almost insane to me. And this puts me on the opposite side that I'm normally on. But in this particular instance, I mean, these guys are doing what the code is. If the code's

written poorly, there's no defense of the code's written poorly, and he utilized an intended valuable circumstance in the code to monetize. There's more to it, by the way, which makes it funny. So the way they found him is first they managed to find out that he bridged tokens from Solana to Ethereum.

I don't know how they managed to track all this, which is impressive. And for me, it's a positive development. The DOJ is paying attention even to small scams and scammers are struggling to get away with it. So bridge tokens from Solana to Ethereum, use the swap aggregator to get funds to other wallets, swap proceeds into Monero and then used overseas crypto exchanges. And then the way they found it is they managed one of the ways they found it is they managed to get its Google receipts. And then the guy, the scammer, his name is Ahmed. He's, he searched for the following terms.

No joke. DeFi hack, several news articles about the exploit, the Dex's website, crypto white collar criminal attorneys. He also searched for embezzled wire fraud, how to prove malicious intent, stop fed government from seizing assets and buying citizenship.

So they've used different means of finding it. But in my opinion, it's a positive development. I understand the slippery slope. But in most cases, for anyone with morals, it's not hard to find out what's intended use and what's not. And I think it's pretty clear on most protocols, they tell you what the protocol's intended to be used for. So for me, that doesn't seem that big, in my opinion, not as big of a concern. But then again, you know, David, you're the expert there. Eleanor, any final thoughts on

the story? David, go ahead, and then we'll go to eleanor all i was going to say is i think there's a big difference between civil and criminal and i think it's hard in a criminal context to say someone used the protocol as designed and then call them criminal eleanor yeah i think i agree with that but i also think that there's different cases obviously every scenario is different what it sounded like you were saying, Dave, before with this other case is that this guy was kind of saying, well, I did it. I use the code as written. And this is where it's wrong. And this is what happens when I use the code, you know, for this purpose. And here, I feel like it was just this guy was clearly he had malicious intent, right? You saw the Google searches, white collar crimes, you know, how long will I go to jail for? So you've got different levels of it. But I think I think here was definitely, you know, a malicious intent. You should have used chat GPT. It was too early.

All right, guys. Ran, are you with us? Ran is out. Guys, I'll wrap this up. I just wanted to find the final. Hey, man. Yeah, cool. Any final words? Ryan is out guys I'll wrap this I just wanted to wrap the space and the way I would wrap it is just say everything seems bullish, CPI data is great I don't see

any reason to be bearish, I think most of the speakers agree, let me see if there's anyone on stage that hasn't spoken yet, no everyone has and I think everyone's bullish as well I'll just tell the, I'll give Ryan the final mic in the meantime while doing that, just for the audience. If you want to come on as a sponsor, today we have a sponsor. I didn't pin the tweets.

I'll pin them now, or just DM me or Rand. But Rand, any final words, man? Really quick, Mario. Really quick. Oh, following the ugly circle. Yeah, go ahead. Follow the ugly circle. Crypto underscore... Don't say it. No one's gonna... No one's gonna search it. So what you tell them in Scott now, I'll teach you ugly red circle Exactly the panel Mario would like that No

because he's my dad and tells me exactly how to do things that you should click on that red mic and follow that account because That is actually where we will eventually be hosting The Twitter spaces and you'll miss it and be really sad. What worries me is that too many people are bullish. Everyone feels euphoric. That's the silliest. People have to make that argument. To me, that's the silliest argument.

People need to be bullish for a market to go up. Now, of course, people are going to be bullish when the market reverses because it has been going up for a while and then they turn bearish. But I think that you need people to be bullish. Otherwise, who's going to buy if people are not bullish? I mean, the point really, Mario, is that people are talking bullish, but they're not putting their money to work. The market is obviously not. But that's a good thing. But Dave, that's a good thing. That means people are bullish and it's waiting for something. Exactly. It that's a good thing. That means people are bullish. They're just waiting for something. Exactly.

It's climbing the wall of worry. Everyone who says they're bullish is basically saying, well, I'm going to wait for this or I'm going to wait for that. I'm going to wait for that. That's the reason that coiled spring happens. But I think one thing, if the ETF decision is not positive, I'm less worried about the XRP case. But then again, I'm not too familiar with it. But for me, the etf decision is could reverse things i just don't think people are giving it enough weight that's what reversed the markets the market was not doing too well before blackrock came in um and if that does not materialize i think

the market has priced in an approval um but then i don't predict markets i'm really bad at it everyone like i never trade never have um but i i genuinely think that if um based on every single space we did um the most positive things people refer to is the etf decision because in terms of macro um the market hasn't been responding too positively to macro like we saw today cpi data you know the market should rip today like equities did but it didn't um unless you want to make the argument that the silk road bitcoin moving kind of um um kind of uh you know didn't allow them out at bitcoin to to to to rise much but that's a difficult argument to make because they came out a while after cpi decision came out or cpi data came out so that's my two cents i think we'll all be looking forward to that for that etf decision

do we know does anyone know is there an exact time of when that decision will be made? We know the date. Do we know the exact time it will come out? I don't think so. I just think we have that August date. Okay. I would have done it live. If I knew the time, I'd do a live space and all of us just waiting for it. That's how serious something it is.

Otherwise, guys, really appreciate it. I've pinned the tweets above. If you want to come on as a sponsor or work with us in any other capacity. And we'll see you again tomorrow. Enjoy the good news, everyone. Thanks, everyone. Bye.