The Wolf Of All Streets - Bitcoin & Alts Crash | Battle For Crypto | Live panel with Noelle Acheson, Dan Gunsberg and Steven McClurg.

Episode Date: June 15, 2023

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It's been a rough 10 days for cryptocurrency markets, including Bitcoin, which took another leg down today and yesterday after the FOMC meeting. Is this a result of the macro and what we're seeing there? Or is this a continuation of the contagion from the Binance and Coinbase lawsuits and the increasing enforcement action from the SEC? I've got a great panel today. I'm going to be talking with Steve, Noel, and Dan, all faces you've seen many times about these topics and inevitably a whole lot more. You guys don't want to miss this. Let's go. What is up, everybody i am scott melker also known as the wolf of all streets before we get started please subscribe to the channel and hit that like button yeah obviously brought up

fomc yesterday we did a marathon twitter spaces putting in about six hours after the youtube stream because it just kind of kept going and we rolled right through FOMC, got the pause that everyone was expecting, but not necessarily in the manner that a lot of people were hoping for, in my opinion. I think that I was having a debate with Rand Neuner that a pause is not a pivot. And I told him I was willing to die on the hill that the pause is not a pivot as he argued that it was a pivot. I think most people after that meeting are on team pause is not a pivot. I love the opinion of our guest today.

I'm going to go ahead and bring him right on. Dan should be here in a few minutes. Listen, I say pause means you can keep tightening and a pivot says you're going in the other direction. Right? I mean, Noel, I see you nodding your head. Is that correct? Yeah, totally right. And let's just backtrack a little bit. A month ago, Scott, the market was saying there was a 0% chance that the Fed was not going to cut rates before the end of the year. 0% chance they were not going to cut rates. And now, of course, they're saying,

all right, maybe they're not going to cut rates this year, but they're still expecting rate cuts, perhaps, in the beginning of next year. The has said they said yesterday we might raise rights again rates again raise rights you try saying that fast again uh we might raise rates um again within the next few months the market took them at their word but he if you parse his comments if he doesn't care what he actually said in the first conference that's not what's going on at all what they did yesterday was signal that this is not a pivot as you said we are not necessarily going to be cutting anytime soon read our lips take us seriously we mean it this time i don't think they will raise again i'll go out on a limb and say that but they want to convey to the market that they might.

Okay, you don't think they'll raise again. But there was the skip heard around the world. Like I said, I dubbed it the Freudian skip. I'm going to trademark that. Where he said, you know, effectively, it slipped out. He said, skip, well, not a skip, a pause. He backtracked very quickly, which gave people the impression that maybe they're going to go for an every other meeting raise, which he outright dismissed, of course. But Steve, I mean, are you of the same opinion? I was raise rates again this year, maybe a few times, and probably into the coming years. I did not believe that they were going to raise yesterday. But if you back up, and I'll share with you why I believe that, you've got two things going on. Number one, you have inflation. Inflation, even though it's come down to only 4% more per year, that's still high inflation. And that compounds upon the higher inflation rates that we had over the last

two years. And I also don't believe that inflation is over. So we still have massive government spending. We've essentially eliminated our debt ceiling for a period of time. And until the government decides to stop spending more money, we're not going to see a pause in inflation. And the inflation that we have right now is also a result of the last 12 years of easy monetary policy where you had no inflation. It's just taken time to catch up. And that's primarily been through wage increases over the last few years. So inflation is coming again. What we're seeing right now is a reversion to the mean. So we had a really high rate of inflation. Now we've gone to a lower rate of inflation and we'll probably settle somewhere around 7% and 8% again. I looked at the price of oil as one of the indicators. Oil's down pretty low. It's at $70 a barrel.

And I do believe we'll probably see a double in the price of oil, if not by the end of the year, if not by the first quarter of next year. So that higher price of oil, which is really due to supply demand imbalances uh will cause a lot of things to go up food which relies on petroleum to grow and then of course transportation of all goods so uh that higher rate of inflation will force the fed to have to raise rates again along with the increase in government spending. Yeah. And to your point, we're seeing quite a few arguments saying, yes, oil is down, like you said, but that means it's probably more likely to go up, A. But B, the amount that it is down is the reason that CPI is down so much. And when you really dig into the other sectors,

they're not dropping. So if oil is the linchpin and goes the other way, all of that CPI is going to pivot right back up, right? I mean, Noel, the other thing I found really interesting in that meeting that you probably heard, you can respond to Steve, was that the Fed effectively said, we're not going to be buying these treasuries after the debt ceiling, right? And I thought that was interesting because I figured that that might be exactly who the Treasury would be selling those brand new bonds to. I'd like Treasuries. Yeah, all sorts of things to pick on there. Yeah, the Fed, a very clear message that we're not going to be financing the government on this.

And they also transmit the message that we have to clean up our balance sheet. They are going to be continuing with QT. I think that is going to be the equivalent of another rate hike, if not two. But it doesn't mean there actually has to be a rate hike. Totally agree with you, Steve. I think oil price is going to end the year much, much higher. The supply situation hasn't really changed that much. We might have Iran coming online, but I think that's largely discounted. We have probably a very harsh summer ahead of us, which a lot of demand for air conditioning in the winter is fast approaching, happens every year, and the European supply situation has not yet been solved.

So unless there is a rapid end to the war, I mean, we can all live in hope, right? I do agree with you, there's going to be a supply-demand imbalance in oil. But here's the big but, inflation is going to be largely coming down because of supply chain issues, which are quite fragile, but getting sorted out more or less. Sure, there are many geopolitical risks that could break them yet again. We have potential tension in the South China Seas, for instance. So there's a lot of risk there. But right now, the inflation is sticky, largely because not so much of goods purchases, as we know, prices are coming down there, but because of services. And that has largely to do with unemployment, which is going to start to move fast.

And a lot of the goods inflation that remains, there is some, is because of supply chain issues that drove the inflation in the first place. It is the barrier to it coming down faster, but that is working its way through the system. So I think inflation will be coming down slowly, painfully slowly, excruciatingly slowly. No way are we getting to 2%, in my opinion, probably for the next few years. But I think that's going to be enough, combined with the QT, to keep the government cautious, cautious about adding extra strain to the banking system, which is fairly stable for now, but the strains have not gone away. We have commercial real estate lurking in the background with very sharp teeth. And there are strains coming up in the emerging markets, debt as well, that could throw the entire financial system into turmoil, which the Fed

does not want. So I think we're going to see caution. I think it wants the leeway. It wants to send the message that it could raise rates so that the animal spirits of the market do not get overconfident like they did for most of the early part of this year. But that's why I think it's nice to have that possibility in their toolbox, but I don't think they'll use it. That said, I'm very pessimistic about the outlook for markets more broadly. Yeah, I mentioned that we had Nouriel Rabini on yesterday, and he made me want to go hide in the corner in the fetal position and cry for the next six six months to six years yeah but yeah it's awesome yeah we we've got a you know we we have something we say anytime you

know that um we talk about norio rabini right even even? Even a broken clock is right twice a day. Dr. Doom. I mean, they call him Dr. Doom. You should have heard his, I want to pivot to Bitcoin here a bit. You should have heard his rant. We had the audacity to ask him about it in the midst of his already dooming gloom about finance,

and he went on a five-minute tear. Scott, you are a brave man. Yeah, well, you know, we needed the soundbite, I guess. I just wanted to refresh on his position. It hasn't gotten any better to tell you, but what also hasn't gotten any better is Bitcoin's price, right? I mean, I think that a lot of people technically have been looking at this 25,000 area, myself included, because it's where the market made a higher high for the first time after that breakdown from 69,000. Well, we just kind of passed through it.

I mean, the day's not over and the week's not over, but it seems that Bitcoin is reacting to everything that's going on. Do you think this little leg down right now, because actually Bitcoin held somewhat stable, I think, through all the Coinbase and Binance. Do you think this leg down is macro FOMC fears? Do you think it's Binance? Do you think it's Coinbase? Or do you think it's just everything is pressing down right now? I think it's all of the above. So FOMC fears,

you know, Bitcoin did break the correlation with risk assets earlier this year. Now that we want it. Yeah, that's going to become closely related again. And anytime that you've got a market that we have, and by the way, whatever, whatever Rubini is saying right now, right now I'm agreeing with them because I think things are going to get really bad. We're in for a hard landing. And when that happens, all risk assets begin to behave the same again. So fortunately for us that are investors in Bitcoin, it is already close to the bottom. I don't know if this price is the absolute bottom, but we're within a range. We could see another 10%, 20% leg down, but that's nothing. I mean, we could see that in one day. But we are at the bottom. If you're a

long-term buyer, this is where I want to be buying it right now. And I mentioned earlier that we're buying bonds. We run a fund. And when Bitcoin kind of hit that 27 to 28 range, we started selling Bitcoin and buying T-bills yielding 6%. um there is a buyer out there for uh short-term treasuries and uh we're one of them you know it's uh it's you know with an inverted yield curve like we have right now six percent is amazing you and tether yeah i mean yeah it's a it's a joke but i mean we saw the tether made over a billion dollars in a quarter and that's just because interest rates are high and they're buying short term bonds. Right. So if they don't try to fix it.

Yeah. No, I'll circle as well is running a very profitable business model right now. But, yeah, no, I am trying to agree with everything that you said there, Steve. I'm going to push back slightly on the correlation with risk assets. I don't think that's necessarily going to come back because right now Bitcoin has a lot of headwinds that risk assets don't have and i don't think interest rates are going to be coming down anytime soon so i don't think there's going to be that driver of easing from the largest financial market in the world we're probably going to see some easing in asia for sure but there's a lot of other things going on there as well but i do think bitcoin is being driven lower by are all the factors that you mentioned especially in my opinion two things that we need to always bear in mind.

One, there are structural headwinds against Bitcoin. I'm not just talking about the regulatory uncertainty. That's not necessarily driving the price down. That is keeping the buyers away, though, institutions who are the drivers of the price because they move the size. They're sitting on the sidelines, especially the US ones anyway, until this blows over. And international institutions are getting more involved, but they are also waiting for regulatory clarity. Even here in Europe, where we have a framework, even in Hong Kong, where one is

emerging, it's still not as clear as many institutions would like. So they're still going to probably wait a while longer. It's the lack of volume, really, that I think is the issue here. With the institutions sitting on the sideline. There are no buyers. There are no buyers to offset the selling pressure that we are seeing emerging from a structural player. Possibly it's easy as saying it's not Binance, but there does look to be selling pressure in the market on low volume with no buyers. That's what we're seeing right now. I don't think the Coinbase is it issue directly, but indirectly, and that until this is sorted out, we might as well bide our time. It's not like there's nothing else

such as AI that is a risk asset. I was talking to Bill Barheit yesterday. Steve, you might have some color on this because I know that you're pretty close to the mining industry. He said that right now that seller is the miners, and he speaks to quite a few of them all over the place. said this is a point where based on their levels of profitability and what

they think is maybe coming that they're everything they mine they're effectively selling right now they're not holding in this current market but to his point he said that also means that because we're not crashing with that much selling pressure that we see these major whale wallets, the people who hold 1,000, 10,000 Bitcoins increasing. So retail's gone. All the little fish are sitting on the sidelines, apathetic or depressed, and the miners are selling off majorly and the huge players are buying. Steve, does that align with your thinking at all? It does. I mean, the good miners, the OGs that have been through multiple cycles are selling immediately. And it doesn't mean that we're at a top, but it means that we're going down, right?

So they usually get it right. I like to look at, I've always looked at that activity when I try to form my opinion. So yeah, I don't really see Bitcoin going up. Again, long-term buyers, I think this is a great time to buy because you might get another 10% down. Who cares, right? In the long run, if you're holding for a long time. Yeah, I mean, Bitcoin at $300,000, okay, that's hyperbolic. But in however many years, you don't care if you bought it 22 or 25 or 27. It doesn't matter at all.

Right. Go ahead. Many people have asked, many people have asked, many people have asked why are the miners selling when energy prices have been coming down

and that's their biggest cost? Well, it's actually not necessarily their biggest cost across the board anymore. Most of the expansion of miners was done through debt financing.

Rates have been going up. Interest costs are one of the reasons that they have to be selling more than they would otherwise have to. Yeah, and I think that a lot of them invested massively at the top of the bull market just because that's how the cycles go. Even Fred Thiel from Marathon sort of admitted that to me when I talked to him. They bought all these machines at a price five times more than it is

now to scale. And now when they're coming online price is down difficulty is at historic highs which is not something you've seen in previous cycles so they just need to take profit where they can right i think the mining floor right now profitability is still like 17 18 000 so they're actually making quite a bit of money the big miners right now even with all that said i mean steve is that accurate i think 17 18 ish is what I've heard well it's it's it's all over the map but but yes uh I agree with both of you it's uh not number one interest costs have gone up um you know NYDIG loaned to basically every miner out there and uh so there's there's there's a lot of outstanding debt that's not getting repaid and there's a lot of outstanding debt that's not getting repaid. And there's a lot of outstanding debt that's been anxiously trying to get repaid.

So that's one side of it. And then any reserves, they're not really holding Bitcoin in reserves either because of the expected price downturn. But that is the major cost right now. It's not necessarily energy anymore. I want to dig into this correlation. So I was trying to find it while you guys were talking. There was a tweet or some sort of news story, but I can't find it. But effectively said that now what we've seen is that when tech stocks drop, we get a strong correlation with Bitcoin going down.

But when tech stocks are going up, we've de-correlated or seeing this high correlation to gold which is like exactly where we don't want to be in theory right but i mean this year alphabet up 38 microsoft 40 apple 46 i mean you get to like meta 117 tesla 138 nvidia 191 i mean these large cap moves in tech to the upside are insane and they start to dwarf now i mean we're still up 50 on bitcoin for the year but that's kind of because we started the year so miserably so is this correlate i mean is correlation just not even worth talking about anymore or do you actually think that now we want to cheer against it because when tech comes down inevitably that's tapped for bitcoin yeah well

really quick just oh yeah just just on the correlation piece you know we've been uncorrelated for the most part all year but um um you know i i when the macro economy really when we really start seeing the pain towards the second half of the year towards the end of the second half the year you know that's when know, that's when these, that's when these risk correlations come back. But for the moment, I really don't see us that correlated until that, until that event happens. And that event, by the way,

is clear from you saying you think Bitcoin's effectively bottomed, but things are about to get a hell of a lot worse in the world, right? You think people are virtually correlated if we're going to new lows on stocks and Bitcoin's ranging. Yeah, even in a correlation though, let's say that tech stocks go down 30% and Bitcoin goes down 10%, that's still a correlation, right? I don't think Bitcoin will go down as much as tech stocks will because we've already come down.

We faced the same situation last year. Bitcoin kind of led the charge and then everything else caught up. In this case, it'll probably be tech stocks leading the charge and then Bitcoin catching up. And that event

is going to be consumer sentiment. Yeah. Right? Correlation itself, though, is a very misunderstood metric. I mean, if you actually look at how it's calculated, it's not just the amount of the move that matters, it's also the directionality. And so to be positively correlated,

you need to move in the same direction. It doesn't matter quite so much if you're moving by the same amount in the same direction. To be negatively correlated, you need to move in the same direction. It doesn't matter quite so much to be moving by the same amount in the same direction. To be negatively correlated, you have to move in opposite directions. And so basically, we just have no idea anymore what that's going to be. I agree with you, Steve, we're not correlated at the moment. I don't think we will be again, except for on the legs down. But let's face it, that's short term.

Another thing I've learned about correlation, having looked at it so closely over the past few years, is that we can fit the correlation timeframe to suit whatever narrative we have in our heads. There's always going to be a number that supports our theory. We do know that when tech stocks go down, Bitcoin's probably going to go down as well because the cohort of holders tends to overlap. When you need to exit your positions to meet margin calls on your NVIDIA, you're probably going to sell Bitcoin because you have less losses accumulated there on that particular day. That's why they tend to move there. But again, the risk asset narrative, there are other narratives now driving Bitcoin that, again, the typical risk assets just don't

have. Yeah, I laugh when you say, you know, if you need to get liquid, you're going to obviously sell your Bitcoin, the loss is less. And you can, if you need to get liquid, you're going to obviously sell your Bitcoin. The loss is less. And you can also do that at midnight on Saturday. Right. Which you can't do in the rest of the market, which is an amazing feature of Bitcoin. It's 24-7, 365. But I do think that's why we see that massive correlation.

Feature, not a bug. If you have an itchy trigger finger, there's only one thing you can sell about half the time so steve your case obviously is hard landing right i think i i somewhat tend to agree what does that look like i mean timeline wise what are you somewhat expecting yeah so right now we have a really interesting situation in the labor markets. A lot of service industry and skilled labor, blue collar labor. There is a demand for labor. You know, the restaurants are still having issues buying food server, you know, hiring food servers and cooks and um the entire hospitality industry is is really struggling right now uh as well as any service industry as a matter of fact uh even going

to more of the skilled labor end of of what i'll call the service industry is airline pilots there's not enough airline pilots uh to go around and uh there's there's actually a um um the uh the the uh pilot union is actually about to uh get through a uh a 28 percent uh pay increase and they can do that right now because there's not enough pilots so um so so so these things are affecting, again, inflation and cost in the service industry, while most higher paying white collar jobs are being cut right now. So a lot of tech jobs, finance jobs, Citi just announced another round of layoffs. So you have higher paying jobs where you're losing labor, and then you've got lower paying jobs that still need people. And that doesn't necessarily correlate.

You're not going to be an accountant and then go start doing construction on the railroad or roadway. So you've got that situation happening right now where there's less money flowing through the system. People are borrowing more. So credit, and I'm sorry, I've already told Scott earlier for everybody that's on, I just had a tooth pulled. So a little bit, you know. You're speaking quite well for someone who had a tooth pulled i wouldn't be here it's hard for me to open my jaw so um so essentially what's happening is we're seeing a lot of jobs cut uh less money to spend on things but people are still spending money they're spending money on credit so credit for so consumer credit is going up and it will eventually max out. Things are costing more because there's not enough service labor. So every time you go to a restaurant, you'll probably

notice the price increases or go to the grocery store, your grocery bill is higher. And then eventually, of course, gasoline is going to be higher. So when all of that comes to fruition, it's going to cause a real drain on consumer sentiment. And we'll probably see that in the fourth quarter of this year. And once you see that, you're going to see people buying non-discretionary items or spending a lot less money on both discretionary and non-discretionary items. And eventually what will happen is consumer sentiment will drive the stock market, which looks at consumer sentiment. And then you'll see a big dump in the stock market as well, along with probably a couple of other rate hikes. So, you know, again, a rotation out of equities into bonds and a general rotation out of equities probably towards the end of the year.

And that's probably where we'll start seeing, beginnings of a hard landing. It's also not reflected in the figures yet, what you're talking about, Steve. We all know people who have lost their jobs, unfortunately, and yeah, mostly on the white collar level yet. But let's face it, a city executive isn't necessarily going to sign up for unemployment insurance right away. And so we're not seeing the result of that. Sure, it's still a small proportion of the overall workforce, but it's not insignificant. And it will eventually start to show through. We're also seeing pressure at the discount level. Discount retailers have been issuing earnings warnings, in fact, because they're starting to see even more savings at the lower income level, which says, as you said, Steve, that consumers are getting worried,

even at the level, even in the strata that, Steve, that consumers are getting worried, even at the level, even in the strata that are not necessarily losing their jobs just yet. And even more importantly, we have to bear in mind the commercial real estate issues. With offices 50% empty, there is less demand for the restaurants in those downtown areas. There's less demand for the sandwich bars and the hamburger places and the fancy restaurants for those business dinners. And so those restaurants are eventually going to start closing down, and that is also going to start moving the unemployment data. Once unemployment data moves, historically, if you look at the chart, it moves fast, and

it moves fast for the snowball reaction that the bankruptcies and the sentiment produces. Yep. that the bankruptcies and the sentiment produces. Yeah. No, I'm seeing all those same things. And really just to, I'll just illustrate something really quickly, right? With prices going up, a typical family takes a long time to adjust their spending habits, right?

So you're still going to spend the same amount on groceries, So you're still going to spend the same amount on groceries or you're still going to buy the same amount of groceries, even though it costs more. You still have these habits of spending money that takes a long time to unwind from. And even though prices have gone up, they're still buying the same amount of things, but they're buying it on credit, right? And so right now, the consumer credit cycle is very similar to what it was in 2007 i made it back alive somehow i literally lost internet switched wi-fi and somehow the stream kept going i have no idea but thank you for holding it but that said i missed what you guys were talking about for the last two minutes i'm assuming did you hear me when

i was saying that everything is crowded and seemingly really expensive or was I already gone by that point? Because that's been blowing my mind. Yeah, I was saying that everywhere I go, prices are triple, but it's still packed and it seems like everyone's traveling like mad. Do you feel like though that this is kind of the last hurrah summer? Everyone's going back to work and accepting that they're going to be in big trouble in the fall and just trying to enjoy it for this last moment because the consumer spending trillion dollar debt on credit cards seems absolutely insane we're still on revenge spending mode let's face it the pandemic wasn't that what we need so we're still in revenge spending but you know it can turn fast i mean i think steve was hinting

earlier sentiment can be brutal we haven't even begun to see how the damage that that can do when we start to see downtowns almost empty, restaurants starting to close, and the unemployment figures ticking up. And I like that term revenge spending because if you look at what happened in 2020, a lot of people lost their jobs, but they continue to spend money because the government bailed them out. There were a lot of people that were, say, making minimum wage and under the unemployment benefits that they were getting, in some cases, they were making 50% more than what they were making before. And that was a large portion of a labor. So there's this mentality that's kind of stepped in where it's like, okay, I may have lost my job,

but I'll be fine. My daddy will bail me out, right? So that's sort of like that. It's kind of a take on your revenge spending. It's like, okay, well, I lost my job, but everything's going to be fine. I'll get bailed out, because a lot of people that that was their reality just just a few years ago. And also, there's the intangible wealth effect. The stock market keeps going up. So we are wealthier. Even with our 401k, we are wealthier, although we're not because that's not realized yet,

but we feel it. So as long as the stock market keeps going up, we're going to continue to feel wealthier. We're going to go to those nice restaurants and those nice holidays. When it turns though, again, that'll change fast. Yeah, I think that maybe on the top end, people are wealthier and doing better than most people suppose.

I think that's just the reality. I think wealthy people have continued to stay very wealthy. Wages have gone up. They still haven't really felt this. And so those are the people who can do that revenge spending that you're talking about and haven't had a reckoning. And I think it's just a disproportionate where that increased debt is coming from. I mean, I don't think people who are poor and struggling are the ones who are filling up luxury hotels and first class on airlines but kind of i mean you know the the wealth their own relative level i mean think about this right remember about remember a year or two ago there were all these like uh viral videos going out

with these you know 22 23 year old kids that were getting jobs at tech companies and they were like tick-tocking their day and all they did was sit around and drink smoothies and go get wine and have picnics and that was their workday. Well, how many of those people still have jobs but still have that expectation of this is the way that life should be, right? So I think a lot of people are still, they may not have jobs so they're still spending the money yeah i want to talk about altcoins right because we've talked a lot about bitcoin but uh the same sort of sideways reality has not been the case for all coins especially any that have seemingly been named securities of late the cardano i think i read that 90 of holders of cardano now are underwater it's a lot

uh matic polygon seeing massive move down solana all really last friday and saturday when we saw that sort of 27 30 percent drop across the board steve listen do you think this is one of those bitcoin dominance phases where all this other stuff dies or flows into Bitcoin. I have pretty significant concerns around the altcoin market here, even if Bitcoin remains decent. Look, I've always said that most coins out there are probably securities. Of course. And there's a lot of them, right? But some of the bigger ones that may have, you know, there may be a different opinion on some of those might some of those might end up being fine. But if you're in the US and you're buying anything other than I would say Bitcoin and Bitcoin like coins that were created in a similar manner, like Litecoin, you know, that's that's that's an example. You know, Litecoin is not a security. It was, you know, it was essentially used the same code as Bitcoin.

Bitcoin. It's Bitcoin. So I would not be buying any altcoins right now. Particularly, you mentioned Cardano. I've always thought Cardano was a security. And the way that their foundation runs is pretty egregious so um you know that is i i'm surprised that they're not under you know a lot more heat uh compared to some of these other ones out there but um but i i wouldn't touch it right now i mean i i would only be even if you're a trader i i wouldn't i wouldn't touch

anything that's not bitcoin and even if you do believe in any, in the stories behind any of these coins, there's the structural issue. Let's face it. If these altcoins are going to be delisted from large exchanges and the liquidity dries up and that just adds another risk factor. It's on a risk reward basis. The investment decisions change, whatever the narrative might be. Yeah. I mean, like when I was a bond trader, for instance, I never traded crap bonds, right? The way that I looked at the bond market was, okay, here are all the ones that are safe. I'll trade these. And if I get stuck with one, I'll be fine, right? Just need to hold it long enough until it matures. I look at crypto exactly the same way. I'll trade something as long as I think that it will still be around in five years. Or if I get stuck with a buy, like with Bitcoin, for instance, I wait long enough, it'll go back up. But some of these other coins, I just don't have that kind of conviction. And I'm really really not interested in trading anything other than yeah but i think what's worth discussing though is that we say almost all these are

securities right uh which may be likely the case but why is being a security such a bad thing in the united states if you couldn't have ever registered a security so that means that none of this would have happened so i'm sympathetic with the projects for launching and seeing what happens because we all know that there's really no path to register. When did being security become a bad thing? Well, here's where it's a bad thing, right? I mean, if you take something like Cardano, you know, let's just use that as an example. I'm not that sympathetic towards the people that created it because you know they essentially created a massive war chest for themselves uh they profited a you know tremendously off of their marketing efforts and um they they essentially issued a security so so what happens when um you know the the the

sec goes after them right i mean the whole token gets shut down it doesn't get a second chance so um and there's and there's several others that are in that boat. There's a lot, in my opinion, that aren't securities. They could be deemed as such, but I'm not taking the risk right now. Noelle, what do you think? And the problem with a security assurance is that it's just really, really expensive

apart from there are many features of the securities laws that just do not align with some of the crypto potential. It's the cost. It would deter innovation. It would push innovation offshore, which surely the United States doesn't want. And it would make many of the models that the crypto innovators have been playing with unviable. Security is technically a legal claim on the issuer. A stock is a legal claim on the company, a bond is a legal claim on the debt, etc. It's a legal claim on the issuer and tokens just basically don't work that way. When you're going to start to work on developing tokens that have governance or other utility that can interact with others, smart contracts, it just doesn't

work in terms of innovation. Sure, there are many ways for a token to list as a security if they are willing to go through the hoops of signing up, but that also means that they would have to trade on a limited subset of platforms. That again is not necessarily aligned with how the crypto market has been developing worldwide. And it comes down to one, dampening innovation, pushing it offshore. And in the end, it's not going to win because this market is unstoppable, because most of the world doesn't really care about United States regulation. It is going to end up with an imbalance that will be corrected once the United States realizes its error, but too late to benefit a lot of the innovation that could be happening within its shores.

Steve, you know everybody in this industry in the United States effectively. Is anybody even considering building new things in the United States right now? I mean, do you have people who are super diehard and are still like, yeah, we're going to stay, we're going to do this? Or is everybody you're talking to at least hedging and opening an office somewhere and moving offshore every every single person i know is either shutting down or moving offshore unless you're a miner i think i think the mining industry in the u.s is because they're they're data centers those are data centers according to fred seal and they did right but i mean that's insane you say you have any little is that everybody and then what is shutting

down look like for these people i mean are we talking about funds i don't think projects that have existing tokens they're not shutting down right they're just hiding i don't even know project in the u.s you're you should be gone you you should you should still not be here you should be somewhere else and if you're still here then i don't know what you were thinking uh if you're a if you're um you know a asset manager uh that's also really hard you know a lot of a lot of funds are moving offshore as well um they're the only safe places are i mean look you know we've got like a handful of etfs and uh those are those are pretty safe and that's really about it i mean and

everybody else i know that even well-established fund managers that are doing anything in crypto um you know jan van eck announced a few weeks ago that he's moving into Europe. Andreessen. Okay, so I dismiss this Andreessen news as a nothing burger. I've had people push back on me quite a bit. I mean, it feels like if you're going to go anywhere, London's the second worst place to be after the United States. So I was surprised that's where they chose to open their office. I thought we'd see Singapore, Dubai, or something like that.

But is that, did I miss something? Noelle, you nodded your head. Like, was that major news in your mind? Yes, it's a very big message. Moving into Europe, and that is a very big message to, not that the government cares what A16C does, but it's a very big message to the whole innovation culture that A16C has played a role in supporting throughout. It's a wake up call. Let's talk about that. Go ahead.

Go ahead. Steve. Yeah. This, cause this is important. No, London has, has even though New York is the,

you know, finance capital of the world, London has historically been really the financial innovation capital of the world. I mean, if you're, if you're involved in structured credit, structured notes, any kind of structured securities, you know, London is really the place innovation capital of the world. If you're involved in structured credit, structured notes, any kind of structured securities, London is really the place to be.

And given that really the world of crypto is really alternatives and an exercise in structured securities, even though not securities in Europe, that really is the place to be. That's where you're going to have the talent. That's where you're going to have the capital market system that will actually support you. And not just even on securities front, on the FX front, it's a much bigger international capital

than New York is. Singapore is also another very big FX capital. And let's face it, we're not just talking about the subset of securities here. There are many that do think that many crypto assets are types of currencies. That's right. Dubai is also rising. I give Dubai really high chances of becoming the global finance capital. Yeah, I agree with you, which is on a geopolitical scale, just mind

blowing. It's like the Saudis buying theudi's buying the pga i mean excuse me a partnership between live and uh the pga tour um but that that's not uncommon at this point it seems like there is a major move towards major organizations at this point even in the face of the accusations of human rights violations just going where the money is right i mean money tops but i i agree with you steve i think dubai could be i'm the world financial capital and not just for crypto which is what i think a lot of people did say yeah actually going back to the whole securities thing in the u.s there is a thread that is suggesting that okay we're willing to register our securities

as a crypto token if you just make it easier less expensive a little bit more streamlined not quite so you know not we don't need millions of dollars on lawyers fees for this. But even then, that doesn't solve the problem that the market structure needs some reform. We need to establish what exactly custody is going to play, what role custody is going to play in the new market structure emerging. One of the most exciting things about what's happening now, it's bleak, but it's never been more interesting because finally, we're getting some coalesced agreement around the fact that the capital market structure needs to evolve. Crypto markets are likely to play a role in the design of how that's going to go forward because I don't think I've come, I haven't come across any government or any large bank that isn't working really hard

on getting their heads around tokenized securities. We saw this morning that the South Korea securities repository is starting to work on a tokenized securities. We saw this morning that the South Korea securities repository is starting to work on a tokenized securities platform. This is not a crypto business. This is a state-owned market, very significant market infrastructure. China as well, right? I mean, isn't China debt on Ethereum blockchain?

I don't remember exactly what it was, but printing bonds or something? My brain is so stranded with all the news. On Ethereum, which is just mind-blowing. So the advances, the progress on that is astonishing and the United States is being left behind the redrawing of

how capital markets work. Hey Steve, what do you think is next after Binance and Coinbase? Gemini. You think? Yeah. I don't see how Gemini even survives. I mean, you guys...

Is Gemini even surviving right now? Like, is this kind of a quietly a zombie company at this point? I don't really know, but it kind of seems that way from the outside. Yeah, they don't have too much in terms of flows at all. You don't have too much in in terms of uh of flows at all you don't have too many new customers um they owe a massive debt to uh their what was their earn program uh i don't know how their their issue with with with dcg gets resolved um i mean i dcg in my opinion in my opinion it's possibly you know i mean they're already insolvent i i really don't know how they're you know continuing to survive in this environment either so um so i don't know how the earned customers from gemini even get paid back so um

yeah i'm i'm i'm shocked that there's not more action against Gemini right now. Not that I want there to be. No, I think we're cheering for no more action, but I think it would be pretty, you'd have to be pretty blind to think that the SEC is done here. That's right. Although, I mean, I actually deep down, unfortunately, agree with you, but I'm going to push back on that theory that the SEC has a a very limited budget very limited bandwidth and it's bitten off a lot with the

buying anti especially the coinbase we're going to start seeing the sec itself getting sued by some of the token issuers whose tokens have been deemed securities as in hey why don't i get a chance to at least defend myself the sec but remember it has a limited budget and it is trending on eggshells politically speaking it doesn't have a lot of friends in the House and even in the Senate. You're probably going to see some wavering of its support there. So politically, will it really want that risk of A, running out of money, B, losing cases publicly? So while unfortunately you're probably right, there is an argument to be made for the fact that it's just going to focus on winning what it has on the table at the moment that's here's my theory here's my theory steve i think they go after all those people you said are shutting down shop and leaving i think they're going to go for

a bunch of lower hanging fruit that can't defend themselves and will settle just to get a whole bunch of wins that require low bandwidth and not come after huge players right now use those wins to finance the next set. Yeah, that would be hot. And then they can just and use them as precedent, right? Even if they're just settlement, settlement, settlement, settlement, it's more for these larger cases to have precedence of all these people not fighting back, which they'll say is just sort of, you know,

obviously none of them will admit guilt. But that's what I think will happen. I think now they're now that they've gone after the two biggest possible targets, I think they're just going to get a whole bunch of wins under their belt that take one lawyer to deal with. Is there a fear of that, Steve? So you said everyone's shutting down or leaving. Is that because of fear of the regulator or because they just can't do business here? It's both. I mean, there's fear of the regulator, but there's also their clients or potential clients fear the regulator, right? So money, you know, I had a great conversation with a group of, you know, well-known names, you know, about a month ago and just talk, you know, that I'll manage money here in the US. And there's no inflows from clients coming in right now. It's only outflows. People are only taking their money

out of funds. They're not putting their money in funds. So there's not only a fear of the regulator from the company itself, but if you're a pension fund right now you're you're looking at the headlines to say yeah i don't want to be i don't want to be the next um you know ontario teachers union right i'm out yeah i don't i don't want that headline risk what's our bull case noelle how where's our uh unicorns and puppies and ice cream salsa every conversation i have is so gloomy i will say though as a counter indicator the amount of gloom in every conversation i have maybe gives me a little optimism maybe all right i'll give you i'll give you the optimism and i've been told i'm a perennial optimist which is actually true that said i'm negative short term on the market but medium term

we need to clear the air we need the stock market crash to bring the animal spirits back into a more reasonable territory. We need valuations to come down. We need some of the hype to be knocked out of the AI market. We need to clear the air in terms of market sentiment. We also need to clear the air in terms of regulatory support. That will happen with time. Once we are through this really difficult time, then the stage is set for a very interesting crypto evolution. And by that, I mean on the global stage. Let's face it, the United States is hugely important, but it is just one market. It's certainly not the market that crypto was created for.

Crypto was created to enable transactions for those that don't want to go through fiat rails. And in much of the world, they don't really have a choice. They don't have reliable fiat rails to go through. In much of the world, they live under fairly autocratic regimes. In much of the world, they are dealing with double-judged inflations. Let's talk about some currency debasement there. I looked at the Turkish lira the other day. Bitcoin in Turkish lira terms has doubled since the beginning of the year.

Now, that is a store of values. So we're starting to see these narratives come to the fore. These narratives are real and hopefully will shut some of the very privileged economists with gray hair that say Bitcoin has no utility, will shut them up, will help them realize that their world is not the only world out there, that Bitcoin does provide the utility. Meanwhile, the technology is marching fast. We're getting Bitcoin layer marching fast. We're getting

Bitcoin layer twos. We're getting new use cases emerging. We're getting Ethereum marching rapidly towards its next upgrade. And let's tip a hat to how successful they've been so far in doing what they said they would do. We're getting new types of layer ones emerging that are offering all sorts of interesting innovations. And we are getting, as I mentioned earlier, rapid development, I would say running towards the goal of a market of liquid tokenized securities. In other words, traditional assets that have some of the crypto advantages, which opens economic access

to people that traditionally have not had it. All of this is really exciting. I've been in this industry for a long time. As you see, I've never been more excited about the actual utility rather than the speculative utility of these assets. So that's the ice cream.

Hey, Steve, I want to leave on a positive note. So do you have any positivity to follow up on? Because I think that was great. Otherwise, we're out of here. And you obviously had dental surgery. I've got nothing positive to say, but I do agree with that a lot. You didn't have dental surgery yesterday, so it's totally understandable. Yeah, but the drugs should, you know, get up a little bit.

I see, by the way, I don't know if you guys have looked at this. We're definitely talking about it on Spaces. Have you guys seen this Promethean story? Have you guys seen this at all? It's, yeah, it's coming to i i'm getting it literally like in flashes from the breaking news and stuff we'll talk about it another day but guys look into the promethean story basically it seems like there's a shell exchange that got fully licensed and then took talking points to the congress floor directly from the democrats and

it's insane yeah matt walsh's tweet thread on this he's on the cottonwood end that they are they are must read yeah if yeah you know what i'm gonna just really quick share my screen so people can see it because i happen to have it here just so you guys can look it up it's matt walsh in bos and uh it is absolute insanity. Absolute insanity. I mean, it's an exchange that got fully licensed in the face of Coinbase attempting to, but you actually can't trade anything because none of them have been deemed

securities who's giving popular talking points for support of the SEC and everyone who works there is like an ex-regulator from one of these companies. It's absolutely insane manipulation. And the message that

crypto exchanges that don't come in and register is because they don't want to. That is not helpful. Well, these guys apparently can do it overnight. You can't trade any crypto on this crypto exchange, but hey, I guess that's... There are a few Matt Walsh threads

you have to look up to get the full story about Prometheum. It is just amazing. I'm going to dig into that right now before space is in about 20 minutes. Steve, I hope you feel better. Noelle, thank you so much as always for joining.

Guys, I will, of course, be back tomorrow, 9 a.m. Eastern Standard Time. And now I'm going... Hopefully, space won't be a six-hour marathon today because I don't know that I have that in me but

it's been really great having both of you. Thank you both and sorry for those tech issues. Thank you for talking amongst yourselves. I thought we were done. I thought it was over. We made it. Thank you guys. See you all tomorrow. Bye. That's dope.