The Wolf Of All Streets - Bitcoin Crashes While Stocks Rally! Is The Crypto Bull Run Over?

Episode Date: November 3, 2025

Bitcoin and crypto markets slipped as traders weighed the Fed’s latest rate cut, renewed U.S.–China trade tensions, and mixed economic data. Stocks opened November higher on earnings and AI optimism, while analysts debated whether Bitcoin’s recent pullback signals a cycle top or a healthy consolidation.

Bitcoin continues to correct while stocks are up pre-market. Bitcoin not looking particularly correlated to risk at the moment seems to be trading on its own, but it's a discussion definitely worth having. Many believing that the crypto top is in because we had a red October, God forbid, it should have been impossible. It can't possibly happen, meaning that, of course, November, which is historically the best month for crypto, probably has to be bad as well. That is sarcasm for those who died. do not understand it. We're going to talk about that and everything happening in the macro today on Macro Monday with Mike, Dave, and James. Let's go. Good morning, everybody,

and welcome to Macro Monday. Before we get started, please subscribe to the channel. Hit that like button. I'm going to bring on Mike and Dave. We're waiting for James to appear, but didn't want to wait any longer, get it started. Good morning, gentlemen. Mike, morning. Morning. Morning meeting. Where are we at? I was kind of neutral more from Anna today. She pointed out some key things that there's the maximum drag from trade's uncertainties entering the rare view mirror this quarter. Easing of monetary policies should be transmitted to ISM and kicking in a little bit. So my sense from was getting a little bit bullish on the economy without directly saying it showed that unemployment rightly is picking up to around 4.35% in October if we could do the day, which we can't,

but that's her estimate. And she's non-farm payrolls probably running around 50,000. So unemployment is somewhat weaker. She sold not, the isms are coming out and manufacturing is show slight improvement and services to show improvement. So kind of neutral to upside there. Our equity strategy, Chris Kane, come in and point in the stock market. It's just fine, as we know, the uptick's firmly intact. The IRSI is only 61. It's not overbought. 40% of S&P stocks are above the 50-day moving average.

That's a problem. Only 40%. Earnings are very, very strong so far. 70% reporting running 13%. That's quite strong. Broad-based earnings and sales strength. Only energy and stables are not doing well with earnings, and they're basically flat.

And the beat rates are well-exceeding pandemic expectations. Erica Eidelberg reiterated what Ira has been saying. She came in for interest rates today, pointed out near term less likely to see the bull steepening due to Fed Chairman's pause. She thinks that he intentionally wanted to prepare the market for a skip meeting, a skip rate cut meeting, 10-year rate yield to remain range bound

and Audrey Child Freeman didn't our equities FX strategy. Didn't have too much to say. There's not strong conviction on the dollar anymore. And I just pointed out the increasing inordinate burden for the stock market that keep going up for things like industrial metals to stay elevated. They're up a little bit less than the stock market this year. Bloomberg Commodity Index, same thing, up a little bit less than the stock market this year. But it's the underpinnings that I find frightening. And that is gold leading everything up 53% stock market. As in the world's most industrial commodity, had kind of leading the losers down almost 15%.

That disparity running almost 70% now is the greatest since 2008, which was the great, and actually it's the greatest in history on annual basis. And then I tilted over and just point out what I'm watching very closely. It's this Bitcoin to gold ratio. I'm a fearful now that it might break below that 25X support. It hit there once. It bounced. Our model shows it's weaker.

And then just look at volatility in the stock market has to stay low. That thing usually tips lower. So watching that ratio closely. To me, gold is just way overbought here. It's not, you know, overweight longs here typically do not well at $4,000, but it's happy. And then I just point out finally, one thing that's really a good indication was happening in commodities is what happened with the mighty soybean. U.S. soybeans just a couple months ago, we're at a 20% discount to Chinese, I'm sorry,

to Brazilian soybeans, which was just irrational for China, not to buy him. But I think they did him just to kind of, you know, a dig to Mr. Trump. now that they've come around to buying soybeans at a really cheap price and everybody think it's a great deal, it's just rational, it's just well played on their part, is what I'd like to point out. Back to you. Yeah, here we are. We've got, obviously, this article stock market today, Dow, SMP 500, NASDAQ futures rise as November kicks off with earnings AI Fed in focus. A lot of people seemingly, Dave, confused by why we can possibly be down on Bitcoin down while we're trading in this range when everything seems to continue to be bullish.

Well, two things. I mean, first of all, Ethereum and the rest of crypto are down more than Bitcoin. And in fact, Ethereum had more liquidated over the last day than Bitcoin did again, which is telling you something. I think that the chatter and the crypto community writ large is overwhelmingly bearish on the people who actually trade. and in hope, oh my God, what's happening in my bags, panic for the ones that don't. Now, what do I mean by that? I mean, there are people who have their position.

They're sitting there. They're not doing anything that is hopefully cheerleading. You know, frankly, I'd say I would be in that capes because I'm not buying or selling anything. I'm hardly cheerleading, but, you know, whatever. But there are people who effectively go on X all day long to try to pump their bags and pray to the gods. Now, the traders are the ones who are momentum chasers and in crypto, the momentum is down. And so when you see a correction like this on a Sunday, it's telling you that the crypto community is bearish. And I think that's accurate.

And I think that the assets that are as you get farther from Bitcoin, it gets worse. And so that sort of, that sort of, I don't know what the right word for it, that kind of market structure when you see Bitcoin. dropping, but you see everything dropping and you're seeing Bitcoin dropping less and liquidations more is telling you that that hot ball of money said, I was expecting a US-China deal to follow through in the weekend. It didn't crap. And you start seeing their stops getting triggered. And so boom, boom, boom, boom, and that's what you're seeing. I don't think you're seeing anything more than that. I also want to point out over the weekend, I had a few arguments with people who are, it's just, I'm using the word cheerleader because it's really funny. You had a great conversation.

and David Katz, or is he going to be Joel Katz or David Katz from? Joel Katz, David Schwartz. I don't know what it is. He's the former, I guess, former CTO of Ripple now on the board, but he's the guy. So he had a really good post to you, which literally, apart from the conclusion, I agree with 100%. And that's snarky, but not really, because it depends on how you're valuing assets. If you value an asset based upon its, you know, speculative ability to potentially,

capture an enormous total addressable market at some point and you want to buy it because of animal spirits. That's cool. And that is what most of crypto is. Let's let's face it. I mean, most things in crypto don't. There's no economic method that you can justify the valuation of virtually anything other than Bitcoin right now. Everything is based on hope. And so my response is sure. So now let's look at this and understand where is the more likelihood of things to, you know, actually grow into that valuation. And what you see, I think, and this makes me sound a lot like a Bitcoin maxi, so God, I hate it because I'm not. I think there's enormous possibility for infrastructure and crypto. But there's only one crypto that has the, and this is an argument we have

all the time, there's only one that has the network effects and characteristics to be value or a denominator for money. And that's Bitcoin. And so when you start seeing, the cheerleaders for XRP, effectively making the same case that the lead cheerleaders for Ether make that it could be money and replace Bitcoin, then you know that your investment thesis is in trouble. And I think that that's happening throughout crypto. And so when people start selling, they sell everything. And it becomes a snowball. And I do think that there is a revaluation going on. At the same time, gold is the hotball of money that in the CFD market is getting, it's getting long in the tooth for it not to have moved, and some of that money is going to

start moving someplace. I don't know where it's going to move. It could move to FX, it could the stock market. It could move it back into crypto or it could just sit there and people could be despondent everywhere. But gold feels like it's in a range, right? 4,000 seems to be one of those levels like Bitcoin 100,000, where it's likely to sit around that range for a while, simply because the bid from central banks is when it happens, you know, when they have money to put in. And I think they've placed their bets for now, unless China is can, continue to buy. That's the one casualty potentially of US China trade deal. I'd be curious what Mike thinks about that, because if we think that China has been buying gold partially to

stick it in the eye of the U.S. instead of the treasuries, if we really do end up with a trade deal in peace and harmony for a while, then that dynamic could reverse. So that would lead to your case. But I think a lot of that is going on. Most importantly, when you're looking at a weekend move, I mean, you're literally looking at the crypto speculators moving, not. not who are buying and who are buying people, you would expect to start coming in, dribbling over the next, you know, whatever, you know, as we approach towards the real end of the year is generally before Christmas, right? Not a lot happens in that last week, although, you know, it's generally a lot of window dressing, but not a lot of real money flows. Anyway, so that's my thoughts. James, welcome. James, you can't, yeah, you got in kind of late. I mean, I just want to show this really quickly because, Dave, this is also a catalyst for a lot of those conversations, but obviously Bitcoin seasonality, October down. 3.69% apparently is the end times. Like, we have reached the apocalypse. It's all over.

There's no chance. Can I tell one story again? I mean, I just want no one. I want James to, James is funny to say, but look, I am so fucking tired of people using some small number of integer data points

to make decisions. All I will point out is the one of the most absolutely with way more data points than any of this, classic indicators of stock market performance was the Super Bowl indicator. It worked way over 90%. For years, we're talking decades, which mentioned if an old NFL team

won the Super Bowl as opposed to a team that had its origin in the American Football League, that year was going to be a good year, and if the American Football League team won, it was going to be a terrible year. It worked over 90% of the time for three decades. Is there any human being who believe it makes sense.

So when you start talking about seasonality in Bitcoin and four-year cycles in Bitcoin, you wonder why I treat it with such derision. It's because it's so far from statistically significant, and it doesn't make any freaking sense. The four-year cycles. I'm down almost 4% though. 4% in a month.

Big deal. That's sarcasm, guys. It gave me an opportunity to make Hunt for Red October jokes for all the people our age. So that was very satisfying. I was actually cheering for slight red, just so I could go full Sean Connery. James, you're up. Let's face that the four-year cycle is dead.

Come on. It's about liquidity. It's all it matters. It's not about mining anymore. The institutions are here. It's about liquidity. And so what we have seen is hundreds of thousands of Bitcoin being sold by OGs for the month after month after month.

And I read somewhere that, and I have not confirmed this. So if somebody please confirm it, if you guys know this, I read over 400, thousand long-term coins were sold in october alone and we stayed above a hundred thousand dollars in bitcoin so that's pretty uh significant but let's look something that no i i'm not seeing anybody talk about and i can't understand why there's not a headline anywhere in in bloomberg about this and mike maybe you want to tease somebody up but scott can you share my screen yep the the the standing repo facility was was tapped for 50 billion dollars on Friday and nobody's talking about it like this is not a normal the a little bit at month end maybe but this is and more than half of

this was in the afternoon or like kind of after our session this is not normal somebody needed liquidity massive amounts and so what happened the sofa rate jumped which we got updated Monday morning because the government's closed all weekend to over 35 basis points above Fed funds. Like this is just not normal. Like this is, hello, like there's a liquidity issue in the markets. The stock market's ignoring it. The, you know, the mainstream media is ignoring it. And I don't understand why.

Unless you've got a perfectly good explanation, Mike, I've got two reasons I can see. One of them is a government shutdown is starving the economy of dollars. and somebody needs dollars badly. Number two, it's month-end activity. And that's normal, but month-end activity would have started showing up before this. And there's, this is, this is just a kind of a red, you know, flag that we ought to be paying a little bit of attention to. And it seems like nobody even cares. That line on that chart is so big that it, like, made all the other lines, uh, pumps on the chart disappear.

I mean, I mean, you've got to be kidding me. Look at that. $50 billion. It's a lot. back in 2019 when we had the when we had the repo crisis i'm not going to go into the whole thing i wrote all about it this weekend if you guys if if the listeners want to hear about it and really understand what happened back then i wrote all about it but 80 billion dollars was that was the most that was tapped in the stress of 2019 when the fed turnaround did q e literally overnight and the

qee not qi i explained all of it but yeah that now of course there are more dollars the their the GDP is a lot higher. Bank reserves are a lot higher. So 50 maybe is the equivalent of 30 or 40 back then. But still, this is significant. And I'd love to hear if Mike has a great explanation because you were a bond trader, Mike, you've seen the stuff before. And this is not normal, in my opinion. Mike, as we speak, I'm texting my colleague. I'm trying to ask my colleague right next to me, Jonathan Levine, who digs into much further. I hadn't really seen that. So Because nobody's talking about it. It's crazy.

What does that chart look like if you zoom back to COVID? That has to be the biggest since those COVID days. You don't need to do it. The $50 billion? Yeah. Yeah, I've got it. I mean, and that was in my newsletter. Actually, let me see if I can find in the chart here that shows it.

I mean, it is significant. Well, but the key things about it is like it's not showing up in any other market except maybe crypto, certainly non-yields don't care. Stock market doesn't care. maybe the crypto's on top of it i don't know here it is here it is uh scott it goes back to like 2018 so here here the levels this is this is a 2019 repo crisis right here when in september 19 or september 17 it jumped up to this level which was 75 billion okay that was a repo crisis and then all this activity happened while the fed was adding liquidity to the system

Then in 2020 in March, it jumped up to $135 billion. Of course, we all know what happened then, but that's what we're looking at. So let me see if I can find the repo borrowing, the total repo, sorry. It's interesting then to see what happens this week, right? Because you can see that it states to sustained high in those moments of crisis. Exactly. Exactly. Exactly. So here's the total assets, the bet of the Fed. And this is what I keep talking about is that when you look back at the, oh, this isn't it, sorry. I'm going to pull up a different one. Let me pull up a different chart here, fellas. And you can see exactly what I'm talking about. And this will show, this kind of just lays it out perfectly for you. Right here. All right. Let me pull up this one. Beager, ready and willing.

We're ready to view this. chart how much is that how much is that Bloomberg terminal cost you a month buddy it's a lot it's like 20 it's like $25,000 a year so I think that's why that's that's the reason I had a hedge fund just so I can have Bloomberg so here's a repo crisis of this is the expansion of this the expansion of the Fed balance sheet this is when they were out there buying treasuries okay T bills and treasuries right here and they never took them off the sheet and this just exploded higher once we got into COVID But this started before COVID. This is the end of 2019, the experience in the boundary.

So I'm expecting this to come like something to happen here. And Mike, if your colleague has a great as some sort of explanation. I know it's month end and there's some activity there. But this is just, I cannot believe that nobody's talking about this. It's kind of blowing my mind. Mike, does you get any color there? Not yet. But even I have to, Jonathan's looking into it now.

Right. I mean, it's interesting. is it? Nobody saw. Maybe part of it, though, Mike, is that the Fed doesn't announce this. They only announced that there was like 20 or 26 or so, I think, on Friday because they didn't include the afternoon session in their material. They just went home. You know, it's like, well, their government employees are done. Okay, wrap it up. Everything good. Okay. Let's go home. And then the afternoon session happens and you have $50 billion total. And nobody saw it. And I saw it on Friday. I was actually this.

What was happening is I was writing my newsletter about what happened. I was going to write about what happened in 2019, the repo crisis. And I pulled this up and it didn't match what was in the, on the, on Fred. And I was like, wait, what is going on here? This doesn't match. And I realized in the middle of writing my newsletter on Saturday that, holy crap, it was tapped for another $20 plus billion and nobody,

30 billion dollars, nobody knows. It was mind blowing. So. well by the end of the day we'll have a better answer if if the stock market follows what's happening in cryptos that's pretty significant but again as you mentioned it's it was the end of the month and also Halloween happened on the Friday and that's kind of a rare thing and the government shutdown yeah governor shutdown so there's a lot of silly stuff that's happening here I mean but you dig into it closer than I do that kind of stuff with the fed I look at the macro I see what's happening

is I don't remember the last time we came in on a day like this and bitcoin decisively dropped below to 200-day movement average. Now, we saw micro-strategy do that a few months ago. And it's that time of year that I look at it is, okay, well, it's been a great year. And Dave pointed out, there was just some lot of silly stuff in markets, people pumping their bags and everything. And now we're, you know, we're towards the end. I look at that Bloomberg Galaxy Crypto Index.

It has like 5% left of gains on the year. And actually 4% if you have factoring what's happening with some of the other markets. And it was up 30% for a while. And my thought is the risks are we hitting. stops. And cryptos are starting to do it. And remember, what was the inflection point? And sometimes everything changes on one day. It was October 10th. Three percent down in the stock market. Okay, no, big deal. That stuff used to happen one day. Now, what happened that weekend? We all saw the flush. I think that shifted the mentality. I think everybody realized,

okay, my overweight long bot is probably got a problem. And now we have to have something to shift it back the other way. But it's not the time of year for do that. You see the iteration I'm worried about here is if we just continue on this path this time of year, it typically will accelerate into the new year versus what happened last year, run an uptrend and that accelerated. It's not, it's, it's, it's, it's, I'm just worried about the lose-lose. And then all my indications are, okay, volatile is very low. The stuff I see it's honing in commodities. Like I said, I have to use the word frightening on Halloween. This has never happened. You've just never seen gold go up this and crude all going down this much. And then, so to me, that's the macro. And, um, but the good news is I

I still think, okay, so Bitcoin's below, it's a hundred-day, it's 200-day moving. So we all know 100,000 is a good support. I fully expect we're going to get a chance to buy Bitcoin in five figures this year. I still fully expect we're going to get a chance to sell VIX above 20. They already had that already, and Bitcoin still kind of, maybe it's the leading indicator. So here, okay, so we get to $100,000, it's still, you know, pretty significant level. It's still significant acid, but it's all the other ones I'm worried about it. The good news is I also look at the things I'm trying to.

Well, but it's like things like, you know, the things that I know, I love when Dave expresses his animosity for things, since it's, he's well thought out. You really help me. It's the thing I've been so looking at forever and you know what you're annoyed, but I finally feeling better about Dogecoin worth $27.00. It was what, $60 billion a year ago. When it goes down to $27 and no zero's behind it, I'll feel better by the market, but it's going that way. Well, I think that there's a couple of nuggets in there, Mike, where you and I, we're close. So, you know, forget price prediction for a second. I mean, Bitcoin's holding up better than the rest of the rest of crypto, but there's undeniably a huge momentum chasing component of the crypto market. And so when it does start going down, it starts going down. But I don't want to remind people of a bunch of things. So first of all, October 10th is a massive deal.

I made the point at the time, and I'll stick to it, that we won't know what's going to happen from October 10th until the bodies all float to the top of the pool. We're talking about who blew up on the mass liquidation event for those who don't know what October 10 means. That was the day that we had about 20 billion in liquidations. Right. So the point was if you go do it in that, it's forensic, you know, research in terms of what happens in markets. So 2022, we had gotten in 2021, the market got ahead of itself.

And we, by the way, since then, haven't even come close. Just to put this in perspective, Bitcoin in 2021 got to a level of euphoria, divided by its hash rate six and a half times where the our all-time high was this year. I mean, it was just dramatically higher. You know, 69,000 then the network was one-sixth the size. So it's like three times, you know, price. So if for some euphoria, we never did never got to that point. We had borrow rates that were just insane.

People were just killing themselves to be able to go along on a leverage basis. That was a Bitcoin. In all coins, it was even crazier, some of the stuff that happened in. DeFi Summer before that. It was just insane movements. This rally that happened post-Trumped election hasn't even scratched the surface of that. So we've seen, we've gone, we're literally since we're now, that's why one of the parts of the four-year cycle being dead. It's obvious. We have gone five years since we've had anything close to that euphoria. But what prompt the bubble in 2022, there were there was confluence of three things that happened. The three things that

that happened and i'm going to get to the real real key one last the first thing that happened was gray scale the you know the gray scale not getting an etf and people waiting on it and the discount people were like oh so cheap i should buy it when it's a 20 percent discount and then it went to 30 that's like oh my god it's even cheaper and then it went to you know 40 and then it went to 50 and when you get discounts that big on huge financial pools there were hedge funds that were betting on that thing that were just getting you know that were getting crushed and then the question becomes, well, will they be able to survive that being crushed? Are they too over levered? And the answer was because of the second thing that happened was the borrow

market for Bitcoin and other assets dried up. And when that market dried up, the interest rates that people who were buying, you know, who were giving interest rates to people, and sorry for your PTSD Scott, the voyagers, the Celsius, the bogfires, they were laughed. And so some went into prop trading, some decided to extend stupid loans. But all of that happened. And then we had Luna, which was the pin, popped a bubble. Luna created a massive event that triggered losses in the financial system that people then said, okay, I need my money. And all of a sudden, the people who they thought had their money didn't have their money. And we saw wave after wave of forced liquidations. That's important. Because when people start selling,

irrespective of price. Markets go down and they go down hard. And then, of course, in November, guess what, a favorite time of year, in November of 22, we had the whole deal where FTT as collateral shouldn't have been collateral because it should have,

the FTX should never have had been leveraged, and that's why Sam's in prison. People always forget that. FTT started dropping and people realized FTX was insolvent because they had stolen all the money that replaced it with Sam coins and then boom, boom, boom. We had waves of liquidations that peaked with a crescendo down to 16,000 or thereabouts on Bitcoin with the rest of the market's getting crushed.

So the question from October 10th, if you're smart, is, okay, we have this market that never had quite as much euphoria. It didn't seem that we had people buying, borrowing like crazy, but there's still a possibility that there's force liquidations that come out when people float to the top of the bull, right? We throw a depth charge in and someone dies. Is that the shadow of that this weekend? I don't know. I have no idea.

Until we know who or what is selling, we don't know. And honestly, we're getting farther from it that I kind of think this is the last gasps that whatever happens over the next few weeks, there shouldn't be anything major. But these are the fault lines that happen in systems. And so when you look at this, it's not remotely surprising that Ethereum has lost 4,000. And, you know, if Ethereum 4,000 is the same importance as Bitcoin, $100,000, Ethereum's lost it rather rather solid. And repeatedly, I'm not sure they're equivalent, but yeah, that makes sense.

But the point is, is we don't know what's collateralizing what in the system anymore. We don't within. We only know is that there's institutions buying Bitcoin. Tom Lee is holding up his institutional flag for institutions to buy Ethereum. We see institutions now moving into Solana, the XRP, you know, leading community is full-throated yelling about how institutions are about to come in when that ETF goes live. There's still no Doge ETF, Mike, so you don't have to worry about that yet. But you know, who the hell knows? But that's where the rubber meets the road here.

But what we do know is that idiots are still getting liquidated. Sure. But if you look at it, if you dig under new. They get rid of all the leverage. No, no. But what's important is if you look at that, right now of that, in 24 hours, shit. 426 million and 24 hours. Right. Of that 426 million, Bitcoin was 100 million of it.

Right. So it's still largely all-point liquidations. It was east was the biggest. And then others is, you know, it's Solana, et cetera, blah, blah, blah. There's lots of. So what you're seeing is this is not Bitcoin let. It's the same October 10th was not Bitcoin let either.

And so, you know, all I could say is when you people who like to intuit from short term market movements, what's happening on a macro level, they tend to end up looking really dumb, you know, weeks or months later, at least be smart enough to say you don't know what's causing it, because it is conceivable that there are forced liquidations happening, and when force liquidations end, that's a bottom. When force liquidations begin, that's trouble, and you're going to have to reset to a new lower level, and you just don't know. And I'll be blunt. I don't know. It feels from a sentiment point of view, much more like a bottom, at least in Bitcoin. People are very, I mean, like I said, repeatedly last week,

the S&P made an all-time high on the same day that the S&P hit fear on the Fear on the Fear and Greed Index. It's completely, completely incongruous. It makes absolutely no sense. Dave, I want to ask James, your newsletter about a week ago was about big banks embrace Bitcoin. So obviously, I think it's worth having that institutional conversation. I just find find it very interesting right now. We have a lot of confusion as to where the Bitcoin demand is coming from. I don't think those who are digging deeply into it have confusion, but over the past three weeks, BlackRock spot Bitcoin ETF has seen less than 0.6K Bitcoin and weekly net inflows. Interestingly, there was a ton into the Solana one. But you can

see it's been kind of flat there. And along the same lines, retail investors, the biggest absentees of this cycle. So actually, interestingly, a lot of data showing that retail has not really been participating. And if we use the ETFs as a gauge for institutions, which I don't necessarily, because I think that's primary retail buying it in their investment and retirement accounts. But it seems like we're definitely having sort of a very clear split on who's adopting Bitcoin right now and who's interested in it. I mean, I'll bring in your newsletter again, but pretty, yeah, I mean, so the, and what big banks, not, this is not institutions buying. This is big banks opening up the doors for retail to buy.

And so this is what we've been waiting for. Plumbing. Yeah. Yeah, the plumbing to be there. They have to embrace it as a product first. And so a few things have to happen. The first thing it had to happen is we had to get at SAB 121 overturned fully, which happened when we got the new administration.

And so the second thing we had to happen is the full repeal of the, this thing called choke point 2.0, which was, there was nothing signed in legislation. It was just Elizabeth Warren and her anti-crypto army that were going after banks and threatening them in financial institutions, if they did add any activity with crypto and Bitcoin companies and service providers, which is that that was something that we experienced, as we've talked about many times before here, in my hedge fund, you know, and that was real. And so that's gone. Sab 121 was not just overturned, but it was basically eviscerated.

And so what happens now is that banks don't have to hold crypto as a liability on their balance sheet. And when they did that, it totally screwed up all of their leverage ratios. And so they couldn't do it basically. And now that that's gone, you've got banks that are. entering the space saying, look, BlackRock's making a ton of money with their ETF. We want a part of this. And Coinbase is custody in the mall. And Coinbase is custody in all.

And that would have been B.N.Y. Mellon and State Street and et cetera, et cetera. Right. And so when you now, you have J.P. Morgan and now Citigroup announced this morning, they want to enter the space. You're going to have Wells Fargo and the other big guys come in. And they're saying, we want a part of this. We're going to offer crypto access, crypto custody, Bitcoin. custody and the ability to borrow against in specific Bitcoin and Ethereum as collateral.

And once that happens, that's a big deal for retail and high net worth investors who actually have assets. You know, this is not for little retail mom and pops. This is for people who actually have assets. This is obviously for the top 10% that they're going after and the, you know, the demographic that's been driving the economy. But that's what they want to do. They want to keep driving the economy by allowing Bitcoin to be used as collateral.

Okay. So what happens then? Well, now we have this function of if this goes far and wide, which is not going to happen overnight, part of the problem with crypto Twitter in Bitcoin Twitter is like, oh, this has been passed. Why is nothing changing? Well, it takes stuff takes so much time. This is not like you don't just log on to your cracking account, you know, buy something

or log into, you know, your finance account, do some sort of 101 perp leverage trade and get paid overnight. Like this takes so much time. But what it is is it's solid footing long term for this type of demographic to borrow against and not sell their assets. It's such a big deal. This is the, you know, buy, borrow, and then die. You don't, this is what the, the wealthy demographic does. They, they don't sell their assets. They buy them, they go up in value, meaning that the U.S. dollar and other fiat currencies go down and value against them. They borrow against them until they die, and then they pass them onto their kids, and then the kids get a new cost basis for them that they don't have to pay taxes on, and they're sitting on an asset that they don't have to sell. They can borrow against.

This is the way it works. And, you know, this kind of opens the door to that as Bitcoin. in Ethereum, but, you know, in my opinion, Bitcoin in particular being a key asset that they can use to hold as collateral and borrow against. I think this is going to arm away also the high rates that we have in crypto-native lending right now. I think, you know, with Bitcoin, you're generally paying 8 to 12 percent, you know, depending on market conditions, on the letins and the other platforms that exist for this, Abre, et cetera, which are all wonderful. But when you're doing securities lending with J.P. Morgan, even with the current interest rates, usually like 4.5.

5%. So if that's just wrapped or blended into your normal securities account, you're going to be paying a much lower rate. And then that's going to come down everywhere and it's going to become the hunt for a better, you know, better interest rates. And I think it's going to just help the entire market and it's going to be absolutely massive. And they're cussing it. They have it. And so if you if you fall below, you don't make payments, you default, well, they've got the collateral right there that they can sell against whatever you're loaning. It's pristine. They've got it right there. It's not like they have to go on. Houses are terrible collateral in that, that they're, ill liquid. They take time to, you know, to unload. We saw this in a great financial crisis where

all these banks were saddled with these houses. They didn't want to own real estate and they're just dumping them on the market because they didn't want to deal with it. Bitcoin, you have it in an escrow account, basically, that's in, it's in custody there. And boom, it's there. They need to have it. They have instant liquidity 24-7. 24-7. It's like pristine collateral. I mean, you can see even in the worst collapses we've seen in crypto, even if it's a small

part of the market, if you actually look at defy and smart contract liquidations and lending, it's hummed along never an issue on any of the major platforms because the collateral's there. If you don't make your margin call, they keep your collateral and sell it. Very easy. Right. Yeah. you need to understand that this is the 1988 scenario right you know and yes we can talk about it

from a personal point of view there's there's two things there's when you talk about that mortgage now imagine where people have appreciated you know bitcoin or whatever and they use that for their down payment or a portion of the loan and the house loan to value is another portion of the loan banks are going to be a hell let's say they give 50% loan to value against bitcoin that's probably around where you'll get it. Imagine that. So now you've gone from. But let's say you get 50% loan to value and let's say you required a 20% down payment.

Well, now you effectively have 40% if you're the bank against your loan to value on your house. So even the global financial crisis, the number of, and you're right, a lot of people walk away. People are much less likely to walk away from a loan that's underwater. Let's say you have a million dollar house and it goes to 900. thousand and you put 200,000 down, well, okay, you're not walking away, right? Because it's, whatever, it goes to 800,000. Now all of a sudden you are. Let's say it goes to 700,000. Well, if you still have 400,000, that's going to go away. It needs to drop a lot more before you walk away. So the banks are going to come into this as soon as it's allowed and they're going to want to,

they're going to love that hybrid type of product. So that's one thing. But the 88 analogy is more important. That is effectively when the accounting rules changed to allow equities to be treated on balance sheets. And an entire business was born. And it's a massive business. It's called prime brokerage. And it's funny, you know, I deal with the XRP army. And so do you, Scott, you know, the weekends, these people, they could barely spell prime brokerage. They don't understand. They're like screaming how great it is that Ripple Prime is going to be this great There's this incredible thing. Now, by the way, Ripple Prime is a great idea.

There are a couple pieces missing. I said that. I'm not going to tell, I'm not going to give them free advice. They can call me, and I'll happily to tell them why. But Ripple has a great balance sheet because the world has gifted them this XRP, you know, hoard, and they can borrow against it, and they can create a great balance sheet. Hidden Road is a great component. They have a custodian.

They have all the key pieces. But prime brokerage is essentially a business which facilitates all the hedge funds in the world for being able to go long and short and trade. And that business is based upon financing of the short position, borrowing of the asset, and giving credit against long positions. It is a financing business. Before 1988, you had to reserve 100% of capital against equity. So it was a completely silly business. Now you can take a haircut based on the volatility or risk of portfolios to able to provide that business, which is a massive difference.

When Bitcoin is accepted as collateral and crypto can be treated on an accounting basis and it requires Basel rule changes, the same as equities, then in addition to, addition to what's going on today, you can have a true financing business, not with exception. James just told you they're about double market rates for hedge funds who are financing Bitcoin leverage right now. And by the way, that double is variable. The volatility on those rates can be dramatic. They can go up a lot and they can go up quickly. And so it makes hedge funds very, very dependent upon the interest rate cycle of what's going on. You might be forced to lighten up just because you go from borrowing on your, against your longs at six or seven or eight

percent to 50 percent, right? These things can move. Once these things change, that matters. and low the people ever loses you on sound yeah there's a guy rumbling can you hear me now he just went away yeah so the point is is this is a long-term thing it's not happening in 2025 it may not happen in 2026 but the fact that it's going to happen is now inevitable because you don't get jp morgan city bank bank in new york lobbying for things from the basal rule committee without it actually happened because it does so that's what that's what we're talking I want to, I want to just moving the conversation on slightly, there's some massive AI and crypto-adjacent, but also just AI deals happening right now that are continuing to send tech flying. Iran announced five-year, 9.7 billion agreement with Microsoft to supply GPUs.

I think it was up last I checked like 72 bucks pre-trading. Cipher stock surges on 5.5 billion, 15-year lease agreement with AWS. And then this one just hit, if you guys didn't see. Amazon announces $38 billion partnership deal with Open AI, 6% up on Amazon stock. So here you go. We are now receiving daily multi-billion dollar AI deals. Wow. Yeah.

I love my opinion on that because these are big things. These are legitimate catalysts, right? I mean. Well, let's talk about that a little bit. The catalysts you mentioned about the mainstream is. clearly what's happening with banking in Bitcoin. Amen's. Finally, we can go look back in history with Elizabeth Warren kind of in the same category as Aaron Burr. And thank her for that. Like, you know, we needed a good antagonist in a good way. It's like, yeah, thanks. And Gary Gensler,

but the key thing that's really shifted for me is the fundamentals have clearly changed. Now, it's delightful finally to see everybody gets so bullish October because it always happens and it didn't happen. That's the key thing that's hardest thing to do in markets, said hedge funds and you guys can do it well. You know, it's the number one thing to do is defining when the answers have changed. The questions always remain the same. And that's clearly been my case in Bitcoin. I've been early. I've been wrong in many ways. But to me, the answers have changed now. Those questions I got to get used to get from those banks you're talking about on the Bloomberg terminal six years ago. Yeah, I was quite bullish. Now the questions I get typically

is what ETF I buy from retail. So also the fundamental shift really kicked in when the tie went out a little bit on the weekend of October 10th. And we saw that if you're buying cryptos now, you're not only one of top beneficiaries is Trump family, the Trump administration, and Trump administration officials. And you're dependent upon that. That's a complete shift from the past when I really like the space in the Trump administration. One, hated it because we saw where it was going, is you're getting away from the system. Now I think that's the inherent on any rally the insiders who've been in for so long. So yeah, this isn't what I bought. into when I bought into it 10 years ago and I made my many exes and we're getting a pile and this is

classic peak bull market stuff classic and it just how it plays out it can last for a long time so that's my point is now we're at the stage now I filled everything over to the U.S. stock market absolutely has to go up because if it just drops 5% all the stuff that we see linking crude oil copper's hanging in there cryptos will drop 10 or 20% this is just a could be a day. That's why we're getting to that time of year. It's just, I look at it as there's any time to be completely out of the market, even in gold. It's now. And I barely have said that in my entire career. Sometimes it's just say, thank you. Nice to get out and have had a great year being long gold. Got lucky. But what's left? Treasuries. And here's a key thing. If yields keep going

up. Since the Fed started easing in September, that tenure note is up about five or six percent, five or six basis points, despite the Fed cutting 50 base points, that's a bad sign. It says, oh, by the way, Fed, Chairman kind of said it, you can't cut in that environment. You're wrong. Bond markets telling them they're wrong to be cutting here, and I think that's the problem, until we get a little bit of reverse wealth effect, inflation is going to stay sticky. Cryptos are just getting started, I think, on that. So two things here.

First, I would agree with you if the crypto community was bullish. It's just not. I mean, that's just, you know, so let's understand that. James, we had a long conversation about that on Monday. It's ranked there in the weirdest time and everybody's pretty much confused. But the point about the Trump family, and frankly, I can't even believe that it wasn't news. But we had the Treasury Secretary of the United States basically go out being pro-Bitcoin over the weekend. And nobody noticed.

I just think it's funny. People are going to look at this in a year or two years. years, three years, and they're going to say, hold on. So wait a minute, the people who control the levers of power, who are going to be nominating the next Federal Reserve chair, who control the economy, are bullish an asset, stand to benefit either personally, which I personally think is wrong, but that's besides the point. But the fact is they're bullish on the asset and they want it to go up. And we bet against them. You know, you ever hear the expression, don't fight the Fed? Well, this is don't fight the government, but yet in our political, politicized thing, people don't

care. And you're right, Mike. You're absolutely right. There are people who are selling Bitcoin because they're, quote, disillusioned. But there was a great article that, you know, a lot of us commented on this past weekend, you know, talking about how this is really Bitcoin's IPO, post IPO moment in a sense. Joe Visser. Right. It was very, very good. It was very well written. I urge everyone to read that. Effectively, what you've heard on this show for me for weeks, he articulated better than I ever have, which is I talked about distribution. Bitcoin needs to move from the cyper punks to the broad financial system for it to achieve what it needs to achieve. And this is not a pretty process. It takes time. And we're going through it. And we have

no idea when it's going to end. What you do know is don't fade the other side of it. And that's the point. And so I wouldn't be remotely surprised to see this continue longer. I wouldn't remotely surprised to see it end and go to a new level. I don't know. And I'll be blunt. I have no this. Right now, I'm totally neutral. I mean, I brought this up, but Trump literally said 60 minutes. I only care about one thing. Will we be number one in crypto? I mean, I listen, you can, you can have your opinions on the president. You can say he's a liar. You can say he's always the truth. He's God. He's a devil. I have no idea. Everybody seems polarized. But when it comes to his view on what he wants from

markets, I think you can say that his word. It's pretty clear. It's pretty clear. It's pretty clear. It's pretty clear. And it's pretty clear that the crypto community is like, we don't want that. So screw it. We're just getting the hell out. Yeah, but look at bring up Scott Besant. By the way, he also said

he had no idea who CZ was after pardoning him in the same video, which is hilarious. That's pretty funny. Go ahead. James, what we're saying? But bring up Scott Bassent's tweet from Friday. That was also. significant and it didn't get glossed over it got glossed over by the general public but not by the crypto community and bitcoin they were like whoa that's uh that's actually a big deal talk about the

white paper one yeah yeah yeah of course it was a dig on the democrats you know that was the point of it but it's kind of funny that he used he used he used bitcoin to you know contrast have a a strong contrast of staying open versus the Democrats closing the government. Hey, James, could that pump in the overnight repo be because of the government shut down? Yeah, yeah, there's a obligation that they had, yeah. The TGA is now at a trillion dollars. That's not normal right now. You know, it's at a trillion dollars, basically, the Treasury General account.

That means a, it's a checking account that's not getting spent. It's just sitting there, you know, with this well of cash that needs. to get into the system. And if you wonder just how many government employees we have and how important it is, well, now you're starting to get a sense that, huh, it's a problem if people don't have money that the government is giving them or paying them. So there's both people not getting money for their benefits and people not getting their paychecks in the government. Those are big deals. And so it's not moving into the system. Could that be a problem for banks? Possibly. I don't know, you know, I haven't, I haven't done a forensic, you know, accountant review or analysis of how that money flows through

the banks, but it could be partly that. It could be partly that it's month end and it could be partly that, oh, that excess liquidity from the reverse repo is now gone and it's been hiding that just the voracious need of liquidity, constant need of liquidity from financial institutions to keep this whole level system going, which goes to Mike's point, which if we don't get more liquidity, we're getting a drawdown. That is just, that's no way, there's no way around it. And that's clear from Friday's activity. We need liquidity or things are going to lock up. And the, and the treasury's not going to stop issuing treasuries. They're going to continue trying to fund these two trillion dollar plus

deficits. You know, those are not going away. So that it is, that's exactly right, Scott. It could be Partly that and partly other factors. I mean, people don't understand that the government shutdown has some pretty big effects. There's one of them, one of my favorite points is the entire, for Wall Street, the entire IPO calendar has ground to a hall because the SEC is not allowed to approve an IPO. Before the shutdown, this was shaping up to be one of the best fourth quarters in Wall Street history. On a nominal base is probably the biggest. Now, it is potentially a complete washout. So if you take that, you understand Wall Street bonuses are going to be massively down.

If this thing drags on into December, you're talking about a massive cut in terms of profitability. Now, does anyone care? Why are you not seeing it in the news? Because no news station wants to cover this. No news station wants to say, oh, the Wall Street fat cats are being hurt by the government shut down when people are literally not going to be able to afford food for their families. you're not getting it covered, but we as macro analysts have to look at this because at the same time, we might be seeing a socialist mayor in New York and Wall Street panicking over that.

You're literally going to see less money in the system, and that money is the money that goes into assets, right, and there'll be less of them. And so that is a non-trivial thing. There are a lot of these non-trivial things. We don't know. I mean, you know, we talked about potentially bankruptcies. you know what if you know what if people who wouldn't you know what if that money didn't flow in and it didn't you know support loans or it didn't support this or it didn't support that there are definitely stresses in the system and we're seeing you're seeing stresses we're seeing stresses now that they're part of it some people are saying that they're that the dems are just waiting until after Tuesday to you know to to fold but who knows after the election who knows

but um but the market has it going it's over 50% to go past November 16th, which is to be crazy. Yeah, back to Bitcoin. Here's your OG selling. Yeah, you sent me, I want to give you. How good of a producer, am I, James? I had that up like 30 seconds after you sent that to me. I mean, and this is important, you know, this is, it's held about $100,000,

even though you've had massive distribution from OGs, you know. I mean, yeah, God bless them. They've been in for how long, you know, God knows how long. and they're going to go get their estates and their boats and their planes. Okay, I don't blame them, you know, but that's what it is, you know. So, but the fact that it's held up above here. And yeah, the only thing, the only, again, I think, Mike, you and I come down the same, like the same path all the way to the point where we diverge of, you know, two things that Bitcoin

is just one of thousands. And then the second thing is that the, the Fed, Treasury have learned their lesson. They haven't learned their lesson. That's clear from Friday that this is going to start getting them nervous. I expect to start hearing Fed officials talk about this this week. And start talking about we may need to shore up the bank reserves and whether it has to do with short-term liquidity needs due to the shutdown or whatever it is. I expect the Fed to start chirping about this because the market absolutely needs. liquidity. We need it.

You can't know about it. So I think that's an important place to piggyback on is I agree with you. There'll be massive pumping just like there was in Japan for the last 30 years and just like there is in China right now. But it almost always comes after a significant drawdown in risk

assets. And that is the key thing I see. I've never been more frightful in the markets now. Just after what gold did this year, what it wasn't supposed to do, what crude oil is doing, and now the thing I've seen tilting over that there's a certain time that you have to just be very, just stand back and say, thank you for all those great years and get out. And I think that's one of those times because I'm not

calling for a crash, but severe reversion can be kicking in. The key thing to remember, though, is we're already finding pretty significant diminishing returns from Fed easing. The Fed started easing in September. Inflation is going up. Stock markets, man, Bitcoin's actually showing major diminishing returns of that. Certainly from a risk asset point, Bitcoin, a gold, ratio was dropping a lot since they started. So I'm seeing that we're finally, well, and we'd get to an endgame, but what's also remember as far as the lesson I learned is, yes, I get it.

I see what you're right about the Fed, but what have politicians learned? It's a great way to ruin your chances of re-election is getting inflation, letting inflation get out of hand. And that, to me, is a big shift. That's what's changed. And now since I've been trading, starting in 1988, is we've been able to cut rates every time and not get inflation, but now we're getting that.

Yeah. And the game's over. And that's why I think cryptos have to have their. The drawdown should be there first. We all agree there's a lot of bogus coins out there can should drop 99%. And then we'll reset. I'm just looking trying to, you know, the question is the same. I'm just looking trying to predict forward with this happening. And I'd seen happy now. We just let's put it this way. Let's say, okay, we're up 20% 30 year in a row on the S&P 500. I mean, it feels like kind of late stages in 1929. Just imagine if we end up only 10% this year. Now that is, the average for less since 2000. How is that going to feel as we get to the end of the year? No, maybe we can say, oh, just a shutdown, we'll be back. Just what Dave says, people aren't getting their bonus from my POs and stuff. But to me, this is all part of that cycle that things like gold are telling us, be careful. Yeah, well, you don't want to look at the part that I just shared with Scott then because God help us. I mean, here we go again.

I mean, like, this is just... But that's a huge deal between them and Chad GPT. It is, but here we go. You know, like, when is, when is AI a bubble? I don't know. I mean, how, I don't know when this is a bubble, but it's going to continue on. And there, people are just looking, they're clearly just looking for, for places to tuck their, their capital in to keep riding this wave.

And, you know, I don't know if, if AI breaks the so-called liquidity bubble, but like Dave says, there's a different, different denominator now after the. after the great financial crisis and then COVID pump of liquidity you can't just dump $5 trillion into into the markets and expect everything to go back to normal they're not there is there is a new normal it's just what it is and so the question is how quickly are they going to respond to things like we saw on Friday that the Fed governors aren't even talking about yet which is just blowing my mind they're going to somebody's going to have to say something at some point here about what's going on in the repo market because bond investors are noticing

for sure you know even if the even if the the stock market then your typical investors are not paying attention the equity market you you better bet that the credit market is is online and add attention here and trying to figure out what's going on so yeah yeah did you have something Yeah. I mean, I think that when you talk about AI as a bubble, you have to break AI into two things. One, the actual consumer applications and what will it do to what vertical, et cetera. And that's a huge amount of analysis that depends on the vertical, right? You know, you can, everything from medicine, which it's a massive, massive booster to that, of course, with our insurance system, we're not going to see any of the benefit, but, you know, in terms of price, but that's different. But the one thing that is clearly not a bubble is the fact that the actual plans for expansion of compute for AI and energy and data centers and that infrastructure, we are the exact opposite of where we were in early 2000 with regard to the internet. So in early 2000, people don't know this, but in the internet bubble, the thing that caused it, there was somewhere around 20x capacity in fiber, you know, in transatlantic fiber,

something called Global Crossing, MCI, WorldCom, all these names that you might have heard about. But we were 20 times the amount of fiber that was needed at that time based upon what corporate America said they were demanding. But they were building because they said, well, it's going to explode. It's going to go asymptotic. It's whatever. With AI, it's the opposite. With AI, we are not even close to the amount of compute that corporate America and corporate, the world corporates are actually already saying they want. And so we are way under capacity in terms of the electric grids in every country.

We are way under... We need nukes desperately. Desperately. We are way under capacity in data systems. Not the flying time. No. Yeah. So when you look at these deals, the reason they're getting signed is because whoever has it is valuable. They are the prettiest girls at the bar and just across the street.

To that point, Dave, that is gorgeous then. As Germany, as Germany implodes their nuclear reactors, you know, you've got Microsoft over here and saying, And we need to figure out how to use more nuclear power in order to fund, to drive. Well, do you think it's an, does anybody think that it's a, it's an accident that Bill Gates changed his climber dumerism, realizing that we just don't have enough power? You think that he's that stupid? No, Bill Gates is a lot of things. I think he's pretty evil, actually. I mean, the I's over, right?

And that was Larry Tank who went full Bitcoin. I mean, so understand. The need for power and infrastructure. that's not, we're nowhere close to capacity. And so people who are dumer about that. And that's part of what's holding up the stock market is because those are the companies that are performing, right? Now, as far as Bitcoin is concerned, Bitcoin has a huge role in that.

A lot of other crypto, nothing to do with it. But Bitcoin is a huge role in that in terms of data. The mine are certainly like an iron and cypher. That's right. So the power, they need the power. They need the power. So when we look at macro trends, the need for electricity, data center space, compute, all of that.

We're in the middle of a revolution. It's like the Industrial Revolution. No one gave a crap about oil. No one gave a crap about steel until the Industrial Revolution happens. And all of a sudden, wow, look at who made all the money, right? Wow. And so, yeah, that's what we're having now. And so that that's a big deal.

But short term, short term, anything can happen, right? Anything. Well, I would say that the need for power is going to dramatically reduce based on this breaking news, which the chat, CPD will no longer provide health or legal. and we all know that that's got to be 95% of the usage of AI right now. What is this bump on my face? Yeah, right. The chat GPT is everybody's doctor, but I actually find that really interesting in the topic for another time.

Before we wrap, I just want to say quickly, if you haven't watched my conversation from Money 2020 with Michael Saylor that I posted yesterday, I just highly recommend that you all do it. Just if you want to understand the products that are being built and the direction that the institution and Treasury side is going. I actually recorded with Mark Moss, James, your buddy, yesterday or two days ago, and it's going to come out Sunday, and it's an entire hour on the same topic.

So I think that's where the puck is certainly moving, so we'll be following it closely. But if you want to see how those yields are being offered and the products that people are likely going to get interested in, as, you know, interest rates drop to zero again. Really compelling conversation. James, Mike, Dave, thank you so much. Dave, you survived the elevator vestibule

that you're recording from. Good job. Good job. And we will be back, of course, next Monday for Macro Monday. Thank you, everyone. Literally an elevator in front of them. How many people use that elevator while we were recording? I have about seven or eight, something like that. Oh, yeah, your commitment, sir, I commend you. Thank you, everybody. We'll see you next week. Bye. Let's go.