The Wolf Of All Streets - Bitcoin Enters Uptober, Will It Make A New All Time High?

Episode Date: September 30, 2024

Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto! Dave Weisberger: https://twitter.com/daveweisberger1  James Lavish: https://twitter.com/jameslavish  Mike McGlone: https://twitter.com/mikemcglone11  ►► WANT MORE? JOIN MY COMMUNITY AND GET EVERYTHING WOLF OF ALL STREETS! 👉https://www.thewolfofallstreets.com/ ►►JOIN ROUNDTABLE TO CHAT WITH ME DIRECTLY ABOUT THE MARKETS! 👉https://roundtable.rtb.io/shortUrl/r6ZvMws ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code '10OFF' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  Follow Scott Melker: Twitter: https://x.com/scottmelker Web: https://www.thewolfofallstreets.com/ Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #MacroMonday The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

It is Monday, September 30th, which means that October is upon us. Is it a meme or can we actually expect, once again, Bitcoin price to start rising, going into Q4 of the halving cycle, the election year, and the liquidity cycle? I have a feeling we're going to see some debate as to where Bitcoin is headed over the next three to six, even 12 months. Amongst the epic panelists we have here, James Lavish, Mike McGlone, and Dave Weisberg. Guys, it's Macro Monday. We have a lot to talk about well beyond Bitcoin.

Let's go. what is up everybody i'm scott melchior also known as the wolf of all streets before we get started please subscribe to the channel and hit that like button i don't know if you guys saw it this weekend but i posted a recap of Token 2049 in Singapore. We constantly hear on these shows talk about crypto and Bitcoin in the context of everything that's happening in the United States. But important to remember that this is a global asset. And when you step into Asia, the vibe and feel is very, very different. Nobody's talking about the SEC or Gary Gensler or the election. They're just building things in Web3 and on Bitcoin and extremely excited. So if you want to get some re-inspiration, I highly suggest that you watch that video that was posted on Saturday morning.

But without further ado, the Macro Monday crew, we've got Mike, Dave, and James. Mike, kind of a lot to talk about today, right? I mean, I think you always love bringing up China. A lot happening there, but maybe we start at the morning meeting and take our cues from that. Definitely do. I think Dave needs some mute. You sound like you're in a background noise, so I definitely want to hear what you have to say.

Got it. Arnold Wong this morning pointed out, and you mentioned this pre-show, but we'll mention also that we had some revisions upward in GDP and GDI, um, the last two quarters. But her point, this is good to hear some good news for the economy. Um, but her point, you know, make me show that as we're speaking, but her point was the labor, um, force is clearly, um, downgrading significantly. She's ISM and manufacturing probably will continue to slow. Everything she sees is inconsistent with U.S. employment heading towards 5% towards the end of next year. This payroll number, she thinks it'll be okay, potentially strong, but it's November.

October payroll that hits November 1st that she expects will be pretty bad. We'll have port strikes, automakers doing furloughs, a hurricane. Who knows how bad the port strikes will be? And that's the key thing I wanted to mention from Ira Jersey. His take is he's our chief interest rate strategist. He's expecting a hard landing base case, expects bull steepening. He thinks the Fed's going to cut more than forecast. I don't see how that's going to happen unless the stock market tells him to.

And our equity strat is Gina is still quite bullish. She points out we've probably been through the worst stage. October can be dicey, but Q4 goes up 80% of the time in the stock market. And to me, that's the key things. And there was a few from the macro, but there's one thing, a few things I wanted to tee off a little bit from last week. And then we can go where you want. Partly, first of all, is what a bit of a, not so much a pushback on what Dave and I said, but something about the facts. Remember we all kind of saying before that

the Fed wasn't going to ease the stock market, correct it? Well, it did. Remember the stock market dropped about beta, about 10%, peak to trawl from the peak in July 16th to the bottom in October 5th. So remember, I'm sorry, August 5th. Remember that August 5th we were on and they were calling for intermediate cuts. It was so silly. So let's look at this from the standpoint of looking back from the future. So we did have that little correction. The Fed cut 50 base points on September 18th. And so they did cut. It took them a little while, but everything's recovered as they should. The key thing I want to point out is when the S&P 500 dropped about 10%, Bitcoin dropped about 25% during that period. Now, obviously it's recovered, but since then, if you look, what's happened is it's the main thing that really happened since that day is that was a day when US

10-year note yield dropped below 4%. It was around 420, right around July 16th, which was around the peak and then everything went down and still below, well below 4% at 377. And also one of the best performers since then also has been gold. If you take it from the peak in July. So I look at it as we did in some ways, we all agreed and we were right. The stock market corrected was a baby one, 10%. That was actually the biggest in a year. And then Fed East. And now what are we doing?

What's next? So I'll end with this. I still think the bottom line is what I tweeted on Sunday is everything will be fine from my standpoint, from a commodity standpoint, from a copper standpoint, from yields going up standpoint,

if the stock markets and for Bitcoin to rise, as long as the US stock market keeps going up. To me, that's the problem. The best comment, maybe comment of the year on my show was last week from Matt Hogan, who said governments around the world have made recessions

illegal. That's a good point. Well, that's the thing, though, for all veterans, we all know this. I mean, and one thing that we nailed on that day in August is James, you're always in by by Bitcoin. You said you're going to dip and you did very well. It's the problem. The thing that we all know is governments always stimulate when economies deteriorate. And what's happening in China was so expected. Some of us expected this almost a year ago. It's about time. You just have to compare it to what it's going to mean in terms of the big picture macro.

And they're stimulating. Why? Because they have to. Why is OPEC cutting back on production? Because they have to. There's no demand. Yeah, I mean, to take me really quick, just because you said that, here's that chart of Bitcoin. If you guys are looking, we're talking

about August 5th is literally that low when it broke down below 50,000. Obviously, it's been nothing but up. But a lot of people, technically, if you're looking at this chart, and I know, Dave, you would be low, high, higher, low, higher, high. So for technical analysts, and even on the weekly, this is a daily chart, you now have broken that bearish market structure of high, low, lower, high, lower, low across the board on a lot of altcoins and certainly on Bitcoin, which is leading a lot of speculation that these are now dips to buy coming into Q4. James, go ahead. You were about to say. Right. And so the point on that is that you need something structural to change um you know in the macro side that would be impacting that i mean look the the reality and mike is right about this has been right about this for a long time is that hedge funds are this you

know bitcoin is super liquid with hedge funds and they use it as a risk asset uh to move in and out of, you know, risk plays. And so we're watching overnight, you know, Japan had been dropping before I went to bed. And, you know, so it ends up that you've got, you've got the Nikkei down 4.8%, you know, that's a, and so remember back when in August 5th, like Mike was saying, Bitcoin got hammered that day, that day that we had the carry trade kind of implode on us, right? 58 to 48 in one day. Right. So and now look at it today.

Now look at it today. Risk off. Exactly, Mike. Risk off. So now look at it today. It's actually holding in there very nicely, which is to your point, Scott, that's an indication along the lines of what you're talking about with the higher lows. And so the issue with Bitcoin is, are we going to have something that takes over the edge here, structurally in the market. So you do have a lot of things going on. We're watching what we hear from eight Fed governors this week, right? Like we can't get enough of it. That's one thing. Another thing, you've got unemployment reports. You've got your jobs reports on Thursday and Friday. You've got your unemployment number that

comes in Friday. And the non-farm payroll is going to be super important because of what Mike just said and what Ana is keying in on. Are we going to accelerate into a 5% unemployment rate? Or is the government going to overwhelm this and just keep pouring money into infrastructure plays that are not quite as productive and creating jobs that aren't quite as productive? Or are we going to have that non-farm payroll kind of hold out here? Is it going to hold in before we get this fight? They're just going to revise it anyways. They revised jobs down over 800,000. Now we have GDP revised up from 5.1 to 5.5, which is wonderful. That's good news.

It's adjusted for inflation. But at this point, we watch these job numbers, and it's almost comical. They never are. Which is interesting because we're going to hear from all eight Fed governors or Fed officials, sorry, this week. And I would bet that the vast majority and we're talking about employment as the biggest indicator they're looking at. You know, that's reality. Dave, I'm sure you want to,

by the way, Dave is outclassing us today. You're mic'd up in a button down. I feel like we, I don't know where we are, but I need to. Yeah, I'm going to the main net and I figured I'd try to look okay know where we are. Yeah, I'm going to Mainnet and I figured I'd try to look okay today. Mainnet. Oh, nice. There's a few people there. Is this better than the front background noise perspective to the AirPods? Okay, fine. Yeah. So let's work backwards. The first thing is the unemployment number. I agree with James. I think it's really

important. I think the household survey is what matters. The government likes to use the other survey to tell people how great they are and bang their chests. But the reality is, is they're going to be watching Native American full time employment. And that's what that's what drives voters. And if you think this isn't voter driven Fed moves, then you are literally asleep or completely delusional. I mean, there are people out there who say that Powell's got a masterful job. I actually am one of them. I've said, listen, he's trying to re-engineer asset inflation while muting consumer inflation and drive the cost of borrowing for the federal fund. And he's done a good job at that, no question. It doesn't mean he's not politically motivated. It doesn't mean that there is an incredible pressure on the Fed to focus more on employment. And in fact, their pivot, let's not forget, that's exactly what they said.

And that's why Anna and I are on the same page. That's why a 10% baby correction, as we call it that, isn't what drove the Fed to do it. It's more tail wagging the dog. What's driving the Fed now is employment and business conditions, business bankruptcies. I'm sure you have all of that. Business borrowing and personal balance sheets don't look good and that's what they care about.

And we'll see what they do. But if this number, it's not number, it's a set of numbers, comes out bleak, then you will see the Fed move, probably not intermeeting, but by the next meeting, they'll move to neutral. And they think they are restrictive right now. Neutral might be another 50%, a 50 basis point cut, who knows. But the the real key point is is the fed put is more or less alive and well and back again whether or not they want it to be it sort of is and that kind of matters now as far as bitcoin and crypto is concerned i think that and and other macro bits

first of all it's worth mentioning again is back down to levels below which caused the freak out on August 5th and obviously you know the fact that that that Nikkei is only down 4% Bitcoin only retrace you know some of its gains still up on the week on the seven day from last time we talked so you know whatever you know is actually quite interesting it means that people got their hedges in order and didn't kill themselves by being overextended on the end. Again, at 142, it went from pushing 160 down to 145, and now today it's at 142 and change. So that matters, right?

The other thing you look at is across crypto. What we see today and this weekend looks like a very typical rotation over the last week that you normally see when Bitcoin has an upleg. It then moderates for a bit and altcoins move higher. The fact that Solana is up 10% on the 10-day, that Doge is up 13% on the 7-day, excuse me, I think is very, very relevant. And so it just got very loud around here. Yeah, I mean, structurally, Dave, to your point,

this is the first time, if you're a technical analyst, that the crypto market looks definitively different since effectively March, which is exactly our base case, which is that it's going to be really rough through the summer after the halving, and then things would start to ramp up. I mean, I literally just pull you up charts. We don't often do this, but this is just a layer ones that I have here for altcoins. I mean, FTM, all of these, if you're talking about hot, low, high, higher, low, higher, high,

they've all made them ahead of Bitcoin. This is the first time that we're seeing actual new money kind of flowing in. It's the same on every chart, of course. But I mean, they all look really, really good objectively from a chart perspective. And that has not been the case in a very, very long time. And it's a day before October. It would be ridiculous, by the way, if we actually see things skyrocket in the first week of October. Well, I mean, look, there's a few things that are going on. Let's talk about some old tropes in the market. The first one is that you don't see big rallies. And this year, it is what it is. But you don't see big rallies until the end of the Jewish holidays when they show up here. Because when traders are going in and out now, that is that they start the end of this week. And then that next week is generally kind of muted. And then you get to the middle of October, and then we'll see when I think real trends start to happen. And why that is, for those who care, is a lot of money managers spend October doing their year-end rebalancing and their repositioning for the following year.

And a lot of firms have fiscal years at the end of October. That's important to understand. People don't know that. So that's from your audience perspective. Understand that a lot of corporations use October 31st as their fiscal year. And so that matters. So obviously traditional calendar-based people, it's just the end of September with the end of the third quarter and we're going into the fourth quarter but this seasonality matters

and that's one of the reasons why october and the crash happened in october it was people tried to you know had to raise cash for the end of the year uh into a weak market there wasn't any bid boom and you get that now is that going to happen again uh as mike's referring to a little bitey that's what he's referring to is is there liquidity for the normal year-end rebalancing and my guess is probably yes since every single central bank in the world now is flooding the market with as much equity as they can i think they'll be funny but that is what people are talking about so you need to understand that but what i was saying is that the profits that people made in Bitcoin from 50 to 60, whatever, a lot of the traders took them the short term-

You sell at 65. You sell at 65 if you're trading. I mean, that's what you do. That's resistance, right? I mean- That's right. And so they sold and put it in all coins. But they're the marginal people who do price formation, but the bid is coming from spot.

And the bid is coming from ETF buyers and central bank buyers that we don't hear about and sovereign wealth buyers. And those buyers are, to the extent they can get away with it, are very, very patient. And so far, they've been able to get away with it. And they will hopefully, for them, will be able to get away with it for quite some time. What I mean by get away with it is as long as big buyers don't spark FOMO in the market, they can afford to be patient and they have been through this. And we've seen a pretty large rotation, over 15 billion ETF holders from- Yeah, it was 1.2 billion last week. 1.2 billion

into the Bitcoin ETFs last week and quietly, BlackRock spot Ethereum ETF here has surpassed a billion, making it one of the top 20 ever. They're terrible, but they're doing well. It's a rotation. We understand. Rotations

and accumulations don't happen in pops. That's all I'll say. And I'll mute myself again because I'm in a hotel lobby for those who care. You're doing good. You're doing good. So let's pull back, you know, back to 50 or 100,000 feet. And what we're all talking about here, and I think we agree, is that the markets try and decide, is it going to reward more cuts from the Fed? Is it looking for more cuts from the Fed saying bad economic data means more cuts in the Fed faster? So another 50 basis point cut, and then maybe a total of 75 basis points or even another 100 basis points before we get through the end of this year. I don't think so. I think 75 basis points would be a lot, but that's number one. We've heard from Powell a couple of

weeks ago that the fight on inflation is all but done. He pointed to a 2.2% number, inflation number, which is the PCE number. That's not the core PCE number. The core PCE number is 2.7%. So he kind of brushed that off and focused in on the number he doesn't usually focus in on. He focuses in on the PCE core number typically, but he kind of said, oh, it's 2.2%. Why did they do that? Because they're concerned about unemployment. To Mike's point and to what Ana Juan was saying this morning in the morning meeting, apparently, is that the risk is that we have a spike in unemployment. Okay. Agreed. So now everybody's looking at the, like, listen to what the Fed says and watching unemployment. And so at that 100,000 foot level,

what are we talking about? We're talking about, is the market going to be rewarded for negative information still? Or is it going to now rewarded for negative information still? Or is it going to now tip over to the other side where it says, uh-oh, this jobs report is so bad that we're going to slip into recession. The Fed's not going to be able to stop it. The Fed's not going to be able to help it unless they pour liquidity in. And that means that we're going to have to draw down by 10 or 15 or even more percent before the Fed and the Treasury will step in and start adding liquidity into the markets because then it will impact credit markets. And that's really what we're looking at is we're teetering on the edge between that perverse bad news is good news or bad news is bad news uh scenario but they they preempted that with 50 bips so right i mean it goes back to the same question of do they know something we

don't know or are they trying to get ahead of it i mean well but remember remember scott we didn't have a meeting in in august so it it kind of gave them cover and that terrible beige book uh number or that terrible beige book reading, they're not really numbers or readings, was enough cover to say, yeah, this is basically telling you that if we had had a meeting last month, we would have cut 25 base points. We're adding another 25 base points here to make it 50. It's not a panic cut. It's just we're catching up a little bit. And the second, well, go ahead, Mike, because you came off mute, and I think you're going to respond to that. And I can add to that. Well, I just want to add a little.

One thing I think the thing that's different this time is what's the same, first of all, as we all know. You said different this time. I'll say what's different is how expensive the U.S. stock market is at the start of an easing cycle as the Fed sees deteriorating economic growth. Not just the Fed, every central bank on the planet, with the exception of the Bank of Japan, and most notably the second largest economy, which has been in a deflationary spiral for almost two years. Now, that's China. The bottom line is those equities are so expensive now. I mean, I can measure 18 measures. I'd rather just stick with one that is market cap to GDP, highest 100 years.

So this is a great experiment. And you're right. The Fed only cares about one thing right now. Before it was inflation. Now the bottom line is increase in unemployment. Make sure it doesn't really stop too much. But we all know it's never made a big difference. They've always started to cut when unemployment starts going up and the curve starts to disinvert

and unemployment has always gone to 6%. In fact, 100% is not going to help that much of unemployment. That's the reality. Maybe it's different this time. So that's my point is we've already priced in so much hopium for so much risk asset accumulation. At these levels, I stick with gold and I'll stick with gold for a while. First, on a one-year basis, it's up 44%. S&P 500 is 36%.

Now, to back up you and Dave and Scott, sure, Bitcoin's up a lot more. But to me, that's what's changed. We've had the launch of the ETFs. We've had the halving. We've had beta taken off. And I'd like to just point out, since S&P Bitcoin, I'm sorry, beta made its peak,

a high price for july was 2006 was july 16th s p 500 is up about a percent bitcoin's essentially unchanged crude oil's down 16 16 that's deflationary forces gold's up about seven percent and tlt's up about seven around that seven percent so i think in the next 12 months we're going to see some normal back and fill maybe a normal 20% correction S&P 500. Yes, I've been early, I've been wrong, but my alternatives have been doing better, most notably gold. And that's why I say the biggest risk for everything, and most notably the high volatile, high speculative, three times volatility of beta of Bitcoin is that we have the normal recessionary backup, maybe not get the recession, but normal backup and Bitcoin potentially leads the way. And I'm thinking it's already leading

the way by lagging versus gold, by lagging versus beta. And it just goes back to normal reversions. I just don't see that cycle over yet. And the fact that we started easing, you fully expect to get that bounce. I mean, do you remember in September 2007? I remember that bounce was awesome. And then some of us went back and started buying more puts. I just, thank you for the bounce. Just question, that's the difference. So back then, stocks were unchanged for quite a while. They're inching up new high. Here, that's just the most expensive. Let's look at the rest of the world versus MSCX US index. It's the highest ever. Just good luck. I mean, there's a certain point you say, what's the alternative? Treasuries and gold. So obviously, real quick, Dave, I just want to

show something and then jump in. Bitcoin obviously has been lagging stocks if we discuss the data from when the all-time high happened. Dave's going to say the same thing, right? That it's cherry-picking dates. We've had this conversation endless times. The one thing, though, that Bitcoin is also lagging as I'm looking at this, I just want to show these charts. So we have US M2, right? M2 money supply. Obviously, we had the huge pump in COVID. It's come down, but it is going up. And when you take a look at global M2 and Bitcoin, it's very, very easy to say what Bitcoin tracks. When there's liquidity, we got Bitcoin in black, M2 supply in blue. And then generally, if it's negative or positive down here, it's gone positive. It's going relatively

parabolic. And Bitcoin has not caught up to this, which it always does in the past. So there is an argument that Bitcoin just tracks liquidity, tracks these liquidity cycles. And if M2 is skyrocketing right now, which it is globally, and Bitcoin is sideways, then watch out above, not watch out below. Which is exactly right. And the point is, when it's correct, it's not going to touch. The black line is not going to kiss the blue line and bounce back. It's going to do what it's done every other time, which is overcorrect. And people will get speculative FOMO, et cetera. And, you know, look, I think the fare for Bitcoin at this stage is probably in the low hundreds.

I think it'll double that. And, you know, and it's for that reason. But I want to talk about two things. First of all, what we're seeing is almost classic crack up boom dynamics. Right. And in a crack up boom, what you see is stock markets outperform at first. And at first, like you talk about, Mike, is financialization. The U.S. doesn't make stuff anymore. When you worry about real economy, the making stuff is what goes down. And what's worse is the Fed is hyper-focused on the stuff we do make, i.e. real and the jobs that we do have. And so the net result of that is, you know, in the way in order to prop up an economy, I mean, some people call it pushing on a massive imbalance and huge risk taking in residential real estate. And it was trillions of dollars.

And for those who weren't in it and for people here, unless you were involved in the market, in the credit markets, and I i mean involved you don't know how bad it was and it was very and when people don't talk about it you don't get it but like i have friends who are hedge fund managers that trade in emerging market debt and you know he they went from you know things you know bonds trading whatever you know let's say a bond, their portfolio would turn over and they would have calls or whatever, a hundred trades a week. It went to one trade for three months. I mean, it was just no bid for enormous numbers of instruments and the entire market seized up. And James could talk about this at length, but that is very, very different. We don't have that right now. So what do we have right now? We have, as you say, an overvalued stock market and

financialization in a crack up boom would predict that that is exactly what you would see until or unless you start seeing consumer hyperinflation, which to be blunt, although a lot of Bitcoiners talk about that as the final death knell that will cause hyper Bitcoinization. I think it's a long way off. And I think that it's still manageable. I mean, to be blunt, people are sheep and they're following. And with the dollar as a reserve currency, I don't think that we're going to experience that. Maybe I'm talking about my own book. I'm talking about all of my own books because we're talking about potential world war and cataclysmic economic conditions if the u.s went into hyperinflation and i really don't necessarily think any of us want to live in that

world but that is you know until that happens the the financialization of the economy is increasing you know i was going to say you know you want to hear a funny symptom you talked about eight fed you know official speaking this week and we all care about it. Since when do the master market manipulators of our time all get treated like rock stars? But yet, here we are, right? In a world where what they do is what matters most, it's ridiculous, but it is what it is. And so we play the cards we're dealt and we try to look at it. So when I look at this, I see S&P earnings projected to be up 18% next year.

Now, all that will mean, you can say it, and I would agree with you, Mike, all that will mean is next year, if that happens and the stock market stays where it is, it'll become 18% less expensive. But people are looking at that and saying, oh, okay, I want to be in stock. If I want to be in stock, what do I really want to be in? I want to be in the one asset that has yet to gain a critical mass of acceptance. And when it does, we'll be 10 to 15, actually more like 15 times where it currently is.

And so I'm playing that optionality with Bitcoin. And I think that that critical mass is, if it hasn't happened already, is well on its way. James, you have a chart here. Yeah. So this is Michael Howell. It's a cross-border capital. I can't remember where I came across this the last week or so, but he's showing here how, and he does his own proprietary measure on liquidity, global liquidity. And M2 is important. USM2 is important. But this also takes into account leverage and debt.

So if you look at it, the last 12 months, it's about a 5% expansion, 5.1% expansion of the global liquidity. Although if you look at the three-month annualized, the last three-month annualized, it's over 11%. So the point is that, and to Dave's point, this is why these guys are rock stars. This is why everybody's paying attention to central bankers. This is why they're listening to the bankers. They're trying to figure out where liquidity is and where it's going, because this is what's most important to markets. And the reason for that is that we are so financialized, so leveraged across the entire

world that this matters more than anything else. How much liquidity is in the system? Is it being added or is it being taken out? Because we cannot keep growing unless we add more debt. That's just reality right now. And so that's why these guys are focusing in on it. Another thing we were talking about before is trying to figure out where the Fed is going, which is part of this, is how much are they going to cut rates?

Well, if you look back at the Fed dot plot, and Mike can pull this up on his Bloomberg terminal. If you look back last meeting, the cuts were being estimated by the Fed officials to, and I'll stop sharing this, but they're estimated to go down under 3%, but now that terminal rate looks like it's going to be 3%, which means that the Fed officials believe that that terminal or that neutral rate is around 3%. And we're going to try to get there as fast as possible. And so that's what I expect. I expect us to try to get there this next month or this next year. That's reality. We're going to try to get to three percent next year. And so and if we're going to cut more than that, then we have a bigger problem.

And then the reality is the other tool will come into play. And that's your liquidity tool. And that's your QE versus QT. We're still technically doing QT. The Fed is still taking $25 billion of liquidity out of the market monthly by letting treasuries and mortgage backs roll off their books. But the reality is that that's not a lot of QT. They'll switch to QE this next year. But the Fed doing QT and QE is irrelevant if we're fiscally driven, right, Mike? I mean, how much does the Fed matter right now if we see what's happening with the Treasury? Right. I mean, we see global money supplies going up. Right, James? So, I mean, and that's kind of just a misdirection. Yeah, that's yeah. Go ahead, Mike. But that's partially central banks. It's also just bank liquidity right i i and well i i don't know

really just where to start here but i'm as i'm looking at all the macro here i just one headline is delanta cuts outlook the pre recording me before we start recording we pointed out we've seen recently reduced everywhere in real estate particularly here in miami and where my wife and i've been looking at just it's it's the macro trend to me, that's overwhelming. And we're talking about the fed doing what they always do when unemployment starts to increase, they're starting to cut rates, but it's global and it's just getting started. And it's when they just start cutting rates. And now we all, as I think Dave said this before, you know, darn, I hate to have to talk about specific fed governors when we want to talk about the macro and what's this person doing.

But I like to point out the cycle is overwhelming. And we're talking about we have to watch out for what the minions always do in cycles. That's what we're just seeing now. Feds starting to cut. Chinese are doing massive stimulus because they have to. OPEC has to stay off the market because they have to, because everything's going down in terms of demand. And it's just a question of what stops it. Typically, at this stage, it's just getting started.

And typically, at this stage, when you get that bounce, for instance, we all knew that the Hang Seng index was way oversold. But the key thing I want to tilt over to is forward-looking what you mentioned, James, earlier about Nikkei. If you overlay that Nikkei with Bitcoin for the last couple of years, it's almost tick for tick. And it's just signs of liquidity and signs of what usually happens is when you get risk assets too expensive, they go down. So here's my base case remains is when you get to this stage in the cycle, we've all known the macro, we've all seen it before, all entities in a plan start adding liquidity. But one thing that hasn't happened in any of our lifetimes, and we only have history to go back to, is the how relatively expensive assets are in the US. Starting with the US stock market, it's the most expensive

even versus a housing market, which is most expensive ever versus income. In that kind of environment, you can only keep that elevated for so long, you always get some reversion. It's just a question of when. And that's why I like to point out, that's why I'm sticking with gold and long bonds. I'm taking a look right now. Where is it? There's an article here. FOMO grips China stock buyers on epic trading day before break, right? This is kind of what you're talking about, obviously, Hang Seng is Hong Kong, but back in a bull market, Chinese CSI 300 index enters bull market.

But I think that, Mike, your long bond, you know, okay. The long bond ownership to me would be a trade only. Because if you're looking at this and you think about the terminal rate coming to 3%, well, long bonds are going to be higher than that, much higher than that. So how much money are you going to make between now and then? And then you've got to cut loose,

in my opinion, because you're going to have higher rates longer. Because I do believe that there's a much higher risk to a resurgence of inflation here over the next year, year and a half. And because of the liquidity that we're seeing poured into the market, regardless of what's going on in the labor market, there's going to be, I think there's going to be more inflation. That's just what I'm expecting because, especially asset inflation. Yeah. I think that it's going to be tilted towards assets more. But if you look at the end of the 70s, or actually if you look at the chart of the 70s, it is one that literally sends chills up the spines of the people at the Fed.

Yeah, and this happens really quickly, Dave. I'm going to let you talk just so people see this chart. This at the Fed. Yeah, and this happens really quickly, Dave. I'm going to let you talk just so people see this chart. This is the chart. Yeah, blue is the 70s. I was bringing it up literally as you mentioned it. This is back, I just brought up quickly, this is 2023, but you see a lot of people were tracking this sort of what we're doing now

from 2013 to 2023. I would love to see it updated for the next year. Yeah, that's down around that. It's just about the 2.5% level. That yellow line will be down a little bit lower. Yeah, and then it's literally following it perfectly. That's right. I've showed the chart too.

I got to tweet that a little bit. I published recently an article called Super Abundance. What's the big difference from the 70s? Those of us who remember it well, and the gas lines and everything is, we have a massive oversupply of energy in this country. So much now, if we don't export it, prices would collapse. And they're already starting to do that. We have a massive oversupply of agriculture and grains. Why? We have to export more than half of our soybeans, almost a third of

our corn and more than half of our wheat because we have super abundance. That's the big difference from the 70s. And the big difference is that took decades to work out. And we had Nixon and Arthur Burns colluding to get elected and keeping rates very low and things. And also a big difference is independence of central banks. They were not as independent right now. Alan Biner pointed that out in his book, Fiscal Monetary History of U.S. 1961 to 1921. And the bottom line is we just are in the back in the biggest money pump in history. We've learned the lessons of too much liquidity inflation. And let me finish, and in the commodities, I see nothing but global deflationary trajectories.

That is gold up 45% in one year basis and crude oil down 25% in one year basis. That's a global recession in action is the question. What stops? Agreed, agreed, agreed. However, we have not learned our lesson, I would contend. And the reason is that the other thing that's different, Mike, and I agree with you, all of that. I did live through the 70s. We had our gas lines where I couldn't go to hockey because we couldn't fill up our car that way.

We were not allowed to. We didn't have a voucher. We were on an odd week it was mental okay so i remember all that however well in chicago we skated to hockey i wish i had dreams of that we didn't have rivers where i was yeah the mohawk didn't freeze over in northern new york but the you know the other difference is that back back in thes, our debt to GDP was 30%. It's now over 120. Like the difference is that whether or not we've even learned our lesson, it doesn't matter whether we've learned our lesson or not.

We are backed into a corner of liquidity needs. Like we just have to have it or else you'll have, like, just think about us going into recession. Just think about the numbers of going into recession. We're already at a $2 trillion deficit. Okay. This is what would keep me up at night if I was yelling is that, oh my God, we're going to, we're going to go into a recession. That's going to, a typical recession will make your, you know, let's just call it your, your expenses,

your, your, your mandatory expenses and, and you know, your unemployment, all that, it's going to rise 10%. And then your tax receipts are going to drop 10%.

So that maybe 20%, you know, on each, 10% on each side. So you're talking about, you're going to rise to three, four trillion dollar deficits. If we have a terrible recession like the great financial crisis, you're up over a five trillion dollar

deficit. That would be catastrophic and they can't have that. They're going to try to avoid that at all costs. Imagine adding five trillion dollars to the debt load in one year. It's all about adding two. Let's go back to the 70s for a second

because thankfully all of us had a chance to live it. And, you know, I was a high school debater during the period of time when inflation went from 3% to, you know, to that. And we debated the economy. And so I remember this very well. The oil lines and all that stuff were in the first surge on that. It was in the early 70s. The Yom Kippur War was in 73. Nixon got out. Carter came

in. And when Carter came in, oil prices started to ease. And it was not the driver in what happened next. And yeah, there were some drivers of of it but it was not the biggest thing you mentioned agriculture uh you mean you talk about us exporting our genetically modified corn that more and more countries around the world are starting to say maybe we shouldn't be eating it uh and if you know rfk is not wrong uh i'm gonna continue to say that he is not wrong when it comes to our food supply our Our super abundant food supply is going to get a correction sooner rather than later, whether it's this election cycle or the next election cycle, it's going to matter. But, you know, I don't think agricultural prices are what's driving it. But, you know, you're right about that technology, you know, is there. But

the financialization of the economy compared to the 70s, if you look at the percentage of the stock market that were financial companies and or white collar companies, it was dramatically lower. I mean, dramatically lower. You probably have that data depends on which index you want to use. So it is it is a bit different. But you're you're basically right. Right. You know, the issue is, can we engineer a way out of the economy where i take exception to what you said there's no effing way we learned our lesson we're following the same playbook and as long as it works they're going to keep doing it you know the 70s let's let's be really clear about this 1971 started the fiat experiment and they were just figuring out they didn't know then how much they can manipulate the markets and

how far they could take it. Quantitative easing, they would never have even thought about it. Never in a billion years had they, that inflation would have been even worse, but they didn't care. They didn't do it. That is something that Ben Bernanke invented before the global financial crisis, right? Or during the global financial crisis, the idea of the Fed actively buying bonds, people used to say, if the government was buying the stock market or buying bonds, they used to make fun of the so called plunge protection team, right? You know, they, people used to say, if they did that, the markets would, would go into some sort of hyperinflationary nonsensical collapse. And the reality is, people just accepted it, because they accept what the regulators is doing. And until that house of cards falls, and hopefully that will be

a couple generations from now, but at least after I'm dead and buried, we'll worry about it. But that's the biggest difference between the 70s and now is the 70s was the start of the fiat experiment. And that's why debt-to-GDP is where it is. We've been untethered. And those of us that are Bitcoiners and those of us who are gold bugs, and it's the same, say, you know what? Gold in 1971 was basically 90 plus percent

of monetary aggregates in value. And then they were released out with the idea. And then of course, it was like, okay, well, wait a minute. We can't actually let that happen because it's really, we need things to inflate. And so they were released out with the idea. And then, of course, it was like, OK, well, wait a minute. We can't actually let that happen because it's really we need things to inflate. And so they did. And so those are the big differences here. I mean, the biggest difference now in the 70s isn't that we've learned our lesson. It's that we financialize the crap out of the economy.

And maybe that will make it better. And hopefully so. But understand what that means for the price of the assets that people Care about and I think that it's fairly bullish for that one more point The Nikkei over the last year is up what? 25% give or take 31 to Yeah

One year it writes to, uh, yeah, one year, right. Uh, Bitcoin in the same point is 250%. So no tick for tick, you know, 100, it was Bitcoin was trading at, okay. 30. I was thinking about from the Nader, but whatever, you know, it, it, it bottomed at around 25. We all remember it because it went from 25 to 30 something twice before it finally took off at the end of the year. So, I mean, the numbers are dramatically different. And the reason is because Bitcoin is altogether an option on its future adoption. And so it's going to have larger magnitude moves if it's going to actually get there. And if it isn't going to get there, it isn't going to get there.

And I think that given where we're at, I think that that seems more and more likely. So I just think that that's a rotation. One thing we do need to talk about, Scott, that a lot of people haven't mentioned, the one crypto asset that has had a lot of news recently and it's macro news is XRP. And that's because of a couple of cross currents one obviously, whether or not the FCC will will file their appeal, which just it makes me feel like I'm just disgusted. But But the other is, they've been making all sorts of headway in terms of inserting it into, you know, ripple, into payment systems around the world. And so if you look at the price of it, it's had a very good week.

It's now bumping up against its intermediate high. And there are a lot of people talking about it. Now, I will continue to say, and I would love to get educated in this, that I don't understand how an asset that is so materially owned by one company has sufficient scarcity so to as to justify even if it's adopted as the method of all global payments i don't see why you know what that does to the asset but i could easily be wrong and i fully admit it i need to be educated on what the supply demand dynamics are there but that matters because if we end up with a mainstream asset that's being used in the world of crypto, that's not a central bank digital currency,

it might actually matter as well. And so we tend to ignore it because it has had so much less volatility being stuck in this, you know, basically around 50 cents for so long throughout all these rallies but if that starts to break out and other false points start to break out then people will start getting excited again but that's an entire amount of liquidity that's sort of sidelined and i'm curious what do you think about that mike everyone's basically looking for the chart you're i would say i would say scott you're definitely more of an expert on expert xrp than we are well then we're gonna have to move on because i'm far from an expert on xrp yeah i i just think it's worth it's worth mentioning that if if payment

processors around the world are moving towards using some crypto assets that is relevant we can talk about it as things get it would be in my, and I hate to alienate the XRPers or whatever, but I think that XRP was a great early attempt at that. I have no idea what Ripple Labs will do outside of the token itself, which can be a very successful company. But I think that Mike will love to hear that crypto dollars, aka stable coins, have probably taken the wind out of any volatile asset for payments when you can literally just send dollars around the world. That's why I always like from the very beginning, I'm just like, boy, the technology is overwhelming. I just love to go in coinmarketcap.com, click on volume. Tether is always on top.

It's $119 billion now. I remember when it was two and I was in Hong Kong talking about it. There is enough. That's an unstoppable trend. I completely agree. The technology is overwhelming. But I remember saying there was Bitcoin and there's 10,000 there was Bitcoin, then there's 10,000 wannabes, and then there was 20,000 wannabes. Now there's a million wannabes. I mean, we're going to look

back at this from the future and say, yeah, it's massive speculation, just like the railroad rally in the 1800s and the dot-com peak to 2000. Then the dust settles and things come out of it. And that's where right now the problem I point out is, and people point out too, yes, I get the Bitcoin. And we all like Bitcoin and gold, but there's certain times I think it's better to be overweight gold than Bitcoin, particularly when you expect when volatility is in the stock markets at basically almost a 10-year low and potentially going higher. And Bitcoin is just so volatile. So at some point, I think it's going to do it, safety not monomous predicted. Well, maybe central banks will buy it. But at three times the volatility of beta and gold,

I'll stick with gold, particularly when I think volatility in the stock market is going up. And the bottom line is it's going to go solo. And because gold has demonstrated it's a strong store of value over thousands of years, you know, and number one. number two is it's always been the flight to safety in my career, you know, or very short term treasuries. But, you know, I mean, that's that's just a reality. If you if you want to protect yourself against inflation, shorter term, probably go longer term. I would say Bitcoin. But that's you know, that that's that's the personal and portfolio decision, portfolio allocation. But I agree, Mike, and we're getting into a period. And even then, if you look at gold in Weimar period, I mean, look at how volatile it was. I mean, you've got that chart, right, Scott, the volatility of gold

in the Weimar period. I mean, it was massively volatile. It's just normal in periods of uncertainty, especially in periods of uncertainty of a hyperinflation event. I don't think we're going to hyperinflation in the US dollar anytime soon. That's my personal opinion. I just don't think it's going to happen. It's the global reserve currency. There's way too much confidence across the entire world.

There's no way we're going to go into hyperinflation in the next couple of years that just doesn't it doesn't make sense to me and by the way it's it's it's really important that we we have to mention it uh when we talk about crypto dollars mike uh it looks like uh the democrats have gotten the memo uh maxine waters actually came out and talked about a grand bargain uh for stable coins. And they understand, probably people from the Treasury explained it to her, they're ignoring Biden at this point. And so the one pivot that is very clear is there probably will be stable coin legislation, it will be promoted. The sole question, and it's a biggie, is will they mandate it because it looks like they want to? Will it get mandated under the auspices of the Fed

and you have to be a bank to hold the reserves? Or will they allow it to be an independent company with audited holdings and treasuries? And obviously, we don't want it to be under the bank regulatory regime because of the way the bank regulatory regime is, considering that it's basically been used to strangle most of the crypto industry in the united states but it is a big it is a very and by the way that also came out over the last

week nick carter published a a tremendous takedown of operation chokepoint um the other big change that happened since we last talked uh is the is options on iBit being approved. And who knows when we're going to get the single day options on iBit. It's like the volatility in the gambling culture that can come in the United States could be interesting. I mean, the long-term effect of that generally is to decrease volatility.

I'm not sure that that will be the case in this event. I think the long-term of it as well is even for me. I'm welcoming it because it makes it easier for me to hedge a book and hedge volatility with options as an institutional investor in my hedge fund. It's just so much easier to do that. You can't do it all hours, but it's going to be very liquid. It's going to be very important for traditional institutions. I can go do it elsewhere. I can have accounts elsewhere that I can trade options on Bitcoin without having to do it on the New York Stock Exchange or CBO, whatever. But this is going to be important for traditional institutions

that want to have access to hedging their book, which will enable them to have bigger positions in Bitcoin, in my opinion. Bigger positions, but it's just the more and more participants,

the more adultification of this space, the more you're going to squash that value. We're not getting less value. We're not going to get less volatility. We're not going to get those 10x. Those days are over. But the bottom line to me for all risk assets is they just take that VIX volatility index, look at the 200-day moving average. It's just bottoming from a six-year low. If volatility is on its way up, which is from a very extreme low for very good reason, we have elections coming up.

We have China heading towards recession of the world. We're just starting to cut rates typically for recession then this highly volatile risk assets probably going to underperform and i just it's been doing that for a while i'm not sure i'm just pointing out mac facts of what some of us did and did very well in 2008 by watching these signals we didn't have bitcoin then and And I agree that long-term that these developments like options are going to, and more and more institutions coming into Bitcoin, it's going to dampen volatility. That's reality. However, in the adoption phase here, when you have the options, we talked about this, I think momentarily last week, is that when you have options like this and you've got the market makers that are selling these calls to the buyers, to institutions or speculators, whoever, they have to hedge their

book on a Delta hedge. And with an asset like Bitcoin that is highly volatile in the short term, that can produce something called the gamma squeeze that you know all too well, Mike, that short-term can produce some volatility that is explosive to the upside. So the bigger one, I just want to point out the bigger one because, yeah, that's true, but that's no different than the liquidation cycles we see in perpetual swaps. It really isn't all that different. What is different is the dominant use case for Bitcoin in the next cycle, what will end this upcycle. And here's the prediction, I'm giving a four year prediction, right? What will end this upcycle is people, you know, when the upcycle starts to end, you will see

an entire huge number of people selling covered calls in order to generate yield, which will, as it always does, work until it doesn't. It stops working if it rallies past it. And all of a sudden, people who think they're long Bitcoin aren't anymore. And that creates a far bigger squeeze when you have funds that are supposed to be allocated to Bitcoin that have sold, that effectively have gotten taken off because it's rallied past the call levels. That is not going to happen. It can't, just mathematically, this cycle, but just be aware that that's working out there. If we look back on this episode, market, in 2028, we're going to be talking about,

oh my God, look what happened to all of this event. All these people who were taking yield and ended up getting stopped out of the big Bitcoin rally. And that tends to create all sorts of really interesting things. Guys, I have breaking news before we go. Quick, I just have to tell you, Mike, that apparently, I just, I never bring up comments, but I'm paid to not talk about XRP, in case you guys are wondering. I'm officially sponsored by not XRP. Can you imagine? Who would pay you? I'm sorry. Who would pay you to not talk about something? So it just says, I came to New York from the trading pits in Chicago to be an over-the-counter options market maker in the US treasury. So just to let you know, you don't have to hedge those

options when you get lifted out of a call or put with the underline. You can also use other calls or puts or options. I usedline, you can also use other calls or puts or options. And I used to, I mean, I had basis trades on everywhere because I used everything I possibly could to hedge properly and get the big. And I just pointed out it was two times in 2017, two weekends in a row on Sunday nights. Mike, would you talk about the launch of these Bitcoin futures and the board trade? And my theory since then has been the same. Back then, 26, 260 day volatility of Bitcoin was about 10 times gold. Now it's about three times gold. It's going to go to two and potentially one. But if volatility in the stock market starts

continuous increase, it should underperform. And it's been doing that for, yes, you're cherry picking. I'm cherry picking, but it was only about a month ago while telling the stock market, maybe bottomed. It was a joke, by the way. That's hilarious. I thought Scott was made to slam soul meme coins. Yes, unless you watch

certain people who say I was promoting soul meme coins. Hey, man, you can't do this out here. Listen, we have the title. Bitcoin enters October. Will it make to new all-time high? I know that we're here. Listen, we have the title. Bitcoin enters October. Will it make to new all-time high? I know that we're here. It's 10 a.m. I just want to go around the panel.

Quick take. I think we make a new all-time high in the next quarter. I don't know about October, but I think that we will make a new all-time high in this quarter. Dave, do you think so? Yes or no? Yes. James? I do.

Mike? I've got to have a contrarian now. I'll be the contrarian. Come on, it's more fun. If Benny goes up, me might. It's like ESPN game day. You can't have all the same teams at the bottom. Yeah, we're worthless. If we all agree, then we only need one, right?

I need a Shiba Inu hat to put on, you know, to say who's going to win. You need the whiff beanie. Come on. That's right, just a whiff beanie. It's an out-of-date Tiger Woods hat instead. All right, guys. Listen, thank you, Mike, Dave, James.

Great talk today. Really enjoyed it, as always. Great to be back on an actual Monday. Dave, I want to hear how Mainnet is, honestly. So next week or at some point in the following week, this is the Masari Mainnet, obviously, in New York. I missed it this year. The last time I went, it was super depressing, but we were peak bear market. So yeah. Yeah. Let's,

let's talk later this week. I'll be back on a bike Thursday. Okay. Awesome. All right, everybody. That's all we got Twitter spaces in 15 minutes. And of course I will be back tomorrow, 9am Eastern standard time. Later guys. Appreciate it.