The Wolf Of All Streets - Bitcoin Price Will Be $570,000 If It Replaces Gold | Dave Weisberger, CEO of CoinRoutes

Episode Date: February 8, 2022

Dave Weisberger made his second appearance on the podcast to share his thoughts on the current irrationality in markets. According to Dave, stocks are behaving more like a speculative casino, which is why he thinks legacy markets are fundamentally broken. This exciting episode covers the Fed’s FUD, why Bitcoin will always be first, crypto correlation, value stocks, looming regulation and so much more. If you are invested in the market in any capacity, you need to watch this incredible breakdown. -- Amber Group: WhaleFin is a digital investing experience offering easy portfolio management tools, attractive investment yields, and access to the emerging digital lifestyle. With over $1T in volume traded, WhaleFin offers personalized, compliant, and secure service across dozens of digital assets in 150+ countries.  Find out more at https://thewolfofallstreets.link/whalefin  -- Horizen: Horizen is the zero-knowledge enabled network of blockchains powered by the largest node system with scalability and flexibility unmatched by others. Blockchains built on Horizen are enhanced by zk-SNARK privacy tech and provide massive throughput without compromising decentralization. Horizen can support up to 10,000 independent blockchains running in parallel and issue an unlimited amount of tokens.  More at https://thewolfofallstreets.link/horizen -- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode of the Wolf of All Streets podcast is sponsored by Horizon and Whalefin. Please stay tuned for more information on them later in the episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where two times every week I talk to your favorite personalities from the world of Bitcoin, finance, music, sports, art, trading, basically anyone with a good story to tell. Now, this is the second time that I've had today's guest on and once before on YouTube, but anytime I see things going absolutely haywire in global markets, he's the first person I call to offer me some perspective. Dave Weisberger is the CEO of CoinRoute, a company that provides

algorithmic trading tools for buying and selling crypto. But he's so much more than that and has been in markets for decades and always has incredible perspective. Dave, thank you so much for coming back on for this emergency session, we'll call it today. Thanks, Scott. It's always a pleasure. And it's just the one thing about the markets is they never fail to zig while you think they should zag. Always seems to be the case. Absolutely true, right? Markets can stay irrational longer than you can stay solvent. But we are at peak irrationality right now. As we're recording this, a couple of days ago, Facebook reported earnings lost 25% of their value, which was more effectively than the value of about 460 of the 500 companies in the S&P. Amazon reports earnings the next day, which are skinned as a positive, but are actually negative

when you dig in. Pumps 15%. Snapchat the same night goes down 23%. The day of trading is up 35%, seven minutes later after hours. What the hell's going on in the stock market? Well, I mean, look, at the end of the day, everybody who makes arguments about how great the market structure is for the stock market, how evolved and mature and how the SEC makes everybody safe are all full of crap. Let's face it. The stock market is a speculative casino where eventually in the long run, it helps create a basic idea of valuation for companies in the capital markets, but it's fundamentally broken. We know that. Companies are raising more money privately than ever before, and founders are liquefying their investments when they go public.

Public companies tend to be ones that don't need to raise additional financing, or if they do, they do it via secondary offerings, which are priced independently or at least somewhat loosely correlated to the market. Moreover, we have stock markets in a 24-hour world that are open six or seven, depending on the location, somewhere between six and nine hours a day, depending on where you are, causing what I call gap volatility. So I looked at Facebook the other day and I just started laughing. Everybody who has been, you know, whether it's Nouriel Roubini, who comes out with his blithering

trash takes on Bitcoin, or Paul Krugman, which was even dumber, reading one of the dumbest editorials I have ever seen. Someone who's a Nobel laureate, who you would think after he made his famous comment about the internet being no more important to the economy than a fax machine, he would have learned to shut his mouth on things he doesn't understand. Yet here we are making himself look intensely stupid two decades in a row or actually it's 15 years in between them. So every 15 years, does Krugman have to say something that's mind bogglingly dumb? You know, I don't know if he has another 15 years in the public eye left. This one's really dumb. But go back to Facebook. It's fascinating. Because I commented about this, and no one really said very much yesterday.

The reality is, people talk about Bitcoin, and they talk about crypto, and they say, it's so volatile. Oh, my god. How could you possibly invest in it? I have never seen Bitcoin drop 25% in a minute. Never. I don't care what it is. I'm sure maybe in the early days, but in the last, really since the market started maturing since 2018, and it really has matured dramatically since 2018. 2017 was probably the end of the Wild West when you saw thousand dollar differences between Bitcoin and one exchange versus another and stuff like that and derivatives. But since it started to mature, you've never seen that. Now, why is that? Well, that's because the markets are 24-7. And so things happen. Instead of a big ass rock being dropped in a pond, which causes this massive

geyser into the water and then all sorts of waves afterwards, you see what you normally would see. You see volatility and it starts to drop and it moves and it does what it's going to do. And Bitcoin has dropped. Obviously, it's dropped 50% from its highs. We all understand that or did from peak to trough in the most recent move. It's obviously rebounding off the floor now as we speak. But you don't see

this sort of gap volatility. And so people who talk about volatility should understand there's a big difference. Gap volatility can't be traded. I want to repeat that because it's a really important point. The average investor has no ability to trade when the markets are closed. Yeah, you can buy or beware, caveat emptor sort of stuff. Some brokers give you ability, but there's no real liquidity when the market doesn't trade. The average investor gets hosed when there's a move like that. Sometimes you get a gap down and it stays there, which is more or less what's happened

with Facebook. It's actually below yesterday's gap low now, although it did rally a bunch and been up and down. Sometimes you get a gap down because people don't know what to do and it rallies off the gap. The fact of the matter is, if you were able to participate the entire time, you're better off. It is almost axiomatic that the 24-7 infrastructure that crypto has is better for the retail investor because they can participate at all times. It's a bit of a pain for companies like mine. We have to staff 24 hours. Our systems have to be up. It's very hard to make changes. We have to do everything scheduled. We understand all that. But it is undeniable from an investor protection point of view that it's better.

And people look at the Facebook thing yesterday, they just kind of shrug their shoulders and they don't care. It's a big deal. And it really is important that every time someone whines about Bitcoin being volatile, that they really should remember back to what happened yesterday with Facebook or go back, you know, last year to what happened with Robinhood. And you saw even bigger moves. And so that's why I thought that was important. Sorry for the diatribe, but it is kind of crazy. It's incredibly important. Sorry for the diatribe, but it is kind of crazy. It's incredibly important. I mean, if you look at the sheer numbers and market cap eliminated, it's like Facebook went

through a depression in one hour. If it was a stock market. I'll play devil's advocate for a second. It's like one of the biggest problems with a company, with the reasons private markets tend to be where companies want to be rather than public, is public markets care about next quarter. Private markets care about the long-term growth. Now, you could argue with Zuckerberg's philosophy, you could say that he's too centralized to really be part of the metaverse, to really be part of Web3, that it really should be more open source. And there are lots of arguments on both sides. I don't think anybody really can make a strong argument that his long term vision isn't an improvement over what Facebook was becoming. I haven't seen anybody. I don't think anybody would argue that the long term prospects for what is now meta was materially different yesterday morning versus the day before.

Exactly. But the short term, clearly, it was bad. I mean, look, it was a bad earnings report. When you get to situations like that, it makes people reassess. And essentially what happens is you're talking about almost the blow-off bottom. If you think about what's happened with all of Cathie Wood's arc holdings, the big tech stocks have all been kind of underperforming. I think the world of Cliff Asness and what he does at AQR, but the reality is January

was probably the best month for, quote, value stocks in a very long time. It actually makes sense that that's the case in a sense, because value stocks tend to be correlated to, well, value. I mean, whether or not something has an intrinsic worth. And we're in a situation where at least people believe that the Federal Reserve is going to put a damper on speculation by raising interest rates. Now, I don't believe that for a heartbeat, and I'll explain why later. But the fact is the market has priced that in. And so when the market prices it, you would expect value to outperform and speculative stocks to go down. So when you look at something like Facebook, which more or less confirmed what people already sort of knew, which is that their short term

isn't as rosy as people thought. And they're pivoting to this big long term thing, which is by its nature speculative. Of course, they punish the stock. Now, is that going to turn out in the long run to be a smart move for people who sold it there? I don't know. I mean, I tend to think not. I bought Facebook today to be totally transparent. I just want to be clear that that's the give and take that's happening. I mean, it's a similar thing in crypto and digital assets. You're seeing the more speculative names or pairs or projects get punished far more than other projects. But it really depends. I'm not sure that there's a whole lot of rationality in how things get judged between project to project. And you talk about this on your podcast all the time, so I won't bother delving into anything,

because I don't really have strong opinions on the short-term trading of a lot of these crypto projects. I just, with the exception of Bitcoin, where I think that the market is pretty well voted already, that the mid-30s to the low-30s, there is an enormous amount of buying, and there's not enough speculative selling power in the world to push past that. You'd have to actually dislodge Bitcoin from what the community would call diamond hands in order to make it go below that. It seems like we have our floor. And what I think we want to talk about is, well, okay, so what's next? And that's a really interesting question. And that I think is worth talking about. Yeah, I absolutely agree with that. I want to stick to Bitcoin for sure, because I know that we both were mightily impressed and thrilled when we saw the recent

Fidelity report, Bitcoin First, come out. And you had some amazing takes about that. So I want to dive deeper into how powerful that report was and how important it is when you zoom out and look at it. I think that there are two, well, there's a lot of really important points that they make, but there are a few points that they make that are fascinating. I mean, the most important one is all the people who look at Bitcoin as, well, of course, it's a technology. And therefore, a newer, better technology is going to come along and replace it. They basically took a baseball bat upside the head of that argument and smashed it. It's a dumb argument because Bitcoin is much more than technology. It's really a monetary good. And they explain it really well. And I'm looking at the chart in front of me. It's a dumb argument because Bitcoin is much more than technology. It's really a monetary good and they explain it really well. And I'm looking at the chart in front of me. It's actually kind of interesting where they list off the seven characteristics that make something money.

And Bitcoin wins on six of the seven. And the only one it hasn't won on is track record. But what's fascinating about that is it has much more of a track record than any other newer technology that could come along. And really to try to build what it's built in terms of network effects on a distributed basis is I think it's a once in a generation, maybe even multi-generation type of event. I mean, the fact that you have this distributed market, you have this pseudonymous creator, Satoshi Nakamoto, and now you have so many people who have Bitcoin nodes, et cetera, et cetera. It has grown up and its track record is actually pretty good. It just isn't good as a store of value. Also, you can't hold against it the fact that it's only existed for 13 years.

Right. The biggest point against is it wasn't invented earlier, right? Because you're comparing it, obviously, to fiat and gold, which have a longer track record, whether you believe it's a good one or not. But when you look at, and this doesn't even take into account the digital nature of the world as it's evolving, how everything, all payments will be digital, how your lives are digital. Yes, you want to interact. I think that the metaverse is cool in many ways, and virtual reality is awesome for playing games and stuff and for medical uses. There's lots of uses for virtual and augmented reality. The reality is, even in person, when our cleaning

lady comes over, she wants to be paid via Zelle. It doesn't matter. We're all going digital. It's easier. It's simpler. And you'll see that evolution. But even taking that into account, on the six categories or characteristics of money that they talk about, which are the same ones that I talk about, durability, Bitcoin and gold are both better than fiat, but whatever. Divisibility, Bitcoin is far better than gold. Fungibility, Bitcoin and gold are both better than fiat, but whatever. Divisibility, Bitcoin is far better than gold. Fungibility, Bitcoin and gold, you would argue, is the same. Portability, Bitcoin is massively better. And here's the important two. On verifiability, Bitcoin is clearly in a class by itself because of the nature of the public blockchain. And scarcity,

Bitcoin is in a class by itself. I mean, gold, they say, is scarce. It has an inflation rate of around the same as Bitcoin's now, somewhere between 1.8% and 2%, depending. But there are asteroids in the universe that have a lot of gold. Gold is actually not as scarce as Bitcoin. It is more likely that we will perfect asteroid mining and increase the global gold supply dramatically than it is that Bitcoin's 21 million cap is going to be broken. So the reality is it's actually more scarce. So when you look at all of that, you start asking yourself the question, well, OK, what the hell does that mean from a value point of view? And that's where the rubber meets the road. So what you're talking

about with Bitcoin is looking at, OK, what's the monetary value of gold and what should the monetary value of gold be? So you have two stops. Stop number one, just what is it? So gold's about $11 trillion to $12 trillion in market cap. Arguably, three quarters of that market cap, around $9 trillion, is monetary value. The rest is jewelry and other assorted uses. Now, how do I answer this question? How do I come up with that? I come up with that really easily by looking at the gold-silver ratio. I could make it a much bigger percentage if I look at the gold-platinum ratio, but that's a different story. But the gold-silver ratio is important because silver used to be money. That gold effectively demonetized silver last century. Silver and gold in the Earth's crust have a 15 to 1 ratio. Silver and gold for thousands of years traded

at a 15 to 1 ratio, 10 to 1, 15 to 1, whatever. Silver is nowhere near as portable as gold. As inflation started happening and gold was not on a gold standard, once we went off the gold standard, gold demonetized silver. Why? Because silver became just prohibitively expensive to use as money. It just did. It's just way too much. I mean, I have, you know, you ever have a monster box of 500 silver coins? I do. And you're not, if you can carry, what, seven, eight gold coins to basically be what's this 500? I mean, it's a crazy thing. And you can carry all the Bitcoin in the world in your mind. So that's right. Well, yeah, there are some people can.

I can't remember that. I can't remember that. I can't remember them either, but in theory. Okay, so then you can write it down. So you do the math and you say, okay, great. So gold is trading between 70 and 100 times. So you start doing the math and you say, okay, well, that difference is the monetary value of gold as opposed to the jewelry value of gold.

And that difference equates to about $9 trillion. So Bitcoin is superior. Clearly, even before you look at the digital world, it's way even more superior in the digital world. So you come to the conclusion that Bitcoin becoming digital gold, if it gets there and has that acceptance, it's worth somewhere around 15 times what it's trading at. Well, last week when I wrote that, maybe 14 times today, I haven't done the math. But that's the beginning. That's the base case. Now, there's a lot of smart money that looks at something that gives you a 10 to 15 to 1 payoff and believes that it's like a 50-50 chance that it gets there and says, this is something I want to shove all my chips into the table for. Now, what Fidelity is basically saying in that report is, this is a fait accompli. So now you have one of the world's largest asset managers telling anyone who will listen, including all the

smart hedge funds and all the smart individuals, that this is a fait accompli. But who hasn't acted yet? Well, I'll tell you who hasn't acted yet. I haven't seen one investment consultant, whether it's Towers Perrin or Mercer, et cetera. So therefore, pension funds who want to invest in Bitcoin are doing it under the guise of what's called alternative investments, which is a much, much smaller part of the multi-trillion dollar asset collection that they have. Well, what happens the day, and I said this to you, I think the very first time we talked, what happens the day, and I said this to you, I think the very first time we talked, what happens the day that the investment consulting community says, you know what? This is a fait accompli. I need to have in my quote 60-40 portfolio some allocation, 2%, 5%,

whatever, to Bitcoin where I used to put gold. What happens? Well, there isn't enough Bitcoin. There's only ever going to be 21 million. A bunch of them have been lost. A lot of them are in very strong hands. This is the classic example of what is often used slowly then suddenly. On that day, when that happens, the price of Bitcoin could do pretty much anything because there won't be enough to satisfy the demand. Remember, that's demand from people who believe that the price should be somewhere in the neighborhood of 15 times what it is today. So it's a really interesting dynamic.

And so when you see Fidelity writing this report, that matters. But as the great knife salesman from Ronco would say, but there's more. The reality is gold, because of its shortcomings, has not kept up as a store of value. And you can ask yourself why. I mean, gold used to represent 100% of global monetary aggregates. It fell about 15 years ago. In its last rally, it got to somewhere around 10 or so percent. It's languished since then.

As monetary printing has gone on, gold has not kept pace with monetary printing. People always say, well, monetary printing is what's fuel gold has not kept pace with monetary printing. People always say, well, monetary printing is what's fueling Bitcoin. And that is true. It's on the margin, the smart money says, OK, I need to hedge against this monetary printing. But gold hasn't kept pace. So what would gold be if it had kept pace with monetary printing? I've seen estimates anywhere from the low end is double where it is today. The high end is 5x what it is today. And that is your terminal state of Bitcoin, just as a global store of value. And that doesn't even talk about what happens if Bitcoin becomes legal tender in a large part

of the world, which is yet another order of magnitude bigger than that. So when you start looking at outcomes, the point that I make all the time is Bitcoin trades like an option. But I've just laid out for you what those outcomes are. Now, those outcomes don't happen overnight. And people, I constantly hear you caution your subscribers. And thank you from the bottom of everyone who looks at investments hard for doing so. Leverage is dangerous. And short-term time preferences are particularly dangerous with something like Bitcoin because Bitcoin effectively trades like an option on that outcome set that I just described. It may not happen, obviously, but if you think there's a material chance of that option set

materializing, then it's a generational opportunity. And even if it's 1%, right? Are we talking about 2%, 5%, 10%, even if it was a half a percent, even if it was a quarter of a percent that everyone allocated to Bitcoin. There's not enough. Right. They're just never, it's not even close. But that makes you realize that- There's somewhere between 50 and 60 millionaires, 50 or 60 million millionaires on the planet.

And there's 21 million Bitcoin. Right. And as you said, there's really probably going to be about 15 million Bitcoin and maybe five or six on the open market, considering how many are in strong hands. So you start asking yourself the question. Obviously, I think we talked about this. I personally think the smart move would be for people who really care to start measuring Bitcoin and Satoshi's rather than in whole Bitcoin because it doesn't really matter. And it turns off the really, well, I hate to say it, but ignorant investors who think that low price means higher possibility for appreciation. It really should always be about market cap. But the reality of the situation is that the number of Satoshi's, stacking sats,

all of that stuff that the people in the Bitcoin community use, they're right. I mean, that is the right way to think about it. And it's really a simple question. You know, I like to play poker. When someone gives me an opportunity, when I have pocket aces pre-flop and someone gives me the opportunity to shove all my money in before the flop, I'm going to do it. Now, one out of every six or seven times I'm going to lose. Sure. But when I get the opportunity to get even money or better on something that I'm going to win 80% of the time, I'm going to do that sort of bet. Well, Bitcoin is sort of a different style bet.

There, you pick your number. I personally think it's like 50% that Bitcoin becomes digital gold. I think it's that high. And that's wildly bullish, I admit. But 50% to get paid 15 times your money is a bet that is really hard to resist, which is why when I see people on Twitter, some of them say it outrageously. But it depends on your time preference. It depends how much money you can afford to lose. It depends on a lot of things. But generally, the younger you are, the more likely that that should be a substantial percentage. But if you think about it from a portfolio allocation point of view, where it is part of a diversified portfolio, that sort of bet is the kind of thing that you really want to be in your portfolio. And that's why I think you're going to see it more and more and more. Right. People have made the argument that you should have Bitcoin, alternative assets in general,

but Bitcoin especially in your portfolio, as you said, because it offers idiosyncratic risk. Effectively, in a world where everything dumps together because they're systemic, you have this chance that it might behave differently and save your portfolio, right? Sort of the holy grail of investing is to find something. But right now, a lot of people are making the argument that it's not behaving that way, that it's trading like a tech stock or that it's dumping or that it's literally just tied to M2 monetary supply. And if they cut it, Bitcoin will drop. So what do you say about the correlation argument?

Do you believe it's an uncorrelated asset? I believe the asset is uncorrelated, but the option on the asset, which is what we are currently trading, is obviously correlated. Now, it's obviously correlated for a couple of reasons. The fact of the matter is, when you lose money in your portfolio because things start dumping, what do you sell? You sell what's most liquid. Let's say you lose money and it's 2 in the morning.

What do you sell? Well, you sell what's most liquid and what I could actually most liquid at that time. So what happens? People who have diversified portfolios, who have just taken a beating and have to raise cash will sell what they can. Bitcoin is one of the things they can. So that tends to be why, and that tends to be the case of in every big dump, things go toward one. Bitcoin is dominated by technical traders on the margin. You have a lot of hodlers. You have the people who believe in the same bet that like me. I haven't traded, well, apart from testing our technology at CoinRoutes, I haven't traded my Bitcoin core position since, well,

it's been a while. It's been months. And when I do, I dollar cost average in over a period of time as I free up funds in the portfolio to do that. And that's it. Now, I don't do that for a couple of reasons because I've learned that to professionally trade, I have to be like you staring at the charts and staring at everything minute by minute by minute. And I don't have the time to do that. I'm running a company after all. And that's that's really what what matters to me is to build coin routes into the preeminent platform. So I focus on that. But the truth of the matter is you can trade Bitcoin technically. If you're doing so, then you literally have to do what you're doing. And you have to look at these correlations because that's what people believe today. But there's a concept in investing that a lot of people don't understand. It's called regime change. And regime changes are

where all the real money is made, like the big, big moves. We used to have a joke because I ran Stadarb for years, both at Salomon Brothers through to Citigroup. And then I ran high frequency market making at Two Sigma. We used to have a joke. We used to make fun of a company that used to advertise on CNBC back in the days of the Internet bubble and just after called channeling stocks.com. And they told people you could get guaranteed winners and losers always by buying at the top, at the bottom of the channel and selling at the top. And that it would always be in this channel and you do well. And when you look at that, they're right.

Nine plus out of 10, more than nine out of 10 times you make money. What they don't tell you is on the 10th time when you're wrong, you could lose 20 times what you make on the times that you're right. And so that's the issue. It's when assets move and the correlations break for a reason. What the Fidelity report is telling you is that there is an event looming. It might not be for a year. It might not be for five years. It might not be for five days. It could be tomorrow. But there is an event looming, which is there will be a domino setup where people start accepting Bitcoin as core to a portfolio. And that will change the regime. There is smart money who might say, hmm, you know what? I need to get in on that. I mean,

Michael Saylor has been very famous for being the evangelist for Bitcoin for MicroStrategy. But what happens if five or 10 major corporate treasurers make the same conclusion? It really becomes, and if you look at the attendance of his conference, 70,000 people listening to his business investing conference. I mean, it's not like these things are low probability events. I mean, they could happen. So yes, on a technical level today, people look at the Federal Reserve and they look and don't fight the Fed resonates in people's ears.

And they look at M2 and they say, OK, well, whatever. The reality is the money supply has already grown. We just told you the fundamental base case for Bitcoin is based on M2 that existed 15 years ago would justify over a 10x in Bitcoin. So why do I care, given we've had the greatest expansion in M2 in existed 15 years ago would justify over a 10x in Bitcoin. So why do I care, given we've had the greatest expansion in M2 in human history, in recorded history over the last few years, why do I care if that pace slows or even reverses a little bit in terms of the fundamental reason? So there's that dynamic tension. The other argument that I find funny is you get to read

these, like Paul Krugman's article, like there's another, they're always, it's always these, the same people, the Bitcoin deniers. And I hate that word because I don't want to shut them up. I want to talk about them and discuss it. But they basically beg the question. They say, well, look, it's volatile. Therefore, it can't be used as a store of value.

Well, that's a cool argument. There's two really good counteranswers. Counteranswers, I've already said, it's an option. You expect it, wait for it to mature, then it's better. Counterargument number two is in places where its volatility is less than the volatility of the fiat currency of that locality, it's already winning. Look at Turkey for the classic, most recent example, but Venezuela and other places. So here in the US, it's really easy to say, well, okay, the dollar is stable. Sure it is. It's

backed by the biggest military on the planet. And the dollar is the global reserve currency. And frankly, as a US citizen, I hope it stays the global reserve currency. I hope that the treasury gets the, understands the reports and understands that allowing stablecoins to flourish and grow can cement the dollar as the global reserve currency and doesn't allow the SEC to derail that train because that would be really bad for all of us. But the fact is, is the U.S. is the last place where Bitcoin will be the true alternative store of value. What it really is looking to do is replace what gold used to be. And that's the first stop. And that's what people need to understand. But anyway, does that answer your question?

Because- It absolutely does. It absolutely does. You'll be happy to know that as we're speaking, Bitcoin just blasted through 40,000. It did. I have, it's the problem with looking at your face instead of my chart.

Yep, there it is. I'm looking too, and I just saw it ticking in the back. So, and even in the days of sort of downside in the stock market, talking about correlation right now, Bitcoin is absolutely blasting off while the stock market is dropping. So we can make the argument anytime that those are very temporary correlations and maybe just random walks in the park. But anyways, you said that there's an event looming. Obviously, it's this moment when asset allocators say, you know, 1% goes into Bitcoin and there's not enough in the world to accommodate that demand.

There's other events looming, right? That some would see as bigger and more near-term and threatening. And that's obviously regulation, right? So there's some wild proposals happening. Yeah. Please, have at it. Well at it well i mean look first of all we've seen and and you know i believe this i i am appalled literally appalled at the naked politics being demonstrated by the leadership of the SEC right now. I can't phrase it any other way. The fact that we have legally trading a Bitcoin ETF backed by futures, which has an implicit 5% to 10%

underperformance to a spot ETF, and that was deemed okay for investors, while spot ETFs, even won by Fidelity most recently, get rejected consistently for absolutely idiotic and completely wrong reasons is appalling. It gives you an idea of why. Now, the reason, the real reason is because the SEC doesn't have control over the spot exchanges. And I think that if they ask for audit ability to look at pricing and manipulation, I think they'd get it. And we've talked about that before. But the reality of this is really appalling. And that's because the argument that they use is they say, well, the CME can't be manipulated. Well, guess what? The CME futures moves in lockstep with the spot markets and the derivative markets worldwide. If it didn't, arbitrageurs would make that happen.

It has created an economic windfall for arbitrageurs who can access the CME. I mean, frankly, it's amusing because CoinRoutes, we just signed all the contracts to do it. I know how much more expensive it is and how out of reach CME futures are and how much more expensive they are to trade than overseas markets that are lesser regulated. But the reality is there's no reason to believe why there's less manipulation on the CME futures of Bitcoin than there is any place else, because any manipulation any place else will get immediately translated in the price of the CME. And to argue other than that is literally to show an overwhelming ignorance about markets work. Yet that was what shows up in the denial letters, which is really, really hard for me to believe that anyone could be that dumb. And I've said this before.

So that means they're not, right? That means they're not that dumb, maybe. Well, they're just writing it because they're hoping that maybe, you know, that nobody in power will care. The reality is they're harming investors. But if you look at regulation, what came out yesterday was massive news. And the reason Bitcoin is rallying today is because of this news, I think. I think this is actually a case of rationality. The IRS saying that you can have a $200 or less transaction in Bitcoin and it is a non-taxable event is earth shattering. It is massive. Well, no, but it gets massive because it allows things like the lightning network to actually

be used. Now, truthfully, if you sell Bitcoin for a cup of coffee now, you're going to probably feel as stupid as the person who bought two pies of pizza pies back in the day. We all know the story. But the fact of the matter is, in terms of eliminating that particular barrier to Bitcoin's use is, I think, very big psychologically. I don't think as a practical matter, it matters all that much because I think Bitcoin's price is driven right now, as I've said before, by speculation on that end state that I talked to death earlier. But the truth is, psychologically, it's a big deal.

The other big deal we've seen in the news the last few weeks is a growing chorus from very senior people, including candidates for the governor of Texas, saying Bitcoin's energy mining can help stabilize their electric grid and promote the use of alternative energy sources. This is how Nick Carter has been screaming from the rooftops. Yet, we still, you almost can't go a week without seeing some pundit saying Bitcoin uses more electricity than small countries. I mean, whatever. But the reality is a modern sustainable world, Bitcoin has a massive place in that world for two reasons. One, because of mining, helping to stabilize the grid, use it being the kind of demander of energy that is perfect to incentivize the use of sustainable energies, which by their nature, most of them are not consistent like fossil fuels are on demand.

Also, burning methane. People on the climate side ignore this fact. Methane gas is, what is it, 20 times more, has the thermo properties in terms of retaining heat than carbon dioxide. So that's why they flare it at natural gas wells. But sometimes it's too expensive to flare. They just release it in the atmosphere. Bitcoin gives a very strong economic motive to flare it and use it. And that's not trivial either. So you have a lot of this stuff and people are talking about it more. So the FUD of the environmental FUD is slowly receding. It's getting harder and harder to argue against. That matters because really the whole China idea has been turned on its head. Now it's very clear that from a geopolitical point of view, embracing Bitcoin in the United States is smart from a geopolitical strategy point of

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It combines the institutional-grade features of the Amber Pro and the intuitive user interface and features of the Amber app. As we enter the metaverse, individual wealth is being built and managed in totally new ways. Whalefin is an all-in-one digital asset platform serving as the gateway to the metaverse and your secure digital wealth partner. Guys, Whalefin combines the world's best investing technology with valuable investment research. It provides the best prices from 100 plus exchanges and venues, all, as I said, with institutional backing and institutional grade security. If you're looking for more information and the perfect platform for trading and investing, then please go to www.thewolfofallstreets.link slash whalefin. That's slash W-H-A-L-E-F-I-N. Check them out now. The only FUD that we have right now is the Fed. When you think about it, right, we had this

massive dump in May of 2021, which you can say was justified or not. But you had, of course, Elon Musk, which I don or not. But you had, of course, Elon Musk, which I don't give him any credit there, but people do. So it matters. You had China completely banning it. You had all the energy FUD, as you just said. This time, it's literally just will the Fed print less money? That's the only thing we're talking about. Let's get right down to brass tacks. The Fed is trapped. It's not just the Fed. Which means the politicians are trapped. Basically, every central bank, for the most part, is trapped. The ECB is trapped. Germany probably is the only country that's slightly better than this. Japan has been trapped. The UK is trapped. The US is trapped. What do we mean by trapped?

If long-term rates reverted to just to be zero vis-a-vis the inflation rates, none of the governments in the G7, I think, other than Germany, could possibly finance their debt, meaning the interest payments will overwhelm the entire current revenue structure of almost every government. If interest rates normalized to real interest, if you had 7% long-term rates in the U.S., could the U.S. government, if they were financing their debt at 7%, what would happen? Do the math. You'd have literally zero discretionary spending in the federal budget without going into deficit spending. It would be catastrophic. So if you look at that and you say, okay, so they can't go to

positive long-term rates or positive short-term rates either because they finance on both ends of the curve. What does that leave you with? That leaves you with jawboning. That leaves you with telling the market, don't speculate and make it worse. We need to cool this down. So they're trying to drive down speculation. And that's probably a good thing. Will it work? In a world where they cannot go to positive real interest rates, can it work? Let's put some history here. Paul Volcker. Now, I was in college at the time when this happened, so I remember it well. And I remember it particularly well because I took an introductory macro course from Professor Robert Gordon.

And you can look him up. He wrote the most popular book for introductory macro at that time. And his theory was it would take seven years of recession to squeeze inflation out of the economy. Seven years. I said, no, inflationary expectations could be broken and it could happen much quicker if, and having read a lot of monetary policy books in those days, if Milton Friedman was right and if we could actually do something about the money supply and do something about what's going on there, it could be done much faster. Fast forward two years later, Paul Volcker raised rates and broke the back of inflation.

Here's what happened. Inflation was running at 14%. He raised the overnight rate to 20%. Think about that. 6% more than the inflation rate. Today, that would mean raising overnight rates to 10% because we have an inflation rate of 7%. Is there one economist even dreaming about raising long-term rates higher than 2%? And even that is over a two-year period. That's already insane. It's the lower highs. So the reality is what Volcker did to break inflation by brute monetary force is not on the table. 10% rates would literally be catastrophic with the debt loads that are

being carried today. So can the Fed actually do that? The answer is no. So now once you've decided that, now your question is, OK, what is happening? Well, the Fed is trying correctly to decrease speculation. And speculation happens in tech stocks. It happens in crypto. It happens in private equity. It happens in NFTs. It happens in artwork.

It happens in cars. It happens everywhere. The reality is there's speculation going on. What speculators do is they buy, hoping to sell it to somebody else later. And if you could stop that, then you decrease a price driver that's going into the economy. Smart move. Is what we're talking about with Bitcoin in the long run, or even in the intermediate term, really speculation?

Well, sure, speculators exacerbate the moves. And in May, you mentioned it, the reason that that may happen was we had three weeks of huge positive funding rates, people paying a lot more on leverage, leverage built up. I mean, right now, when I look at the inverse perpetuals, the open interest across the board is like a third of what it was in May, a third. The funding rates are zero. And funding's been vacillating neutral, right? I was going to say it's gone negative, positive slightly, but there's been no market raise on either side. Right. So long-term speculation on the long side is dramatically lower. In fact, if anything, if there's speculation, it's been more on the short side.

And that's hard to get to. And I've kind of gone back and forth over trying to dive into that because people have to understand that a lot of the open interest in these contracts are done by firms who are trying to accommodate long-term holders who are not speculators. So so-and-so bank has a private client that wants to buy Bitcoin. Their bank is not allowed to touch, and I hate the word, physical Bitcoin. God, I hate that they say that, but that's what they do. They can't touch Bitcoin spot. So what do they do? They buy a long-term swap contract from Bank X, whether that's JP Morgan or whoever, it doesn't really matter. What does JP Morgan do? Well, then they go to a market maker in the space who basically sells them that back-to-back, and that market maker now hedges it. Market maker is going to be long, whichever is the cheapest thing to hold at any point in time. So when perpetuals are cheap

to hold, they're long perpetuals. When futures are long, they are the cheapest thing to hold, they're long the future. When spots are the cheapest thing to hold, they're long the spot, and they trade around that. And that causes a lot of brownie in motion. It doesn't really mean anything. So there's a certain amount of open interest that's structural based upon servicing some subset of clients who that was their method of choice of buying. And so you have to understand that. But to get back to speculation, it's really important to understand that we don't have a lot right now. And look, at every single time the market starts to gap up, it gets to get price discovery. If we got past, I think you've isolated 43,000 as the next major resistance level. 39.6 and then kind of 42, 43. Yeah.

You know, baby steps. Right. So every time you get past a major resistance level, there are people whose trading strategies say, oops, time to buy. Let's hope. The bonds kick in. Yeah. The algorithm, the algos kick in, of course. Right. And so, and then they liquidate if it doesn't follow through. And a large part of why the analysis and why you do such a service for people is because that analysis works because of all these underlying factors. Where it ceases to work is when there's something else going on, like another big source of demand or a source of supply comes on the market because a fund goes belly up and has to liquidate and has to sell their holdings. Both of those things happen

on both the downside and the upside. And people need to understand that there's all this stuff going on. That's that regime change side. But the reality is, it feels to me like the sporty level, and whether it's 39.6 or whatever, is very hard to get through because the speculators are going to fade every rally. So without a long-term source of demand kicking in, it won't get through it. If it does, look what happened last year at this time. Yeah, of course. I mean, absolute mayhem. We went from these prices to 65,000 in a matter of really weeks, months, weeks. At this price, we went from like 20,000 in a matter of like weeks, you know, months, weeks. Half this price, like 20,000 in the matter of like, you know. Right. I just remember that on in January of 2021, price was 42,000. And in January of 2022, price was 42,000. I just sort of that that that sticks with me. But obviously,

we traded all around that. Well, I remember Thanksgiving of 2020. The Thanksgiving day Thanksgiving was 20. Yep. We were well below 20,000 at that point. So, I mean, look, these things vastly, it is an option on an interesting long-term scenario. And it's going to move like that. And it will continue to move like that. And as long as you understand that, it's fine. But, I mean, today, it's pretty broad-based. I'm looking at Ethereum flirting with 3,000 again, right?

So it's not just Bitcoin. Yeah. And one of the key parts of speaking of Ethereum of Fidelity's report that I absolutely loved something I've been saying for a long time, first of all, is that the notion of a cryptocurrency is such a misnomer that we need to just assassinate that that name and bury it and let it die, because most of these are not currencies. And it sort of puts this forced mentality of putting everything in one bucket. So Bitcoin first, they said this, I say this all the time, but Bitcoin and everything else in my mind, right? There's Bitcoin and then there's a whole bunch of technology investments that are VC backed that you can be passionate about and invest in. And so that was their

other approach that is being less talked about, I think, was that you can approach this market in two massive baskets. I think that that's something that we, this is what's called a violent agreement. I've been saying that for a very long time. I think Bitcoin, I've told you, you know, you would listen to me and think I'm a Bitcoin maxi. I'm not. Why am I not? Because there is clearly the possibility for tremendous value in many other projects, for many other verticals and many other things. The fact is, those are different investment cases. It doesn't mean they're wrong. It just means they're different. Yeah, I mean, I always make it like you. It's almost like if you were a gold maximalist and for some reason passionately believe that Amazon stock was a threat to your gold thesis. Yeah, I think that's accurate. I mean, look, Ethereum gas fees are high. We understand

it. You know, the NFT world is a is truly revolutionary. I can't even possibly do it justice. We don't have the time to do it. But I will give you know, it's like, you know, Masari did that. I did a phenomenal job. Ryan wrote a tremendous job in his 2022 thesis when he talks about this. And anyone who wants to know about NFTs or wants to understand what the use cases are and stuff, I always point them in that direction. But the truth of the matter is there is a sea change going on of an entirely new asset class of cryptographic assets. I won't call them currencies. There are a few things which pretend to be currencies to compete with Bitcoin. Sure. I don't want to dive into it. On that, I suppose I'm much more of a maxi. Me too. You're not making a better Bitcoin.

I think we agree. But there is clearly scope for multiple layer ones for different use cases or smart contracts. And we haven't even talked about DeFi. That'll be another one. But the truth of the matter is, if Bitcoin dramatically rallies, the entire asset class will rally. You will see charlatans. You will see profiteers. You will see hype.

We've seen it before. We'll see it again. It happens in every cycle. And it's unfortunate, but it's no different than looking back 22 years ago and seeing all the crap that was being peddled at the same time as Amazon. And a few years later, when Google came out, et cetera, et cetera. And the amount of wealth that's been made by the technology, by the winners in that technology, and by no means is it limited to Amazon and Google. There are hundreds of companies that have valuable niches in the internet world and in the digital world that have all made money

from gaming through others. The fact of the matter is there were also hundreds that were complete frauds. And we've seen this in every case. And so in other words, when people say, look at all the fraud that goes on in crypto, that's proof of it being a terrible asset class. It's like, well, if you did that, then you would say that the stock market, technology stocks, you would have dismissed that out of hand. And frankly, once upon a time, Warren Buffett did dismiss technology stock investing out of hand. So it's kind of funny. People don't like to think about it, but it's true, right? You have a world where guilt by association gets used so often, but it's wrong. on the side of the criminals or the or the pornographers or the scammers. He was like, you know, I was early on the Internet. Everybody said that's just for porn. I was early on Bitcoin.

Everybody said that's just for buying drugs. Right. And the people who get it realize the greater use case than just those things. And we still see those same criticisms, unbelievably, of crypto, you know, 13 years into into its existence. Yep. That's true. It's funny because if you look at the amount of fines paid for money laundering using cash and using bank accounts, it's dramatic. And people just ignore it. It really is. It's sad in a way.

It's cognitive dissonance. How many people are just, it just goes to show an old communication theory of cognitive dissonance. Once people are proven wrong on something, they have two options. They can either accept it and change their opinion, or they dig their heels in and get even stronger opinions that were stronger wrong opinions, because they want to convince themselves that they're not stupid. And so they start looking for arguments to justify their position. And it creates a sad little circle where they just kind of lose all their credibility. And

we're seeing that. I mean, I mentioned Krugman. I mean, in his case, the Internet one was probably the worst one. He sort of recovered from that. His arguments were every single one of them were these beg the question style arguments where you see it's used for criminals. So therefore, law abiding people shouldn't use it, that kind of stuff, which is really silly. Right. It's absolutely no sense. Maybe the criminals know something that you don't. And making that point, we just saw, I just love this case, right? We saw there was a massive Bitfinex hack in 2016 that was widely publicized. Well, a lot of those coins just moved for the first time in years, billions of dollars worth. But the criminals who hacked in 2016 have yet to be able to actually turn any of that into dollars, right? They're moving it around, but they've never been able to actually realize any of the profits of a multi-billion dollar hack because it's a public ledger and there's no way for them to get their cash out.

I think I told you this the first time I was on the show. I would listen to a senior investigator from the FBI say, we don't go out of our way to dissuade criminals from using Bitcoin because we love it when they do. Yeah, it's easy to track. Cash, very, very difficult, unless it's like one of those movies where you open the suitcase and the blue paint shoots in your face, right? That's the only way you can track the cash, which apparently is a thing. True enough. So the bottom line here is dollar cost average buy and hold Bitcoin and wait. I mean, well, no, that is for your unsophisticated trading investor.

There are ways Bitcoin is an enormously valuable asset for traders who are skilled and put in the time and effort to do their research. And it is. I mean, look, every trader I know and i'm on the board of new york security traders and there are many people in that organization we hate the word security traders which we could change it to asset traders because so many people are trading crypto uh because of the volatility and because of the way that you know that that they that it trades but what's important is is people who trade, it should come with a warning label. Please make sure that you match your time preference. Please make sure that you understand

how to calculate portfolio risk and money management. Please do your own research and don't just rely upon what some idiot says on Twitter off one off. If you want to follow someone and read all their conclusions and dig in deep and follow them, that makes perfect sense. And there are lots of brilliant people who put a lot of really great advice on Twitter. You're one of them, but there are many. The fact is, is I bifurcate it. Trading, it's a great vehicle. Investing, I think you're better off dollar cost averaging and holding. But that difference matters, right? And I like to make it that way. I know, look, you're too humble to say it, but people who follow you and understand, and there are others, will potentially and will typically outperform the holders.

But it's a time commitment. And it's a psychology commitment. And there is a loss part of it. And you need to understand what a stop loss is. And you need to understand money management and risk control. And if you don't, and you lever 20 times or more, you're going to get hurt. And you made to be like that channelingstocks.com. You make money, you may win 15 times in a row and be up a lot, and then lose 100% of all your profits and everything else on the 16th. And that's what

you want to avoid at all costs. All about avoiding the blowups. I love that you have enough faith in humanity to think that they would actually read those terms and conditions that you just laid out, right? You say, don't do this, don't do that. Nobody listens to any of that. They just see the one thing that you say, he's bullish. I'm cynical. What I don't want to do is dissuade people who are willing to put in the time and effort. Absolutely. That's all I'm saying. But for the average person, don't. Yeah, I absolutely agree. So where can everybody follow you and keep up with you after this conversation?

Well, I mean, I post at DaveWeisberger1. Don't ask why I had to do the one on Twitter. It was a Twitter problem on Twitter. Dave Weisberger, David Weisberger on LinkedIn. We're also at CoinRoutes and there will be some news on CoinRoutes coming out very shortly in terms of the completion of a funding round and some other things that will be interesting to people, which will be out on a variety of social media places. I'm sorry we didn't talk about that more.

I got carried away and then... That's okay. We have plenty of things going on. Yeah, Dave Weisberger is the right name. You're the only one clearly in our minds. So thank you very much for doing this once again. Listen, I think that this is the closest back to back that I've had a guest on the show, right? You were just on like two months ago. So maybe we'll have to make it a more regular thing and that every time something absolutely insane happens in the market, we just talk about it. Happy to do it. Scott's always a pleasure. Thank you.