The Wolf Of All Streets - Bitcoin Slowly Recovering | Tether Prints $1B | $50K SOON? | Crypto Town Hall

Episode Date: January 29, 2024

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Hey, I'll go check your DMS, buddy. Try to get, try to coordinate a podcast. All right, Scott. Thanks, man. I blew it on the timing for tomorrow. Guys, we're just going to have a personal conversation here. Don't worry. But thank you. We can do it maybe tomorrow or Thursday. Meanwhile, good morning, Mario. Good morning, everyone else. Yeah. Good morning. Good morning guys. Hey, I got you here.

It's easier than us trying to coordinate on WhatsApp since I've got you. So, yeah, we got obviously a somewhat boring market at the moment. So it doesn't give us much to talk about there, which to me can be pretty refreshing. Tether printing a billion dollars, 50K soon is uh i think uh we have 50k soon predictions then we have chris berniski saying uh 20ks soon i don't know if you guys saw that tweet alex did you see uh his tweet saying for uh for reasons he can't explain fully here i like the i love him but it sounds like one of those sources trust me me, bro. Right. We're going, we're going pretty far down. I saw him.

I thought making a decent case for lower. I didn't see 20 though. Is that what he was going for? He said, he said he thought for sure 30s to 36 would not be surprised if it went well down into the 20s or to the mid 20s, something, something to that effect. Yeah. That would surprise me. Yeah.

I don't agree. Yeah. Yeah. I still think like 35 is reasonable um to occur but um i i right now frankly don't have a very strong bias either way i would say but i definitely think it we could go lower into the mid 30s is totally reasonable i'd be shocked if we went below 30 frankly shocked i mean we're kind of we were kind of just in the high to mid 30s. Right? That's a theoretically surprise anyone to 38. Five. Yeah, I think it's it's frankly, a very reasonable I think it's a simple and reasonable way to ask this question is just like was 38. Five, the yearly low, like I

think you could you could say no or yes and and and not mean 20 if you say no you know yeah you could say no or yes with extremely minimal conviction in my opinion right because i think there's just a lot of exogenous factors right now and yeah i i don't and i and i really don't have much conviction frankly either way at the moment i mean to your point about it being a relatively boring market like i mean i've, I was pretty convicted that we were going to go lower. And now that we bounced off 38.5, I'm sort of like, we're going to go down again. It's totally possible. But I feel like we did go lower. So now I'm sort of, you know, yeah, I'm not really sure, frankly, truly. Exactly. And you know, the market always seeking narratives and now we're

just kind of floating for the having again, which is exactly where we probably should have been this time without the ETF talk about, oh my God, I said the words ETF and James Aferton arrived. I mean, do we summoned you? That was incredible. What's up guys? I didn't know that the first time I said the words, the letters ETF today, that you would randomly appear on stage, but you've got that power clearly now. Maybe we should, I saw you were lifting your mic, but I'm going to just go to James really quick and get the, maybe a quick ETF update. I mean, I saw that obviously the big news sort of in the last few days was that BlackRock's AUM surpassing 2 billion. I think. That Fidelity is not far behind, 1.8-ish, you know, somewhere in that ballpark.

Pretty impressive numbers here. How are you viewing this right now, the Kentucky Derby? Yeah. Can you hear me? Yeah, you sound great. Okay, good. Yeah, so, I mean, volumes are slowing. That's the big thing.

So volumes are slowing for GPC, but kind of picking up. So overall volumes are slowing, but IBIT and FBTC are gaining on GBTC pretty quickly. Net flows were still over 700. So around 759 has come in. The number one thing on Friday is that we went back to net flows and GBTC's outflows lowered to 255. So flows are getting better, I guess. They're kind of leveling off on both sides. So we kind of seem to be at a little bit of an equilibrium.

So on Friday, we were at plus 15 million, which is not really anything in the grand scheme of things. So things seem to start to be settling out, I guess, is the way I'm looking at it. And if you look at, so right now, this is just a spot ETF that I'm talking about. If you add in the open interest in the C&P Bitcoin futures, we're at net outflows for Bitcoin exposure in the U.S. traditional finance ecosystem for the most part. So that explains some of the downtrends in price. Right. But wouldn't that be hedges unwinding? If you're looking at futures, wouldn't that likely be hedges unwinding? I mean, if this trade is done, that's what you would expect open interest to be dropping dramatically on futures, right? 100%. That and also people just betting. A lot

of people were probably buying futures to bet on ETF approval. So things have collapsed since, basically since the day that ETFs have improved and that's also leveled off. So we're not seeing a drop in open interest in the way that we were the last couple of weeks. So things just kind of seem to be more at an equilibrium than they were in the last two-ish weeks. Do we have any time? Am I right in saying that the net inflow to date

is about 750750 million? Yes. On the spot ETFs, yes. If you include the drop in open interest on the CME futures and outflows from Canadian ETFs and European ETFs, it's probably more closer to zero, slight outflows. Yeah. James, what about this rule? Well, I don't know if it's true. I read a tweet about it which says that if you sell GBTC in terms of tax harvesting, you're not allowed to buy a similar product for like 30 days or something like that.

Is that a national error? That can't be true. The wash trading rule can't possibly apply to a different asset, does it? No, no, no. Wash sale. It could, because otherwise you could just trade out of ARK and trade into the iBit, and then you could tax harvest. Because these assets are identical, actually, there is a case for this, as far as I understand.

That's interesting. I had never heard it. That's surprising. James? Yeah, so right now, as far as I'm. That's interesting. I never heard it. That's surprising. James? Yeah. So right now, as far as I'm aware, there is no watch sale rule on ETFs that said contact a tax expert before you do anything. So if you look at the gold and metals ETFs, they are not subject to the watch sale rule in the way that a normal ETF equities bonds would have you. So that said, if any of these market structure bills get passed,

for the most part, all of them would institute a wash sale rule on cryptocurrencies, which I believe would basically just port over to these ETS. So there's no guarantee that a wash sale rule won't be in effect for this next tax year. So I would just be aware of that, I guess. Again, I'm not a tax expert, so consult a tax expert. But right now, as far as I'm aware, the wash sale rule is not in effect for these things. Yeah, I've definitely never heard it being applied across multiple assets, even if they're tracking the same underlying. I mean, that would logically make sense, Ram, to your point. But I can't imagine that they've found a way to pass that law if it doesn't exist for others.

We've been talking about the wash sale rule going and, you know, effectively coming to crypto for years. And surprisingly, it still hasn't. I think it's just a testament to how slowly the government works when it comes to these things, because that's one of those cases that seems pretty obvious that it should apply. If you can't sell a stock, if you have to wait for people who don't know, it means when you sell something, you have to wait 30 days basically to buy it back. You can't take a tax write-off on the loss and take advantage of that. That hasn't existed for crypto yet. I think that if it exists everywhere else, it probably should exist for crypto. To make the argument, it shouldn't exist but but um that's the basic underlying i'm really surprised i would be really surprised if they applied it in that way ram where did you see that like who was

talking about it i saw a tweet from an account called marty party um last week i'm kind of i'm actually last searching for the tweet but marty party is the kind of guy that really tweets a lot so yeah he said and he said i'm not going to say like i like him but i'm not going to say like conspiracy theory necessarily but i think he's sort of at the forefront of the ideas of things that might happen how about that yeah exactly exactly um look it's just i was just interested to know whether there could be some influence but i think if we if we were to summarize it pretty much a flat start to the ETF. And I think that we could probably more realistically say

that this is not a one-day game, but maybe a six-month game. And we should maybe just revisit this ETF inflow thing in six months, unless there's huge inflows or huge outflows. I'm done talking about this thing. Well, Rand, I said the word ETF, and then

James appeared. Literally the second that I said ETF, as you were coming up, it was like he was summoned. So we obviously had to ask. Friday, though, was just really quickly to wrap this. James, you said Friday was 200-something million out of GBTC. Do we have numbers on Monday yet or anything since? Because that seems what everyone really cares about now is when is the GBT selling over or nearly?

Yeah, so I don't have the numbers in front of me for today. I mean, we won't have flows until tonight, really probably till tomorrow. But I can look at volumes, but we're not really, we're only an hour in,

so it's not going to be anything. Yeah, often we see those GBTC transfers going base that are kind of ahead of the total flows. But that's more of an on-chain analysis than an inflow-outflow, I guess, from your perspective. Yeah, exactly. And they've been, for the most part, indicative of the amplitude and direction of the flows, obviously. But from my experience, they haven't been really all that accurate in exactly how much is coming out. So I've seen cases where the flows were higher than whatever was being transferred. And I've seen most cases, the number being transferred, the outflows ended up being lowered, in some cases, significantly lower. So I'm still iffy on using that to try to, like,

predict exactly what's going to happen. That said, when there's transfers, like there has been pretty much every day, we've seen meaningful outflows but um yeah i'm not sure understood jack yeah hey guys good morning so uh i think on the short term we saw a bounce of like five or six percent and i think that happened right after the jp jp morgan basically said that the grayscale sell-off is cooling down and basically pretty much over. So that, I think, triggered the retracement back to 42. And I think, obviously, this is a new environment right now, and we're in the process of price discovery. I personally believe, I think, 40 is going to bounce around 40 for a while until there will be more news from the interested parties. And now we have a lot of corporate

finance interested parties like JP Morgan, even though Jamie Dimon is like, you know, token gibberish. But like there are others out there, obviously, ARK and Fidelity. We just need to basically watch the news and see how they get to speak about how their product is performing. And of course, they will be interested to speak about it in a positive manner, which I think will influence the price. Quickly, Gordon, you're here

and probably are one of the few who's not, I guess, crypto native and probably a bit skeptical from our past conversations from the outside, I guess, through the TradFi lens. How are you viewing what's going on here? Was that geared towards me? It was. Yeah, sure. So, I mean, I don't have specific views on like the day to day moves, but I think what's important near term is I think what risk assets are going to do. And I think this week we have some pretty important data points coming out today. We get how the Treasury, how much the Treasury is going to need to be funded with.

And then on Wednesday, much more importantly, we get how they're going to basically fund that that amount of money that they're going to issue over the next few quarters. And I think those two dynamics are going to give us a path to what risk assets are going to do. And I think based on that dynamic, you're going to either get a breakout or a breakdown in risk assets, including Bitcoin. I think that's a reasonable view. I was joking this morning that every morning I open the Bloomberg sort of market wrap first thing when I wake up. And it has key things to watch this week as one of the first things. I don't think I've ever seen a longer list on any given day that I've woken up that how many things worldwide are being watched by markets this week. Yeah. One other thing I'd add is, you know, our viewpoint at GLJ Research, and this doesn't

mean we're right, but this is just our viewpoint, is that in general, yields are going to go higher this year. And the reason we believe that is because increasingly the debt that the U.S. government is issuing, i.e. the U.S. Treasury Department, Janet Yellen and team are issuing, increasingly needs to be funded domestically. You see China dumping, you see other countries dumping U.S. treasuries. And our viewpoint is that if you look at the margins at banks, the net interest margins, they've been coming down. Or if you look at the debt write-offs, they're getting worse. So typically, the U.S. banks are what fund the issuance of debt in the U.S. So if they are increasingly unable to fund that debt, you have a supply-demand imbalance,

i.e. more supply than you have demand. So more supply than demand, that means prices of bonds down, yields up. If that indeed proves true, and again, this is just our viewpoint, so take it with a grain of salt. But if that proves true, that would actually be bad for Bitcoin because it would be bad overall for risk assets. So near term, we think that the announcements this week, clearly you have the number of the amount of debt that's going to be issued by the Treasury comes out today. Much more importantly, the composition of how they're going to fund that on Wednesday, as well as the Fed decision on Wednesday. Clearly, comments around their plans for QT are going to be important. Depending on how all that pans out,

we think that drives the direction of Bitcoin near term. But longer term, you know, for the whole year, we think that the rise in yields, sell off and risk assets, that she'll probably have some pressure on Bitcoin. Gordon, if more and more of this needs to be funded domestically and effectively as a result adds to treasury woes, right? Because they end up spending more and more of the budget on interest rates. Doesn't that effectively force the hand of the Fed to start lowering interest rates regardless of where the market is, regardless of where inflation is? These interest rates, to me, appear unsustainable, especially as a bigger and bigger chunk of it is shouldered by Treasury?

Yeah, that's a good question. The answer is I don't know. So the Fed is supposed to be data dependent, and their primary mandate is to fight inflation. So with the U.S. economy, by their own data, running hot, jobs, jobless, unemployment rate very low historically, they should not be cutting rates. And if you look historically pre-2008, and the reason I use 2008 is because that is when the U.S. embarked upon for the first time quantitative easing, which I think was a big mistake. But pre-2008, if you go all the way back to like 1940, on average, the Fed funds rate is 200 to 300 basis points above CPI, and it averaged around 5%. So normalized rates are 5%. I know that's hard for people to grasp now, but that's just a fact.

But the question is, will they resort to quantitative easing again and supportive measures when the reverse repo runs out, which is the reverse repo is just excess basically fed money or quantitative easing money they printed that they're now using to buy Janet Yellen's bonds. I think that given their history, given how reckless they've been, the answer is probably they support markets and resort to easing and supportive measures. But the problem is inflation is really high and people can't afford stuff anymore. So I think they're facing a conundrum. But if you've gone to my head, I think they resort to supportive measures.

And because they can't obviously pay the debt, as Iago said. So, yeah, Gordon, I understand that base case. I'll just be very surprised if they allow it in election year. I guess we'll see what happens. There was a great quote I wish I had in front of me from, and not that this was going to be the topic of conversation today, but from Del Giorno. I don't know if you guys saw in the kind of debate about inflation. And this is what he said.

This is Del Giorno, obviously one of the largest food companies. They've kept their prices effectively the same rather than raising them even through all this inflation. He said, turkey, meats, roast beef, ham, it's crazy. We have eaten as much margin as we can. What they are reported is not what we are experiencing. I didn't intend to have a debate or conversation about inflation, but it doesn't seem like we can trust the numbers at all anyways, right? It seems that there's zero consensus on

what's actually happening with inflation and people on the street are not feeling what the government is saying as far as things coming down. I mean, so how can they raise rates again, Gordon? Well, if you look at we have this chart where we compare inflation today to inflation kind of in the 60s and 70s. And if you look at it, there's waves of inflation. But typically where we're at in the cycle now, it would seem to suggest, assuming that we're headed down a similar path, you're going to get a resurgence in inflation. You can already see that starting with oil prices and super core inflation was quite scary to the upside, even in the most recent read. So if inflation gets out of hand again, which typically it always does, that's an instance where they'll have to at least consider raising rates. Understood. The next point that Gordon made, obviously,

and I think is one worth opening to the panel, is what effect that would have on Bitcoin. I think, obviously, we're primarily Bitcoin believers. On the panel, do we define it as a risk asset? Do we define it as digital gold? Do we think that that correlation would spike again if risk assets became under pressure once again? I mean, Ran, I'm curious what you think about that. Do you think that right now, I mean, we've seen that it hasn't largely been correlated at all with the S&P of late, but we should go to the panel.

But Ran, I mean, do you think that Bitcoin is going to trade like a risk asset in the context of macro? Or do you think we look at the four year cycle and say, who who cares i think it's definitely going to be a risk asset for now um i think definitely for now i think scott maybe we should pivot a little bit to talk about like there's a big stuff happening this week um there's fomc this week which is you know i don't even get a rate cut but i think is that happening i think there was an attack last night or yesterday or the weekend on a US base in Jordan, an aerial attack which is being blamed on Iran. That could cause

quite a bit of escalation. I think we should maybe look at the slightly bigger picture and maybe just get comments. When I look at this US Iraq thing, I think the US is getting destroyed now in the Middle East. So you've got – I just want to give you, like, perspective of someone who's on the outside.

One is you've got the Houthis, which are a very small rebel group, and they basically managed to close the Suez Canal, despite the U.S. being very in their full force with their chest out and and and and their their path um i don't think that the u.s has the the power to go up against iran now so you know basically i think you know joe biden said you know we'll attack them at a at a date and time suitable to us on our terms i don't think it's that easy and i'm starting to like to look at this and go hold on a second is there a world war starting here how can that affect crypto i don't think it's that easy. And I'm starting to look at this and go, hold on a second. Is there a world war starting here? How can that affect crypto? I don't know if anybody's got some views in that regard.

I literally tweeted the other day to some headline about the attack on Americans. I said, I'm old enough to remember when they used to call this war. It seems like they're just pretending that we're not at war when we are literally at war already in the Middle East. And not only are you at war, but I think the U.S. is actually losing the war because it's not the type of war that they know how to fight. You know, you take all the U.S. and all the arms they've got and all

the effort that they've put in, and the Houthis are just taking unmanned drones and dropping them on two ships. Yeah, I don't know the last time the United States, quote-unquote, won a war or anybody did, for that matter, but nothing new here. Pretty crazy. Simon?

Yeah, I mean, I don't know if the audience is going to need to add, but I'd love to hear some other, like, am I panicking for no reason? Is this just another escalation that is nothing? Yeah, guys, you can share that in the comments. Simon, what are your thoughts? Yeah, I think that, guys, you can share that in the comments.

Simon, what are your thoughts? Yeah, I think that, well, I think the most important thing is to understand what needs to happen to end it and to de-escalate. And there's, you know, there's only a few, well, there's only some major hurdles to overcome. Firstly, all of the axis of resistance, which consists of Houthis

in Yemen, Hezbollah in Lebanon, and Hamas in Palestine or Gaza, they're all saying the same thing, which is end the war. And so the situation that the u.s needs to decide is how far are they going to stand by israel and that's the only thing um prior to that there was negotiations where um iran uh you know had the nuclear deal and then in 2020 president trump broke from the deal, assassinated Qasem Soleimani, and then went to the Abraham Accords, which sidestepped Iran and made a deal between Israel, Saudi Arabia and America. And so that was the de-escalating effect or the destabilizing effect. And so now you've got all these bases and essentially the whole Middle East is saying America, just get your foreign aid, your foreign policy out of here. And so this then ties into the grander trends that America can no longer afford as foreign policy. And so why is it actually there? Well, it seems like, you know, America is willing to risk a war with Iran in its defense of Israel. So that's the strategic decision. The real area to create peace in the Middle East is to have normalization between Saudi Arabia and Iran. And only China can broker that deal.

And China started to broker that deal. Whereas obviously America is taking clearly the side of Israel and Saudi Arabia. And so therefore, you know, America can't play the role of peacemaker. And that's the thing. So this is when you get into the multi-polar or you know polar world that we we are living in where obviously Russia is also and America involved in both the failed states of Syria and Yemen and it's just a you know it requires a retreat and then obviously America's decision is well is retreating being seen as a sign of weakness? And what are the consequences to the real powers like Russia and China? only way to to de-escalate this is to say well we're not willing to take america down for israel

um and we need to retreat our foreign policy otherwise this is going to be escalation escalation escalation which is what we're seeing right now um and there has to be an end to the you know there has to be a solution to the palestinian cause and israel has said there is no solution we just want to get rid of them. So that's really the stakes. And yes, we saw with the retreat from Afghanistan, we saw with the NATO proxy war in Russia, with Ukraine sacrificing to try and weaken Russia.

And all of these things are showing a bit of a sign of weakness. And I don't know how America is going to react to that. So this is kind of a pivotal moment where Iran has said, well, and it was on the border of, it wasn't quite in Jordan. It was on the border of Jordan and Syria, which is a bit, you know, it wasn't quite it wasn't quite in jordan it was in the border of jordan and syria which is a bit you know it wasn't quite jordan and yeah so so that that is a really important and it really just plays into this so bringing that back to bitcoin i'm expecting kind of a covid style um type of event where you get something like,

okay, let's say we get a massive, we get a massive fear driven event, like China, Evergrande type thing, or Iran escalation leads to a massive crash. And then people realize that Bitcoin is the solution, which was kind of exactly what happened.

And then you'd have a reaction with the quantitative tightening or quantitative easing when it realized it's got to actually fund all these wars. So it's a very interesting, critical moment. And it all ties together. And Bitcoin, I believe, is at the center of that. But short term, you'll get big reactions. The longterm fundamentals will prevail there. I think it's interesting how much Simon and I disagree on what we believe are the facts around the geopolitical situation, but we come to effectively the same conclusion. So maybe I'll start with where we disagree. The United States is unquestionably,

and this is one of the places that we agree, is unquestionably showing great weakness right now. And the United States is the most important beacon autocrats and dictators and theofascists. Now, one of the problems that the West has always had, that democracies always have, is that they don't want to go to war. The people, the population have a say. They don't like war. And so there's a great reticence, which is effectively, at least in the short term, always a weakness for liberal societies, vis-a-vis the much more aggressive autocracies that exist in the world. And then what goes further is because we enjoy much higher levels of free speech and free thought, and because the West has a culture of debate, going back all the way to ancient Greece, there is a cohort of people in Western society who are always going to be arguing that their society is the worst society, that their society is doing things that it shouldn't be doing. And there's always that messiness of that debate. Now, Biden is proving to be a very weak president in the face of this. And part of the reason is

that half of his voters are people who speak in the way that Simon speaks, right? He calls the Houthi and Hezbollah and other proxies of Iran the axis of resistance. So let's examine for a moment who this axis of so-called resistance is, right? These are not Jedis, you know, fighting an evil empire. The Houthis have reintroduced slavery. The Hezbollah, and by extension Lebanon, have far worse discrimination against Palestinians than countries like Jordan or Israel do. So, for example, in Jordan and Israel, Palestinians can own property and participate in any profession. In Lebanon, they're not allowed to have citizenship, they're not allowed to have citizenship. They're not allowed to own property. And there's a large number of professions, including all government work,

that they're not allowed to participate in. And then, of course, the actual octopus, because these are just tentacles, is Iran. And Iran is a theocracy which regularly forces women, you know, to beat them to death in the streets, you know, every couple of months because they're not covering their faces. It hangs people on a weekly basis for voicing on social media things which they don't like. This is not a nice regime, and it is hated by its people. It's hated by the Persians, who are an educated people and represent 60% of the population, and it's hated by everyone else. It's currently got border skirmishes with Afghanistan and with Pakistan and with Azerbaijan, and those three populations represent about 30% of the population there. And so it's a very, very vulnerable and a very, very scared

government. And it also is entirely dependent on a relatively trickle, slim stream of oil revenue that can be shut down in a moment. It currently has some 100% inflation. It is extremely weak. And the way it's trying to maintain its position is by investing in and supporting proxies like Hamas, Hezbollah, and the Houthis. So the US has this problem where it doesn't want to engage. It doesn't want to face down what is clearly the nexus of all of this problem.

But if it doesn't, you find yourself in the situation like where the West was at the beginning of World War II, where a willingness, a reticence to re-engage in war, an exhaustion with the idea of war, which the US has because of Iraq and Afghanistan, which were huge mistakes, means that autocrats and theocracies and dictatorships can run wild for much longer than they should, which makes the problem far more severe and ultimately introduces a situation which is likely going to be much, much more dangerous and much, much worse. So clearly, Simon and I completely disagree on the geocentric. Tied back to Bitcoin, because I don't want us to become a war spaces.

But where do we agree? In both of these cases, right, both Simon and I, so it doesn't matter how you view the world, the outcome is the same. It's US weakness, which translates it into dollar weakness, which means that the currency that we currently have as a reserve currency is losing its luster, losing its attractiveness. And as a result, the world more and more, in particular countries, more and more are going to be looking for an alternative. Gold is not a good alternative. You need to ship it. It's very vulnerable to transportation. Bitcoin does exactly the same thing, but with complete security. And so Bitcoin is the big winner of any scenario that we see over the next few years.

Yeah, I won't respond, Scott, because it's a different topic. So I'll just say, completely different narrative, same result. Agree there, Jage. So that is a bullish narrative for Bitcoin somehow either way that that goes. I mean, before we kind of move on to this topic, anybody else on the panel have a feeling specifically on how what's happening worldwide in terms of global conflict could affect Bitcoin specifically without getting into the details.

Andrew, do you have thoughts on that? Jack, you can go ahead. Just a few points. So last time Bitcoin really, really jumped fast, it was due to the banking failure. Silicon Valley Bank and various others. There was actually a catalyst, I think, that made a lot of people rethink Bitcoin as possibly the safe asset, kind of like a digital gold in light of uncertainty in the banking system specifically. And so that was the first time I saw Bitcoin diverging from the global markets and actually

going in reverse. Markets were dumping, Bitcoin was rising. Now, obviously, any sort of geopolitical tension, and I totally agree with the previous speaker, I think he's right on point. Similarly to oil, oil generally jumps worse, like any issues in the Middle East or whatnot. Here, if we have a risk of any sort of financial instabilities, whether it's due to bad fiscal policies or governments going nuts and any sort of manipulation of the fiat world. I think those two things combined is definitely a bullish narrative for Bitcoin.

And I think I'm totally in Fred Kruger's camp. You probably have seen his podcasts. I think we're looking at melt up to possibly 80,000 plus maybe just this year alone. Just because there's so many things that are converging on this. I mean, there is all of those issues in the world. There is finally the acceptance by the biggest country in terms of ability to give retail to tap into that asset and i think again like back to my previous point all of those large companies will try to shift narrative towards promotion of the asset no matter like what jamie diamond says well what jamie diamond says and what jamie diamond's doing are two opposite things anyways

i think we can all agree on that when you look at how involved JP Morgan is, obviously, in this space. I think another worthy conversation actually today, in context of sort of the geopolitical conversation is central bank digital currencies. Obviously, we had when Vivek decided to suspend his campaign, he was obviously in Trump's ear. You had Trump make a statement that he would never allow central bank digital currencies in the United States. RFK, who has been sort of long the Bitcoin candidate to some degree, very recently also made the same statement. He said that we would never allow central bank digital currencies in the United States. I mean, I know, Simon, you believe they're inevitable and coming everywhere, right?

Do you think that any of these candidates could actually stop that progression? No, no one can stop it. CBDC, yeah, exactly as you said. CBDCs are inevitable, predictable, guaranteed. what will be the solution to the banking issues and the over-leverage in both China and America and the rest of the world. But they take us to a place we really don't want to be, which is why I think that the understanding

of moving away from Bitcoin as an ETF in order to protect your wealth from inflation actually changes to a narrative of Bitcoin and self-custody as a mechanism for freeing yourself from the oppression of central bank digital currencies becomes the next narrative over the next decade or two. Sam, when we talk about central bank digital currencies, do you think there's any chance that the CBDC will be US dollar denominated? Yeah, I think every CBDC will have its own denomination.

Do you think that if, let's just hypoth you said the US were to launch a CBDC, do you see this CBDC being linked to the current US dollars that I have? So if I've got $500,000, that's my net wealth. Do you think that they'll debit my USD account and credit me with new CBDC USD? You know, I think there'll be a slower launch. So it will be event driven. So let's say a bank goes bust. They'll say, let the bank go bust.

But everyone that had a bank balance can download this app, agree to our terms and conditions, agree to all the programmatic nature of the new digital dollar. And we'll just replace debt-free money. We'll replace the money that was created a debt at the bank with debt free money at the central bank if they have another universal basic income style event then they can beta test it with get some free money by downloading this app and you know there'll be incentives

based around fiscal and monetary union where the government will say, here's an incentive for some kind of fiscal stimulus if you agree to this new monetary policy and download this app. I think it would just be beta tested based upon disaster. And when all said and done, when all said and done,

I'm just trying to, I'm trying to fast forward like 10 years from now when there is a CBDC and I'm trying to work out whether the CBDC and the amount of CBDC that you have will be a derivative of the amount of dollars that you have. That's what I'm trying to understand. Like, so for example, I don't know,

like, you know, in this world, if everything that is liquid is, you know, $500, like, you know, in this world, if everything that is liquid is, you know, $500,000, will I land up with, is it the opportunity that they need to reset the financial system? In other words, get rid of the current currency, which they've deflated to death, etc. Or is it going to be, is the CBDC just going to be programmatic USD?

Yes, there's a couple of ways of looking at it peacetime and wartime um so if it happens in peacetime i think that's the scenario we're talking about and essentially you imagine at the moment you have a money supply m m1 m2 m3 m4 but imagine how much easier it would be to control things if you could program into just one money supply called M and you didn't need to go to a bank and say, hey, let's manipulate the interest rates so that we can decrease interest rates, encourage more people to take on debt so the bank can create a load of money. That creates the interest on top of the money uh the money the interest doesn't exist to pay the money so every time it it blows up we have this business cycle and then every time

we get this bogey called inflation that comes along because you want to factor in the interest on the money and the private bankers and the private bank is creating it um then we need to increase interest rates and send all the people that save the economy by taking on the debt bankrupt because they can no longer afford their mortgage. Instead, they'll just program in money that's created fully by the central bank. And I think there'll be a phase out. I think if we enter into non-peace time, i.e. we do enter into World War III, then i think there'll be a you know like we did last time so the with the winning allies and the losing allies the losing allies had to pay all the debt to the winning allies they had to settle in gold and then they all sat around a table at bretton

woods and decided what the future of the monetary system is going to look like um i think i think there would be a similar thing uh after after world war three and then in the middle you'd be settling with bitcoin and gold and bitcoin would just naturally be a better way so i think it just depends what happens on the geopolitics and whether the world is willing to escalate this and that ties into the previous conversation. Remember, central bank digital currency, think of it like this. It's deleveraging. It's taking out, think of USDC, right? USDC is going direct from government debt to a blockchain asset with no bank in the middle.

Why did they come after PayPal and Why did they come after PayPal? And why did they come after Facebook? Because that's the most destabilizing effect to debt-based money at a fractional reserve bank. Because what we saw in 2023 is that if everyone wants their withdrawals, it breaks the banking system. And they had to flee to something that's either backed by FDIC or Bitcoin,

or USDC started having market pricing for the fact that it had $3 billion at a bank. So you can actually get real-time pricing. And in 2025, the Bank for International Settlements... So here's what I think, here's the bullish scenario. Imagine a CBDC where everyone has a CBDC, including the IMF and everyone that wants to get involved in that game. Everyone can have a stable coin, and there's the kind of free banking where everyone can compete. And the CBDC that is the most oppressive, that has the worst programs into it,

will be the worst forms of CBDCs. But the one that has the best backing whether it be a bitcoin standard or whatever is the one and allows for the most freedom is the one that becomes the world reserve currency that's what i see is a really nice effect and i i think i think we could we could get there where you just have these multiple cbdc's the least oppressive and the least oppressive and the most oppressive are the ones that compete it out well if trump comes in he said he wouldn't allow a cbdc not that i believe any politician about anything they say but at least that's what

he said i don't really think the cbdc is going to be on the dot i mean that's how this started right rfk just said the same and trump said it but based on what we've heard even from pal i don't think it's really on the docket in the united states in the coming four years but maybe i'm yes i was gonna add here i mean i think some of the longer term game theory simon mentioned is interesting but it's not only not on the docket the bet is expressly opposed it on a number of occasions. Yeah, they said no chance. The closest they came was a paper they put out in early winter of last year, which was long awaited, where they really failed to even enunciate what the problem is they'd be trying to solve. And then they were very uncertain whether a blockchain would be the solution to this uncertain problem.

So it was incredibly ambivalent to the concept. And frankly, the only I do see movement, you talk about the BIS. Obviously, we see the ECB. These just don't matter at all. I would say they literally don't matter at all. They might do it. They might try to make it a way for the euro to sort of become ascendant again. But that's it at the moment

i see no interest whatsoever in the united states across both parties i mean the closest is a small faction of the democratic party that is interested in this as a concept but even with even there no no one has proposed an actual design that you know is palatable to anyone as far as I can tell. Yeah, if I could add, a CBDC doesn't necessarily mean blockchain. A CBDC is just a digital currency created by a bank that's not backed by somebody else's debt. So we already have essentially digital currencies at a bank, but someone has to them into existence. And then it has to have an interest rate attached with that digital currency. A CBDC is just a deleveraging effect where you have the same amount of money, but you don't have

the additional interest, and it's issued by the central bank or the government rather than the private banking sector. It doesn't have to be blockchain. It's not tech. Yeah. I mean, I think it's a novel concept. It's diametrically opposed to the two sided banking system, which the Fed is like strongly promised to preserve.

So I think very, very unlikely to happen. so then that means that we're just getting political uh talking points and i mean you like i just i mean to be honest like i mean yeah if if simon thinks that the fed is going to you know um deinter disintermediate the very banks that it serves and uses as its organs of power i think that's extremely unlikely. So outside of that, I don't really see a use case. I haven't seen one presented other than either, I mean, basically stuff that regular folks wouldn't notice. So 90, you know, back end technology upgrade, perhaps, or something that's incredibly authoritarian, right?

I mean, I don't see a middle ground of a reasonable policy that solves any known problem. Yeah, I also don't think that the US is admitted to having any, you know, problem. You know, for now they can keep inflating the dollar and, you know, keep printing more dollars. I saw something today about the rate of, trying to think of exactly how it is worded,

but from $33 trillion to $34 trillion in national debt, I think took 30 days, if I'm not mistaken. And they're increasing the rate of debt. And since the debt ceiling crisis, it's already up 10% from the 31 to 34, whatever it is. Yeah, and this is a fiscal impulse problem, right? Which, I mean, I think my big criticism of the 31 to 34, whatever it is. Yeah. And this is a fiscal impulse problem, right? Which I mean, I think my big criticism of the Fed is that, I guess, as a as a partly to maintain their supposed independence, they refuse to comment on this side of the ledger, basically,

which is the fiscal side, which is completely out of control, right? It would be great to see the Fed or Powell come out and explain that, like, actually, rates absolutely cannot stay that high forever, because we will bankrupt this country. But he doesn't want to do that, because it would effectively be a political statement about administrative fiscal policy. But of course, like, they know that and they really should be honest about the actual totality of the situation all right scott i think uh i think we've squeezed the the juice out of the lemon here there's just some days man it was actually a really interesting conversation but uh yeah not

not much to talk about in the immediate news for the moment there's a great pump happening on the market i mean i don't know if you're a great pump i see every i literally just i'm on x obviously and i saw like 10 tweets that were like bitcoin is pumping and i literally opened the chart it's from well now it's at i guess 42.6 it was like 42.1 and now it's 42.6 where is over 100 bucks it was over 100 bucks i think there's a jupiter airdrop happening this week on the 31st, which is Wednesday, which is going to be probably quite a big airdrop. On the days where there are airdrops, a lot of activity happens on the network and a lot of money goes onto the chain.

So I think probably worth keeping your eye on that one. Yeah, I agree. And I mean, on that dip, I was looking for like 75 to 77 solana and literally on a live stream i was like i'm gonna adjust my zone here and i'm buying a little bit at 81 so i only got a little bit of the position i was trying to fill there but i'm glad i grabbed some because it seems like the market really bounced from there i mean i we should in theory if bitcoin is going to sit here and be boring we should see a lot of action in the altcoin market, you would think. Yeah, I mean, I want a correction.

I want this thing to smash down so we can buy what we want to buy and we can move on with the bull market. My bag's unpacked. Yeah, like I said, I got about 25% of what I wanted there on the dip, I think, because, you know, greed. But I guess maybe that'll, hopefully tomorrow we'll have some price action to really discuss and make for a more exciting show. Go ahead, Simon, as a comment before we go. Go ahead, Simon. Yeah, I can cover it

tomorrow if you want, but just had some FTX bankruptcy and Celsius bankruptcy stuff. Would you rather it tomorrow? Yeah, let's hold on it. I think we'll go ahead and wrap for today. Cool. We'll do that tomorrow. We've got some bankruptcy. All right, guys.

Thanks, Mario. Thank you, everyone. Thanks, Mario. You were great today. Mario did amazing today. Bro, you did well today, bro. Actually, Mario's best day. Killed it. Mario's best day.

Yeah, really deep, insightful commentary. Great questions. Glad we had them. Thanks, everyone. Bye.