The Wolf Of All Streets - Bitcoin's Huge Tipping Point | Macro Monday

Episode Date: July 29, 2024

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Finally, home from the Bitcoin conference in Nashville. And I think you could argue that this is likely the big tipping point for Bitcoin if we're looking for a tipping point from the mainstream't need politicians. I have my doubts that they're genuine, but we will dive into all of that. Either way, this was an absolutely insane weekend, huge for Bitcoin. And in the context of everything macro should make for a very interesting discussion with Dave James and Mike, who's back after two weeks avoiding the markets, I think we'll say. I can't wait to have this conversation. Let's go. Scott Melker Let's go. Scott Melker

Let's go. Scott Melker Let's go. Scott Melker Let's go. Scott Melker Let's go. Scott Melker

Let's go. Scott Melker Let's go. Scott Melker Let's go. Scott Melker What is up, everybody? I'm Scott Melker, also known as the Wolf of All Streets. Before Let's go. I think I slept 15 hours the entire time I was in Nashville. I crashed for nine or 10 hours last night and literally couldn't get out of bed anymore.

It was unbelievable. I was, it was, it was an awesome comp, you know, switch microphones here. Sorry. Is that better? Yep. So it's, it was an awesome conference. Absolutely, utterly overwhelmed from the week, but it was incredible for sure. I heard a rumor that someone with your name who looked exactly like you was doing karaoke Saturday night at three o'clock in the morning with the Preston Fish.

There may or may not be videos of that. Yeah. I can't wait to see those come out. I heard that yesterday morning and I was like, man, I'm really sorry. I missed that. So listen, before we get into the conference, actually, we do have Mike back. I think this is a great time to just set the table with the macro, get the morning meeting, get those things out of the way, because I have a feeling we're going to go very deep here into politics once again and what we saw at the conference. So Mike, please. Yeah, thanks. I have to hop off a little bit because I've been asked by TV and radio comment on Bitcoin. I'm always fearful when that happens because that's usually signs of peaks when they want me to talk about it, but just let you know, FYI, then I'll come right back on. But from our morning meeting, our chief economist, Ana Wong, pointed out the labor market's tier rating makes you think it's weaker than most people expect. Gina Martin-Adams, our equity strategist, pointed out earnings are still good, but pointed out the risk is in energy. And the key thing I like to point out from commodities, it's nothing but deflation at the moment.

The Bloomberg Commodity Index was up about 12% on the year. Now it's flat. Gold's up 16%. That's actually beating the S&P 500. That sticks with my overall outlook. I think gold's going to beat everything. I think at some point when we get a normal correction in the stock market. Everything tilts lower.

And I didn't say if, it's just at some point. And Bitcoin's probably the leading indicator. But from a macro standpoint, I look at it as this is just one of those overdue, the pendulum for a recession that swung way too far towards recession a year ago, swung back too far this way. It's just starting to swing back this year. And commodities, it's clear. So I look at crude oil, it was up 15. It was almost 20% in the year. Now it's barely up 7%. Commodities are declining and gold's the only one going up. So the key thing

is I'll end with this. I'd like to overlay that Bloomberg, the S&P 500 200-day moving average with the Bitcoin 200-day moving average and Bitcoin dropped below it and came right back up. But we can see one thing that's really scary about it is what you said about the conference. Just having been to those and seen those, you got to be very careful about the enthusiasm for conferences. And the whole thing about Bitcoin now is we have to expect President Trump to be elected. And there's potential he won't be. I mean, it's still probably about 50-50. And I still look at it as it's a risk asset.

That's about three times the volatility. It has to be 500. And as long as the stock market keeps going up, it should be OK. And it's showing signs that it's not OK. Now it's recovered. But to me, that's the macro. Bottom line from commodities is really deflationary forces. And I don't see what stops it.

Before Dave jumps all over that statement, Mike, I would normally agree with you that you got to be careful about enthusiasm around a conference. But typically in Bitcoin conferences, from what I have experienced personally, is that you get a nice run up and then you go to the Bitcoin conference and you crash. Not crash, but you do have a sell off. You certainly have a drift. We've never had good price action at a Bitcoin conference. This is different. This is different this time. And it really is different this time because the message coming out of Washington is changing.

There's a dramatic message change. And, you know, we're seeing that with the political atmosphere, with Trump and, you know, Robert Kennedy and Vivek come out all enthusiastic around Bitcoin and this ecosystem. It's kind of forced in the hand of all politicians. And that's the difference this year. Now, I would agree with you that, yes, we're seeing risk on this morning, no doubt about it. Maybe that's going to help actually push Bitcoin right through the all-time high and we'll go on to a new all-time high. I don't know. But typically in Bitcoin conferences, it's the opposite. But this year is a little bit different because, you know. There we go. It's a little bit different. But it's important to understand why it's different.

Because one of the things that drive people like Mike and I absolutely crazy is it's different this time. Like when you said I want to value companies based upon number of eyeballs as opposed to their ability to monetize those eyeballs. We had, you know, this massive bubble in all things internet. When you started valuing cryptos based upon, oh, I have this huge community of all these people. And all of a sudden, you know, it's worth, you know, $30 billion for some meme coin. And all of a sudden, it's not, you know, or I have this great, you know, new layer one that has no applications on it, that has no chance of an application on it for years. I'm going to bid that up to double digit billions of dollars. I mean, honestly, trees don't grow to the sky.

Markets aren't different. They are the same. Yes, you get some more exaggeration, more overreaction on both the upside and the downside, time after time. I mean, it's different. But there's one thing here that's different, but there's one thing here that is different and it's exactly in line with my thesis. For anybody who's been watching this show for any length of time, my thesis has always been Bitcoin trades like an option on its own adoption. And after this weekend at any price below $150,000, I can honestly tell you that it's trading as one

of the most mispriced options I've ever seen. And that is very, very, very important because at the end of the day, Bitcoin, if it achieves digital gold status, you're talking a 10x from these levels, full stop. Now you have to ask yourself the question, what were the things that would have to happen for that to occur? And quite literally, the final boss in that scenario would have been nation state adoption as a reserve asset. So all of a sudden, we heard, Mike doesn't want to hear me anymore. No, he said he had to jump off for a quick. So now nation state adoption, which, you know, we had El Salvador. Everyone was like, oh, my God, El Salvador. And with all due respect to Bukele, who's doing a phenomenal job, I'm not disparaging it even slightly.

It's just small, six million people out of, you know, well, you know what, you know, seven, eight billion people on planet Earth. So, you know, that was small with the thought of Milley, if he were going to do it, which he has not yet done it yet, that was bigger because they're a bigger country. The United States is the big kahuna. And the fact that two or three presidential candidates are talking about it is a big deal. Now, one has to ask oneself the question, OK, what will the rest of the world do? Let's game theory this. Why would Trump want to do something like this? Well, the answer is he's a traitor and he likes to be able to point to things and say, look how smart I am. Well, how smart is it to be the first country to establish a reserve in Bitcoin, knowing that as everybody

else goes in, as well as your own buying, you're going to push the price up. How smart would it be to establish a Bitcoin reserve at an average price of $100,000 when- The first superpower country. At the end of, and I'm saying that because if we started actually buying it, it would definitely, that's the smallest that you can see. How smart would it be if you have an average price that says you're the one buying? People don't understand this. This is a really simple piece of math. When a large institution, and we are the largest, decides to start buying any asset, I don't care what it is, the price starts at A, it moves up to B.

And their average price of buying is somewhere in the middle. You know, if you get started early enough, maybe your average price could be in the bottom bit. But now you're P&L. What makes you look good is the delta from where you bought to where it's done when you end. And if you could do what people have been literally sent to jail for, for doing it in stocks legally, buy, then tout your book and other people buy and push the price still farther. Now, how smart do you look?

But there's some nuance. I don't want to interrupt you, but there's some nuance because Trump didn't say it. No, I know he didn't. Not what he said. And he didn't say they're going to make Bitcoin a strategic reserve asset

as much as we did now. Lummis did. And she came on right afterwards. That's right. I have Trump's quote right here. I listened to it. I listened to it a lot. 100% of all Bitcoin the U.S. government currently holds or acquires into the future will keep 100%.

So, by the way, he's going to commute Ross's sentence, but keep Ross's Bitcoin. But go ahead. Well, I mean, at the end of the day, whatever they accumulate, accumulate could be from a variety of reasons. It could be there are mining rigs that are owned by the U.S. government for all we know as well. We don't know. And we know other nation states are doing that. Or we have a pretty fair idea that that's happening because one can't reconcile the amount of mining that's taking place, place geolocated in China with any companies that are willing to claim, you know, running mining rigs in China. So it's fairly likely they're doing some.

And there have been multiple countries who have talked about doing that as well in Eastern Europe. So the point that I'm making is if you want to understand motivation for doing this, it's really simple. But the most important point here is it's not even only Trump, because now we're hearing all this talk about a crypto reset from, you know, the Harris campaign. And so it is, you said it really well. I can't remember which exact, what your exact words were, but if you had said to people a year ago, Bitcoin will be talked about by all the presidential candidates that the leading candidate would keynote a Bitcoin conference and that the one who didn't show up would be talking about resetting their

crypto policy, specifically talking about that. And that the largest pack in the United States election is coming from crypto. You would have predicted a price that was rather high. And I'm not saying that the price action is wrong. I'm not saying that at all. I mean, look, I still think we're in a trading range. Now we're towards the top of the trading range. Talk to me when we break it. And I think we will break it when we get toward the fall

and what's going on in the election gets clear. But that's what's happening. This was a major deal. Now, my major, as i've said many four is was in communications and rhetoric symbolically this was a very big deal yeah and let's let's be fair to scott's point you know uh trump stepped in it a few times oh sure he he commingled bitcoin with crypto and you know he was he he misspoke a few times like when all bitcoin in the world is not going to be mined in the united states and that's actually against that that's actually against the the you know the establishment and

and protocol of of bitcoin that makes it so strong you know we don we don't want it all. Nobody that really understands Bitcoin wants it all mined in one country. That obviously couldn't happen anyways. But so it's clear that he doesn't really understand it yet. And that's fine, but that's okay. It takes people some time. But he also said things that were really important that are starting conversations at that top

level that now cannot be avoided. Because when you have a former president, who's now the leading candidate for the next election, that, and when he says that we're going to stop choke point 2.0, now you've got to have that conversation. You can't just ignore it anymore and say, oh, this wasn't really real. It was real. We've talked about it on the show a number of times, but it was real. And you've got to understand that. And now you have to recognize it. her her administration going to repair the, the, the,

the obliterated relationship that she has and her, this administration has on the crypto and Bitcoin space. I mean, maybe again, it's just political talking points and political hot air, but in this case, it is producing a conversation, it's creating a conversation that just can't be avoided anymore. We have a problem, which is that when you unpack the speech

or the intentions, you get accused of having Trump derangement syndrome. And if you speak about what the Harris campaign is, then you're a libtard who is not reporting accurately. This is what I can tell you actually happened. I interviewed Ro Khanna, coincidentally, the congressman from Silicon Valley, Democratic congressman who's been trying to put this roundtable together since 2022, finally got it done. He happened to be on the phone with Harris when he walked in for the interview, and she is genuinely attempting to at least understand or listen to people. It's disingenuous. Totally. It's how can I get votes? What do I need to say? But this is. Yeah. But the report

is technically accurate that she's looking at least politically to reset and figure out how to go forward and stop the damage that's being done. On the flip side, Trump also has no clue. But that does not matter. As James said, he's realized it's a great political talking point. What matters, as we've seen with the current White House, is not the president. It's the people they put around them. Joe Biden doesn't even know how to spell crypto. It's the people he's chosen at the SEC, the people he's chosen at advisers at the White

House from Elizabeth Warren that have been the reason they were having this. So if Trump surrounds himself with young, intelligent people who understand Bitcoin and does create a legitimate counsel, as he's said, it doesn't really matter if he gets it or not. By the way, they don't usually speak. They don't read everything in that speech, everything in that speech, which I live streamed when the stream went out, had my spidey senses tingling. He said so many wildly incorrect, inconsistent, crazy things. And there was one line that got me so bad that seemingly nobody's talking about because they were so excited.

And by the way, the energy in the room was pretty bad. Like you thought people were going to be so excited. And by the way, the energy in the room was pretty bad. Like you thought people were going to be really excited, but to James point saying crypto over and over again to a bunch of Bitcoiners saying a few of these things, making everybody wait an hour, which was not his fault. That was secret service, but it, it wasn't as palpable by 10 or 15 minutes into the speech as you would have expected. But he said this, I'm going to bring it up because this one, and maybe, maybe I'm being hypercritical, but man, this one really, really hit. I've heard from Vivek, 175 million people in some form are involved with this world of crypto and Bitcoin and all

the others, 175 million. So when they heard that, they said, let's be nice to them, at least until after the election. I'm sorry, man, you can't say the quiet part out loud. You can't say like that. He said it. OK, so you can call me Trump deranged or whatever. He literally said, I'm doing this for the election and we'll see what happens afterwards. So I don't trust any of them. No, we don't need to. Well, here's the really interesting question, Scott. So, look, I listened to this speech and I was yelling at it for half of it. You know, why are you saying this see. And you know that if he speaks for 30 minutes, 28 of those minutes,

you're going to be shaking your head saying, what the hell is he saying? They're telling me I'm being hypercritical. They're telling me I'm being hypercritical. That is literally what you're going to get every single time. It doesn't matter. I said, did I not say at the beginning that it's a net huge positive? He'll put great advisors around him.

It's definitely better for crypto and people are still mad saying that I'm being too hypercritical. I'm not mad. I'm not mad. I think you're accurate. But I do think that the symbolic change by having a presidential candidate

and two, obviously, you know, RFK is, you know, he would be, and two, obviously, you know, RFK is, you know, he would be if he got elected, you know, forget it. I don't want to recalibrate. But if you're trying to vote, if you're trying to basically price Bitcoin as a long term investment based upon its long term fundamentals, and you have a 60% chance that one of the major overhangs will disappear and become a net positive. Right. Which is, you know, the stuff that the U.S. would force sell on Twitter and said a thousand Bitcoin was transferred from this known U.S. DOD wallet to Kraken, Bitcoin would have dropped five, 10 percent within the next five minutes. Anyone going to dispute that? I don't think that we'd argue with that. And that's gone now. And, you know, there's at least 60% likely to be gone and highly likely that the Harris camp will say the same thing because it's easy and cheap to say it. So things that are easy and cheap to say, they're going to say. So that's one thing that's undeniably bullish. Another thing that's

undeniably bullish is the U.S. talking about, talking about with senators and a president who could be interpretive saying you know i might sign this if it gets if it gets put to me becoming a reserve asset that is a big deal uh because it's part of game theory that's all i'm trying to say and that is being technically proposed he didn't say it he didn't say strategic reserve asset he said strategic stockpile it's don't sell anything we accumulate guys but but lummis literally said we're going to buy a million that's a bill that's being proposed look you know harris has already said in her campaign she'd sign a bill on reparations or at least reparation exploration and there's been a senator proposing that every year sent for when did when

did john do i can't remember, the Michigan senator who's since passed, brought it up every year for like over two decades. So I mean, yeah, bills get proposed. That doesn't mean anything. What matters is the fact that, hell, we have presidents talking about Bitcoin now. This is the point. So let's boil it all back to first principles. What really been talked about by congressmen and senators for the last number of years here and there. Senator Lummis has been a champion for Bitcoin, a great champion for Bitcoin, and she's working really hard at expanding that conversation. And suddenly in the last few months, Bitcoin has jumped onto the executive office level of reelection for votes, like looking for votes for reelection.

Like that is a massive, massive development. So if you don't recognize that, it doesn't it really doesn't even matter what these talking points are as much as if they're overall generally positive. That means that they want to appeal to this community and they realize that this community is really important. That's the conversation like that, everything else that, so we can, we can dissect and, and criticize. And I agree with just about every single thing you said, Scott. And I agree with what you're saying, Dave. And, but to just pull back and get away from all the noise and that's what you're left with and that's why this is so important and it this is this is a development that is uh that it it's substantial i mean the other thing that that's really fascinating you know you know about

this it's part of a macro perspective is is is you have to look at what has been going on uh you know, about this, it's part of a macro perspective, is you have to look at what has been going on. You know, we've had the ETF has finally opened up, you know, so people can start to buy. There were multiple panelists who basically said words like, the wire houses have yet to be able to buy Bitcoin. We've seen no retail yet, but that's going to get approved in the next 10 months. We had that disclosures of small, like teeny bits of pension funds allocations into Bitcoins, but they are teeny bits. Game theory-

Some of them are pretty significant. Wisconsin, they do not, they are very difficult to get to go into the alternative side. So this, that was pretty significant. Oh, I'm not saying these are small bits. I to go into the alternative side. So that was pretty significant. Oh, I'm not saying these are small bits. I'm saying that the thing is, is the reason my thesis has been what it's been is that when the portfolio re-weightings, which are traditionally done in the fall, happen, it could be very, very interesting. It all lines up.

That's kind of the point. At the end of the day, you're getting people. I mean, who was it that said that Bitcoin is a pessimistic asset against all the things? Basically, I forgot. I think it was Fink. No, it wasn't him. It was somebody else, another major hedge fund manager, who basically said, if McGlone is is he didn't call you by name mike

but he goes if mcglone is right and the world goes to hell you got to be in bitcoin i mean you're not hearing that i mean it's one thing if dave weisberger says that okay so who the hell am i but when when major you know it was someone at a multi-trillion dollar you know uh asset allocator said might have been latin when you see those sorts of words start to resonate, it is non trivial. All of these things are happening simultaneously. And that's why I was excited. I can't get excited about anything Trump does or says,

because listening to him, it's like three quarters of all the words are, are, are chest beating. It's like, it's just, I just find that really hard to listen to. It doesn't mean that I don't think his policies will be good because honestly, look at the people he's surrounding himself with. I mean, I look at the comments. And I want to make one other point about Gensler

because Gensler matters and Warren matters. Fire Gary Gensler was the moment of that speech, by the way. So much so that it was a talking point. He read from the screen, you could see. And then he said, wow, I didn't realize he was so unpopular. It was like, yeah, at this moment, he said, I'm going to say that again. I'm going to tell you something.

If you made that same statement at STA, Security Traders Association National Conference, you would get the same response. Maybe not quite as loud, but it would be loud. People do not understand how bad it is. If you could get an interview with the CEO of Virtu, Doug Sifu, and ask him how big of a talking point it would be throughout the entire financial services, the worker bees and the people who are actually building it, maybe not the heads of the big banks. It's a big deal. It's a big deal that Scaramucci, who is unabashedly pro-Harris, is screaming from the rooftops, fire all of Elizabeth Warren's appointees. It is a big

deal that Mark Cuban is saying exactly the same thing. These are not small changes. And Chokepoint, I mean, Lynn Alden pointed it out, you know, this morning, Chokepoint is a big deal. You know, these guys, here's where the knife edge is. The knife edge is this. And this is something that matters. If you're in the Harris camp and even in the Warren camp at this point, the smart move, and they're not dumb people, the smart move would be embrace Bitcoin and a CBDC that has a portion of its assets backed in Bitcoin so they can control the population with their CBDC. That is their smart move because they've lost the war on Bitcoin. Doesn't mean they've lost the war against crypto. Doesn't mean they've lost the war against CBDC. By the way, that eventuality horrifies me. I think it's a terrible outcome. I was going to comment that would be the absolute worst outcome for the American people. It is terrible for the American people. It's great for holders of Bitcoin financially who don't ever want to protest against the government or live a free life.

But I think it's a horrible outcome. But honestly, that is the most likely outcome in the case that… That this administration goes forward and has a positive view on Bitcoin. But just for your listeners, Scott, for people who don't understand what Dave is saying, the CBDC backed by Bitcoin would still give the government the gates and the keys to those gates to turn on and turn off your money, period. Full stop, they could decide exactly what and when you spend it, what you spend it on, when you spend it, how much you can spend it on, whether you can travel, whether you can buy this kind of food, that kind of food, you've used too much energy, whatever it is, they'll make a carbon footprint for you and they can adjust it down to virtually the penny.

So that's the terrifying, terrifying development of what Dave is talking about. Okay, Mike, you've got to bring us back to Earth, man. What do you think about all this? We need your pragmatic, measured perspective. I think it's in the weeds a little too much. I mean, I wrote about this stuff in 2019. This is all stuff completely predictable. The space has money. It has votes. It tracks the dollar. We all knew it was going to tilt. The politicians will figure it out eventually. And it takes Trump to, you know, he wants to get reelected. He says everything people want to say,

want to hear to vote for him. We get that. You guys have pointed out. I look at, first of all, as a trader, if I'm a trader, I see all this bullish stuff this morning. Everybody's so bullish. I look at it and my clients just say, hey, Mike, can you structure a little put option strategy for me? That's what I'd be thinking right now. But in the macro big picture, I'm bearish all risk assets. It's not so much just what Dave said. It's undeniably bullish. It's undeniably bearish that we have the VIX volatility index and a 52-week moving average minus the T-Bull rate, the lowest since right before the great financial crisis. Now, some of us made a lot of money then. Just pointing out the volatility has always been reverting. And

you just look at the 10-year note yield in China. It's at 2.15%. Now, it's the lowest ever in our database for almost 20 years. And I look at our stock market, the GDP, it's two times GDP. We haven't been that high since on the way up. So I'm just looking for a little inflection point. And I just look at Bitcoin as it's been a great performer when everything is going up. It's the fastest horse in the race.

But when things revert, which they will, which is why I'm still tilted towards things like TLT and the bond market being the best performer in the next couple of years and following what gold's already doing and beating the stock market. That's when I say we have to get through that bridge. And I have to focus on those indicators that worked well in the past. And the key thing that really struck is when Dave says the option, the option, I get it. I'm options inherently. When volatility is this low for this long, the lesson that every smart money manager

and plant knows, you're not supposed to be overweight risk assets. Now, the sell side won't get that. They won't say it until things start going down. We all know that, but some of the hedge funds are on top of that. And that's what we've seen in things like the grains have collapsed and they're way short. Crude oil has collapsed and they're just kind of moved out. Copper is still long. It's gone back down. Everything I see is tilting towards deflationary recession, which is really normal and worthy of the inflation. I don't disagree with many of those points, Mike, but let's go back again to the first principles. How long do you really believe that the Fed and the Treasury, how long do you really believe they'll allow a recession to continue?

Like, do you think that we could really go into a two or three year recession for real? I love that that's a question, by the way. Because we just estimated that we just crossed $35 trillion of U.S. debt this morning. So how long do you think they could really let it go on? It's a good point. But let's remember, as we all agree, is we've never had unemployment bottom from this low and not go to 6%. And every single time the Fed was at ease, what's the difference this time? It's the lessons of Jeff Booth. Humans learn from their errors. We made the mistake of too much liquidity. So my point is what's going to happen

this time is all assets are going to start heading lower, which is they always do just normal reversion. We've seen a lot of things already. Typically, most notably commodities, mostly elastic. The Fed will follow up with easing, but they're going to be behind that climb for a long time. And the key thing is about is Bitcoin is it's the highest volatility of most risk assets. And that's wonderful when people said it has a negative delta, but it doesn't. It never has in the long term. At some point it will.

But right now it still has a very high delta and gamma to risk assets. That's why tilt towards gold and treasuries until we get past this first bridge, at least. Let's get to that first cut. Now, here's one problem. They're not going to cut till September. And if we see the stock market start getting more bad data and tilting lower, the market's going to say, oh, mine, just what we were afraid of. Inflation's still high. The Fed's behind the curve and the stock market probably has to go down for inflation to go down when it's two times GDP. What does that

mean for Bitcoin? I agree with every single thing you just said, but go back to the first principles. We cannot have the treasury market lock up like we did in 2019 before we even had COVID lockdown. So they buy it. So they're going to have to step in and buy. They will print and we will have- That's why I'm so bullish. I think we're going to go back to 80s style inflation at some point here, especially if Trump is elected and we have Reagan-style tax cuts. And I think we're going to have massive inflation. So what you're talking about, I do not disagree,

but I think it will be very short-lived. I don't think it'll be a two, three, four-year process for us to get out of it. I think they will just swarm in and print to get us back online. We can't have a hard landing. We can't. We can maybe bounce, but we can't have a hard landing where we skid along for years. I just think that the only thing you can point to is that the Fed will print. There's no way out. And so how do they manage that debt? The only way to manage that debt is to get nominal GDP higher. How do you get nominal GDP higher? By expanding the money supply, period.

Because unless we have some sort of product every miracle in the next two years from AI, which I believe we will have a productivity miracle from AI, but I don't think it won't come in time to stop this train in my opinion. So I agree with everything you say, except for the backside of it, that I don't think we're going to be able to sustain a long-term recession. I just don't think we'll be able to stomach it. But I mean, isn't that the nature of the business cycle, James? I mean, eventually you have to have a long recession or depression. Or you could avoid it by having massive inflation. Or you could do what Japan has done.

Or with China. China is severely into deflation right now. It's probably heading towards a normal depression, which it's way overdue for. And just what Dave said, we're all turning Japanese. It's the trend. So, I mean, look at Japan as a model. China's heading there. And I don't disagree with Dave, but I think it's more a couple of bridges down the road that we massively deflate.

We did it in 1933, but what happened? The stock market had to go down 90% first. Yeah. Well, but what was the rescue? What did Roosevelt do? He debased the currency. He debased the currency by stealing everyone's gold and reflating. Exactly.

And we did it then, and we did it in 1971. And what do you think we're going to do this time? We're just going to steal everybody's. We're going to steal everybody's. And what asset? Is it going to be the Bitcoin? And what option? No, I think they're just going to debase the currency further.

Of course. They're going to debase the currency further. Of course. They're going to debase the currency further. And once established, and we're not there yet. I will not say Bitcoin is trading. The reason that Mike and I disagree boils down to a very simple point, which is if Bitcoin were trading with a zero on the end of its price right now, which, by the way, is still well below what Michael Saylor and all these other people are talking about. If Bitcoin had a zero, literally 10x from here, then I would be looking at its volatility, its relations, et cetera, because then it would be already at digital gold. And the truth of the matter is, it isn't. It's one-tenth

that price. So right now, it's sort of like valuing Bitcoin and looking at its volatility compared to the S&P is like valuing a biotech stock who people are judging based upon whether or not the thing is going to get data that indicates it's going to get approved. Because you could have a biotech stock that gets positive clinical trial data on the day that the market drops 15 or 20 percent. And that stock might very well drop that day. But later that week, that stock is going to go crazy if, in fact, they get that. I think what we had this weekend was the moral equivalent of a positive clinical trial on a biotech stock is how you have to look at Bitcoin, because Bitcoin, which effectively has undeniably superior qualities of a store of value to anything else in the world in terms of its durability, divisibility, verifi rare scares provable scarcity transferability in a digital way there is un and by the way that's even getting better people aren't even talking about what's going on in terms of the upgrade cycle in terms of uh being able to improve the tps on layer twos and a lot of the work that's being done so in terms of that piece people the bitcoin side

are excited about that well what's the? What's the most important thing? Acceptance, acceptability. And what happened? And what's been happening over the last month? This is a massive sea change in acceptability. I literally think it's the same. Sea change. That's it right there. And to look at past behavior and look at its correlation is fine, but no more fine than I would look at the correlation of biotech stock X with an anti-cancer drug that people were disputing or saying, eh, it's probably not going to happen. Oh my God, look at this clinical trial result. I think it's literally like that. And that's kind of my point.

And that's different. Now, is Mike right that the world is due for a reset? Yes. Is James right that they're never going to allow it? Yes. What has been my thesis all along? That we have a manipulated bond market, manipulated economy. Do I expect that manipulation to keep going? Yes. Do I expect to accelerate? Yes. The only place where I disagree- Expect more acronyms. Right. The only place where I disagree at all with James on the productivity miracle is don't underestimate what would happen if a Vivek-style deregulatory wave came through the United States. That could be extremely positive. But equally true, don't underestimate the carnage that a a proposed 10 across the board tariff could

create so we got cross currents here and we don't know what's going to happen and i hate talking about it until it happens let's see who wins the election and let's see what they actually propose i want to ask you guys a lot of uncertainty yeah i want to ask you guys a question that's likely to get me murdered but once again i'm going to say I try to take politics from a 30,000 foot view and I try to not inject any personal politics and just ask reasonable questions. So we have Kamala Harris saying that they'd like a reset,

obviously, with the crypto industry. We know that that would be a politically good move, even if it's just politics, right? They need to do something. So people are criticizing. The only reset i would even begin even begin to uh accept is fire gary blowing gensler and warren out yeah blow them out

every single committee shut them down like throw out all of their uh proposals get them out and then we'll start start that people have made the statement that, oh, she can't politically afford to publicly denounce Elizabeth Warren. Well, guess what? I think that's she I think she can't. They should act now. I agree with that. OK, but let's take the once again, 30,000 foot view. If she pivots, let's say she gets smart advisors that the industry likes to give her some advice. Didn't isn't that what Trump just did that now she's getting screamed at? Like we have four years of history

from both of these administrations. Listen, we have four years of history. They both printed a shit ton of money. Both presidents, they were both outwardly anti-crypto. This administration has been a hundred times worse. I'm not saying who will or won't be better. But if she wins, if she wins, it's possible. Don't we want that pivot forced and for her to get smart people around her for the next four years?

Yeah. Yes, but understand something. Trump. Oh, my God. People are yelling at me for pushing her. No, no, it's not pushing. I'm making a very simple statement. Trump didn't like, Trump had Mnuchin, who didn't like it because he saw the same thing that

we see, which is, you know, I need to be able to print at will. And if there's a scorecard out there that's readily available on the screen 24 seven, that doesn't make me look good. So let's, let's poo poo that. But Trump promoted, put Jay Clayton, who is an independent, nonpartisan head of the SEC. And Clayton, look, I've said this before. I know the story. I know why.

He was ignorant on Bitcoin, didn't want it to be his legacy. And so he didn't want to destroy the industry. He simply didn't want it to be positive, to promote the industry during his period of time. And that was also a different part of that. He charged Ripple his last day in office. I'm aware. And the XRP case was wrong on so many levels. I'm sorry, man. Watch what people do, not what they say. And that's what we're doing in the chat. We're interpreting what they could have meant. When someone tells me what they're going

to do, I believe them. That's all I'm saying. I understand. There were conversations. I was in that building multiple times during the Trump, the last Trump administration, multiple times. We can't fire Scott, it's his show. You're not wrong, but I know what the staff was like. I know what they were thinking. And they were thinking there was all, they were looking at the ICO mania and look at what happened. The ICO mania went crazy. They out the Dow report they did a few things but they didn't really go after them they really were trying to be and they never even thought about going after coinbase and cracking this SEC is very different and it's very different in a variety of

ways and Elizabeth Warren literally told us that she was raising an anti-crypto army. It's a big difference. If you don't repudiate that, literally, my favorite line in the Trump speech was, we're going to get Elizabeth Warren's goons but if she wants to and by the way this would help her in the with the whole financial services industry if she says listen i'm glad elizabeth supports my candidacy but i do not support her being in charge of any of this stuff and all of her appointees are going to be gone if she said words like that what if she does and so that's what i'm saying like i mean i wasn't doing backflips in parties and have a party. I mean, you saw like 70, I don't have it in front of me, but 70 Democratic congressmen wrote a letter to Elizabeth Warren a few days ago saying stop. I mean, this is becoming politically. Yeah, OK, but it's good.

Look, you know, there are people out there in the Democratic Party that I have enormous respect for and think, like Richie Torres is one, for a lot of reasons. There are others. I frankly, while I disagree with Ro Khanna on the nature of government's ability to actually control the economy, and we do disagree, we agree on far more than we disagree. And I have respect for him. And I never say anything bad about him, ever. I follow him and I'm always respectful and I would consider it is fine Elizabeth Warren I do not have that about because I don't respect people who lie and And that's the difference and call that out. How can you respect Trump? I

don't I Don't have respect for what I don't have respect for The way he talks and what he does, but you have to look at policies. And we've not been given good choices. I agree with Scott. If right now, if there was a vote between, and we were given, if RFK were given a full, fair treatment in the media, I mean, I haven't said to anybody, I've never said on this show that I'm voting for Trump because I don't know what the choices we're going to have at the time. The ballot's not been put in front of me yet. But I'll tell you one thing, Mike, one other thing you haven't talked about. Would I want to say I support Trump for one particular reason? Should I be or would I want

to be part of his 100-day team to build crypto regulation? Yeah, I think I should be part of that team. I don't think there's very many people on the planet that understand financial market microstructure in legacy assets and in crypto as well as I do. Do I want to be part of that team? Yes. Do I think the world probably wants to be part of that team? Probably. Do I have to support Trump to make that happen

at some point? Likely, but I haven't made that decision yet. Yeah, I just see these comments over and over again that the Democrats could have acted for four years. That's completely right. They've been an anti-crypto army. They've raised it. But Trump also could have acted for four years to a lesser degree.

And maybe it's a different situation than it was. I'm just saying both of these things, we have some evidence of what happened and we have some ideas of what could happen. And I think we need to see at the table regardless guys republicans are exponentially better for crypto i said it it's out there i'm not even reacting to that okay go ahead mike so let me just make a political um prediction based on the macro i think the next president's going to go down um and have a short one one-term presidency as we held towards a normal recession that we're way overdue for. We all know we're going to have to spike the system to do it. We're spending way too much in

deficit spending just to keep things up. So whoever it is, it's going to end that party's reign for a little while. I also like to make a key point about Bitcoin. The problem I see with Bitcoin is the easy money has been made. Remember, GBT discount's gone. ETH discount's gone. MicroStrategy, they've all had great runs. And I love that those are all gone. The futures are gone.

The ARB's gone. Everything is just getting, all the stuff that I enjoyed writing about for five years is over. And that's why I have to point out is I hope Dave's right. I hope James is right. But I haven't seen any evidence of it yet. And I think the leading indicator for everything I'm looking for is going to be Bitcoin. So here's one key thing I want to point out is Bitcoin is so in favor right now. We can see from the flows. What's really out of favor and just starting to gain some favor is gold. Gold ETF flows have bottomed from a two-year low and are just starting to turn back upward.

What's been significantly and most thing out of favor is treasury bonds. Everybody hates them. But then I look at the yield in the US treasury bond, it's 200 basis points above the Chinese one and above the rest of the world, it's much higher. So I look at the next potential trade, which is always my focus. Where's the vig of a trade that's going to make a decent amount of money where it's not in the consensus? Those I think are the things that are anti... It was a great opportunity. It's that are anti-consensus, everything is going to go up. And that's the problem we have right now. We only had one good correction in the stock market since 2011. That was 2022. It dropped 25%. It kind of dropped 80%. We have to expect some normalization there. I'm hoping it doesn't happen that way, but that's why I think I'm looking for that bridge first before I suggest overweight long. Don't forget Mike, that, that yes,

I fully agree with you that, that Bitcoin has been the tip of the risk spear for years, except for a couple of, of circumstances. One of those was when Silicon Valley bank collapsed, Bitcoin went up. So there is a flight to safety in certain situations. So it depends on what tips off this recession, or if it just grinds into it, like we're watching. Okay. So if we have something that tips it off, that, that, you know, that would, that could create a situation where Bitcoin is a flight to safety. I mean, we saw it when Trump was almost assassinated, Bitcoin ripped. So like this is now that could be because of a number of factors that it ripped because he wasn't assassinated. Now that it raised the probability that he was going to be elected,

but there are a few things that you have to look at here. So and you can't just ignore that, that that is a possibility that Bitcoin becomes a flight to safety in certain situations. But this one key fact about when Trump was the assassination tip came on, it tilted the polls of him being elected 7 percent. So we had Lynn Alden. That might be the only reason. And then everything came back. Now we know it's back to 50-50. Or it could have been the possibility of civil unrest. It could have been that. And we don't know. If you remember that day, which I do, it was an extremely raw and energetic day. There was so much

confusion and so much noise out there. It was interesting that Bitcoin went up amidst that noise. Yeah, well, I have to admit, I'm still kind of biased towards... I just look at digital gold as just a little too volatile right now when I think the safer bet might be in actual

analog gold. We'll see how long that lasts. Yeah. The reason it's a gold is because it hasn't reached it yet. And to get there, it has to have significant volatility. It's sort of a... The problem that I have is it's a circular argument, right? You know, you have an asset that's

worth, what, $1 trillion and you have another one that's worth $16 trillion. And you're saying that of the $16 trillion, probably about $12 trillion of it is pure monetary value at least if not if not more and he's going to compare the volatility of this thing that hasn't gotten there yet is still not considered that to that thing well for them to become equivalent this thing literally needs to go up by a factor of 10, which implies substantial volatility. And so to say that it's more volatile

is like, yeah, it's true. It's by construction, but it's a circular argument. That's the problem. I mean, I'm not saying you're wrong. I mean, it's definitely more volatile. And I'm not saying that in periods when there are no news and nothing that's changing that that volatility is because of the massive amount, relatively higher percentage of price determinative action from speculators, which is true. That's a big thing. Scott, for this to happen. Go ahead. For this to happen, what Michael Saylor said, which is it's a bold statement. But for this to happen, Bitcoin would have to become a risk-off asset

and part of the allocation of people's portfolios would have to come out of bonds for that to happen right there. Not out of their stocks, which is where it's coming now. Right now when RIA is good, right. Now it's part of the 60, not part of the 40, which is fine. But that's the reality when RIA is- It becomes a separate asset class to be allocated to

as a flight to safety and a store of value. Which means we need a 60-38-2 portfolio and RIAs still haven't even done that for gold. Scott, expand on what James is saying because he's exactly correct. Gold used to be in 33. Gold was some huge percentage of global monetary aggregates. And before 1913, it was basically 100%. Damn close to it. Okay. What Saylor is saying is we're going to have a return to the pre-1913, i.e. pre-Federal Reserve, where Bitcoin is global monetary aggregates. Is he possibly right?

Maybe. I mean, is it priced in? Not even close. Right now, I'm not even talking about that. I'm talking about, can Bitcoin get to the 6% to 8% of monetary aggregates that gold is currently at, side by side? And even there, we're talking about multiples. We're talking about over an order of magnitude of price appreciation required to do that. And so you can talk about what he's talking about. And maybe he's right.

I mean, look, I'm a Bitcoiner. I mean, I'm wearing my orange, you know, acquire and serve. You know, I thought it was the most appropriate for this. I do think that it's possible. But that's why I have a huge problem with looking at his volatility as a negative when the reality is it's all about acceptance. I mean, it's sort of like when people were trying to value companies, why is Facebook, why did meta become so valuable so quickly? Why did Google become so valuable so quickly? Was it because people used it for search?

Yes, it's because they were able to monetize those eyeballs they built a network effect that is what most of the great things most of the great wealth has been created because of network effects bitcoin does not have a network effect yet i know the people in that room down in anfield would disagree but the truth is it's still it's the magic internet money to the average person on the street. Elon Musk was supposed to be on stage with Trump. They kept announcing the special guest and he trolled hard. I will share the story another day. He trolled hard, even flew his plane over Nashville, which he didn't need to and continued a different direction.

There's a long story to why that happened. That was part of the delay. But that would have said if the two of them had been on stage for Fireside Chat talking about Bitcoin, this would be the biggest international media story of history, and it would have exited the echo chamber. But I want to talk about one other thing. I know we're running out of time, but this actually quietly...

There were so many things that happened at this conference that were so big that were just overshadowed, obviously, by the bigger that need to be talked about. I don't know if you guys saw Cantor Fitzgerald. They obviously custody Tether. They've put to death the Tether is, in fact, rumor. But Lutnik here said, A, they own a quote, I believe, on stage,

a shitload of Bitcoin. That Cantor Fitzgerald owns a shitload of Bitcoin. But the bigger story, they're going to open Bitcoin financing lending business. And so, obviously, we've seen this in CeFi, Voyager, BlockFi, Celsius, et cetera, didn't go too good, but CancerFit, Gerald, announcing that they're going to allow people to take loans using Bitcoin as collateral. We all know Bitcoin is pristine collateral. There's a lot happening here. So there's one issue right away is I've met Howard years ago. And one thing to quote on

Wall Street was I've never met someone who really liked him. I'm just quoting what I've heard. And that's having worked for a primary there. And they've done a lot of trades with him and know a lot of people who died when 9-11 collapsed who worked at Canard. So I'm sure you guys would get that. But key thing point out that the fact that this broker dealer owns Bitcoin is very disconcerting to me. So are you a broker dealer or are you an asset manager? And if you're more of an asset manager, that tilts the scale. So, I mean, obviously, he's another person bullish on this thing. But I do like what he's pointed out about Tether, which is the key thing I said from the very beginning.

I can't emphasize enough is this technology is overwhelmingly favorable to the U.S. Finally, Trump's figured it out. The other side of the aisle is just starting to the U.S. Finally, Trump's figured it out. The other side of the aisle is just starting to figure out the hard way. But I also like I have to end with the macro big picture to me in terms of I can't suggest and it's the thing people tell me, oh, I buy gold and only gold. How can you do that anymore without some Bitcoin in that space? But there's sometimes I think you're supposed to on a risk adjusted basis, overweight Bitcoin. That's when everything's going up and a risk on

asset and sometimes you're supposed to underweight that Bitcoin. I think they're tilting towards that focus. But to spotlight tether, why is it so important? Well, if you are an investor and you're like, let's say you're a hedge fund and you want to move around in this space and you want to trade around these moves, technical moves or short-term moves in something like Bitcoin, well, you need to have cash available to do that. And until we have major wirehouses making it available

where you can just trade on their platforms with it, then you're going to have to have money on exchange of places like Coinbase. And so how do you do, so how can you have that money available? You keep it in Tether right there, ready to move in and out of these trades. What does Tether buy? Treasuries. And so the US government understands that it's kind of like the crypto money market vehicle. And that's what it is. And it's the top, it's in the top 20 holders

of US Treasuries in the world. I think it's up to like 16 now. So like, this is a really big, this is an important aspect. It's an important point that you made, Mike. Yeah, and Mike does get a victory lap for having talked about crypto dollars.

So Mike, your wisdom has penetrated the jump team. Finally. Just pointing out trends. Just pointing out trends. That's all. having talked about crypto dollars. So Mike, your wisdom has penetrated the. Finally. Just pointing out trends, just pointing out trends. That's all. Okay, first, before we wrap and we could talk for five hours, James, I know your shirt, we put it in the comments,

FOMO21.com, you can get those shirts there. It's GuyNeilJacobs, is that correct? Yeah, that's right. Awesome, just wanted to make sure that we didn't let that go because I saw it in the comment. It is down in the description. Second, listen, I found the conference extremely inspiring, amazing. People sat there in line with Secret Service with smiles on their faces for hours. Everyone was excited. Guys, it's our job to get into the nuance and to dissect things. Say it's not because it's your guy or anyone else's. I think it's very clear to everyone at this point that Republicans would

be far better than the Democrats for crypto, regardless of the rhetoric and what's happening here. It's not a political statement when we talk about these things. I think that Trump just happens to be on the orange pilling spectrum and we can hope that he gets there. And that's the path that every single person takes. It's not unfair to say right now he doesn't get it yet, but I'm very happy that it's on the national stage. I think he's forcing the narrative around the world. Like James said, the very idea that he said these things means that there has to be action against them. Right. And so I think it's really, really impactful, really, really important.

It's just, if you're listening and you're trying to actually listen to what someone's saying, it's hard when it's wildly inconsistent. I mean, there's one point that I just want to tick on something Mike said really quick. You talk about broker-dealers. People don't understand just how impactful renouncing Gensler would be for bitcoin because they say well bitcoin is a commodity the fact is u.s broker dealers are not allowed to own it not allowed to offer trading in it because gensler has extra legally he's not done this via public rule or a rule filing he is basically told finra do not approve any licenses for broker dealers to be able to offer non-securities trading in Bitcoin. Those same broker-dealers can offer trading in Palladium. They could offer

trading in gold. They can offer trading in silver bullion, I mean, but they're not allowed to offer it in Bitcoin. Why? Well, because the SEC is extra legal and they have essentially forced that. And that is a big change because now imagine a world where broker-dealers can act as agents on exchanges like coinbase or kraken or whatever doing it through their own account which by the way matters to me viscerally because coin routes would do that that is literally what we wanted to do but we've been forbidden from doing it for five years in the united states uh and that is a massive deal so if you want to understand why that's a big deal, now imagine a world where customers aren't buying ETFs, but they could have custody Bitcoin and brokers could start working with all the custodians and onboarding.

It opens up a totally new pathway of money. And it is a big deal. And that changes instantaneously as soon as you have even an independent running the sec forget a dan gallagher from who's now chief of council of robin hood who would be amazing or hester purse or somebody else of that of that nature there there are multiple people who would be phenomenal sec chairs uh that would change things but literally even an individual the bar is low right now the bar it really you just have to have someone who is not actively hostile. We've always said, listen,

the pendulum always swings on every issue and it's swung way too far. We just need to get to the middle. Honestly, you're right. It's going to swing. Our happy scenario was always leave us alone, right? Anything on top of that is silver lining. So, and I think we're very much

on the path to leave us alone. Agreed. And I will take that anytime. Guys, I just ask you, I see, I know how people react to things emotionally. It's our job to attempt, everybody has bias, to attempt to look at things from an outside perspective and dig into them and dive into them and judge them. And if you're having a knee-jerk reaction to what someone says, because it's a slight criticism, then you need to zoom out and consider facts from the outside and try to understand them through that perspective. I used to be the worst over-emotional dumb ass in the world. I believed everything I was force

fed. You're going to get older and you're going to be pretty embarrassed about the things you thought in your twenties. I can tell you if you are, you just really, I'm telling you, read the words, step back for five minutes and then see what it means. And I'm telling you, Bitcoin doesn't need politicians, but it's great that we have some talking our book. Yeah. I mean, you have to look at all sides in order to critically think, period. Right. Right. And I want, and I think we need a seat at the table, no matter who wins,

regardless of who I want to win or what I want to happen, guys, that's all we got. We're way over time. Thank you gentlemen so much. It's going to get very, very interesting over the next few months. Really appreciate you guys.

Bye. Thank you. Let's go.