The Wolf Of All Streets - Bitcoin's Next Catalysts | Macro Monday

Episode Date: June 3, 2024

Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto! Dave Weisberger: https://twitter.com/daveweisberger1  James Lavish: https://twitter.com/jameslavish  Mike McGlone: https://twitter.com/mikemcglone11  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code 'TENOFFSALE' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd  ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #macromonday  Timestamps: 0:00 Intro 2:20 Macro update 8:20 Recession? 14:30 Oil 18:15 Bitcoin 29:30 What is a severe drawdown? 37:10 Bitcoin chart 50:00 Gamestop 55:30 RFK The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Bitcoin is pushing up about to touch 70,000, leading many to wonder what will be the catalyst to finally break the recent all-time high. While that's happening, we have Roaring Kitty back with hundreds of millions of dollars worth of GameStop calls, liquidating about a billion dollars over the weekend in GameStop shorts. If only there was a market that was open 24-7, 365, where their shorts could have closed on the weekend instead of waiting until Monday to have their faces ripped off. We're going to talk about this, the macro, and more. It's Macro Monday with Dave Weisberg, Mike McGlone, James Lavish. Let's go. Guys, I missed a lot of shows at the tail end of last week because I was very busy with Dave Weisberger in Austin, Texas for Consensus.

We even had to cancel two spaces because I was there with Mario and Ran was off somewhere at MemeCon or something in Lisbon. He forewent a trip to Austin, Texas for Consensus to go to MemeCon, if that tells you anything about what's happening in this market right now. Go ahead and bring on all the boys right now. We got Dave, Mike, and James. Dave rocking the McLaren orange at the casino in Vegas. He's out there doing the meme coin thing in real life, a.k.a. playing poker and trying to get himself into the World Series, right? Well, actually, I cashed in my first World Series event,

the Mystery Millions, and I opened up day two in about five hours with $900,000 in chips. And we'll see. You know, it's a brutal tournament, though. Today, everyone gets knocked out. You get paid a bounty, and the bounties are there's some weird way they do it with an envelope. And you could randomly knock out a short stack and win a million bucks. So it will be a brutal tournament. We'll see how long I last.

My money's on you and my money's on McClaren. Mike, we got a Monday morning as usual. Anything huge in the morning meeting that we should know about? Anything changing here? And then after that, James, I want to talk about the recession red flag from your newsletter. Yeah. session red flag from your newsletter. Listening to my colleagues makes me keep my bullish bias on gold, which did end the month of May, another record monthly close. But Fremont Wong expects 4% unemployment, continue to tick up. There's increasing fear of losing jobs 12 months ahead,

finding a job. And she still expects employment to continue. Gina Martin Adams, our equity strategist, pointed out the sentiment towards China is continuing to deteriorate, expects that, but expects stocks to be more subject to macro data in the second half. Ira Jersey made a key point. The auctions last week were some of the worst in his career. Every one of them tailed. That keeps me bullish gold because what's the alternative to the dollar in treasuries

is gold. ECB is going to be cutting. Bank of Canada is going to be cutting. Again, all that stuff's quite bullish for gold. Everything else for me dipping into my space is just bearish for commodities. I've been digging in lately, updating my wealth of nations, Adam Smith, kind of just revisiting the cycles and things he taught. And everything I see in commodities are just very bearish deflationary cycles. Crude oil looks like it's peaked. Hedge funds got way too long at the high like they did last year. Copper looks like it's peaked. Again, hedge funds are still way too long in that market. Corn looks like it's peaked unless you get a drought. So my space and I see

deteriorating demand for diesel, unleaded gas, container boards, things like inverted curve, leading indicator, stuff that doesn't matter until the stock market goes down. All that looks bad. And I'll just tilt over the one thing I just published today that I've been mentioning. I've been publishing it every other month and just pointing out what I'm seeing and the facts of the deteriorating trend of Bitcoin versus gold. I'm still worried about gold, that metric versus beta. And here's

one thing I'll end with is since the end of 2000, every single time the S&P 500 is about 20% above its 100-week moving average, everything that's extended and risky and high beta typically doesn't go up much more. Bitcoin is a good example of that. And we're at the point now that you're just at levels where you're supposed to be very careful about beta, just backing up. And what that means for every other risk asset. For MySpace, it definitely means bullish for gold, bearish for copper, and potentially bearish for Bitcoin. What about frozen concentrated orange juice? There you go. It doesn't matter in the macro.

But it's a good question. They've been squeezing some commodities like cocoa got squeezed this year, but we were on top of that. Luckily, my colleague wrote about it. I just did the technical outlook and just pointed out technically it's supposed to break out. But what happens after this is the lessons of Adam Smith and all lessons, it's the high price cure just starting to kick in. People reduce demand, supply comes on on it takes a little while bitcoin and gold are the ones that don't really have that high price cure but they do um bitcoin is still three times the volatility of gold so all i have to say is buy low sell high

fear that's the other guy's problem uh look you know everything you said is why the fed is going to have to inject liquidity and probably actually did over the weekend although we won't know that for a while i look at yields look you know down you know yield down today after the auctions of last week which i was desperately waiting for james to comment on that because to me that that makes literally no sense except oh wait a minute i've been saying for two years that the bond market's a manipulated market. Great. So now we know why. I'd like to really want you to comment about that. But I absolutely can't stomach hearing you talk about Bitcoin has to go down with the S&P and gold can go up because of the beta. I think of all the things that you've

said, when you look back on that statement in five years, you're going to say, geez, what the hell was I smoking? Because it just doesn't make any sense. The fact is Bitcoin is high beta because Bitcoin is high beta to liquidity. It is not high beta to stock markets. The two, it is the difference in statistics class. They teach you the difference between correlation and causation. Correlation, they move together. Causation, they're linked. Bitcoin is no linkage whatsoever to actual functioning companies, which have to generate cash flow. Bitcoin does have somewhat of a linkage to gold because it's going to replace gold's monetary status. It's not going to take its place overnight any more than gold took silver's monetary status overnight. But silver,

because it's so hard to carry around, and trust me, try to carry around a monster box of 500 silver coins, which is worth basically what? A little teeny roll of gold. It's just not very portable. The fact that Bitcoin is more portable than all of them. And if I sit at a poker table with, and I pointed at OKEx or I had my Bitcoin ring, or I was wearing my CoinRoute shirt one day, trust me, every single person has an opinion on it. It's no longer the same thing. I don't get what is that anymore. That just doesn't happen.

And so the fact is, is I think that Bitcoin is in a range. It's still in a range, guys. Yes, it's now pushing toward the top of the range. So I'm not getting all that excited. But it feels to me like the breakout will be to the upside at some point. It might be in September, might be in October. It might be next week. I don't know. It could even be this week. Who the hell knows? But every single time I hear you say Bitcoin is beta to the S&P, it just burns me because Bitcoin has immense beta to liquidity. And what you didn't say, which is my favorite

thing that you say, and you're right about, is that we're still shaking off the effects of the greatest liquidity surge in human recorded history. But the problem is, is that the Fed has no choice but to pump liquidity in to maintain the yen, to maintain, to manipulate the bond market, et cetera. But I really want to hear James talk about the auctions because the fact that we're not sitting here at 5% yields or moving toward that with those auctions to me is strange. James, you're muted. I got to unmute myself. So a few things. First, Dave, if you guys did not know, I was completely off grid last week. I had maybe an hour or two of internet last week. So I have not seen everything. I still haven't gotten through it all. I got back late last night, but and for anybody who, who likes to do it,

there's plenty of public land in the West that you can just go and park somewhere and get away from Twitter for a week. How dare you? So, but I will, I promise to share thoughts on the auction later this morning. So, but what I did see and what I have been seeing and Scott, you saw what I wrote about is there is a, there's, there's softness, um, you know, that we're seeing in manufacturing and in sentiment and, you know, one, and yeah, what I wrote about here was the, the Texas, the Dallas fed service, the fed, um, the various feds do these surveys and there are surveys, um, not just in, in Texas, but they have some in Kansas city and Chicago

on the manufacturing side. And when they all are showing the same thing, it's worrisome. But what Texas is showing is there's a downturn in sentiment, and especially in the manufacturing and in the services and retail areas. And so what's important about this, and I just shared something, Scott, if you can see the chart I shared. So these surveys have two things. They have the actual data and then they have how people are feeling, how the business managers are feeling, how the entrepreneurs are feeling, how the owners are feeling. And that's turned down pretty sharply. And you can see it, especially in the comment section.

So if you go back to that, Scott, you can see in the comment section, if you go back to the newsletter at the bottom there, you hear uh you have a subscription you're not yeah i just gotta sign it in give me a minute but anyway so but the the point is that uh and i can bring it but the point is that you you hear these managers saying things like um you know uh let me i'll i'll read a couple of the comments to you and this is what's significant things seem to be slowing down in the printing and and related activities fabricated metal production things to be slowing down machine manufacturing it isn't much fun to be in business right now computer electronic product manufacturing customer volumes are decreasing transportation equipment things are

in a mess trucking is is definitely in a recession. Inflation doesn't seem to moderate as much as we expected. Interest rates and inflation continue to dominate company decisions. Prices for goods, supplies, services remain elevated, restraining consumer purchases and construction projects. We're on the brink of having to make major staffing cuts. We're fairly certain that we'll be closing doors and releasing as many as 60 employees in the next few months. Higher prices are frustrating our guests. Businesses just continues to be very volatile. There are storms on the horizon. Inflation is getting pretty scary. And perhaps my favorite is we can't make enough interest on our deposits to cover inflation. So what's the theme here? The theme here is that the managers are really feeling

the inflation from the bottom up. They're seeing the customers being negatively affected by it. And it's now beginning to really negatively affect their business. Why? Because they were able to pass through some of that inflation at the beginning. Now they've hit that limit. Customers are like, well, I'm just not going to buy that product or I can't. I just I can't afford it now. And so that coupled with so you've got manufacturers have higher input costs, higher raw material costs, which means higher production costs at the same time that their employees are demanding higher wages because they're like, I can't live. I can't even buy food. I need a higher wage or I'm going to have to go do something else. I'll go drive Uber or something. I can't do this. And so they're having to raise

wages at the same time that they're feeling that, that compression of margin. So that's real, that's happening out there. And so, and Texas is the second largest economy in the nation. It's not something to be ignored. When does it really hit? And Mike's good point of, you know, when does the unemployment really tick up? And we've got a few reports this week. We've got the JALT report. You've got the unemployment report later this week. And so that's what we're watching for. We're watching for unemployment to tick up, not in just one area, but across the board. But why isn't it? Why are we not seeing recessionary signals in the US? And it's because we've talked about this before. It's fiscal dominance. We're running $2 trillion deficits and spending money in pockets of the economy. And it's making GDP look better than

it really is. And so that's the problem. It's not really gaslighting as much as it's making GDP look better than it really is. And so that's the problem. It's not really gaslighting as much as it's manipulation. And so that's what we're feeling right now. You've got consumers absolutely feeling it. Businesses are absolutely feeling it. You can see it out there. It's not great everywhere. And if you believe that inflation is really 3%, as Dave says, he used to be able to look out at the Brooklyn Bridge. Was it Manhattan Bridge? I can't remember. No, we actually could see. He used to be able to look out the Brooklyn Bridge. Was it Manhattan Bridge? I can't remember. No, we actually used to be able to see the Brooklyn Bridge. Okay. So he could sell you the Brooklyn Bridge if you really believe the inflation.

You all feel it. Everybody feels it. You go to the grocery store, you cannot tell me the prices are up 3% from last year. Come on. They're not. They're not up 6% from two years ago. They're up 20, 30, 40, 50% on items. It's nonsensical. It's okay. Yeah. It's okay. six percent from two years ago they're up 20 30 40 50 percent and on items it's just it's

nonsensical so it's okay yeah it's okay okay biden's gonna release a million you know you know a million barrels of oil to bring the price of uh and and gonna release some of the strategic gasoline reserves you know in order to try to win the election everything will be fine no problem yeah and you know and i want to hear actually mike's take on oil because it's interesting. And I read a headline this morning. I did not get to the story, but it was about OPEC plus concedes $100 oil is not going to happen. Oil is going down. Yeah. And that would be because of the economy. But it's also because of normal cycles. And one thing I just need to follow up a little bit is I'm mentioning that, Dave, I think seems to be missing what I'm pointing out. I'm mentioning simple pattern recognition things that are not good right now for Bitcoin.

I'm pointing out facts. No, no, you're pointing out the quality. Let me finish. You're giving opinions. I'm giving facts. Now, here's a fact that Bitcoin is up today. And I think part of the main reason is because we had that significant reversal at the end of the day in beta.

The point is Bitcoin has been, it was born of the major, you know, of the financial crisis. It's followed beta the whole way up. It's led beta. The problem I'm pointing out now is when beta goes down, which will be soon,

I think, I've been wrong, I've been early, Bitcoin is going to probably lead the way and it's going to suffer on a volatility weighted basis the way markets usually do in value at risk models. Now, all the Bitcoiners tell me I'm going to be wrong. I'm like, prove it. Let me show the market. Let the market prove it first. Let the market have at least a 10% correction and see how Bitcoin reacts. And I'm pointing out, I got to finish on this. I got to rant here. I'm pointing out it is showing divergent weakness versus gold versus a lot of things and had a great reason

for new highs. And people who didn't sell into that new high are just trying to talk it up. Big picture, yes, it's going to go higher. I believe with that. But right now we have to get through the beta correction. So here's a fact in commodities. Typically they go to the cost of production. Natural gas isn't one who did it. It got down to the same price as it first traded in 1990. It's bounced. It's probably bottom. Crude oil is going that way. So the market right now in crude oil is completely dependent on OPEC cuts and fiscal monetary

stimulus in China to go up. You see how the world's changed? China is going down. Look at bond yields in China. Tenured yield in China right now is 2.3%. That's the lowest in our database in 20 years and it's 200 basis points below the US. That's a deflationary recession kicking in the world's largest demand source for crude oil. Then I look at copper, it looks like we put in a pretty good

peak recently. You look at managed money net position, same in corn. The whole cycle of commodities is normal because we had the high price cure. Now that's the difference with Bitcoin. The key thing I want to point out is, big picture. We have definable diminishing supply. And as Dave always says, the option, the option, I get that. The point is we got to get through that test. And then I'll just end with this. The key thing that made me a lot of money in 2008 is worse now than it was then. That's the extremely low volatility in the VIX, 52 week moving average minus the T-bill is the lowest since 2007. Volatility always means reverse higher. The big difference back then is the stock market was 1.3% times GDP.

Now it's two times GDP, and China was in an acceleration. China's declining. That's the world that's changed. Well, on a one-year time horizon, I have to say this. On a one-year time horizon, Bitcoin has tripled 300%. Gold is up, what, 25%, 30%. The problem is, is your divergent weakness is looking at periods of time that are not fair. Bitcoin moves in jumps. In the history of Bitcoin, it's volatility, it's beta, everything comes in small time horizons.

It was a stat and I haven't seen it refreshed. Scott, you might be able to find it. But there are 15 days that if you held Bitcoin, those are the 15 days that make up the entire move. But Bitcoin is up 300% on a one-year basis. Gold is up 30% to 35% on a one-year basis. So I've got to ask, are you careful about coordination? It's freaking crazy. Dave, I want to point one-year basis. So I've got to ask, are you careful about a correlation? Dave, I want to point one extra thing out.

It's interesting. Off the highs, I just kind of took a date and price range. Bitcoin's 5.72% off its all-time high. Gold is 4.74% off its all-time high. But my point here is not to ridicule it. So I'm not picking a point in time i'm going back

i'm going back since bitcoin is really relevant when futures start it's not a point in time and just pointing out if you look at relative to the s&p 500 when it gets this stretch you don't want to be in that bitcoin trade i understand what we're looking at but there's but statistically none of this is remotely significant here's why why. Let's explain the why here, because I think this is important for the audience. Bitcoin got way the hell ahead of itself in 2021. Got to euphoria that is insane. The same price in 2021 today would be somewhere north of $300,000. Just keep that.

Think about that in terms of relative to what relative to inflation adjusted network strength. So if you look at the Bitcoin network and you look at the number of holders, you look at the number of addresses, you look at the patch power in the network. If you use that to kind of just to justify the Bitcoin price, it is literally 2021. If you inflation adjust the network strength, it would be over 300,000. We are nowhere near that. So we had this huge euphoric bubble in Bitcoin. And then we had 2022, which was a complete catastrophic, oh my God, I have to sell it because of everything. You're missing one key thing. We had a bubble and everything. And Bitcoin's the fastest source. Yeah, it came off the bubble. It came off the bubble faster

because we had multiple things. We had the Widowmaker trade. We had the GBTC trade implode and billions of dollars were vaporized in Three Arrows Capital, which killed Voyager, sorry, Scott, which killed BlockFi. We then had FTX going kerfewy. And all of that

created massive for selling where people who didn't want to sell Bitcoin had no choice but to sell Bitcoin. All of that caused a very, it is a seminal event. But if you ignore that seminal event and only look at charts, that's why I don't like charts. Charts sometimes are useful, like really useful, like Texas traders. I forgot what Chris's last name is. That's just West Capital. Yeah, that Scott has on his show is freaking amazing. I think he's great at picking what's going on. But if you could try to do a long-term chart view and ignore the fact that we had a bubble, which corrected, but in an asset that it was not the asset itself that caused the bubble. It was all the crap that was going on

around it. You're missing the forest for the trees. And I think your analysis misses the forest for the trees on Bitcoin. I think your analysis on oil is spot on. I think you're absolutely right about the S&P. And the only thing that could keep that going is the fiscal stimulus and a wave of liquidity. But I think to ignore and say that Bitcoin is showing divergent weakness, it's just a different timeframe. Bitcoin's in a range. And in fact, Scott and I were predicting a range off the halving. Actually, what we didn't predict was it pushing to an all-time high before the halving. And that was just from the ETF. But just from the ETF is not a stupid thing. What it meant was that 50% of the world's investable assets now can buy Bitcoin for the first time, and they are slowly getting access

to it. That's why when every single chartist was saying, and they all were, I mean, come on, well, not Chris, but a lot of them, so many people said, you know, last week or two weeks ago or three weeks ago or four weeks ago, oh my God, we're going to go back down into the 50s, we're going to go back down into the 40s. And here we are back towards the top of the range again, which is what I've been saying is going to happen. But I still think we're at a range. I think you have to understand.

So my point is timeframes matter. And Bitcoin's beta, you're right. Bitcoin has the highest beta to liquidity. Watch what the Fed is doing. Watch what actual liquidity. I saw a stat which could mean trouble, but someone put something on Twitter and I was curious. This is for you, James, and you, Scott. Someone put something on Twitter that money supply, and I don't know which measure, collapsed really fast. And the last four times that that happened, it may have been M1. I don't know what they were looking at. Signaled recession. Have you seen anything about that? Yeah. M2 is up year over year, but I do know what you're talking about. I think it was M1 specific to the United States. Yeah. I'll have to look at that look i i think we have to

take it all in context right so i i i actually agree with both of you and disagree with both of you on on a couple points but the um look mike i i i agree 100 that bitcoin has been the tip of the the uh risk on spear i mean it just has been's just reality. However, we do have to look back and you have to look at what's the reason that the market sells off? Is it because of treasury dysfunction? Is it because of banks collapsing, of regional banks collapsing? Because if you look back in March of 2023, March and April of 2023, Bitcoin was up 25, 30% in the face of the collapse of Silicon Valley Bank. And so that is meaningful. That is an absolutely meaningful measure. And it's- You could even say as a result of, by the way.

As a result of, absolutely. And it was bumping around its recent lows before that. But what's significant about that is that whatever happens to the market here and why we sell off is going to matter with what happens with Bitcoin. And the difference here is that we have these ETFs. We just saw the University of Wisconsin added the Bitcoin ETFs to their portfolio. It's a tiny little allocation, but like we've been saying, you're gonna toe in, you're gonna leg in, you're gonna, they're going to now be forced

to do their homework and research on it. Why is that significant? Because more and more people will start understanding what Bitcoin really is and how it's different from every other digital asset and digital currency. And so that's important because you'll have more people understanding why they want to own this when you have a regional bank collapse, when you have a spiral downturn in treasuries that the Fed has to step in and start monetizing, Bitcoin will rip on that, in my opinion, if that's the reason for the downturn in the market. Exactly. It's an opinion. I want to see the market.

As a guy who's focused on pattern recognition, I want to see the market show me that me that it's not showing me that yeah it's still showing me that it'll go down it showed it once and it's not showing it consistently i agree and so well we haven't had another bank collapse at least yeah well no we haven't we haven't every we just haven't just give me a 10 correction and bait and see how bitcoin responds it hasn't done that yeah but i think they're all going up together. I get that. That's supposed to be the fastest horse race should go up the most. But that's the problem. Now things are so expensive and risk assets are so risky. And it's the key thing you said earlier, everybody's starting to worry about inflation. And people tell me like Dave says, oh, the Fed's

going to add a liquidity. Again, that's an opinion based on what's missing. The market has to go down first. It's called auto correlation. You're missing the, why did Bitcoin crash? And we have all these things with FTX and things goes under because the tide went out. We saw who wasn't wearing clothes and part of it is because it went too high. So to me, it's just the cycles I'm worried about. And if we, if we see, if we see the market crash and you look, we know that we can't have severe asset deflation or that does affect the treasury negatively. We know that. And even though Powell will just say, I don't care about the stock market, he does in a sense, if it goes down too fast, too hard. And we saw it in March of 2020. And we'll see it again

if that happens, because the treasury market will become dysfunctional. Did he say that? Because that's a silly statement. Just read the Ben Bernanke's Courage Act that he didn't care about the stock market. It's the most important thing in the history of financial assets right now is the U.S. stock market. It's the versus GDP.

It's the most expensive since the 1930s. Anybody who says they don't care about it, good luck with your next year investing. It's all that matters when it starts moving. Agreed. And so if that draws down significantly, we will see liquidity. I think that you will see liquidity because they don't really have a choice. And that is an opinion, but it's a strong opinion off the facts of their recent behavior in the last two downturns. And so that's what we expect.

And I expect them to print more than they did last time by a factor. So what's going to take them to print? That's my point. The iteration is the stock market has to go down first, which means beta has a drag pull on all risk assets. Bitcoin's a very risk asset. We're assuming it's going to outperform like treasury bonds or gold. I'm not making that assumption. I'm just pointing out here's three times of all beta. If beta goes down, that's a risk. And for the Fed to print, beta has got to go down first. Okay. And that isn't the Fed. Shouldn't we talk about then monetary versus fiscal printing? Because we are printing. It's just not the Fed that everybody's watching that's doing it. Exactly. Which is what is keeping the charade going. However, Mike, what I'm saying, okay. And so let's, let's bring this home let's bring this over the goal line what i'm saying is that if you are

in bitcoin for a trade if that's what you're doing and you're just trading it i agree with mike just be ready that this thing could severely draw down but i think that it's going to be very difficult to time that as a trade so if you are if you're a long-term holder of Bitcoin, like I am, like I assume Dave is and all you guys are, if you're a long-term holder and you believe that this is going to be ultimately the ultimate risk-off asset in the future, it's not yet. I agree. But if you believe that, then you ought to just be having a little bit of powder on the side, on your sidelines to add to it when we do, if and when we do see a severe

drawdown that has nothing to do with bank collapse and people trying to get their money into something that can't be seized, that can't be just taken from them because they're in a regional bank that doesn't have the proper insurance coverage. Okay. So that's what, that's what I'm saying is that if you're long-term bullish on Bitcoin and you're, and you believe, and you agree that, that there's a, there's a high probability, which I do agree with you, Mike, that there's a high probability that we do have a sharp drawdown, but I think it's gonna be difficult to time. So just add to it as it, when it does come in and and sit on your long-term core Bitcoin holding for, for, you know, for as long as, as long as it. Yeah.

Totally agree. I have a question, Dave, before you jump in. Okay. And somebody asked it in the comments, define severe drawdown. 20, 20 plus percent, 20 plus percent. Just even a range. I'm not saying a specific number, but I believe, as Dave alluded to before, that if we hadn't have had the ETFs, we would be doing the exact same thing we're doing now in the 40s. Oh, well, let me back up. The severe drawdown would be 20 plus percent in the S&p but that could be 40 50 percent in bitcoin you don't know like you're talking about severe drawdown into the i think that bitcoin's gonna yeah do i think it's bitcoin's gonna go under 40 000 again i don't but you know if we

it could do it momentarily you see the exchanges just crash when these things happen you know it's just it's it's still in its infancy you know in reality it's not yet that or at least the companies who are uh managing the the trading platforms if you get to a state where we have a significant long position which we don't but if you did if you get to a significant long position uh then you know the where's i don't have derivative information up here, so I'll go look up funding rates in a second. I can look it up. Yeah, I'm looking up funding rates.

Yeah, the funding rates are still, they are infinitesimally slightly higher than normal, but if you, and the market has ripped 2000 bucks, so that's not, there's nothing there there. But if you get to that, if you get a liquidation cascade at the same time, yeah, that could break it. The issue really is that there's latent demand out there. There are clearly people who have buy orders in their bidding supporting propping up the market. So every time people expect it to drop X, it drops one third X. That's happened basically for the last four months, just because it is hard to invest in a market this small. The amount of money that is interested in investing in this

market is much larger than this market. There is not that much supply, which is why I think that de-linking is likely. But it is absolutely true that in a crash, all beta goes to one. I mean, all correlation goes to one. Beta, you know. The one thing I can tell you, Mike, and this is something that's important and people should know, is I ran statistical arbitrage trading strategies for over a decade. And the single thing that kills people more than anything else is assuming betas are stable. Betas are notoriously unstable. That's long-term capital management.

That's right. That's what I have to say. Go ahead, Mike, please. No, that's what's really tweaking me, Lee. I remember in 2007, a friend of mine at GE thought he owned GE stock, thought it was like T-bills. I'm hearing that lately. People are using SPYs as T-bills.

But it's the psychology. The psychology is so extreme now. People think SPY is a T-bill, is a store capital. That's when it happens. And a typical drawdown is 50%. So the last point is the last. I hope I'm wrong. That's my point.

I don't say these things lightly. I'm big picture, long-term, very bullish Bitcoin. But when you see two times GDP in the market, cancellation of the stock market, and you're overweight, long stock market, I just say, good luck. The history is against you. I think it's really important to make this distinction for the audience. I think you're 100% right as it comes to beta of an asset class to what it is beta to. So the S&P is clearly has a ridiculous beta to the money supply and what's going on in investable assets.

So does Bitcoin, right? They both are notoriously unstable. I am telling you, Bitcoin is a single asset. And it's as a single asset beta to any of those stocks is not nearly as stable as you take your 3x beta. It depends on your time. I'm just talking about volatility. I'm just looking at annualized volatility it's just the fact it's usually right now it's actually kicking up the high was around 10x around 2017 you're sitting here james and i are telling you that our core belief i there are two data points here my belief

is is that bitcoin's price to be as exuberant as it was in 21 will be well over $300,000. Bitcoin's price, in my opinion, will hit $240,000 in this cycle. In order for that to happen, it has to do 4x or close to 4x. Obviously, we want a low volatility asset. That will be impossible. At the same time, the notion that correlation is causation, which is beta, is different. So do I think that Bitcoin could get to $240,000 if the S&P drops to $2,500? No. Do I think Bitcoin could get to $240,000 if the S&P is still around $5,000? Yes. That's the difference. Okay. i can't phrase it differently than that but we just

have this issue that what drove all assets number one the high the high volatility bitcoin up their net pair was the biggest liquidity pump in history and then of course covid and the russians invaded i'd say the unlimited friendship which really bid gold um and that my point is over for now. And now we still have sticky inflation, expensive stock market, expensive, massive speculation still in cryptos and a Fed that says they're going to ease, but they can't. And to ease in this environment is just silly. So that dangling carrot that's really, really lifted Bitcoin for its whole life is potentially going away. I just want to see proof that it's going to outperform this. So we can beat that one forever.

It's just what I see. And I see it like, yeah, it's like when people talk to me, they're bullish copper. I'm like, okay, well, what do you think of what's happening in bond yields in China and in beta here? Those both bond yields have to go up in China and your stock market has to go up. Otherwise, copper is just put at a pretty good peak. That's what I'm worried about that Bitcoin did similar. And it had a good reason to make that high.

Copper and the S&P have done the opposite of what you've been saying this year. But what you have been saying, which you've been totally right about, is that copper is an incredibly good proxy for what's going on at the S&P. And you've been absolutely right about that. And no arguments there. I just think that if you take the idea that 15 days is where all of Bitcoin's price appreciation is, that having to wait for the proof means it will be proven to you when Bitcoin does a moonshot, you will be out of the market. And then when it's like a little correct again, you'll jump in. And from a trader's perspective- So it'll do a moonshot, you will be out of the market. And then when it's like a little correct again, you'll jump in. And from a trader's perspective- It'll do a moonshot with the stock market staying stable or going down. Okay. So that,

again, that's a view. I'm just pointing out the facts lately are the trends are, yes, potential be wrong. You got those 15 days, but that's my, just point out pattern recognition. That's what it is. And all I'll say is pattern recognition. I tried to, I mean, I literally tried, I spent years in different, certainly at two Sigma, we were doing retail things, trying to do pattern recognition, recognition on charts to make money. You can't, they don't work. They work when you see them. They sometimes are explanatory. You have to combine them with other things. There are many, many things that you've said, and a lot of them are really important. But I think that that pattern

just is statistically insignificant. When it comes to Bitcoin, because it is. As we bring up the chart here, you and I have talked about that we're trading now in the top half of this range on Bitcoin. We can set the range basically from 74 down to that low there. If we're cherry picking dates, which Dave loves to talk about, May 1st, we were at 56, right? And we closed the end of May at 67. It was actually a tremendous month. If you look at it, beginning of month to close of month, and now we're pushing at 70. So yes, we're not at the high of 74,000, but if we just look at May, it was an exceptional month and June tends to perform well. We're pushing towards 70,000. But if we just look at May, it was an exceptional month and June tends

to perform well. We're pushing towards 70,000. If you guys are wondering why I was laughing in the background while you were talking, I was watching GameStop trade here. This is the daily, but it gapped from $23 to $40, immediately circuit breaker from what I could tell at $38 and sat there for a couple of minutes. And32 from what i heard yeah and for anyone who wasn't paying attention this is because gil roaring kitty uh we all know he came back recently and started memeing x to death but he announced that he had roughly i think 160 million dollars here it says position in calls i believe in options on gamestop he can totally take a position and publicly share it by the way there's no manipulation there and that is what caused this to happen if this goes back to

the 70 region he'll make a billion dollars on this trade in case you guys are wondering so this is what's driving the stock market right now right i mean the real insanity is that you want to talk i mean spx is that's the monthly that that's useless. Here's my favorite. I mean, SPX is up, gapped up, right? I mean. Can we pivot to my favorite topic? The one that will cause me to rant? I was going to save that.

I was going to literally like go kill a steer in the back and gut it and then throw the red meat into the building and run away before you ate my hand. I'm assuming this is what you want to talk about yeah so here we have the the cadaver in chief which is now my favorite line that that is the ryan selkis line i kind of take whatever uh after his his party his senate majority leader bipartisan uh congress basically says that the SEC staff accounting bulletin 121 is terrible policy. He vetoes that. Now let's unpack that for people so they understand just how dumb this is. Politically dumb, economically dumb, and effectively shows that we have kindergartners running our economy in this administration. It is something that has gotten me incredibly fired up. Elizabeth Warren is behind this.

Elizabeth Warren, who aka the devil's handmaid. It has her fingerprints all over it. So here's the deal. So SAB, just to be really clear, is a staff accounting bulletin. It did not go through a public comment period. It did not go through industry consultation. It was not a rulemaking yet. It has the impact of a rulemaking because with that guidance, no bank could possibly custody Bitcoin or Ether or any other crypto for you know for customers without without exposure exactly without without without it being exposed to the point where no risk committee would allow them to do it uh so effectively it as the force of law despite being a terribly bad process arguably an unconstitutional process probably if the banks wanted to they could probably sue in the courts and

add them to the growing chapter of people who are crushing Gensler and Warren in the courts. But Congress sees this and says, this is no. So now they could go to the courts, I guess, because of West Virginia versus EPA, which is the major questions doctrine, which basically says this is wrong and it probably wouldn't hold up. But banks don't do that. Only crypto people do that. So we have it. And we have the president basically siding against the courts and against Congress to effectively try to extend Operation Chokepoint 2.0 to cripple the crypto industry because, wait for it, people, it's too risky. Meanwhile, his stock market is being led by GameStop, which has no free cash flow, where the insiders have been dumping stock. And this is what's leading the market. Hey, I think Keith Gill is cool. I actually loved the

fact in his initial analysis years ago that GameStop could use this to create an online community and, hey, we should build on it. And that's fine. But we have a market that is like this. And he even thinks that he could say that Bitcoin is more risky and people should be exercising. And I'm sorry, Elizabeth Warren, but frankly, you would have been failed out of fifth grade math

if you said that by looking at it. So I'm sorry, but this is unbelievable. Now, what does this mean, though, to the market? Well, what does it mean? By the way, we just crested 70,000 for those. 000 for those yeah 70 000 and it could still be signed into law let's me let's be clear it could still be signed into law with congress it could be but the fact of the matter is but the point is that it's just showing the ignorance of of this uh administration no no james no no no not ignorance malevolence malevolence fine malevolence of this

administration well ignorance of the administration decided david you've been on the hill you've been on the hill you've talked you know that the the a lot of the senators and congressmen don't even make their own decisions they're just informed by their staff and if the staff is informed or being pushed by elizabeth warren then it's out of you know it, then that's out of ignorance to the malevolence that's behind it. That's the point, is that there's enough ignorance that they won't stand up to her. But here's the reasoning. The reasoning is unbelievable. Brad Sherman said the quiet part out loud two weeks ago. And I know we talked about it. He said, and I quote, we have a fiscal policy that would make Argentina blush. And so we can't afford any competition to the dollar.

So we have to stop these crypto guys because they want their own currency. Now, this is ignorant on two levels. First, it's ignorant that he could hold back market forces. Anytime a government's ever tried to hold back a market, they've gotten crushed. Talk to the Brits. They know all about it. The reason Soros has enough money to destroy our DA processes all throughout the country is because he bet against the pound in the 90s. I was in London at the time, and I know exactly what happened. We could talk about that ad nauseum, but that's really dumb. But the second reason is Mike's point. He always makes this point. He's always right that crypto is actually helping dollars stay as a reserve

currency because crypto dollars are so popular and so important. So it's actually blinding ignorance on the part of Warren and Sherman and all of these people who say these things. I mean, it is- But Dave, and this is, I agree a hundred percent. And for context for people, Tether is a top 20 holder of US treasuries. That's the point. But the second thing is the malevolence comes in. Why are they doing this? What's the end game? The end game is the CBDC. And that's what everybody better wake up.

They better wake the fuck up to now. Like now, like you better wake up because you do not power my man. James has channeled his inner Lepard. Seriously, you do not want them to have a single item oversight of your spending. You do not want that. And that's where we're headed. And that's what Warren wants. And that's why they're ultimately doing this. And for people who want to understand why have I basically held my nose and effectively on Twitter come out and effectively supported Trump,

although I might still vote for RFK if he has a chance, is I can't vote. There is no issue which bothers me more about Biden, who has clearly declared for CBDC, and whether it's DeSantis or Trump, they have both come out specifically against CBDC. Kennedy is against the CBDC. The notion of a controlled federal, a paratheque bureaucratic economy, the Bolshification of America would be complete under Elizabeth Warren. It is literally that bad. And I agree with you, James, and that's why. And yeah, you know, look, the funniest news this morning, and it came out over the weekend, was literally Gary Gensler of all people, because he was the CFO of Hillary's campaign, did exactly what Trump was convicted on,

except in his case, it wasn't to pay hush money for an NDA, which by the way, John Edwards was, when he was running for politics, famously did exactly the same thing that Trump did. By the way, what Gary Gensler did, it was for the Steele dossier, which was arguably completely wrong and certainly more evil. And so now we're going to have to see that. And that will probably get factored over the next few weeks into articles of impeachment. Who the hell knows what's going to go on behind the scenes? But you see all this crap. And one of the reasons Bitcoin is probably rallying is people realize that Biden's advisors, whoever realize that Biden is, well, Biden's advisors, whoever the hell is running Jill, I don't know, maybe Dr. Jill is running

the economy. I don't know. But whoever's running the show is going to realize they have a lot of problems that in what's going on. Do, do, am I happy? You know, it's like about this. I mean, you know, what, what Trump did, you know, cheating on a pregnant wife with a porn star. Am I, is that something that I can count? I've been married 35 years, have been faithful my entire life. I find that reprehensible what he did. I am not a fan. But if I don't care if it's the only way to prevent a government that could put a CBDC

into place over the next four years, I'm voting against that government. There's just no two ways about it. So for people who want to understand, it's not about anything else. I'm not Ryan. I'm not cheerleading Trump, but the absolute reality is the policies, it's a big deal. And the polls and the betting markets are saying that this is actually helping them. He raised an enormous amount of money. He raised $200 million. People, and so money does matter and unfortunately you know i think that's why bitcoin is actually rallying it's because of that and and and is that reasonable no the whole

thing is insane we're being we are the laughingstock of the world i've talked to multiple people from other countries and they can't believe the kind of shit that we're going through in this country okay i'm gonna take a breath now. Mike, any thoughts? I got to chime in. I always, for the most enduring bull market in cryptos is the volume and market capitalization increasing in tether. And I've been pointing that out. I like to publish on it because I know people read it. And if our government messes that up, shame on them. They will not mesh it up. But you're seeing part of the discourse. We have to have the antagonists. It's just how our system works. But it tilts me back to how we started this conversation with GameSide. There's a speculative frenzy going on in US stock market. It's the most

expensive in our lifetimes versus GDP. Volatility is very low and inflation is above the Fed target. For the Fed to ease in that environment is the reverse of all the lessons we've learned of history, and that is humans are all about error correction. We will not make that correction of easing too soon, creating the inflation that's crushing everybody in the world, most notably the lower classes in this country. They're not going to make that mistake. And here's my bottom line is that's not going to happen until the stock market goes down with the Fed ease, which is part of the reason I'm worried about all risk assets and Bitcoins as a risk asset. And I will make the point that in the 1930s, if the Fed had the tool, and I love the initial one on YouTube of the quantitative easing, and you can look it up, it's these two people talking about the Ben Bernanke and whatnot. It's hysterical.

But if the Fed had quantitative easing and we had a plunge protection committee, which we do, which can buy S&P futures, which can put out liquidity, if we had that in the 30s, it would have looked very different. If we had that in the 70s, it would have looked very different. Who the hell knows what would have happened we also have a much we have a much higher concentration of wealth now so that it's not a broad uh you know it's not a it's not a broad wealth creating uh situation with the with the s&p you know because you you have you you're seeing consumer credit delinquencies rising rapidly what is happening you know like it's is happening? It's not widespread across all- It's why we need crypto. It's why we need what we do, James. As I've said before, if you set out to create wealth inequality, if your goal was wealth inequality, what would you do?

You would flood the system with liquidity. You would keep rates lower so that you would prioritize capital over labor. You would slam on as much regulation as you possibly can, which always favor large companies over small. And small companies are the engine of growth and economic mobility. You would do all those things. At the same time, you would continue to expand budget deficits to the point we're now at 130% of GDP. Oh, wait a minute. Both parties. Both. This isn't political. Both parties over the last 30 years now at 130% of GDP. Oh, wait a minute. Both parties, both. This isn't

political. Both parties over the last 30 years, that's been the policy. They have done exactly what you would do if you wanted to create wealth inequality. Well, guess what? You got it. And it's going to get worse. And there's only one real good answer to that. And that's to return to a sound money-based economy. And we are a long way from doing that. That's not happening with either party or either candidate, for the record. Not even close. These are the two largest spending presidents in history, and they can go

share their theoretical opinions of what they'll do, but we both know they're just going to spend their way endlessly, print money, and continue the same path. It's the same thing. There's a lot of nuance. Don't get me wrong, but give me a break. If you're looking at GameStop and believing that, path. It's the same thing. There's a lot of nuance. Don't get me wrong, but give me a break. If you're looking at GameStop and believing that, well, there's still a lot of money sitting in people's accounts that are in the lower demographic, even if it really is

non-professional investors who are buying GameStop up at this level, to me, it looks more like a Hail Mary pass. These people are trying to buy a lottery ticket to get out. And so even if the lottery ticket is worth less, they have something that they can hold on to and they're using credit cards to buy it, which is the craziest thing. That is such a great analogy. What do economists call the lottery? They call the lottery the most regressive tax on the poor. Yeah. Well, it's human nature.

Think about that in combination with what you just said. It's human nature to go to a casino when things are bad and throw your money down. I'm in Vegas, baby. You can't see it. But when things are bad, you just hope it does well. To me, this is just a classic human nature. Things I've heard my whole career. I hope Bitcoin, like, I hope

Bitcoin, I know in the long term, it's going to come out ahead. It's just the shorter term that we have to get through. We, no one who's really running money now, except us, who knows what it's like to have a 50% drawdown in beta. It's what always has happened in history, especially when you get to indicators like this. And it just, hopefully it won't happen soon, but it's just a matter of time. And that's part of the reason I and it's happening the rest of the world. So here's one thing I like to end with. If you look at I've always go to bond yields, government bond yields are one of the best indicators. Obviously, we have the inverter curve stuff that doesn't matter in the US.

It will matter once the stock market tells us to matter. We have leading indicators that are negative. But if you look at the top five countries in the world, China, Japan, UK, India, Germany, the average of their bond yields are 100 basis points less than US 10-year-old treasury, 100 basis points. That's the most in our database since 2006. In 2008, when we hit into crisis, they were 100 basis points above. So the rest of the world is showing those deflationary tilts and there's only one thing holding it up. It's US. And what's holding the US up?

S&P 500. Can I ask a question? Fiscal spending is what's holding US up. Yeah, you go. Yeah. And how long is that going? That's good for the old and the big Bitcoin. Ask yourself a question.

What happens to the dollar's reserve status if people don't get higher rates by having money, parking money in US treasuries? Where do they go it's i'd love that so that's why i'm bullish gold so go to any other country in the world maybe there's a five in terms of dollar being a ten where do you go where you get the deep money and by the way you get 5.3 percent us t-bill so i get that the dollar reserve i've heard it my entire career every time someone's told me yields are going up because there's more deficit, I get it. But every time they've been wrong, I just point out there's no other currency that's even close.

Gold's potentially there already. We're seeing that with this major shift in central bank buying gold. And Bitcoin's a newcomer on the block. All true. But all I'll say is this. If you look at a negative yield curve, the negative yield curve is an assumption that this situation can will be kicked down the road 10 years or 30 years. That is what the negative yield curve is telling you.

Because otherwise, if you think that there is a chance of an inflationary spiral, then anyone who's willing to lock up their money for 10 years at that rate is literally a moron. And if people aren't morons, they believe that the governments will be able to keep this exact situation for another 10 to 30 years. That is what the market is saying. Whether they're right or wrong is a totally different story. The market is saying that this fiscal situation, this situation is going to exist for that long.

That's what it's telling us. Or it gets better before it gets worse and they can trade out of it. Okay, whatever. Yeah, you're right. But I'm not talking about what hedge funds are saying. I'm talking about you just – If you're a long-term holder of a 10-year treasury, you think you're going to lose money on that real rate. That's just reality.

But that's the thing. If you're a long-term holder of a 10-year treasury, you're getting 100 basis points above every other country, major country in the world. That's my point. We're the least worst of everything else. Those bond yields usually are a good indicator. So I see the 10-year treasury now is 445. I think it's going to 345 or 245. That's exactly where most of the rest of the world is right now.

I think we're closer to the 70s where it stayed like that until it got too bad. I mean, this year is an election year. They're going to do everything they can to keep it like this. Let's see what happens. I don't know who wins. Yeah, I'm RFK for now. I've said it openly, as you said, Dave. If he actually has a chance, I think a lot of people would jump on.

We need to see the evidence of that. I spent two and a half hours in a room with him with less than 10 people at consensus. And I can just tell you, when you speak to the guy personally, all the crazy, crazy that you think you're hearing that even sounds crazy to me when I see it on the media, it's just not there. And I sat and I said to him, listen, we have the two largest spending presidents in history. I asked him the question of what I said to you. I said, we're adding a trillion dollars to the debt every 100 days. This is the single largest problem facing America. Neither party will address it. They're both going to just plow through it as if it doesn't exist. He gave a very actually eloquent response as to how he would deal with that. But interestingly, one of them, and maybe it's because of the audience he was speaking to, but he said, we need to grow our

way through it to some degree because there's no way to just cut enough to do that. But we need to grow our way through it. And he believes crypto is a huge part of adopting the technology, embracing it, bringing it to the United States. And he believes that AI, tech, crypto could help grow enough to start to offset a bit of that. He doesn't think we're ending the debt spiral. The sole question I would ask for him, did you ask him this question? Does he believe that the federal government, the three-letter agencies,

the amount of regulation we have is sustainable, yes or no? No, you know the answer to that. His uncle said, take the CIA splintered into pieces and spread it to the wind. And, you know, that that's certainly where he where he believes. Hey, listen, I like I said, you know, it's pretty. Here he is. Emmy and I, it was a great couple of days that we spent there with him.

I would love to see. Listen, even if you don't like the guy, you think he's nuts. I would just love to see if I just love to see a viable third option. I don't want to have to be forced to vote for one of these. I really hope he gets on the debate stage where they're going to have to do with Zoom, where Trump won't even give the guy secret service. Yeah, Scott, we stood with him for an hour talking to him in Miami. And, and, you know, Jeff Booth was there. And we were talking to him. And I agree, what you hear, the soundbites you hear are completely taken out of context. Like he has,

he has a, he has a good vision and understanding what's going on in, in the, especially in DC, and the US economy. And, you know, but what remains to be seen is whether the two-party system will allow or will be able to defend off effectively a third choice. And when you have, you know, you have two presidential candidates that we have now, I think it opens the door, you know? It finally opens the door.

I tweeted something. I said, listen, I'm going to support him just to give another option. Then we can decide. It's not like Ross Perot. Yeah, it's not like the Ross Perot situation. Like, this is different. You have two, you know, extremely. We have a convicted felon.

Someone who needs to be on drugs to be in public. I mean, that's the part that the other countries are laughing at us about, right? I agree. I mean, look, I'm not, as I said, I have not made up my mind who I'm voting for. And it is literally for exactly the reasons that you stated. But the simple, simple fact is we, it is unsustained. We cannot survive this with this amount of regulation. You know, with this, you just can't. The only way to get out of this is to grow out and and to embrace

different principles. And it's yeah, you're not going to get it. I don't think you get it with either party. Maybe maybe that will push Trump towards doing that. I don't know. No way. I don't think we did. I don't think we can grow our way out of it, but it's nice to have someone at least address it as a viable problem and not pretend it doesn't exist. When I do believe it's the largest problem facing our country. It's that 10 Oh four guys. Thank you for the extra four minutes. This was amazing. James,

congratulations on earning your spot back from Larry. Yeah. I heard, I heard he was phenomenal and I almost lost it. You know, he came in. He came in firing hot. I will say that. You got to love it. Larry Unplugged is the best. Thanks for sending him. It was great, guys.

We'll see you tomorrow, 9 a.m. Eastern Standard Time. Of course, next week for Macro Monday. Thank you, gentlemen. See you all soon. Bye. Let's go.