The Wolf Of All Streets - CPI To Delay Crypo ATHs? | Crypto Town Hall

Episode Date: October 10, 2024

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Morning, everyone. Go ahead and turn the music off. Oh, yeah. I'm not used to having that amazing hot beats fresh off the mixtape at the beginning of the show, but I'm tempted to just leave it on for the next hour and let you guys listen to that instead of hearing us talk. Obviously, those of us in Florida, we're dealing with the hurricane over the past few days. For my part, we got very lucky and effectively missed and we got a ton of rain. Dave, I know that you're not there, but it seems like even in Miami, you got some action, right? Yeah, well, I mean, compared to other people, I suffered some property damage.

My boat got capsized. I have no idea how. It literally got flipped. You know, 26-foot boat gone. But, you know, compared to other people and what they've suffered in both Helene and this, I mean, it's a footnote. You know, it's no big deal. Thankfully, everybody I know is safe.

And that's all that really matters. Yeah, all of our family came here basically to evacuate, even though we were obviously until sort of yesterday in the direct path of the storm as well, but a bit further inland. And they're all heading back now. And it seems like it might not be great in the areas around Tampa where they were from wind and rain damage but uh at least i think on the storm surge side which was so bad with helene it seems like that was less of an issue with this storm which was expected to do the most damage especially the areas that had already been hit by the last hurricane i mean strangely where we are even inland helene was nowhere near us as you know the center of the storm it made landfall up in the basically the big bend of florida and we got a ton of trees down and power outages and rain and wind and a lot of problems. And this storm came straight at us and effectively did nothing. But

rain was very, you know, the expectation obviously was built up, which I think is important that they if the storm had gone 20 miles more north, Tampa would have gotten wrecked. And now you see people in Tampa saying why they evacuate us, you know know it's always the same with every one of these storms but either way I think it's going to be interesting to see how much damage was done and I think we're very lucky in general that it didn't hit as a category 5 with 200 mile an hour winds and that the highest winds I think when it hit were around 100 even where it made landfall so luckily it weakened and better situation yeah well i mean all i might i lost you there dave go ahead

i think we lost dave on the highway i lost him too yeah um i think he's driving it sounded like so probably just went through a bad area of connection. So let's actually, so now that we've obviously put that out of the way, and hopefully the damage won't be too great. The big story today, I think, is obviously the CPI numbers. It was down from 2.5% to 2.4%. And the expectation was 2.3%, which puts us right in that perfect threaded needle of nobody has any

rational way to decide what it means for markets, right? Because inflation still downward trending from 2.5 to 2.4%. But we know that the arbitrary expectations set by the market were 2.3%. And so we were above the expectation, but still on the way down. I mean, Dwayne, how do you generally unpack this when we have a situation like this, where the trend is still in the right direction per se, but we miss expectation? Right. Well, we're speaking about this this morning, actually. And in some ways, this particular this particular report is kind of inconsequential in the sense that, you know, the last couple of days, all of these things were down as well. But it looks like it's just really an interim thing that we're dealing with here. Because if you look at all of the prevailing tailwinds and trends, we're still moving in that particular direction in regards to gold,

in regards to Bitcoin, in regards to some of the main indicators here that we use for the economy. So, you know, we're really just sort of an interim position. So I don't really think we're going to, you know, get much information from this. And I really don't think the market is going to change or react to this particular readout. But I think the question on everyone's mind is the knee-jerk reaction of the Fed, right? What's the Fed going to do? Will we get another cut?

You know, I think there was an expectation after we got the 50 bps that we would get another 50 in November. And now I think 25 is leading. There's people even saying to go to zero or that once again, we're hearing the narrative that if it goes the wrong way here with jobs or inflation on another print that we could see another Fed hype, which I think is unlikely. I mean, so I think maybe the story here is people trying to figure out what the Fed might do. I mean, Dwayne, what do you think? Right. And that's been the debate for the last few months. Like one of the things that I was concerned about actually is that, you know, if you get a perfunctory rate cut of 25 basis points, or even if you get 50, that the market's going to react and say they want more. They want a whole rate cutting cycle. We've heard people say that they're expecting, you know, 200, 250 within a whole cycle here, right?

So that was sort of the issue that either people are going to say, okay, we want more, or they're going to look at it as there's a problem in the economy. So everyone's going to panic, right? And we're going to have recessionary fears overtake. But what we've seen thus far is that it looks like inflationary fears for the interim are overtaking recessionary fears, which in a way is a good thing, especially if you're, you know, if you're looking at equities, if you're looking at Bitcoin, if you're looking at some of these, you know, at some of these different sectors. So I would say,

you know, at least for the interim, enjoy the ride, like, you know, don't, don't really fight against what we're seeing here with the market and just go on with the prevailing trends that we've been seeing here. Yeah, that all makes perfect sense. I would love if anyone else has an opinion here. Joe, I mean, what are you thinking? How are you framing it when you look at this? And then maybe we can put it in context of crypto, obviously.

I mean, the 10 years is rallied right last five days up almost seven percent i mean i think the market's just maybe not not buying all of this and you know or we could be in a position where you know i think with stocks seeing some all-time highs out there bitcoin still kind of like just ranging i think people just don't know where to put their chips on the table right now i mean i'm i'm not buying it with bitcoin anymore it doesn't make sense to me um market caps are these etfs and everything in the buying like i think there's some funny business happening i don't want to go down that rabbit hole too hard but i mean how is bitcoin sitting there at 60k with the rally in the market where

things are at and and money coming off the table from these money markets. I don't like what I'm seeing there. But I think looking at the inflation scenario, things like we're getting this off landing, we wanted market forces in the interim weeks here are going to continue to move up and down. But I think ultimately, you know, the, the money markets will, you know, the, the rates will come down and people will start to invest and we will see like the super cycle next year. So, so October delayed till 2025 or just a delayed till, you know, next week or something.

Too much. I think there's too much with the election too. It's, it's, I think people just don't know. I mean, I, polymarket is a new thing that we didn't have last cycle. And I think people want to point to a lot of accuracy there. And they think that they could kind of trade off of that and what's going on. Honestly, I think it could be manipulated very easily with social media. That's kind of what we're seeing. And so it's like, I wouldn't put too much into it. Even though people are betting on things.

You know, it's not a perfect science yet. Dave, if your mic's working, feel free to jump in. Yeah, sorry. I just got a phone call from the guy I rented my boat slip from. Of course. You can only imagine what I dumped on him. Miami. And he's still texting me.

Look, the two things I want to respond to. First, the bond market before this print was already backed up. I mean, both the 10-year and the 10-year in particular had backed up and were well over 4% yields, which considering if people really believe in a rate cut cycle, that's justified, that wouldn't be the case. So, you know, while we're very far from bond vigilantes, we will see what happens. But to me, I think it's really important to watch that space, because remember, the Fed wants to see bond prices, long bond prices go up. They don't want to see them go down because they want

to see going up is good for yields, et cetera. Also means less yielding to people who own it, which means less money flowing in, which will help cool things. So they're definitely looking at it that way. And that's important. The other thing is in terms of crypto, I mean, look, my thesis has been is that these few weeks until we get to the back half of the month and the election starts to get clearer, we would not see a whole lot of action. I think that there's a lot of angst still and a lot of money being taken off the table from crypto native folks. And the reason Bitcoin is still over 60 and not somewhere in the 40s or low 40s is because of all the excess demand from the ETFs, which shifted the demand curve up. But the next wave of that isn't likely until the fourth quarter, right? Which, you know, obviously it just started, but it takes time for that money to roll in. So,

you know, it's a little bit of, I feel like, you know, the patience Padawan meme, right? You know, wait for what you think is going to be there, which comes to the same conclusion as the previous speaker. But it is worth watching because the amount of liquidity, I don't see any way out of any of the central banks around the world, which is going to have them decrease liquidity. I just don't see how it's possible. You can't fund our deficit by decreasing liquidity. You've got to print more money to pay for it. So that is worth keeping the eye on. So where does that put you as far as November rate cuts? Honestly, I always thought that they would do nothing in November post the election, unless, you know, whoever is taking over. I mean, I think if Trump wins, it's very,

very unlikely, unless Powell really wants to keep his job and really cares about this stuff anymore. And if Harris wins, it's possible because they don't want to be seen as, you know, in this, the transition period being bad. I've always thought it was more political than anything else. If they could justify it, they will. But I think that I agree with your, you had a really great show with Noel this morning. I agree with her take, which is, I think that Powell, left to his own devices, would be wait and see and not do anything. I tend to agree with that. David, just saw you jump up on stage. What do you think?

Hopefully you were listening. If not, I can go to someone else as we continue. No, I just got on. Are you talking about the CPI? Sure, but I'll go to matthew and then uh catch up in a minute matthew what do you think yeah um i still see us edging towards potential stagflation here i mean inflation is clearly sticky um we still don't really know why they reduced by half a percentage point last time although the market says there's 87 chance of another cut in november

so again i don't know quite what that's based on but we are seeing some signs that the economy is beginning to slow a little bit you know employment is or unemployment is ticking a little bit higher um so but i think the big narrative right now is we're still waiting for this Israel strike. It's going to happen, but I don't know quite, you know, I don't think anybody knows yet. They're obviously taking a long time planning it, I guess. But it's going to happen. That's going to surely knock the markets down. That's why I think the market has been sliding a little bit in the past few days.

We've seen Solana come from 151, currently down 136 right now as we speak. And it's pretty much the low of the day. So we may possibly drift a little bit higher over the weekend if we don't get the Israel strike. But when we do, there's another leg down for the markets.

And that is probably going to be a nasty leg down. But after that, I think then that hopefully everything's open and starting to look a bit better if we get a peace initiative within the Middle East, which I think is likely after the next strike. Then I think that'll be positive markets. And hopefully, if we do start to see,

we don't want to see anyway, we really don't want to see much lower, you know, dropping rates aggressively. That means there's a problem in the market. We don't want to see anyway we really don't want to see much lower you know dropping rates aggressively that means there's a problem in the market we don't want to see a problem so we want to be as close to a soft landing as possible so it's good that there's a bit of debate over whether we're going to get another cut or not because that means the markets may be not in such you know the economy is not in such a bad situation so i do think that looking at the charts we're still in this big consolidation with Bitcoin, with Solana, with whichever one you look at, basically. We've moved up aggressively.

We're actually chopping sideways and slightly down, which is a bit of a bull flag situation. We may not have completed that bull flag, but when we do, I think it's going to be aggressive upside. And I think we're going to new all-time highs for Bitcoin. And I think we're going to new all time highs for Bitcoin. And I think we're going to challenge the previous all time high, maybe it would double top for Solana around 258. So I think we're going to get a really good rally after the next leg down. But I'm nervous. I've actually been trading short anyway, shorting the market a lot recently, and done nicely out of it. So I think there's going to be more to come because we cannot ignore what this Israel strike is going to do to the markets. You know, Iran have threatened to block the Straits of Hormuz. That will rocket oil prices. So, yeah, short term, we've got to be nervous, but longer term, you know,

light at the end of the tunnel. David, I saw you giving some emojis there. So you're caught up. What do you think? Yeah, I think that idea of like, we don't want cuts, right? We don't want cuts that, you know, if the Fed keep, so the Fed at the last meeting, obviously projected the bottom market, the futures market has been projecting cuts through next year. The Fed came out at their dot plots and their projections here at the last September meeting and also kind

of confirmed that, hey, we even think we're going to be cutting rates, they projected rates to to go down by 200 225 basis points total through next year. And then the futures market has that through June or had it through June and next year. And so that is like a worst case scenario for risk assets in general, obviously, including any of these coins here. So we don't want that. And so they, yes, they started off with the rate cut. You know, there is, you know, we had this discussion in a previous space that there, you know, the velocity of money is dropping.

And so and it's dropping pretty rapidly and and what they want to do is try to stave that off uh so that so they start cutting rates to try to engineer a soft landing to where that velocity stops dropping uh and and starts to move slightly higher again which is they have precedent of doing that in the 90s and they had you know even in 2019, they kind of staved it off a little bit before COVID really made that velocity of money drop. And so that's why they're cutting. And the ideal scenario is for them to stop, to have a cut here in November, to have a cut in December, which is widely anticipated. Things would have to drastically change for them not to cut. But they don't have to drastically change for them not to cut in January. If things stabilize,

if inflation levels stabilize and stop dropping, or at least like we saw today, a little bit higher than expected and kind of stabilize, and then they stop cutting rates and yields, as we've seen, have been rising. That's actually a pretty, like, for risk appetite, that's actually a pretty good thing for going into 2025 and for having a positive 2025. And so, like, and I'm looking at a chart right now of Bitcoin just in general. And it has been, you know, earlier this year, we were way up above the 200-day moving average. It had a lot of momentum and made a big run to the end of last year, beginning of this year, and has been consolidating for months on end to the point where, like, the 50-day, the 200-day, I mean, all the major moving averages that you are pretty much all sitting right on top of each

other. And so it is anticipating either a breakout move, it's anticipating a breakout move, obviously, in either direction, either to the upside or to the downside. If we want it to be to the upside, then then we want risk appetite and in general, just to increase, then what we want is for them to stop cutting rates. Not for November. They're going to cut in November. A lot of people think that they shouldn't cut, but it doesn't matter what we think they should or shouldn't do.

What matters is what do the markets think they're going to do? Because the Fed doesn't ever do anything that the markets haven't priced in. They're M.O. They don't like to shock the markets. They prepare what they're going to do. And so they're going to cut in November, whether we think they should or not. They're probably going to cut in December.

The bond market hasn't started to price that one in yet, but the odds are still pretty high for that. But then after that, early in 2025, if they were to start to slow that down and even come to a halt, then I think you'll see Bitcoin take off because it's been such a long consolidation. It's building up a lot of potential energy that once there's that catalyst, then you'll see that turn into active energy and an active move in this scenario to the upside. Is anyone here particularly bearish?

Cause everybody seems to have a bull case. I mean, what's the bear case here? It seems like it's either Q4 or 2025, but we're going to fly no matter what. I mean, Fulis, how are you looking at all this right now? We're supposed to get October or, you know, October 10th now. But then when you dig in back of October, things usually start. Yeah. Hey, Scott, if you I mean, yeah, something I've just been thinking about there is, you know, this this idea that crypto is seasonal and that if you look back over previous octobers i mean the the bottom being in didn't occur until sometimes quite far into the month you know i'm just looking at the list here in 2023 it was the 6th in 2022 it was the 12th go now to 2019 it was the 6th again 2018 was the 12th

you have the 4th the 5th so i mean a lot of the times you know people expect october to just you know october first hits and then we we start flying but uh uh historically that has not been the case now i will say that um btc dumping uh you know four thousand dollars or 6.5 percent whatever whatever it is probably wasn't on a lot of people's bingo cards uh for for this year's october i think that the key difference now is the amount and we've touched on it already the amount of uncertainty in the market right uh we spoke about you know cpi came in slightly higher than expected no big deal unemployment claims printing the highest number since june 2023 with 258k now people are saying that that's potentially due to the situation where you are in Florida. But, I mean, the points that remains that, you know, more rate cuts are becoming increasingly likely further into the year.

You have the ongoing geopolitical situation in the middle east you know when as matthew touched on uh you know the chances that a major israeli strike uh is coming down the pipeline is is quite high and that of course will cause instability in the market and probably a quite severe drop you know if you look back on the last time those tensions were ratcheted up i think it was back in uh let me just pull up my chart here yeah i think it was back in in july right july june um we got a we got a pretty severe drop sorry yeah it was it was june um and then you look at the the u.s elections and i mean it's easy for us you know uh browsing crypto twitter every day to just assume that trump is is a shoe in and kamala's doing everything wrong but unfortunately and i mean the the grim reality assume that Trump is a shoo-in and Kamala is doing everything wrong. But unfortunately,

and I mean, the grim reality of that fact is that CT is a little bit of an echo chamber, as most social media sites are. You know, sometimes I browse Reddit and it shocks me how much of a left-wing liberal echo chamber it is. But at the same time, I think you have to take you have to take all of these social media platforms with a pinch of salt and realize that the people running them and the people communicating on them usually are very far from being impartial. So I mean, if you just get your news from CT, you're probably going to think that Trump is a shoo-in. But I think that the reality is very far from that. And I think most smart people, most investors are aware of that fact. The fact that it's not, you know, it's not going to be some overwhelming landslide for Trump. In fact, I mean I think someone in the call earlier said people don't know where to put their chips.

I think that's a fantastic way of putting it. If you look at BTC, basically, we had a strong trending move in January and February this year, topped out on the 14th of March. And since then, I mean, we've had a downtrend, sure, but it's been like a choppy downtrend with plenty of upside right pretty much range bound price action or depending on how you want to measure it maybe even a descending channel type price action but that has caused people to lose their minds because we're just getting you know people talking about the chop we've had this year people talking about uh conditions that are extremely hard to trade i think it's just indicative of the amount of uncertainty that's in the market right now, and kind of people just waiting. And one of the major

differences this year from previous cycles, let's say, you look at election years, you look at halving years, there is institutional involvement this year at a level that we've never seen before and that no matter what way you slice it that changes the the parameters that changes how things are traded like no market is ever the same each successive year especially a nascent market like crypto where you know every every successive year in crypto counts for probably 10 years in TradFi in terms of how quickly the market evolves and how readily the market participants adapt to new changes. But crypto this year seems even, and I've only been in crypto for four years. So, I mean, I'm not really speaking from any kind of depth of experience here. But from those four years, this year, in particular, seems very, very different from the previous years, based on the fact that we now have institutional involvements. TradFi seems like something you need to pay far more attention to

this year than in previous years. And I think we see that with the amount of action that we've been getting in the New York session these last six, seven months, pretty much since the ETFs came online in a big way. So look, it's one of those things where, I mean, I've just spoken for five minutes. And then at the end, I'm going to say, I don't really know, because I think that's actually a situation that a lot of investors, a lot of traders are finding themselves in. There are huge question marks over the macro at the moment. And that doesn't, I don't think I see that resolving any time potentially until post-elections, you know, into December.

One of the scenarios I posted on my ex-account, it's a joke, kind of a half joke scenario, but, you know, this big dip down to like 48, 49K, followed by a massive rally into December, some kind of Santa rally. I mean, it's a joke, but something like that actually wouldn't surprise me terribly, because sentiment seems so... People are waiting for something. And I think when people wait, they tend to de-risk and into an event like the elections. And if we see potentially the geopolitical situation worsen, people will de-risk. Bitcoin might nuke.

And then let's say when we get a little bit more certainty after the elections into December, maybe people will risk on again. That all makes perfect sense. I think we all have sort of a consensus here on the market. And I think it's everyone's opinion that this CPI is just one more data point and is not likely to be the defining factor in what necessarily happens with Bitcoin next. There's actually a couple of really interesting stories, I think, that are worth discussing in the news, as this is supposed to be a breaking news and news update show. One of them that struck me, and I talked about it

at length this morning with Noelle Atison on YouTube was that 50% of traditional hedge funds, not crypto hedge funds, traditional hedge funds in a poll have exposure to crypto in some way, shape or form. I think the majority of them said in some sort of effectively like leverage trading capacity. But that to me was an absolutely astounding number that half of the traditional hedge funds in one way, shape or form have some crypto exposure. I think that was up from somewhere in the low 30 percent last time they did this. I mean, Dave, listen, you've been in the hedge fund world coming from TradFi into crypto. Does that number surprise you?

No, it doesn't because we saw all the data the thesis of why the bitcoin etfs are were so incredibly successful ahead of schedule is because so many hedge funds uh started dipping their toes into that water i mean that's what the data bears out right i mean you see things like citadel you know on the list and And, you know, I actually haven't, I was actually at a conference talking with you, those guys, not about that. But the most interesting thing about, you know, hanging out with a bunch of TradFi people over the last couple of weeks, I've had two TradFi conferences that I've gone to, is that crypto is seen now, Bitcoin in particular, is seen as inevitable by most of those people. Now, understand, they are well before traditional asset managers, long-only funds get in, which starts generally with financial advisors or registered investment advisors, which, if you've been listening to your friend Matt Hogan, I can't tell if he's about on here now. No, he's not. But your friend and Juan from Bitwise, they were always targeting end of Q3, beginning of Q4 for those allocations to start, meaning that we saw $15 billion.

And most of that or very little of that is the actual monies that they expect from end investors and from major large capital pools to be going in. So, no, I don't think it's surprising. What's important for people in crypto to understand is the type of investors that are coming into this process are patient. They won't FOMO in. They're not going to chase. And we've said this before, but it's worth understanding.

It does, however, shift the supply-demand curve. And that's a thesis I put out and I tweeted this morning in response to TXMC is, look, the reason we didn't drop down into the 40s, the reason that I basically argue with McGlone all summer long about why I didn't think Bitcoin was dropping as far as other people were saying is because we've had a demand curve shift. There are patient buyers out there accumulating. And, you know, we have to keep our eye on the prize here. What is Bitcoin's ultimate value? Well, you know, look, you know, depends who you believe.

If you believe it's going to take over for the monetary component of gold, we have a very long way to go. If you believe it's going to be the base layer of the Internet of value, then we have an extremely long way to go. And we're all talking about right now, will we get a rate cut for more crypto people, people who are already in the space to go take a higher percentage allocation to leveraged buying? And honestly, I don't think that's the right question. It will certainly matter. There's no doubt about it. I mean, you know, we haven't talked about it here, but now understand that six months from now, I don't know when it actually goes live, but when the iBit options go, you've just opened up Bitcoin leveraged, you know, trading to the entire US market as well. That's not a small thing. And that can, that could create volatility

in both directions. It could dampen volatility. It's worth a deep dive. But it's non trivial. And so no, I'm not surprised by those numbers is the short answer. And it's completely consistent with the narrative that we will hang out at these levels. As that accumulation goes, I completely agree with the previous speaker that we're a coiling spring. But markets don't tend to do what we expect them to do. And so it could easily go in one direction that different than we expect. It could easily stay this way for longer than we expect, or it could easily just, you know, God candle and people will be like, I never got my chance to buy. What do I do? So who knows is the short answer. I don't have the hubris to believe that I do know. I just know that I don that when Bitcoin makes whatever move it's going to make, I don't want to be out of the market.

And so I'm sitting here, no leverage, sleeping like a baby. Yeah, that all makes perfect sense. Another story that I think that sums that up. I don't think we need to dig into that too deeply. Another story that I found just absolutely incredible that I'm sure many of you saw in the past two days is the story of the FBI and DOJ. The FBI created a token, which was ticker NFA, Next Fund AI, which is interesting because there's another project launching called NFA. But called NFA to basically entrap, although I've gotten legal clarity that this was not technically entrapment in this case, to entrap a few quote unquote market makers, what they call themselves, into effectively pitching their wash trading and pump and dump services to the FBI, leading to a massive

slew of arrests that were not just in the United States, but 14 individuals and four cryptocurrency companies, Gotbit, ZM Quant, CLS Global, and MyTrade. I mean, this is absolutely astounding. If you read into the article, there's memes like a Pepe the Frog pump it in the actual claim because they were sent by the quote unquote market makers to the FBI who was obviously acting like a new project. And quote saying, we know this is wash trading and some people may not look favorably on that. We can have our bots effectively create buy and sell orders that will give fake volume and the impression to retail that these tokens are doing well i mean this is next level right and i think there's a few things here and i would love

your guys opinions one obviously is that uh the jurisdiction of DOJ, they do not view as limited to the United States. They're willing to go anywhere in the world to effectively crack down on this. Second is that they're saying basically, Hey, listen, wash trading is a tale as old as time, fake volume, and it's no new. We're coming after people who are doing it in crypto. And I think another takeaway is that how absolutely immature and ridiculous this market still is, which may be me more early. And it's an opportunity. Dave, you have your hand up. Go ahead. Yeah, I mean, it makes one think what would have happened if in

2017, you know, well, you know, basically, as we got into this administration, if the SEC, instead of spending their money on lawyers and suing the best actors and whining about doing what they're doing and making promotional videos, if they actually work with law enforcement to find bad actors. Because this is a good thing. I mean, I don't think there's anybody in crypto who thinks it's a good thing that people are flaunting what are the securities laws in every single country that has securities laws. And by the way, whether or not we call it a security, it's still a liquid, electronically traded investable asset. And so fraud is fraud is fraud. And I don't think anybody thinks that it's good that pump and dumps happen. I don't think anybody thinks it's good that rug pulls happen. I don't think anybody thinks that fraud is helpful

to the maturation and the growth of what real builders are building. And so, you know, my point of view is, you know, kudos to the FBI. If only the SEC, CFTC, and frankly, the, you know, the FCA in London and ESMA and other people in Europe, et cetera, et cetera, had been doing things like this to get into and clean up the space, it would be better. But what it does show is you don't need new rules to go after fraud. And that's the other thing, that's the other assertion that the SEC has made many times. So I think this once again proves that we could actually have rational things going on to get the bad guys as opposed to the stupidity that we've had. Totally agree with that. Anyone else? Alex, what's your take on this? I mean, you're surprised that the FBI and DOJ went this far out of their way to uh effectively uh you know trap and trap these guys

and uh get them get them well so so first off this is not entrapment um for folks like entrapment is the word just gets thrown around a lot yes for something to be entrapment you have to not want to do the crime if a cop comes up to you and is like hey do you want to do crimes and you're like fuck yeah let's go do crimes that's not entrapment that's just asking if you want to do crimes and you being an idiot and saying yes entrapment is when they're like hey i'm going if you don't like go do this crime with me i'm going to murder your kid that that's entrapment you have to not want to do it um anyways but on top of that no i mean i think dave's right like this is exactly what they should be doing. I mean, the other funny thing about this is

this story has actually, in a lot of ways, very little to do with crypto. Like, the FBI has been, and the IRS and other federal law enforcement agencies have been running these types of stings on shady financial folks in, you know,

TradFi for years and years and years. This is bread and butter of what they do. And so I think that's the reason it looks like it worked well in this point. Again, I agree with everything Dave said about this is exactly what federal enforcement should be doing. They're identifying fraud. They're setting up things. They're going after that. Like 100%, this is a good thing for them to be doing. So as far as the way that we view this market or that retail approaches new projects that are launching, how does this give us a new framing for what's happening potentially?

I don't think we want to extrapolate this to everything launching, obviously. I think it's probably a small percentage. But as a retail participant in crypto who's excited about this new technology or a new project that's launching or a new use case, how does that align us with the actual tokenomics or what's happening on the launch to know whether something is to be bought or not, or whether the price action is real or it isn't? How widespread do you guys think that this is? I mean, Scott, go to all the top sites and look at the centralized exchanges and the volume there compared to what the DEX volume is. I mean, you know, when FTX collapsed, we were all kind of like, oh, everything's going to go on chain.

Wrong, right? Like it's just the number of bots that are out there and the algorithmic trading is just unbelievable. I mean, you know, we probably got how many people talking up here.

I mean, how many of you are actually like hitting the button and how often and what volume are you pushing into the market as like a leader into the space every week? And then you see the billions and billions of dollars that are traded. It's all bots trading.

And then if you think about new projects, the new projects that want to get out there, and they want to get some marketing and purview, and they're trying to grow their business in whatever way. And if we say that tokenizing is a new way to launch a business, and that's the disruption. And of course, you want good actors and people doing the right thing and it's innovation. But, you know, if you want to go get listed on one of these exchanges is that's a little bit more, I would say international, but still have a lot of volume, you know, and you launch something and you're like, Hey,

this is a community oriented token. You know, you're getting a DM like four days after launch is saying, Hey, volumes are you're going to get del four days after launch is saying, hey, volumes are, you're going to get delisted, volumes are going down. And then what position did that put some of these people in? I mean, it's the incentive. Obviously, you say, great, do whatever you're going to do. But then that incentive is to do what? It's probably to message the market maker and say, hey, we're going to get delisted. Right. And like, that's the conversation that that's been had. I mean, I, you know, I bet if you went through, you know, the emails of, you know,

even all the top 10 market makers like based in the United States, I bet you'd find some really interesting emails. Yeah. Joe. So like that, the next question that I, you know, I think there's a misinterpretation of the term market maker still, certainly in the crypto space. Like people always like accuse the market maker still, certainly in the crypto space. People always accuse the market maker of being like the whale, basically. They don't realize the market maker's job effectively is to keep a tight spread, to be on both sides of the order book to make sure that

the market's efficient and that when someone wants to buy, there's someone to sell. When someone wants to sell, there's someone to buy and that you're paying an accurate price to do so. So where's the line from being a market maker that's making the market efficient and then, I guess, buying and selling to yourself and it becomes loss trading? Because to some degree, part of that is part of their job, right? 100 percent, yeah, they're there to make the market and a lot of, you know, you're going to want multiple market makers. And like, what technically is that, right? If someone's job is to make markets, to have a tight spread,

to, you know, have depth in the market, right? So someone can come in and actually purchase more than $4 of something without moving, you know, the market up 30%. Like we'd probably say that's a good thing for the market is to have a lot of depth into something. And then, well, what happens when you have two or three or four market makers and they're all kind of like trading against each other with their funds? Like, is that wash trading? Right. I mean, I think there's a line though, where it's like, Hey, like, you know, and it's probably

a lot of the exchange. Well, when you have the guy on tape, like, yeah. I mean, when you have the guy on Telegram literally saying like, we're going to pump the price of this by buying and selling, that's different, obviously. But there has to be a closer to the line something. Correct. Yes. And I think, you know, you've got a lot of, you know, I think when you look back at it, I mean, Scott, I just sent you the thing about the SEC commissioner saying, like, this has been all a disaster, you know, I think if there's like some more clarity and, you know, people that know what's going on and they can actually work with like above board firms and it's easy to get access

to people like that. And it's easy to understand the regulation and the landscape of what's happening. You're just going to have less of this, right? So it's like, you just need more clarity on the front end and have people doing the right things. Then they can get connected with the people that are doing, that are trading the right way, that are providing that, you know, that depth and, you know, they don't get scammed on these loan deals that are happening in the back door. And it's, you know, I think there's just so much that can be done. It's like, well, you know, you're always going to have a couple of bad actors, but you're going to have more when the regulation isn't clear. Yeah, that, that all makes perfect sense. But it still interests me that these projects,

if they know that this is happening, would actually want this service because it can't end well. And if you've been watching the way that things launch in this cycle, obviously, nobody in retail is making any money. We've talked about this at length. I think yesterday was the bulk of the VC space. Most of these things launch and go down 90 something percent. And I think that that's not abnormal with the amount of projects, but nobody's really making much money on these. So why would a project even want a service that gives a fake impression to a bunch of retail that isn't buying it. I think that's really the question. The people in this market are trading memes because of this kind of thing.

They don't trust any of these launches anymore. They think VCs are getting enriched. They think the tokenomics are poor. Add on to that that there's an assumption that the volume in trading isn't even real when the price does go up. Why would a project ever want this? There's really only two type of tokens that are being launched or two projects that are being launched. It's meme coins, right? Like I'm here at Permissionless this week and Chris Dixon was on stage yesterday and he always has that great

thought around, you know, if you claim a project has no utility or value, then it's a legal thing, right? Or at least there's clarity there. The second you say that it has some utility or value, then it's a legal thing, right? Or at least there's clarity there. The second you say that it has some utility and you want to have an actual use case and provide value, then suddenly it becomes like potentially illegal, right? So that's why you're seeing people either launch meme tokens, that's it. Or, you know, you got Uniswap coming out with the news that they're launching Unichain. It's like, great, we have another layer too, right? It's like, I mean, I love Uniswap. They're great leaders in the industry.

Like DeFi, like push it. Everything's kind of like optimism roll up. You know, it seems like that's kind of like the go-to for US-based companies is to be on that chain or like building in that kind of super chain ecosystem. Great. It's up 20% on the week. Like I'm stoked, like more innovation. But again, like who's building on it, right?

Like where are the apps? And that's why it's so hard is to build apps and consumer apps in our industry is one of the hardest things to do. And it's just, you know, you have really smart entrepreneurs that, you know, would love to go do that, but they're either pushed offshore

or they're going to say, hey, I'm just not going to, we're going to raise some money. I'm just going to go do something else for a little bit until maybe this gets figured out. And so that's why we're not getting these use cases. And so I think that's the hardest part about what's going on. And that's where we need to kind of really punch the hole through and get some regulation figured out, or we're just going to have layer five meme coin number 5,000, I mean, to your point from earlier, as we come to wrap, you referenced Mark Uyeda's Fox Business interview yesterday, which we were looking for and kind of happened right before the show. For those who don't know, obviously, the SEC basically said that 5000 employees, there's five commissioners, Gary Gensler is the chairman. So he's basically the tiebreaker between two Democrats and two Republicans.

Those two Republicans are Hester Peirce, who has been a very outspoken critic of Gary Gensler in the SEC's positions, and Mark Uyeda, who basically co-hosts every single dissent or co-writes every single dissent that Hester Peirce writes. So every time Gensler does something against the crypto industry, we tend to get this dissent letter from Uyeda and Peirce, the two Republican commissioners. And then Peirce usually goes on the road show. She does press, things like that. We haven't seen Uyeda speak that much, but he went on Fox Business yesterday morning and he did not pull any punches. I mean, the headline that you shared with me, SEC commissioner confesses its crypto approach has fueled disaster for the whole industry. He basically said Gensler controls the entire agenda.

You know, he said all the quiet parts out loud. He said there's 5,000 people at the SEC. Gensler controls 4,995 of them. I control five, right? I mean, he did not mince words at all in this interview and has basically come out and said that our policies are an outright disaster. And regulation by enforcement is an outright disaster. And these things absolutely need to change.

I mean, there's obviously some real dissent within the SEC. And I think to your point, we're going to need a lot more clarity from legislators or at least regime change for that to be any different. Right. And this was in this was in response on his part to the crypto dot com Wells notice. Right. Him saying, you know, we're a few weeks away from an election. We're out of that September period where the SEC has to close their books and get more enforcement on the on the books. It's kind of like parking tickets and police. For those who don't know, the SEC tries to get as many cases in by the end of September. But still, here right before the election, even with the Harris administration claiming a pivot on crypto, you have the SEC

sending more as well as notices and more of the same. So just a really interesting environment, I think, to be in crypto in the United States. Guys, I think we've actually hit all the topics for today. So we'll be back tomorrow, same time, 10.15am Eastern Standard Time. As I always say, when I'm up here by myself hosting, follow everybody on stage. They're up here because they're awesome. And they deserve your follow. And if you're going to bother to listen to this show, you might as well bother to read their tweets. Are they still called tweets or are they exes now? Read their exes as well.

All right, guys. Thank you very much. We're going to move to wrap. See you tomorrow. Bye.