The Wolf Of All Streets - Crypto Skyrockets | Bitcoin To Break All-Time High | Macro

Starting point is 00:00:00 Bitcoin came within a hair's breadth of hitting an all-time high last night, touching about $68,850. Of course, there's debate as to what the all-time high even is. We're calling it $69,000 around here because we know that every single exchange had a different all-time high. I think this move has caught a lot of people by surprise, expecting the four-year cycle to play out and for Bitcoin not to make new highs until later in the year. I certainly did not expect to be here quite this fast, guys. I've been taking some time off. I was in Japan. It's Macro Monday on a Tuesday, sort of. Myself, Dave Weisberger, and Matt Siegel from VanEck, James Lavish, and Mike McGlow not available today, but this is going to be a lot of fun. We have a lot to

Starting point is 00:00:41 talk about since I haven't been here for the last six days of shows. Let's go, guys. What is up, everybody? I'm Scott Melker, also known as the Wolf of Wall Street. Before we get started, please subscribe to the channel and hit that like button. Let's go. What happened with price? I think we went from around 50,000 to 69,000. I'm not a superstitious person, but if the market goes down now, I know that I will be blamed by everyone. So I should have just stayed away until we had already made an all-time high. I'm going to go ahead and bring on Dave and Matt now. Good morning, gentlemen. Thank you for being here. $69,000 Bitcoin, Dave. See, we needed Mike McGlone today. Matt, you don't know this, but Dave and Mike have a history of making bets. The last one, what was it? Bitcoin would hit 40

Starting point is 00:01:49 before 20, and we were around 30, I think. Dave obviously won that one. That was a stake bet. The one that they just recently made a couple of weeks ago was that Mike said that gold would outperform Bitcoin this year. How are we looking, Dave? I mean, you know, it's like I know Mike can afford it, so it's OK. You know, look, at the end of the day, Bitcoin may go, you know, we might. In fact, I think we probably will see a pullback at some point as risk assets pull back. Not until then. But, you know, when risk assets pull back, I think we see a pullback. And I'll explain why in a little bit. But the one thing that is in absolutely no question about it is Bitcoin is now starting to demonetize gold. And you can see that in the flows of GLD and gold

Starting point is 00:02:41 ETFs versus the HODL and all the other Bitcoin ETFs. It's very, very clear. Now, demonetization is not a switch. People always, you know, in the crypto universe, everyone has the attention, a span of hummingbirds, right? You know, you flip from flower to flower. It's, oh, my God, the panic, you know, et cetera. It's up, down, whatever.

Starting point is 00:03:01 If you just zoom out for a second and you take a look and you say, okay, what is likely to happen? down, whatever. If you just zoom out for a second and you take a look and you say, OK, what is likely to happen? Well, the very first thing that has to happen is people who have precious metals as part of their portfolios start dipping their toe in the water with Bitcoin. You don't start selling what they have. It's a process. But at the end of the day, ever since Paul Tudor Jones said Bitcoin would be the fastest horse. And by the way, you notice that that it really hasn't been nearly as pronounced. There's been that process. And in order for that process to play out, everybody who has access to each access to gold products like GLB in their

Starting point is 00:03:38 portfolio has to be able to trade the Bitcoin ETFf everyone who has access to gold physical needs to be able to you know hodl bitcoin in in self-custody wallets and the reality is we haven't gotten there yet i mean it takes time it is a process but it's pretty clear why that process will play out i mean mark yusko is really good about explaining it and you know we could go into that but that's the process that's happening so my bet with mike is very simple i'm like, you know, we could go into that, but that's the process that's happening. So my bet with Mike is very simple. I'm like, look, you know, as macro drivers happen, as more people start to distrust our political system or economic system, more money is going to go into Bitcoin than gold. And oh, by the way, it's one tenth the size. Therefore, that money is going to make the product, make it perform better simply because of available liquidity. So it's as

Starting point is 00:04:24 simple as that. Matthew, you may have the numbers, but it's pretty simply because of available liquidity. So it's as simple as that. Matthew, you may have the numbers, but it's pretty astounding. The outflows of gold that we saw, the inflows obviously into the spot ETFs have been, I would say, absolutely insane. But the speed at which these ETFs have reached the level where they are versus what GLD, which was the best sort of corollary we had, has also been astounding. And I mean, we're like 50 billion, I think, for spot ETFs total. What's the gold? 100? I mean, we're halfway there or something. Yeah. Bitcoin ETFs have taken in eight times what the gold ETF took in in one-t tenth of the time. That's measuring since the ETF launched. So these have definitely been blockbuster products. Like in my mind, there's no question

Starting point is 00:05:13 which asset is going to outperform. I think they're both going to do well because of this more widespread disillusionment with the dollar and our fiscal authorities. But when you look at just the size of the asset, Bitcoin is a teenager. Gold's a 5,000-year-old asset. Put $10 billion into each of them, Bitcoin's going to have a much bigger price response. And as for Mike McGlone and Turning Bearish at the bottom there, Bloomberg is an organization where the board is anti-Bitcoin, anti-crypto. They could keep changing their data feeds. It's not something that the organization wants to be involved in. And this is a participatory asset class. You got to get involved with self-custody yourself. So I wouldn't expect Bloomberg to be in the lead at calling the

Starting point is 00:06:02 crypto bull market. Interestingly, though, I mean, he's historically been very bullish on Bitcoin. He does get it, but he did sort of say in passing the last show I did with him that Bloomberg has asked him to talk about Bitcoin less. Yeah. And they let go of Jamie Coots, who was a great analyst. Like, you know, they're not committed. And right now you would assume that they would want the clicks, right? So I guess I give them credit there for staying with their ethos, just like Vanguard, whose CEO coincidentally is now gone. I don't think that probably has anything to do with Bitcoin as much as people would like to believe that. But it seems like a time when any of these organizations could certainly capitalize on the hype that we're seeing. But I do want to ask you guys a question because the hype that we're seeing is nothing like the hype that we saw in the previous bull market yet. That's my sort of

Starting point is 00:06:49 anecdotal evidence, reading Twitter, the amount of texts or calls that I've gotten, far less. I just don't think that we've hit retail or institutional mania yet at all. Well, you have to look at, I think that there are some definite indications that that's not true. And it's not necessarily- Is it meme coins, Dave? Well, there's three reasons. One is meme coins.

Starting point is 00:07:18 Two are NFT floors. And three is the derivative markets. So meme coins are, look, I'm not going to say anything other than that. I've made fun of the Shiba Inu community, but compared to the Shiba community, which at least, and Shibarium and all the other stuff that they've done,

Starting point is 00:07:38 at least there's some notion of a community there. I mean, some of these other ones are literally nuts. I mean, you know, people paying for coins, you know, and creating market caps that, I mean, look, it's Beanie Babies all over again. And that's fine. You know, it's, look, people were able to bid on Beanie Babies. And, you know, my daughter was talking with people who they didn't understand that your kids are too young, but Webkinz was another one that, you know, was a game that they played and, you know, bid this stuff up. And, you know, look, these things can last for a little longer than you expect. I wouldn't be shorting

Starting point is 00:08:14 them. But the truth of the matter is, there's no value creation there other than the fact that you as, I love your expression, humans are going to human and, you know, people get greedy and everyone says, oh, OK, I can make money. And it's like the game of musical chairs. When the music stops, who's sitting and who the hell knows? So when you see that sort of behavior, you know, there's plenty of animal spirits in the in the digital asset space. There's no two ways about it.

Starting point is 00:08:42 That said, there's plenty of animal spirits in the equity space, too. space too. What we saw and being old enough to have sat in the internet bubble and watching it, look, enormous wealth was created from 99 to 2000. People, if you were smart enough to buy and hold the right companies back then, you did phenomenally well, despite the fact that at one point you were marked down 90%. But there were lots of companies that were complete nonsense. And I mean, lots, I mean, thousands of them. I mean, it looks very, very similar to what we have here. So, you know, before everyone want to toss the baby out with the bathwater, you need to understand that, you know, from an equity point of view, you could look at Bitcoin as well with the growth potential of Amazon. And it's highly likely to be more like Amazon than anything else.

Starting point is 00:09:26 And a lot of these other things, the growth potential of NetTaxi. If you say, what's NetTaxi? I can tell you the story, but it doesn't matter because it doesn't exist anymore. And there are lots of those. So there's a lot of things going on. The last thing I want to talk about is derivatives, because the last time I saw anything like this was more or less the last time we were making not the all time high, but the predecessor high where we had two or three weeks of this stuff. And if you look, perpetual swap funding rates are eight or nine times normal on Bybit, Binance Futures andEX, and about five times normal on Deribit. And all that means is there's more buying interest on the perpetual swap market.

Starting point is 00:10:10 They're trading at premiums. The CME futures are also trading back at premiums again and have been doing so for the last couple of weeks as this rally basically since you left for Japan. The March future is 68.305 versus 67.730, which is 600 bucks, which is about 100 basis points, give or take. And it probably should be trading at around 45 to 50 based on interest rate. So there are premiums in the speculative leverage products. And so, yeah, you know, does that mean it's going to go down? No, we could stay that way for a couple of weeks. Does that mean that a momentum ignition liquidation cascade is more likely?

Starting point is 00:10:55 Yeah, it is more likely at these levels. But what would that do? I mean, what would happen if someone bombed the price of Bitcoin down $4,000 right now? You know what would happen? It would clear out all the suckers, and it would then start to rally again, in my opinion. Yeah, I mean, that's a tale as old as time. A liquidation flush. We'll see it.

Starting point is 00:11:15 We're going to see one. We'll see it 50 more times in this run. Yeah, I want to push back on one thing. I agree with you on the meme coin thing, and meme coin runs, guys, tend to be local tops. Doesn't mean it will this time. But when we usually see this, that's usually when you do get this sort of flush. The only thing I'll say is I don't think it's indicative of retail being back. I think it's indicative of the crypto degens taking advantage of an opportunity to make money. I don't think new people have come into the space through dinosaur meme coins like Doge,

Starting point is 00:11:43 Shiba Inu, and Pepe that are running like crazy. So I think it's the same old people running the cycle and not new ones. But Matthew, there's a lot to unpack with what Dave said. You can basically choose your own adventure there. Yeah. I mean, Dogecoin was an $80 billion market cap in May of 2021. All right. So it peaked. And then we had five more months of bull market and you wanted to own Bitcoin during those five months. So you can look at Dogecoin at 25 billion now and say that that's wasted capital. But I look at, you know, we are entering a weird world here. Look at this election. Like, look at what's going on around the world,

Starting point is 00:12:25 increasing adoption of Bitcoin. I saw a BRICS headline today that they're teaming up for a blockchain-based currency. Ethiopia is now mining Bitcoin. It's going to get weirder this cycle. Why would it be less weird this cycle than last cycle? So I think the total meme coin market cap will be greater. I think that's a tough game to try to pick which ones you want to stick with. But some tiny minority of them will meme themselves into real utility, like Bonk is already kind of almost there. So it's not our core competency of what we're doing in our liquid token strategies. We're trying to focus on tokens that have some category killing criteria and token value accrual. But I'm not going to say that this is a top just because meme coins are running. I think the meme coins are going to be bigger this time than last

Starting point is 00:13:16 time. I just have to laugh at the notion that VanEck would have put some of their liquid fund into dog and frog coins and YOLO. But that would be a top signal for me, by the way, Matt, if you're doing this. You guys were heavily in that, right? I want to go back sort of, Dave, to your point about demonetizing gold a bit. Because interestingly, you guys may have seen, but we just made a new all-time high in market cap. So Bitcoin market cap, capitalization hit an all-time high, even though price didn't quite make it. And now Bitcoin at 68-ish is almost at silver's $1.38 trillion market cap. So passing silver is not a small thing either. No. Yeah. And by the way, gold is pumping. In case anyone was wondering, Mike McGlone would be happy.

Starting point is 00:14:01 Gold is at $21.31 right now. So we are seeing that move, and you got to wonder what that might be hearkening. But yeah, Dave, I mean, we're right about to pass silver here. I mean, everyone always asks about this demonetization point that I make. And look, let's just give a couple of stats. Ratio of gold to silver in the Earth's crust, 15. Price difference between gold and silver for millennia, 15. Gold was 15 times more than silver. As silver, and it doesn't matter what old movie, if they're historically accurate, you watch, if they're talking about anything before, you know, 17, the Industrial Revolution,

Starting point is 00:14:41 the people who were raiding and whatever and pillaging, you know, the Viking shows, you know, Last Kingdom, whatever, they're looking for silver. Why? Because silver was spendable. It was portable. It was easier to find, et cetera. That was silver was money. China, get back for millennia, silver was money. But what happened? As natural, you know, as the world became, you know, started to grow, the industrial revolution, there was more commerce. Silver is being, you know, one-fifteenth the value of gold. The problem is, is people like gold better. Why? Because it was more portable.

Starting point is 00:15:14 Because, you know, I have, you know, you ever, you know, try to carry a monster box of silver? So a monster box of silver is 500 coins and it's, you know, whatever, $10,000, $15,000. It doesn't matter what you say it's worth. You know, it doesn't matter. It's just some number. The same amount of gold you can carry in your hand. And the other, you're like struggling because it's really, really heavy. I mean, it's not as portable, not as whatever.

Starting point is 00:15:39 And so what you ended up with is post the William Jennings Bryan cross of gold, you know, bimetallism and all the stuff in the 1800s, you ended up with a world that said silver is money. OK, we kind of understand it's a monetary metal ish, but really we're going to use gold. And so the price at 70 or 80 to one, and it's been as high as 100, is just reflective of the fact that silver's main use case is industrial, not monetary. It is just a simple fact. And so silver no longer has that monetary. And so gold demonetized silver effectively. If you want to understand the argument that is the argument that Peter Schiff and all the morons who totally ignore the fact that Bitcoin can have value,

Starting point is 00:16:21 and I call them morons because they're willfully ignoring what the evidence in front of their own eyes. What they make is they make this argument that says, well, gold has inherent use, yada, yada, yada. Well, OK, cool. Anyone old enough to remember before five years ago knows that platinum is dramatically rarer than gold in the Earth's crust. And platinum for our whole lifetime up until five years ago was more expensive than gold. It wouldn't matter what the conference was, what the way it was. It would be, your tears would be bronze, silver, gold, platinum. Platinum was always above it. Look at the price of platinum today. Half the price of gold. And so when you look at that and you say, okay, wait a minute, what happened? Well, it's like, well, it's clear platinum and gold. Gold is being used for money. There isn't enough platinum to be used for money. It's not held by central banks. Therefore, the monetary use of gold, which is where the central bank buying that, though, that's the buyer, by the way, that's pushing to twenty one hundred and above its central banks, that monetary use of gold is clearly a large percentage of its

Starting point is 00:17:27 market cap. There's no two ways about it. And so the question when you start talking about Bitcoin is, well, Bitcoin, when I say demonetized gold, what I mean is it will assume that monetary portion of gold's market cap. And the other big thing to look at when you do this, I know there's a long soliloquy, Matthew, I'm sure that I'd love to hear your opinion on this, is that gold in pre 71 before all hell broke loose on currency. And there's lots of things that have happened since 71 used to be 100 percent of monetary aggregates. Basically, you're pretty damn close to it. In fact, the fact that it couldn't be anymore is why, in fact, Nixon broke the gold window. Now it's around 8 percent of monetary aggregates. That's and that's a big difference. So if people who say, well, digital gold is the terminal price of Bitcoin.

Starting point is 00:18:13 No, the terminal price of Bitcoin, if it gets a full adoption, is is basically at least 10 times the monetary value of gold. And that's assuming no inflation, et cetera. So I'm going to stop there because there's been a mouthful. But that's really, that's my thesis, if you really want to get down. I like that thesis. I mean, it's, you know, good money crowds out bad. I'm not sure that gold counts as bad money. But I think that the market for hard money is growing because of wider disillusionment with the current fiat.

Starting point is 00:18:48 But just to point out like a follow up question, I guess the gold to silver market cap is still around like 14 times, if I'm not mistaken. So it's it's interesting that that like 15 to one ratio, at least it's holding somewhere, at least unless my market cap number is very incorrect. Yeah, the market cap numbers are. I don't know where they're getting it. It's a strange one because if you look at the price per ounce, that was what was 15 to 1, not the market cap 15 to 1. It has to do with 15 to 1 is the ratio in the crust. So it's strange, but you're right. It's a weird one.

Starting point is 00:19:25 So then there's been more silver mined relative to gold? Because I think silver has mined. Yeah, I think that's the reality. I don't know what the ratio in the crust is. I mean, look, the other thing about gold that's fascinating, everyone, and when you compare it to the ETF, the other fact that is really interesting is gold. People just assume there's a certain amount of gold. There's gold reserves.

Starting point is 00:19:49 There's above ground, yada, yada, yada. It's not really true. We don't know exactly what's in the earth's crust. But what we do know is that mining is elastic to price. So we know that the inflation rate of gold over the last 100 years has been about 1.8%. We know that. That inflation rate isn't really inflation rate. That's how much more gold gets mined every year.

Starting point is 00:20:10 But what people don't realize is that mining is not monotonic at 1.8%. When gold price spikes, miners invest and it goes higher. The price languishes and miners' capex is like, okay, this isn't so good. And it comes back down again. So you get a line like that one of the interesting things is one of these days you're going to hear someone talking about it is uh will whether it's spacex for elon musk or somebody else find one of these asteroids that that have been proven to have more gold on it than it's on the i'm not counting about worrying about that in my lifetime, personally.

Starting point is 00:20:45 No, no. I'm just saying the fact is, is asteroid mining, you know, look at the price of gold goes completely ballistic. You know, I saw the movie Bruce Willis, man. What a hero. I didn't need on again. I'm not talking about getting killed. I mean, going out to an asteroid and mining the gold. But look, at the end of the day, the point is there's some elasticity in the supply of

Starting point is 00:21:03 gold based on how you can get it. That's the difference. That is not true with Bitcoin. Bitcoin's supply schedule is immutable, for lack of a better word. Well, I'm down with that narrative over a decade plus of Bitcoin partially demonetizing the gold as a monetary premium. But in the nearer term, I'm about crypto demonetizing FAANG. And Bitcoin just flipped Meta stock, which I think is important because Meta as a 2.5% weight in the S&P 500 fell 80% peak to trough in 21, 22. That was a bigger bear market than Bitcoin. And now we've got BTC flipping meta.

Starting point is 00:21:48 And I think that global, you know, asset allocators and PMs are going to look at Bitcoin as a potential hedge on FANG margin deterioration. And, you know, some of the key landmarks we have to look forward to if, if Bitcoin flips Google that's 84K per Bitcoin. If Bitcoin flips Amazon, 94K. And if Bitcoin flips Apple, which is looking more likely today with Apple getting hammered here and China sales evaporating, that would be 137K for Bitcoin. So those numbers feel attainable in this cycle. The gold one feels like it's a

Starting point is 00:22:29 next cycle, subsequent cycle type of affair. We still got to do a 1314X from here. And that's assuming that gold doesn't rise, which it is in the meantime, which I think you can make the argument with the thing as well. I want to ask you then, you talked about asset allocators there, Matthew, of course, talking about them paying attention when we have these sort of milestone events, whether it's Flipping Meta or others. We still have a lot of them that have not been offering these products. I read, I've been behind, but Bank of America's Merrill Wells Fargo offer Bitcoin ETF products for clients. We, of course, right before I think I left for last week, Carson Group, which is a $30 billion AUM RIA platform, started finally offering these ETF products. Vanguard, of course, still not offering these ETF products. But we could talk about the success of the ETFs as much

Starting point is 00:23:16 as we want. And it's important to note that that's still in the context of them not being available to the, I would say, maybe even the bulk of institutional or certainly RIAs. I don't think most RIAs are offering these. Maybe they're taking unsolicited offers from clients, but they're certainly not selling them yet. Agree. Agree with that characterization.

Starting point is 00:23:37 I mean, that's an amazing stat. Matt, do I have a question for you? Because you may or may not be able to answer it depending upon the nature of the conversations. I've asked the same question to Matt Hogan, and he's deferred. Thanks for the easy setup here. the the final i mean i i'm thinking of a medieval analogy the final bursting of the gate is when mercer towers parent and the other investment consultants that drive asset allocation for institutional portfolios when they all basically say hey in a 60 40 we always say 60 40 we know full well it really isn't 60 40 but for those viewers who don't know what that means, a standard portfolio allocation for an average pension fund or endowment traditionally was 60% equities, 40% bonds. And by the way, that's kind of nuts these days, given where the bond markets are.

Starting point is 00:24:39 But we'll leave that alone. But there's a big difference in the world of institutional investment that people should understand between investments and alternative investments. Alternative investments, things like hedge fund, real estate, private equity, venture, get money. There's no question about it. But the lion's share of the average money are in covenants around things that are part of the normal investable universe. The normal investable universe is basically equities and bonds. And in many cases, precious metals or GLD became a proxy for precious metals for institutions. So this is a long-winded setup, but a lot of people don't know about this stuff. What is not well known outside of the industry is that the gatekeepers to the vast

Starting point is 00:25:26 majority of pensions, endowments, whatever, are called investment consultants. I named a couple of them that are large. And as far as I know, Bitcoin or these ETFs, it's a long time between now and when they would be considered part of investable as opposed to alternative investments. I'm curious because I'm assuming you guys have conversations with those people. And I'm curious if you have any thoughts of where that goes or what the timing might be. Yeah, I think you've correctly identified these consultants as a major driver of institutional flows and they all have people who are responsible for keeping an eye on the crypto market and none of them have put this asset class or recommended it in any type of allocation nor do they seem close to doing so, according to my conversations, where it's kind of like keeping things warm, want to keep smart on it, like nowhere close to recommending what would

Starting point is 00:26:32 change your mind, you know, no answer. So doesn't the ETF at least further that conversation? I mean, that's kind of what I want to talk about here. You had obviously the amazing study that said that 37% of RAs didn't even think that this would get approved a week before it did, right? That only 19% of them even had a way to gain access or were looking at it. My assumption is that these guys weren't even considering due diligence until they saw the approval. I think they're just getting disintermediated, the consultants. There's a new business model of just selling models to Wall Street. VanEck works with a company called Asset Mark, which is publicly traded. AMK is the ticker, stocks at an all-time high. They offer a series of models that clients can gain exposure to that essentially are comprised of ETFs.

Starting point is 00:27:22 So we manage a thematic disruption model portfolio for them that has 6% weighting to VanEck, HODL, Bitcoin ETF. And that strategy took profits last week. So the position size had grown north of 7%. PM here trimmed it back into the mid fives. And it's like, hey, I'm going to use this volatility to harvest gains and redeploy. And I just think it's independent, forward-looking firms like AssetMark who are just doing it directly rather than waiting for the consultants to bless it. So wait, what's it going to take for the consultants to bless it?

Starting point is 00:27:59 Is it just Larry Fink going on TV one day and saying, we think everybody should have 1% in their portfolio. I mean, aren't we just literally waiting for like the Larry Fink comment or another, you know, fastest horse in the race, Dave, to your point where they all open the door? It's a process. That's what, you know, it's like, it's sort of like, you know, the flip side of the idiocy, a story that came out today at the FCC, having a joint task force with the DOJ to basically investigate corporate greed, which is another way of saying, you know, the comrades want to impose wage and price controls in a different way, which, by the way, for those paying attention in 5,000 years of human history, have never worked in peacetime. In every single

Starting point is 00:28:42 case, wage and price controls that have been put in have been counterproductive for 5,000 years. Yet, they continue like the idiot to bang their head against the wall because they think this time will be different. It's more or less the same thing. People think about markets. They think, oh, well, this magic bullet happened. It's not that. Markets are complex, and you have lots and lots of people. I mean, right now, what we're seeing is and three weeks ago, I made this point, you know, you know, on the show. I said, look, we're seeing this kind of sweet spot where people who had been considered a recession is coming. Look up and say, well, wait a minute, there isn't a recession and risk assets are doing well. I'm keeping I'm keep putting money in the risk assets. And it's and it's become a reality that everybody hates.

Starting point is 00:29:28 You know, Matthew mentioned the things or, you know, whatever. And clearly a lot of money has gone there. But, you know, economic indicators, even, you know, one of my old favorite ones, if you want to understand how the real economy is doing in terms of at least nominal terms. Now, I think in real terms, I'm not so sure this is true. Let's just say Baltic Dry Index. The Baltic Dry Index, which is sitting right now toward the upper end of a range. No, seriously, it matters. It's measuring shipping. And so you look at this stuff and you say, well, you know what? This doesn't feel recession-y, in nominal terms at least.

Starting point is 00:30:02 And so, you know, people, that's what you're seeing. Now, I've said for weeks that in the next two to three weeks is a danger zone for risk assets, because if you look at it, you zoom in, you can look at where it is, you see it's at from, you go back, yeah, there we are kind of in the middle, right? The middle to the upper of this small range that's there. But what I was going to say is, is what I don't know is, will there be a lot of selling to pay for realized capital gains from last year? Because I mentioned this because in 2000.

Starting point is 00:30:37 This is the time. I mean, this is the time. Generally not yet. Generally in about, starting in about two weeks, you would see selling. And in 2000, which had seen an explosive rally, everybody hated off of the Y2K monetary stimulus and the Internet bubble and all sorts of stuff going on. Very similar to today, by the way, for lots of reasons. You saw a pretty serious correction, you know, 15 percent in one day on the NASDAQ, etc., which, by the way, got wiped out. I mean, the market rallied back past there in June for what you saw was a sifting

Starting point is 00:31:13 mechanism. So if you go back to 2000, what happened? In March of 2000, the internet bubble popped and the shit companies, the real crap, never recovered. I mean, they had a mild shadow recovery, but they never really recovered. Whereas the large cap, Cisco, actually went back to a new all-time high later in the year around June or so. So it was an interesting market. And then, of course, we slid down and yada, yada, yada. We all know what happened. But it took a while.

Starting point is 00:31:41 If that happens in the next couple of weeks, it wouldn't surprise me. The dynamic that's different is that is the precise environment where what Matthew was talking about, about Bitcoin flippening bangs, is most likely to happen. Most likely to happen as one struggles and money is still streaming into the other. And so to me, that's an interesting thesis. Now, what we've been seeing in crypto right now is fascinating. We've commented on this many times. What we're seeing in crypto right now is alt season, but real new demand for Bitcoin. So the crypto guys, for the most part, the hot money has been fleeing Bitcoin for dog with hat and

Starting point is 00:32:26 whatever. And you see that in the price action, but not for other level ones or anything like that, but for crap. But there's been a spot bid every day in Bitcoin and that has been keeping Bitcoin moving. And so you have new money in the ecosystem, more money you put in the ecosystem, more money to slosh around. And so that's what we're seeing now. I want to ask Matthew then, you just mentioned these spot inflows, obviously, and this buying in Bitcoin. I mean, we're seeing records made on an almost daily basis. For every few days, it's highest volume day or highest inflow day. What stops that?

Starting point is 00:33:01 In the words of Mike McGlone, what stops that in the in the words of mike mcglow what stops that yeah so i just was looking at some research this morning out from uh hc wainwright which is a broker that does some work on bitcoin miners and they track uh the selling by bitcoin miners as a person each individual listed company as a percentage of the bitcoin that they uh mined in the month. And what we saw was a pretty big tick down in how much Bitcoin miners were selling. And I think what happened is that you get prices above 50K, it takes a lot of stress off those balance sheets. They know they're going to be profitable after the halving and they can kind of hodl on a bit more. So if that- But their stocks have gotten smashed here. The other thing that happened, Marathon reported last week, the CEO said on the call that they

Starting point is 00:33:52 bought the Bitcoin ETF during the month with some spare cash. It's like, what are you doing? They had raised equity. They were planning to put it into CapEx. They noticed that the ETF was down and just FOMOed into it. So, you know. I love that. That's such crypto diversity, right? The diversification of my portfolio as well as MicroStrategy, Coinbase, a couple miners, and I own a lot of crypto. Yeah.

Starting point is 00:34:20 So, you know how reflexive these markets are. If there's a breakdown and, you know, circumstances change, then everyone who's a buyer will be a seller. So that's the risk. But I would just want to loop back on, Scott, like something that you asked about what will change the consultants' minds. And my roadmap for that is that it happens at the sovereign level. And the world is kind of waking up to the idea that ESG was a mistake, that we've wasted so much shareholder capital and taxpayer money on these net zero dreams that are really just anti-growth. And it took a few very aggressive politicians like Millais to kind of make that view mainstream. But now that it is,

Starting point is 00:35:16 the next politician that comes around, whether it's RFK Jr., who wants to back treasury bills with Bitcoin, it just won't feel so extreme. And some G10 country will end up with a leader that effectively diversifies into Bitcoin. And at that point, the McKinsey's of the world will have no choice but to okay it. So that's kind of how I think it'll happen. But it clearly has to be someone other than Aboukele, right? And we just saw that. Yeah, yeah. It just has to be bigger. It just has to be bigger, right? Every country that's kind of how I think it'll happen. But it clearly has to be someone other than Abukale, right? And we just saw that. Yeah, yeah. It just has to be bigger. You know, it just has to be bigger, right?

Starting point is 00:35:48 Every country that's announced has subsequently announced it's been a bigger GDP and a bigger investment, right? So it started with Bhutan and Oman, El Salvador. Those are tiny. UAE, that's a bigger country, right? Argentina, that's a bigger country. Even Ethiopia, which is now mining Bitcoin for its own state reserves, that's a bigger country, even Ethiopia, which is now mining Bitcoin for its own state reserves. That's a bigger country. So I think that that's how that's how it happens.

Starting point is 00:36:09 I believe Qatar, at least we saw some speculation that Qatar, the Qatari president, Amir, I don't I don't know the political structure of Qatar, but was visiting Bukele. And I saw Max Geiser very openly saying whether true or not, that Qatar was. Exactly. Scaramucci quote tweeted that and he does a lot of work in the region. So I have to ask one question. There were two stories out in the last couple of weeks that contradicted that are not contradicted, that are opposed to one another. First was this idiotic report. I mean, I have no words for it because it was like, you know, it was the ECB Bitcoin is going to be zero report, which, you know, if you look through

Starting point is 00:36:50 the arguments, they are they're kind of a rehash of things that it's just literally illogical. Yes, it could happen, I suppose, in a certain sense, you know, if the collective consciousness of humanity, like if we had a, you know, a power outage or a solar flare that knocked out all the computers in the world and we had to go back to to a non-digital world i suppose but outside of that i don't see it very likely but that came out at the same time or within days uh there there was there was a paper written by the you know i guess the same organization or similar organization in europe that oh it's from the WEF that said that Bitcoin is incredibly helpful for the promotion of sustainable energy, which is something we all know to be true, but is definitely against the mainstream anti-Bitcoin or anti-crypto army narrative. The fact is, Matthew correctly said ESG as constituted now is destructive of

Starting point is 00:37:49 shareholder value, makes no sense, etc. But some of the precepts of ESG, at least the environmental precept, it's not a bad thing if one understands what needs to happen in the planet. The biggest single disconnect has been that the notion that because Bitcoin uses a nominal amount of a large amount of electricity, that somehow it's anti-ESG or anti-environment. And the truth is exactly the opposite. That narrative matters because if you end up in a world where people mainstream starts believing that the best way to incentivize renewables, stabilize electric grids using renewables, et cetera, is Bitcoin, all of a sudden that those same animal spirits have piled an enormous amount of money into ESG, all of a sudden piles into Bitcoin. And sovereigns then say, well, listen, this is part of our strategy to go net zero. This is part of our strategy to become more sustainable.

Starting point is 00:38:42 And when the World Economic Forum said that, I thought that was one of the most bullish things I have seen in a long time. And the market yawned. No one cared. It's kind of a helpful thing that AI can do is help people get away from this moral relativity when it comes to electricity, right? Like an AI search takes a comparable amount of energy as Bitcoin. I just saw a story this morning that Amazon is inking an enormous deal for nuclear energy in Pennsylvania

Starting point is 00:39:15 to power the data center. So that energy, is it going to power your objectionable AI search or your Bitcoin? It's kind of two sides of the same coin. Hey, Scott, it's worth looking. I know, we're there. 68,600. I don't know if you guys can see my screen.

Starting point is 00:39:39 Does it work? This box down here is the one I'm waggling my cursor around. That box, that's the Bitcoin dollar books, which this morning were weighted more red than green. Super thing. More green than red. That means we are spot led. This is just adding up Coinbase Kraken and Bitstamp, but I could change that and add more. This is the chart.

Starting point is 00:40:02 We're almost right back to that level. So kind of interesting that this is going on. And we see this is fairly significant volatility, but it's literally the same thing. And what I was talking about before, if you look at the inverse perpetuals, these numbers are going to be smaller. It's the same thing. You see the stair step, boom. And you see how cross this is. These markets are completely out of joint. And so there's lots of speculation, but with trapped money, that is. And you can see how high these prices are, relatively speaking.

Starting point is 00:40:34 And when I talk about funding rates, those are down here. So you can see here, you know, 0.078 instead of 0.01, 0.067, 0.095. They're not crazy, but it's telling you a lot of what's going on. So I just wanted to let people see the kinds of stuff that I'm always looking at. And given the fact that the market looked like it was, there's a shot of getting to quote the all-time high as we're talking, I figured we'll take a look, but I'll keep looking. Anyway, sorry, I didn't mean to interrupt. I just- No, no. I mean, it's hard not to be watching the price action and what's happening as we're speaking. I want to actually ask you guys about this. I think Pomp actually wrote a newsletter on this this morning, and I saw this Dylan LeClaire tweet. The time it took Bitcoin to double after previous breaks of all-time highs. December 20, 18 days. March 2017, 84 days. That's a long time, apparently. It was less than three months to double. November 2013, 10 days. And March 2013, 18 days. That's a long time, apparently. It was less than three months to double. November 2013, 10 days. And March 2013, 18 days. So interestingly, this does not include,

Starting point is 00:41:32 which I think is disingenuous, when we broke 65,000 and went to 69,000 and never did double. So that's a curious omission as I'm looking at that because we went from 69 back to 16. I think it probably means like new highs. Yeah, no, it's a fair point. They just left it out. But the narrative here, obviously, is that when we make a new all-time high, it absolutely goes parabolic and flies and effectively doubles. I mean, that's talking about $138,000 Bitcoin in less than three months. I mean, is that really what we're looking at here? That would surprise me even more than

Starting point is 00:42:12 where we're at now. But hey, I guess with the flows, it's possible. I mean, but what do you think, Dave? You're shaking your head. Do you disagree? Well, I don't think it would. I disagree that it should surprise you. I think that, look, everyone who watches this show knows my thesis going back, and Matthew, you haven't heard this, but for me at least, I believe Bitcoin trades like an option on its own adoption, that it has asymmetric return probability of it gets to digital gold or beyond, or it doesn't. If it does, it 10X's from here. If it doesn't and it never gets adopted, maybe it fades to a niche product, et cetera. Who knows where the terminal price is? But either way, you're looking at maybe down 50% or up 1,000%. When you have that sort of

Starting point is 00:42:57 return profile, it's more like an option than it is like an asset and that means volatility can be discontinuous it means volatility could be significant the fact is people buying bitcoin now the vast majority of them are buying it because they think there's a reasonable shot that bitcoin will be 10 times this price so ask yourself what will make them sell i mean i i know strategy. My strategy on my personal level is I have a dollar balance for three months and I have a Bitcoin balance for substantially more than three months. And as I dip below three months, I sell, well, in this particular case, GBTC, because that was the easiest to sell. And I bought that, you know, I bought a bunch of Bitcoin effectively at 13,000. So, you know, and they're long-term capital gains.

Starting point is 00:43:47 So I'm selling little bits and dribs and drabs. But the truth is I'm selling it just to pay for vacations and fun life. Right. You know, and that's not allowed to do that. There are a lot of people who are doing that, but major sellers, most of the people who are holding it are like even 120,000. That's not what I'm holding it for. I'm holding it for five or 600,000. And there are a lot of people who believe that. I actually am one of them.

Starting point is 00:44:10 I am as well. I was just talking about the timeframe. I absolutely think we're gonna 2X in this bull market. The question becomes, where is, all supply is elastic to the point of as the price rises, people have targets and they sell. But other than selling for need, where are the sellers? Where are the price? What does the actual marginal demand and utility curves look like for Bitcoin?

Starting point is 00:44:35 And we don't know that answer, but it in all likelihood is not shaped as as normal assets are. That's really my point. So where does it go if it goes into price discovery and people stop selling and there's price insensitive buyers, or at least they're insensitive below 200, 300,000? Who the hell knows? Does it get there? It's possible. I mean, I've said on your show multiple times, I think that 120 is a perfectly, that wouldn't even be a surprising outcome if we got to that this year i'm not saying we will because obviously it's it's it's risk etc there's lots of reasons but it's not crazy and and so i always kind of wonder about about people who look at chart

Starting point is 00:45:16 patterns you know that have had three literally you know i made this joke i mean matthew i always say that everyone who talks to the bitcoin cycles if it it's the Holy Grail, it's like it was a quant, three or four observations is never going to make me, you know, believe we have anything close to having cycles. Yeah. Yeah. We can preempt the having cycle very easily here. I mean, we're sitting at 68, 750 right now, just to give you guys an idea on a four hour chart. That's yesterday's high. The all time high is that close. I mean, it's crazy. Honestly, I'm surprised it got here so fast. And maybe it's because I was away and it just sort of teleported to above the prices that I was expecting that it happened. But I mean,

Starting point is 00:45:56 it's pretty hard for me not to stare at this chart. I found myself staring at the chart for the first time in years, literally watching the price action. Not something that I've done in a very, very, very, very long time, but absolutely blowing my mind. But Matthew, there's something, there was a story here I wanted to ask you about while we're watching that. Bitcoin ETF issuer VanEck has huge crypto growth goals in Europe. Of course, your CEO made comments about this. I think it's important to remember that even as big as these ETFs are, it's pretty much

Starting point is 00:46:23 an American thing. Well, so that story interviews the CEO of VanEck Europe, which is a wholly owned subsidiary of the parent company. And because of the easier regulations, they were much quicker to get spot Bitcoin and ETH ETFs off the ground. And there's roughly maybe six, 700 million in those products. And we're number one in liquidity and I think the ETH product. So they had success kind of earlier even than VanEck US on the ETFs front. The other thing that we're doing in Europe. We recently rolled out a NFT startup called Segment, S-E-G-M-I-N-T, which uses ERC-1155 to create fractionalizable NFTs, where you can basically have this lock and key model where you buy an NFT and then you can create a lock and 10 different keys and essentially sell fractions of that NFT. And then in order to redeem the whole NFT, you'd have to buy back all the keys.

Starting point is 00:47:31 We think there's a white space in NFT functionality that we can fill there. But the full utility of that product is not available in the US. So I'd encourage anyone interested to go onto segment.io and have a look at it. There is some considerable crypto native functionality that it doesn't work with US regulators, but because of Mika, we are able to explore. So I think that story in the separate interview with Martin reflects some of the autonomy that Vane that Europe has to play around in areas that Gary Gensler and the SEC don't want Americans doing. And I think it just hints to how many markets still will be lacking these products. As you said, they have them. But we see Hong Kong

Starting point is 00:48:18 talking about this and others. But imagine if the entire world starts to approve these products at the time when we're hitting all time high. Here we go. Going up. Are we going to do it? Is it happening? Okay. We're at six. We broke yesterday's high 68.

Starting point is 00:48:31 Oh my gosh. It's hard to talk about anything else right now. I can talk about this guy. Yeah. Look, micro strategy proposed at 600 million convertible note offering following one day, 23% share price surge. While we're watching this,

Starting point is 00:48:44 can we just talk about the biggest, I mean, is this guy going to be the Warren Buffett of our generation just by buying Bitcoin? And I was just tweeting, I'm about to tweet something, because Jim Cramer evidently said, the only decision to buy Bitcoin for MicroStrategy is, Cramer said, it's better to be lucky than good, which I think is maybe one of the dumbest things that Kramer has ever uttered out of his mouth.

Starting point is 00:49:08 I mean, Michael Saylor is a lot of things, right? You could call him a visionary. People were thinking, calling him a tinfoil hat conspiracy theorist for what he says about the fiat. But the fact is he's incredibly thoughtful, and his investment thesis thesis has never changed and his conviction level has been high. And if he turns out to be right, how do you consider that lucky? I mean, lucky is, oh, I don't know, YOLO. You know, this is this is literally the opposite of luck is when one has conviction and foresight and implements a strategy and it works. I don't know how you call that lucky i mean was jeff benzos lucky

Starting point is 00:49:45 in deciding that one click made sense and and just in time distribution would build an empire i don't think it's any more lucky than that and i find it amusing that crypto skeptics or other people don't understand you know that most of the people in our generation or in fact in any generation that have been incredibly wealthy combine the attributes of thoughtfulness, foresight, a thesis, and being willing to take other people's abuse in order to build something that was truly inspirational. And what Saylor did in front of two to 3,000 other CFOs and CEOs saying, listen, this should be part of your balance sheet. Here's the reasons. Look, he was right. I mean, call it what it is. I mean, people on Wall Street deified people like Abby Joseph Cullen for getting a bull

Starting point is 00:50:29 market right or deified Michael Burry for getting the big short right. And those are one-off kind of theses. Saylor's thesis is more enduring. And you can say what you want about him. Is he Warren Buffett? I mean, it's a different thing. But in a sense i mean in a sense yes and it's you know anyone who has the strength of character and will with a thesis that turns out and is playing out in real time calling that lucky to me is just absurd so close we just hit 68 9 50 uh it's like uh there's a there's more exciting than watching like uh sports the Super Bowl. Yeah. Well, if you're looking at my screen, you'll see that it looks like it's funny. You know, I talk about this, but looking at that, the composite order book is so predictive in the short term.

Starting point is 00:51:23 It's one of the reasons that CoinRoute's algos actually outperform, you know, our on Bitcoin and Ethereum people who are using it to trade. We save them. We shave basis points off what it would cost them because the algos are using that stuff. But it is amazingly how predictive it gets at turning points in the market. And so I'm watching this stuff. Now, of course, what we're seeing is what humans can see. The computer sees it much, much quicker. But the reality is, is this market just started to move because on almost certainly a couple of large buy orders went in. It just isn't the liquidity. I mean, the liquidity on the on the high end, even in the in the perpetual swap markets, it's much it's much less liquid in terms of what you could do. You used to be able to buy a thousand Bitcoin just from the consolidated order books on the stock exchange, on the stock, on the spot exchanges, either in Tether or in dollars. And you'd move it one percent. Now it's like a percent and a half.

Starting point is 00:52:13 Yeah, but I'm calling complete bullshit, by the way, on the narratives that OTC desks have run out and you can't buy on Cash App. I'm sorry. And I love the people, some of the people who are saying, yeah, I, because Caitlin has one of these days you should have Caitlin and I, and we should have an actual debate about market mechanisms and leverage. She doesn't believe there's any good use for leverage. She's and the reality is, is the world uses leverage market makers use leverage. I used to run two Sigma securities, the market maker, right? We weren't levered in the sense of having outsized bets. But the fact is, is you want to be able to access every source of liquidity. So you need to be able to access it. If you're making a market in Bitcoin and you're not looking at the inverse perpetual swap, the non-inverse perpetual swap, the tether swaps, the tether spot,

Starting point is 00:53:03 the dollar spot. You also need to be able to hedge. Well, that's what I mean. If you're not using all of the vehicles that sum total Bitcoin liquidity, then you're not going to be as profitable as the ones who are. So why would you hold inventory? I mean, market makers are not like a supermarket. You don't like stock. You know, OK, the new, you know, the Super Bowl is coming.

Starting point is 00:53:27 I got to go stock, you know, a lot more Motelo. I would have said Bud Light in previous years, but I don't think it was as big of a deal. I think they're recovering. The fact is, you don't go increase the amount of beers and chips that you're holding in your shelves. You're an OTC market maker. That's not how it works. What works is you're surveilling the liquidity the way that we would with this kind of technology. And if there's enough liquidity to make your price, you make your price. And that's where you are. And by the way, there's two sides

Starting point is 00:53:54 of liquidity in all of these markets and market makers are using it. So this notion that there's a fixed supply at OTC desks is beyond absurd because no smart OTC desk could do this. Max Boonen, you know, who built B2C2 had a great thread explaining the exact, you know, because, you know, he said something quickly. I then, you know, said, I then tweeted about, you know, how the mechanics work. And he then went and did a phenomenal masterclass. I don't even want to find it in how OTC desks work because what they're doing is they're accessing all the liquidity in the market. The problem is, is when there are no sellers anywhere, well, then you see action like we do right now. Whereas we just saw Coinbase's bid,

Starting point is 00:54:34 you know, $60, $70, $80 higher than Kraken's offer. Right? And so when you see, and we've been seeing it. 19 bucks. We missed by 19 bucks right there. You're going to get there. Don't worry. Okay. I can't believe we have to sign off right now, but I will say that I'm going to Twitter spaces and we have Scaramucci there. So that should be an entertaining conversation.

Starting point is 00:54:56 Oh my God. Did it just. There you go. 68,943 bid on Coinbase right now. Yeah. 69,000 on the inverseuals all across the board. I mean, $68,990. $10?

Starting point is 00:55:10 Where are you looking? I'm just watching the Coinbase chart. Literally, I'm just watching the Coinbase chart right here. Yeah, the Coinbase chart. Yeah. The bid on Coinbase right now is $68,970, give or take.

Starting point is 00:55:26 It's flipping around a lot. It'll be there. Now, there we go. No, maybe not. Whatever. Anyway, you're going to see it because, as I said on your show, and I can't remember when it was. It was sometime in January.

Starting point is 00:55:40 I said all-time highs are baked in the cake this year. So I feel pretty good about that one. So it's $68,990. There's a huge sell-all there. Oh, $68, 997. Yeah. I mean, are we signing out? You guys can be free to go. I might just sit here for the next 13 minutes. I'm going to go hit that last bit and push us over. Thank you, man. Dave, you can stick around. I'm going to watch this for a few more minutes. I can't help myself. Thank you, Matthew. Great to see you guys. Okay, Scott. Well, I'm going to take off because I'm going to join you on the Twitter spaces also.

Starting point is 00:56:07 Oh, yeah. See you there. I'm going to take care of a few things. But interesting times, my friend. Interesting times. Oh, there it is. It just hit 69. We did it.

Starting point is 00:56:15 We broke the all-time high. 69,800. The alerts are going off. All-time high. We did it. We did it. Yeah. Well, there you go.

Starting point is 00:56:25 Now we'll see how many people think they can sell it off. 69020... Whatever. It's all over the place. Lots of fun. We did it. We did it live. All right, everybody. I'm going to take off. Thanks, man. All right, guys. We did it. Going to Twitter

Starting point is 00:56:41 space has got to come. It's going to be a celebration party. Feels good, man. Feels good. We made it, we did it. Going to Twitter space. He's got to come. It's going to be a celebration party. Ah, feels good, man. Feels good. We made it. We did it. See, I had to just come back to work. That's it.

Starting point is 00:56:53 Had to come back. I'll be back tomorrow. Of course, I got to go. I hate that I got to go. We should be celebrating. We should be drinking. For me, it's midnight, actually, in Japan. So I could probably convince somebody to do that with me.

Starting point is 00:57:04 Guys, that's all I got for you today. I will see you tomorrow. Go celebrate. Go hug somebody. Give somebody a kiss. Amazing day. Peace, guys.

The Wolf Of All Streets - Crypto Skyrockets | Bitcoin To Break All-Time High | Macro

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.