The Wolf Of All Streets - Don't Buy This Rally | Dave Weisberger & Mike McGlone

Episode Date: January 30, 2023

My special guests are: Dave Weisberger: https://twitter.com/daveweisberger1 Mike McGlone: https://twitter.com/mikemcglone11 CoinRoutes: http://bit.ly/3ZXeYKd ►► JOIN THE FREE WOLF DEN NEWSLETTER https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #Bitcoin #Crypto #trading  Timestamps: The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Markets have been seeing a nice rally on sustained, looser conditions, but that is likely about to change. We did not have Jerome Powell and the Fed in the spotlight, but now they are back in the driver's seat with all eyes on what happens this week. Will they raise 0.25 as it's priced in? Will they raise 0.5? What will the tone be when they do one of those things? I personally believe that we'll probably get a 0.25 rate hike, but then extremely hawkish tone and that markets won't be happy with it either way. But I'm interested to talk about today's guests. I think you guys know them by now, Mike McClone and Dave Weisberger here for Macro Monday. Guys, don't want to miss it. Let's go. started, please subscribe to the channel and hit that like button. Hopefully you guys can hear me. I had a camera glitch there for a moment and a little bit of a heart attack, but I'm hopefully

getting the thumbs up that everything is working. Guys, as you know, this is sponsored by Prime XPT. So check that out. If you guys didn't see Dirk last Wednesday, we're going to have him back this Wednesday. Really a lot of fun live trading with him. i'm gonna go ahead and bring on our guests right now why leave you in suspense i've got mike mcglone and dave weisberger gentlemen how are you doing today good morning happy monday good morning scott it's beautiful in sunny miami always always beautiful in sunny miami and not so much else. So I can see why both of you have decided to settle there for sure. So listen, as I said, Mike, I'm just gonna let you dive in, actually, because I know you mentioned to me before that at 830 this morning, you had your call

with everyone at Bloomberg and you get to really get your finger on the pulse first thing on Monday morning. So what was the what was the chatter? and what was the tone? Well, it's Bloomberg Intelligence. Our group is, yes, I'm biased. I'm not selling a product, which is the key thing, but I'm biased towards my own view. And I'm not pressured by anybody for that view, which is something that Dave and I know from being buy side, sell side, is I've been, sometimes you get pressured. in the view from what you expressed earlier is similar from we got from our senior economist Ana Wong that we will see 25 now that's just what's pricing the market Fed funds futures show 25 basis points on Wednesday a hike key thing to remember is the Fed is still hiking number one rule in market risk assets they're taking away

the punch bowl be careful doing anything but selling rallies. Most notably in the stock market, commodities, crypto is a little different world, but they're still hiking. And she expects Powell to sound hawkish. She's got no reason to be dubious yet. Why? Let the market do it for them. So completely confirms with you.

The key thing is also from our chief equity strategist, Gina Martin-Adams, pointing out its technicals. Our equities are bumping up against pretty good resistance. Now, she seems somewhat neutral, but I'm taking that as a bear stance. The key thing I think that's profound from our interest rate strategist, Iris Jersey, he is making a call for 10-year note yield to continue dropping towards, what number did he say, 2.7%, which right now it's 3.5%. That means more lower higher bonds, lower inflation, and more deflation for commodities, which is my bias. Key thing that

our FX strategist, Audrey Chiltreden, point out that HCB is still hiking. And this is my key takeaway from this is we are still seeing central banks hiking as the world is tilting towards recession. Now, you saw the latest we pointed out are downgrades from World Bank. Now, sometimes they're considered less, but it's still tilting that way. And basically, the Fed needs higher unemployment, unfortunately. But those are based on a lot of lagging measures. So I'll dig into my outlook a little bit as I just want to point out key things that I was way too early on last year and could say I was wrong. You get stopped out. And as a trader is like Mark Yusko points out, as long as you make more money when you're right and stop yourself out when you're wrong, you do OK. I'm sure Dave can relate to that. And you can, too, anybody who trades. But the key thing I'm point out this morning is the price of the benchmark measure

for U.S. electricity and heat, natural gas, is at the same price as 1995. It's absolutely plunged from last year's spike. That's not profound. That was my call. And that's what it always does. That's what it has been doing. Why? Because the technology of creating more and using less is accelerating. And that's what I think we're going to be getting into from this whole war situation is everything's tilting back the other way. The key thing is that it's accelerated that move from the Fed. You know, the thing is also plunging is crude oil is plunging. You're looking for inflation from commodities. I say good luck with that one. They should continue to collapse. And the whole world is

hoping for China to open up. And that's the whole world is hoping for china open up and that's the key thing is when you have a major consensus like that that consensus better be right but it tilts it more towards them the the mean where it's less likely to be right and there's too many positions leaning on that so my bottom line is i still think in the macro that the s p 500 right about 4 000 now is more likely to go 33,000 than the $5,000 by the end of this year. And I can't not have a view on any markets without a view in the stock market, because the correlations have all gone almost one to one, certainly on the way down, and bounced back up this year. And the key leading indicator has been crypto. So with that view,

I just can't get bullish cryptos yet in the short term. Now, the big picture, I fully expect Bitcoin in the next couple of years by probably around the halving, maybe 25, 20, 25, and get to 100 grand. Question is, if you buy here aggressively on leverage, which is my background, you might get stopped out at 15,000. So be careful with that. And it's just one of those rules is that time of year when your market pumps that much beginning of the year, all this hopium, despite for kind of, I think, really less than robust reasons, just bouncing, then you have to be very careful. So that's my bottom line. And I think the key thing is when I might get the ICASI Connections Conference this week, I have to moderate a panel on the investment outlook. I'm going to say, OK, start with what's your bias for the equity market? Basically, for everything to stabilize, you need stocks to go up.

And that's bad for the Fed. It's bad for inflation. And I fully think it's more likely the stock markets continue being a downward market. Everything is going to follow except for bonds, gold and eventually Bitcoin. I'll pass it back to you. I think we lost Scott. Dave, then it's your turn. I think we got this. Scott is a rainbow.

We'll keep going. We got the old-fashioned color bars. You lost my camera. I'm trying to get it, but you guys keep on going. I am here. Dave, your use. The funny part about that, Mike, is I find myself agreeing with a lot of what you're saying. I think a couple things you said are profound and are more important than people realize.

The first profound point you made, which is actually the single biggest thing I think you said, is people constantly underestimate the importance of technology in being able to drive prices down for stuff. And we're seeing that we see that with energy all the time. We see it with commodities all the time, but we see it with other things, too. And one of the things, a theme that I have heard from one of your colleagues, the stalwart, you know, Joe is something where he and I agree. I mean, we don't agree on everything by any stretch, although on this one, I totally agree, which is I think people underestimate the impact of technology as a disinflationary force. And conversely, the policies or, you know, monetary policies that might hurt technology could actually contribute or decrease the ability to get out of inflation. So he talks about the time. That's point number one.

And with all the layoffs that are going on in technology land, I mean, honestly, so far, mostly in big tech, it's mostly a calling. Right. That you do this. They kind of like the ability to use to get rid of lower performers and, you know, get and retrench themselves so they can grow a little bit better. So I don't think there's anything any real damage that's been done there. But it's worth understanding that. When I think about the stock market, I think that it is so much less monolithic than just looking at the S&P, though.

I think it's really important to understand what's going on. I mean, is it value? Is it growth? What kinds of companies are doing what? Are multiples compressing yet? Yes or no? And I think we've seen some multiple compression. And I think that's what you're talking about. But there are certain companies that are actually doing much better than others. And it is not, you know, correlations inside the S&P, you know, in big moves tend to be higher. I think right now they tend to be a little bit weaker. I think that when we start talking about

correlation of crypto, I think that it's important to understand that as well, which is a whole lot of nothing. You know, there's a lot of words I just said, but it means that, you know, I still think we're sitting in the what I call the bottoming process. I'm actually I continue to get more bullish week by week as this scenario plays out, because it's literally, if you remember several weeks ago, Scott, what I hoped would play out, the most bullish scenario play out is playing out, which is a rally back to resistance, which if at some point it gets through it, it becomes support and is a big deal. I will continue to mention, I will stare at the 24.5 level because it's the 200 week

moving average. I've been staring at it this weekend when I was sitting there watching the football games and watching Bitcoin rally up to 24,000. I'm looking at it saying, the most bullish thing will be a decisive rejection of this level now. But, you know, holding 23 and kind of staying around these levels. And that's exactly what's playing out. Yeah, you can look at it right here just so people can see. I pulled it up. You have the 50 and 200 MA in blue and red. Red is the 200, just so people can see what you're talking about.

Well, that's the 200-day moving average. 200-day moving average. 200-day moving average. This is weak. Are we showing them our tricks of the trade? Ignore the daily, focus on the weekly? Yeah. I mean, I think that the bottom line is, unfortunately, we do this show every week,

and I keep talking about weekly numbers, which means it's going to be a long time playing out, but it is a very big deal. The fact is that the other thing that's going on here that is very newsworthy, you know, from a macro point of view, is the Bitcoin minor degree of difficulty is at an all time high. The hash rate last week hit an all time high. I mean, to put this in perspective, I mean, the Bitcoin hash rate is now more than double where it was, you know, when Bitcoin was at prices more than double where it was when Bitcoin was at prices, more than double where it is today. So it's a very big deal. Not great for miners, by the way. I continue to say that, but phenomenally good for understanding the strength and resilience of the network.

And I think that that's a very big deal. And so from a Bitcoin perspective, we have that. I want to talk, I know you're going to want to talk about crypto news, the White House statement and the decision by the Fed on Caitlin Long's bank out in Wyoming are both worth talking about. But just to get back to what Mike was saying, just in terms of pure macro, it is where I will continue to note two other things. Number one, they are changing the definition of inflation soon. And at the same time that inflation, the most recent readings came in under expectations. And that's because of, if I'm not a betting, well, I am a betting man. If I were a betting man.

Oh, whoa. And now we got you too. We're creative cameras. We can hear you though. Keep talking. We got the audio. There he goes. This is Mike.

I'm going to switch. I'll switch back to a different camera. Yeah, you're good. Keep going. I'll switch back to the other camera. Don't know what happened to the one. But the point is that inflation came in under expectation. The PCE, which is the PCE deflator, which is all every Fed's chairs, you know, favored version came in under expectations.

The surveys going out, sentiment, the inflation expectation drop is one of the largest on record a year out. And, you know, things like that are going to give the fed the ability to do to pause later but i agree with what mike said before it seems really likely that they're going to go back to a serious jaw boning because what they don't want to do is have speculative assets take off and have a wealth effect from on the margin people day trading pink sheets and low small caps and cryptos go, I mean, not Bitcoin, but you know, like, you know, all coins go crazy. He doesn't want that. So he's going to talk tough. The reality is he can talk tough as much as he wants. The fact is, if inflation comes in, he's going to ease off, particularly as employment and continues to

kind of tick up. And job growth was also, once again, at the weekend of expectations and one of the lowest job ads recently in quite some time. So, you know, I do think that you'll see this talk more than actions phase out of the Fed for the next six months, unless we see a spike in inflation or something else goes wrong. That would take a macro event. Now, macro events can happen, but I think that's true. The other thing that's interesting is the treasury debt standoff thing. What's actually happening right now is closet QE. It could become, because they almost have to, you know, in terms of what's going on in the market. So liquidity is slightly better than one might expect in a rising rate environment, but that's worth monitoring. It's not a big, not a big effect right now.

Talk about liquidity, QE being in the closet. That's a, that's a curious term. How so? Well, I was reading, you know, the best person, you know, I'll give I'll give credit is Noel Atchison, who formerly of Coindesk and now does the crypto is macro now newsletter. So I don't want to plug another newsletter on your show, but I read it. Yeah. And she talks about this, I think, let her explanation be better than most. But what she's talking about is the notion that Treasury is not paying certain bills and paying others. And the way that they're actually doing it is actually injecting slightly more money into the economy than might otherwise be happening. I'm not exactly sure. I haven't dealt into it, to be honest. But she tends to be right more often than she's wrong. Go ahead, Mike.

Well, if I can just riff a little bit off what you said, Dave. Micro, macro, technical. First of all, you mentioned the 200-week moving average. I'm completely with you. We're in a bonding process in Bitcoin, and investors should only be looking to accumulate. and traders, if they focus on the dailies, are more likely to lose your hair. So that's one thing I've done since I've been in the business with clients, focus on the weeklies. And 200-week, the biggest dip versus that ever in Bitcoin, yeah, you don't want to be getting short. That down 80%, sure, that's really good signs. But the key thing I want to point out, that's also happened in the NASDAQ. The NASDAQ's been hovering on its 200-week moving average since October last year.

And the key thing about that moving average, the Fed has never tightened with the NASDAQ hovering on that moving average. When it gets below it or actually as it traded below it, it's always been easy. That's the juxtaposition. That's the big difference now. And that's where don't fight the Fed and most central banks ever tightening. So the key thing is a little bit of the technicals roping that in. But I want to point also, Ref, on a little bit you said about inflation. We should expect inflation numbers to collapse. It's typically what they do in recessions. Yet they're lagging and they're going to lag a lot. So we should expect the estimates for inflation were way underestimated.

It's the power of the estimate revisions, as you've seen this a lot. Once they start lagging, which they are now, that's trending towards the markets heading towards recession, which we fully I fully expect. And the key thing I want to point out into the macro is the macro for inflation. What happened? You point out we need some kind of event. What happened last year was essentially a 100-year event, almost. I compare when Russia invaded Ukraine, which has been pushed back, and Ukraine is becoming a fortress of defense now. Just don't underestimate what the allies are doing in there that you don't hear about with the technology and intelligence. But when they invaded Ukraine, that to me is synonymous with the great grain robbery in 1973, 74, when the Russia, we had a major drought in the Soviet Union. They just kind of stole a lot of grain from the U.S.

They did it very clandestinely. It was a big pump. And when Saddam Hussein invaded Kuwait, and I did not say Iraq because it was one person who did that, just like we had one person. These are autocratic leaders. Both of those events established very significant highs in commodities and inflation, particularly in 1990. It took 14 years to get back above that high in crude oil from 1990. So that's what happened last year. So expecting more of that is unlikely. What happens now is that it typically happens is the hangover. And I just never seen a hangover with the Fed still tightening that ends.

It usually takes a long time. So I can go back to you, Scott. Yeah. Can I make one comment on that? I just want just one really quick riff. If you want to understand risk, the one riskiest, the riskiest combination of events from which people haven't talked about the one macro event, which and this is from a trading point of view is more a human life point of view. But the notion of what's going on in Ukraine, where, you know, where Putin is losing and now tanks are going there, et cetera, and oil prices collapsing at the same time cutting off his source of funds, is I worry that the cornered badger approach.

I mean, things are really bad. It's really, really bad for the Russian government. Really, really bad. I mean, we would all prefer it to be painful, but not collapse worthy because of the kind of chaos that that could cause. And, you know, I don't want to be Nostradamus. I hope I am wrong. But of all the macro events, something horrendous coming out of the Soviet Union because of those twin things hitting simultaneously, that kind of chaos is likely to cause some volatility at some point later this year.

I have to make the point because if oil does continue to collapse at the same time, it is not a situation that will be calm sailing. There will be volatility at a bare minimum. That's been a fear since the first day, right? That Putin obviously is a wild card. And if he starts to lose, he launches a nuclear weapon or something and all hell breaks loose. Right. Exactly.

One thing Dave said was quite spot on. You said Soviet Union. That's what he's trying to redo. That's what we grew up with. But just remember a year from now that we started to kick into the risk. It was pretty clear. I fully expected that Ukraine would just be overrun in a couple of days or weeks. But that's what's changed. And a lot of that is technology. I mean, how did we win in Afghanistan? Not win, but how did the Soviets get beaten in Afghanistan? It's just U.S. technology. So

to me, that's what's going on. It's the macro. And we all know, yes, you can't push back, push them too hard because of nuclear risk. But that's where Z kind of drew the line, I think, President Z finally said, OK, we'll be unlimited friends unless you nuke your neighbors. That's probably kind of what more grizzled veterans, which you certainly are, David, you see this all the time. There's so many people, bullish commodities at the beginning of the year. I'm like, that's last year's trade. It's already done. You can't focus on last year's trade if you focus on what that means. And so looking forward, I fully expect we're going to get this bottom in Bitcoin. But if you look at the last few bottoms, they were very painful. It took four years to get above that high about high from 2017 in

bitcoin um and then that how many times we bounce around 4 000 and with covid to make it difficult how many times we bump up to 15 grand and go back down it's it can't be easy if it's easy something's wrong but from the buy and hold types um you're okay because i sense that this this major event with what happened with Sandbank and Freed and what's going to tip with the regulation, if you want to go there, is going to be looked back upon as that's what the regulation, that's what we needed in this space for the adults to get in and say, thank you, we're in for the long haul. Well, there's two pieces to that that deserve comment. The first one is time. Cycles do tend to compress because people are always trying to

anticipate cycles. And so you'll end up with more volatility as FOMO types will say, OK, this is it. We're on the upskring. Look, as I said, I am unadulterated. I almost sound like a Bitcoin maxi bull when I talk about it. I think that Bitcoin, I've said this a million times on this program, Bitcoin trades like an option on its own adoption. And those metrics are getting very, very strong. I will not be surprised if 2023 is the year that Bitcoin delinks decisively from other risk assets. I mean, it's still going to be treated as a risk assets, but it could happen in 23. I think I'm more leaning toward 2024 for that to happen, but I do think it will happen. And that is something to be watching for. A day trader who's watching for it to happen intraday

is going to get disappointed more often than not, right? But the fact is, that is a big piece of what's going on. So that's point number one. When we talk about, you know, what's going on in terms of the bottoming process and Sam Bankman-Fried, there are two points within that. Point number one, quite literally, the one thing that FTX did is it changed the supply-demand dynamic. In fact, flipped it. Before FTX, with the whole cycle of depravity of all the lenders who really weren't lenders, who really weren't taking your Bitcoin and being agent lenders, but they were in fact taking your stuff and lending it out to people like buying junk bonds and saying otherwise. I mean, that was what we saw all year long. And then we saw at FTX, we saw an actual theft. Now, some people made money on the other side of that, but Alameda

lost a lot of money, in all likelihood, you know, somewhere between eight and $10 billion, maybe more. And then he tried to plug it with crap, which is, of course, theft. The fact is, it will push people toward regulation. The real question is what? And, you know, Commissioner Peirce and the current people running the House Financial Services Committee understand that that regulation can't take the form of, well, let's just say our existing laws are good enough and just kind of move forward with them because they don't work. And there have been some really good articles written lately that explain this point, which I've

been harping on. But the simple fact is that it's the form the regulation takes is what is the most important here, which means time is important because the farther we get away from the FTX situation, the more, the closer we get to the trial and we have conclusive proof it was theft, the less likely that knee-jerk reaction will happen. The faster regulation gets pushed, the more likely bad regulation will happen. So it's kind of an interesting dichotomy that we're in. And I'm kind of hoping that we get reasonable committee hearings that bipartisan people will actually get their voices heard, because theft is theft. And it's really important to distinguish that from other things that have gone on. But look, to be blunt, if regulation came in and said, you have to make, you can literally go to prison for lying about what your risk disclosures

are, then I think most people in crypto would say, yeah, that would be an unadulterated good thing. You can't say this is safe when you're making junk bond loans to people. You mean you can't say that your money is FDIC insured when it's actually in three hours capitals? Right. And, you know, the funny thing is, like, you know, this morning's news that the DFS is investigating the Winklevoss twins to see if Gemini make false and misleading statements about the program. I mean, ordinarily, when when when you have these situations that regulators want to find people after, you know, the thing has already happened. That's sort of the ultimate locking the barn door after the horse is already bolted kind of scenario. Ordinarily, I kind of like shake my head and say, well, this is bad. I'm actually not sure that's bad.

I don't know what they I didn't read the disclosures. I actually was on the waiting list. And when it came time to get off the waiting list for Earn, I said, you know what? Doesn't feel right. My spidey senses were going completely crazy on all of those things. And I didn't participate for myself or our company at CoinRoutes. I had multiple people saying, hey, take your cash cushion and put it into crypto yields things to make more money. And I refused. I just, it just didn't feel right to me. And so we stayed away from it a little bit deeper than that. But it's the same thing. I don't know what Gemini's advertising was, but I do know this. If their advertising was strongly indicating they were agency lending

coins out to people who are using them for trading as opposed to lending it for people to use for risk, they're going to have a real problem. Yeah, and it circles back to the same problems of Celsius, BlockFi, Voyager. I mean, these are all some version of the exact same project. I want to go back to product. I want to go back to what you said before about quick regulation likely being heavy handed and a negative and slower regulation. We've obviously had, I mean, I have the article here, but the White House now once again sort of focusing on crypto, saying that they're going to come up with some directives, that they need Congress to step up their efforts and start regulating. I wrote in a whole entire newsletter this morning on 2023 sort of being the year of regulation. But

even to play devil's advocate against myself, what if they just keep kicking the can down the road? To your point, because it feels like we had an executive order almost a year ago that said this exact same thing. Well, I think it's important. The administration a year ago said, everybody send us some ideas in six months. Here we are. I mean, let's be really clear here.

This is exactly on brand. Now, what do i mean by that basically in the same week you had the federal reserve rejecting uh uh caitlin what because the name changed so what's the name of the bank again uh custodia bank i have it it was that's a third different name so i didn't remember it was avanti and yeah there was one before avanti too i didn't remember. It was Avanti and yeah. There was one before Avanti too. I can't remember what it was, but anyway, it doesn't matter. Undeniably, and I think she's been on your program, but undeniably, Caitlin Long is one of the good ones. She is trying to create a financial institution that uses no leverage, that's not using fractional reserves, that there is no way anyone could argue is introducing risk into the system

in any coherent way. But the risk to the system is promoting Bitcoin. I want to repeat that because essentially it is exactly what I've been saying many, many times. There is a belief in corners of team government control, which tends to be on the extremes of both parties, but unfortunately is in the ascendance on the left right now, where anything that challenges the narrative, the government should control the economy, is going to be attacked. And I believe, and I don't think I'm the only one, I think it's very, very clear that quite a few people agree with me. I believe that as long as Liz Warren is in the ascendance for economic policy, that you're going to see crap like this happen, where you get jawboning out of the White House. That's what this report is saying. Oh, no, Bitcoin can introduce instability into the financial system. And so therefore, we don't want people to touch it. And you get the Federal Reserve aping that by saying, OK, we don't want to have a crypto oriented bank

have that license. That's not because they think the particular bank's approach was risky. It's because the bank is unabashedly going to be using Bitcoin, which, considering self-custody, considering its limited supply, has characteristics that threaten government control. And actually, if you watch any of the Bitcoin, biggest Bitcoin bulls on the planet, whoever they are, I mean, it doesn't matter whether it's Max Kaiser to people who are a little bit less colorful. The argument is always about a new financial system. But more importantly, people like Mike and I are like a better benchmark, the gold style measuring stick against fiscal profligacy. But people who want to be able to spend unabashedly

don't want it to succeed. And so you're seeing that impact in the decisions, because there's no real rational reason that a fully custodied bank, that no fractional reserve, no leverage in the system should be denied. But yet, there they go. And that's what happened. And when you read the report, it's the same thing. It's like, what are you going to do? Now, I'm not going to make one point about why this is so horrible. Actually, the person who made it much more eloquent than me is Hester Peirce. But the fact is, understand that by doing what they're doing, they're creating adverse selection, meaning selection bias, meaning the firms that are most likely to protect customer assets, to believe in fair and orderly markets, to intrinsically understand the importance of best execution, all things we want in the market are the ones that are being kept away

from trading Bitcoin and crypto. That is what they're doing. Literally, to quote Commissioner Peirce, they're doing the exact opposite of what you would want to do to have a healthy regulatory system. But that's by talking. So the question is, will cooler heads prevail or not? And I obviously don't have the answer. I'm not clued in in Washington. But I do think that there are some very key decisions. I mean, we talked about six months ago, Mike made the point correctly, that stable coins is something that's a really easy slam dunk. Only call something a stable coin when it's fully backed. Got it. How many people disagree with that in the United States that are serious? Very few. There's other things that are very clear, right? If you're taking risk with customer

assets, disclose those risks. Now, not the way the SEC does it with an Edgar filing buried in fine print in the middle of a 500-page prospectus, but actually say what the risks are so that a normal person could say, okay, I understand what's going on here. Those are the things that should happen in regulation that's very hard to argue. You can go further and say, well, you know what, ring fencing customer assets. The fact that BlockFi creditors, that the SEC is actually ahead of BlockFi depositors in the creditor line is awful. And I'll continue to mention that point. I know it makes you shake your head. You're lucky.

Because I'm agreeing with you. I'm shaking my head because it's so nonsensical. How can you not? Right. So regulation laws that don't allow crap like that to happen that says if you put assets into something that you are primary always, which is true in equities, it's true in securities, but it's by law. It's not because of anything else is important right i mean that was one of the reasons that when when you know john corzine had his little issue a few years ago there was you know people did lose some money but at least there wasn't you know at least at least it wasn't as bad as it could have been because of the way the rules work. Yeah. There's one thing I just want to,

and the macro of that is that the lessons I've learned is try to ignore things that I don't understand. Well, not that I don't understand that I think are just kind of noise. Like the details, FTX are not going to shape my outlook for cryptos or markets, anything. And the details of regulation will,

but I like to go back to what Churchill said. Americans will always do the right thing only if they tried everything else. And that's the thing that I think people miss sometimes in the rest of the world, and they think they're weak. It's our strength is our open discourse. Letting people like Elizabeth Warren and OCS point out the negatives of socialism

brings on the typical American, it's in our DNA to say, no, we're not going to be idiots. We're all here for a reason. We're going to be more like Switzerland and Canada and Europe in this space. You know that or we'll end up like China or the Soviet Union. And we're not going to do that. So to me, the bottom line regulation still remains the same.

All you have to do is look on any measure and you see what's the top traded crypto, the dollar. Any American who thinks that's bad it's just irrational you look what that's actually such an important point mike i i every time you make it i want to amplify it yeah there are enough people saying that to the administration that it explains why they say stuff but aren't doing stuff because they don't want to. That would be the worst possible case would be for that to get lost. Yeah. So maybe we'll just end it there and move on because why waste more words on it?

Right. I think we all agree that stable coins are the killer app of crypto for the moment. I just want to bring this up because actually, when you look at the title of the blog post from the White House, the administration's roadmap to mitigate cryptocurrencies risks. That's not a positive title, right? It's not that negative either. Right. Exactly. And then also, if you look at the sort of different bullet points as you go through it, it focused on the framework,

enforcement, investor protection. But the big one that it talks about is the connection between legacy, finance, and crypto. That's your point, Dave, right? This is all word salad leading to we're not letting this mess up our system. Well, the bottom line for me remains that I can't see how we're going to stop the process of getting to an end game where we're going to be able to, mile and pop, be able to click in their Swab account and buy a widely tracked ETF that tracks a pretty well disseminated index of cryptos like the S&P 500. We're nowhere near there, but it's going to happen. That's the reason we created this index five years ago. It's almost

inevitable that has to happen, particularly if you listen to people say we're protecting investors. got to be able to buy an index so i look at that as that's part of that dangling carrot until we get there to me we're nowhere near a saturation point we're just so early days and that's just a minor thing it's not really happening um it happened more before this but to me now this is like our etf team says that's what solves this problem of people having to go to the FTX to hold their money when they can just buy an ETF. And that means safety for every pension fund, endowment, family office, sovereign wealth fund will see that. Okay, fine. It's mainstream. And to me, that's how early days we are.

But that's been on the SEC's desk for years. Yeah. Well, I mean, the Bitcoin ETF decision on the SEC is, I will continue to say, is the single dumbest, single back-ass word decision-making that they have ever done. And yes, I said that on purpose. The fact of the matter is that allowing GBTC in brokerage accounts already, which fluctuates with wildly fluctuating premiums and discounts, allowing ETFs to trade Bitcoin in

a brokerage account that tracks futures, which we saw them allowing the US oil fund back, what was it, 15 years ago now, which is down 90 some odd percent, despite oil being only slightly down, allowing those sorts of products, which are vastly inferior, while denying a Bitcoin ETF is insane on its face. There are other reason, which is that it will the CME is more regulated, therefore less subject to manipulation is the single. I mean, I have friends in Dira and I'm sure that it just kills them that that's those words came out of an SEC mouth because it's exactly the opposite of true. I mean, the CME is closed for a period of time during the week, meaning you can manipulate the market of what's going on there very easily. And people do into the opens and the closes of the

CME. The CME gap is legendary among traders in terms of what's going on. There is no doubt they have it exactly wrong. And I don't think that those facts are going to have a problem when it gets in front of a judge. But that decision is just mind-bogglingly dumb. What Mike is talking about when you get to an index, that is, I can understand their points there. They're going to say, well, the other cryptos are in here or bullshit assets. But that sounds suspiciously like the SEC picking winners and losers. Checkmark, right?

And I'm not sure they're not supposed to do that. And by the way, if you look at the volatility of Bitcoin compared to several tech companies over the last year, guess what? It's been less volatile and has fallen less far. And the same is true with Ethereum. Amazon's a good example. So, I mean, you know, it's crazy when you do that. But I want to point out one point is when you look at what's happening now, it is suspiciously like what's happened before every

major bill run in Bitcoin. Look at what was going on and look at what's happening. And in the backdrop of realization of the U.S. government saying, oh, look, we don't really want this thing, but I think they're getting to the point where they understand that the billions of people who are getting closer, inching closer to adopting Bitcoin, are a lot of them aren't here. You know, the amount of say what I do, do what I say, you know, you know, follow what I do, not what I say, it's going on, it's crazy. The biggest difference, argue me, the biggest dichotomy, and I don't know how it is at Bloomberg, but I talked to a lot of people in TradFi. And last week, and this week, there are a ton of conferences down here.

For every single firm that has an official policy that they can't trade Bitcoin, arguably the amount of people who are trading Bitcoin in their personal accounts, and these are senior managing directors and managing directors and the actual doers inside all of institutions. The institutions might not be coming

because the feds are telling them not to, but the people of the institutions are all of institutions. The institutions might not be coming because the feds are telling them not to, but the people of the institutions are all trading this. Most of them are hodlers. I think I talked to two dozen people who told me, I gave a talk at the Equity Leader Summit on demystifying crypto. And I think two dozen people afterwards said, yeah, it made me feel good. i've had the same sort of view in my personal account and it's too bad that the company i work with won't won't do anything with it i mean that's a that's becoming dominant that is that is a majority opinion it's so profound virtually anybody i think our age who's seen the demise of old guard analog type companies kodak

uh blockbuster i'll get it like you said it's the option do you don't want to take the demise of old guard analog type companies, Kodak, Blockbuster, all get it. Like you said, it's the option. You don't want to take the risk of not having a piece of that option. It's just simple diversification. And to me, now that's just a question of how to do it. Right. So we talk about it really quick, Dave. Okay, go ahead. To bring this back to trading, just to make the point, There is a reason that I think that somewhere in the top end of the old 18 to 22, 23 trading range is becoming resistance or support, excuse me. There's a reason for it. It's because all the forced selling has happened and the people feel the vast majority of the world feels under allocated. Thankfully, we haven't seen the under-allocation turn into FOMO immediately.

Why? Because there's no reason for it to be for all the macro reasons Mike has laid out. We're still in a tightening environment. Risk assets are still not doing very much. But that can change very quickly. And it's one of those things that I would not be remotely surprised March, April, to see us break through 24-5 with conviction. And as far as I can tell on the chart and in terms of what it is, yeah, there's a short pause where the first cascade load happened in the 30s, but really bopping right back up into the trading range that we had for quite some time between 38 and 40 something post Luna, I don't see a whole lot of resistance to that,

you know, if and when it moves, but it's going to take time and there's going to need to be a catalyst. But honestly, I think the risk is dramatically higher to the upside here. But I agree with Mike, leverage, oh man, it's really easy to get stopped out, you know, if you're using leverage.

And I think that the world is learning this. Yeah. You talk about people being under-allocated. Doesn't that mean that they're waiting for 12,000 and then they buy at 40? I mean, when you're trading and people are under-allocated and they want to buy, I mean, that's inevitably the path of maximum pain. I just want to say something also as well, Mike, to your point about the indexing to both of you. I think the problem there is sort of a chicken and an egg. We want an index, but it has to come from the same regulator that has to tell us what is or is not an unregistered security. How can you ever get an index that's traded if it would be including what the SEC views as unregistered securities.

Well, yeah, that's a hump we have to get over. I want to make a point on that because that's a trigger thing. And I said this at this conference I was at last week. That should not be a fucking issue. The fact of the matter is if the security laws were written to understand and work with digital assets, being a security would not be a problem. The problem is that the securities laws, which they seem to be, they love to enforce technical violations and not go after what will actually help investors. That's the issue. If securities laws didn't have issues, and there

are many of them in terms of being able to trade multi-currency, being able to support self-custody, not needing a transfer agent, there's a litany of them. If the securities laws were written, the fact that it's a security shouldn't matter. It doesn't matter in Switzerland. It doesn't matter in Japan. It probably won't matter in Europe. It doesn't matter in the UK. It won't matter in Europe. It doesn't matter in the UK. It only matters here because we have two regulators fighting for jurisdiction, one of which has a set of laws that were written before, basically when they did computations on an abacus and not on a computer. And you literally have laws that don't work. I mean, they barely work for the stock market. And we're all reading 1400 pages of crap that they put out on this because they want to overengineer it. It really

is that. Being a security shouldn't matter. The fact is the SEC's mission of protecting investors and maintaining fair and orderly markets while encouraging capital formation should work for crypto if they had their heads screwed on the right way. And they did what Commissioner Peirce has been calling for the whole time, which is work to create rules that could encourage ring fencing of assets, encourage and force proper disclosures, police against manipulation, provide for best execution. And they don't. And it is a problem. I mean, one of the things that we saw in the 90s into the 2000s is trading costs as decimalization happened and as the New York Stock Exchange monopoly was broken, where trading costs dropped for retail

and dropped for institutions by about 90%. Volumes went up by 10x and it became much, much more prevalent. Well, if you're a retail investor trying to buy crypto, I and Verge, we did a video on our site, you know, why, you know, on crypto trading. And we compared Abra and Coinbase to trade, you know, their retail apps to using our software trading on exchanges like Binance US, Coinbase and Kraken. And it is a dramatically lower cost to use good software. And so it is and retail, even their fee tiers are going to come down too. So retail costs are going to come down a lot. And when they do, then you'll see a big explosion. The fact of the matter is right now, it's hard to see that happening because so many firms who are representing retail

don't care about best X. I mean, I'm going to be on a jihad over the next several months about best execution because it sounds like a dry technical term because in equities it sort of is because in equities it's kind of taken for granted. But in crypto, it costs a lot to buy and sell right now. And those costs are going to come down. And when you get costs coming down, more protection of your assets so that you don't feel they're going to vaporize like they do with FTX, just risks that you understand, that's when all this stuff really goes on a mega bill run. And that's why good regulation will matter. So sorry for the jihad, but I couldn't take it.

You set me off. Securities rules should be encouraging that, not making it impossible. Well, I think part of that is there's a few better motivational factors for Americans and American psyche than the sense of falling behind, the Sputnik moment. And there's only one person right now that's really the problem. And he's already over two years into his term. He might not last much longer at the SEC. And the pressure is becoming overwhelming for Mr. Gensler. So we have to point out those are kicking in he did authorize the first the bitcoin etf i have to admit it's not perfect but you do get better returns right now because you're rolling

into backwardation then you get the underline it's got a very nice attractive thing to it and it's you know dbtc is a discount but i want to just point go back to the technicals a little bit one thing that i love the mention of 200 week moving average um getting to the daily the shorter term stuff it's the bitcoins never spent this much time below it and that was bumping up against it and that's the difference that's what's changed that's maturation it's great we're going to be talking about this more in the future but um i fully expect that at some point if i'm certainly if i'm right about and i fully it's also showing signs of what you said, Dave, showing divergent strength and becoming more of a maybe a risk off asset. But up 40 percent in the year is dicey versus the Nasdaq up, what, 10 percent?

I mean, that's even this morning. Bitcoin since Friday is a fraction and everything is lower. So that's a good sign of that happening. But if I'm right about this typical recession, earnings drop 25%. That's very mild. It's normal. It happens. S&P goes, drops maybe 50% from an all-time high. That's not normal. I mean, that's very normal. Then we're going to have a problem in all cryptos.

But I have to leave you with this. I'm bullish Bitcoin, but I fully expect Ethereum is going to continue to outperform. Just want to give some very quick context on the chart here, because I pointed it out all until June. We had never really traded below the 200 weekly NA. A week here, a week there. You can see it in each circle. And even in March of 2020, it went below and the next week was back above. You can see it in every single orange circle.

We've been below it since June. But that's your classic value at risk model. And Dave knows it's only as good as the inputs. I remember doing this at a hedge fund. Yes, it's never going to happen. So buy there and then you get stopped out. But that's the way life is. That's what's changing. The value at risk models have to readjust to the giving markets. All the algorithms change. All algorithms, maybe some of our artificial intelligence, but they're all based on past performance and they have human inputs. To me, that's just part of the change you have to work with. And I look at it as, okay,

who's getting hurt here and why, and what's it going to mean for the next trade? And I still look at it as Dave, lesson that Dave and I learned most is when you really believe in something, you get positioned. If you're not feeling a decent amount of pain on that, you're usually not going to get the enduring gain. I mean, the thing Mike just said that's really important here is the value risk model people oh my god people who are speculating buying up against it at the same time that waves billions of forced selling came into the market people didn't want to sell they sold they had to sell yeah right there's a reason why bitcoin delinked from from FTX really quickly.

It's because once the stuff that was sold because they had they had already sold it. When it became literally the day that it became obvious that FTX had no Bitcoin left, that they had sold it all already. You know, that was the bottom in Bitcoin. And it's not surprising. So, you know, let's not underestimate what would have happened if Madoff had been 100 exit size relative to the stock market. And that is not an idle comparison, because Luna, which was basically a collapse that triggered all of this, was the similar size to Madoff in a market that was 1,100th the size of the stock market. But that's good. And so that triggered three arrows, that triggered, you know,

but if Madoff, relative to the size of the market, the catastrophes we've seen in crypto were absolutely enormous. And so those waves of force selling relative to the size of the market were enormous. And so those that waves of force selling relative to the size of the market were enormous. And I'm going to keep saying that because people need to understand what we've seen and why we've seen it. And the fact that we're coming out the other side is actually rather, rather stronger than I would have expected back in, you know, basically a month and a half ago. Well, it's also the cleansing of bear markets. We know that FTX would probably just gone on forever until we had Madoff, would have gone forever

unless we had a collapse in markets. That's the good thing about bear markets. You flush out the weak ones, the over-speculated idiots, I'm not afraid to say it, and get back to adult proper management of risk assets and investing. And I know we're going to look back and this is a great opportunity,

but again, in shorter term, if I'm writing about S&P 500, we're going to see more pain in all assets, except for maybe bond yields and gold. It's a really good point because the title here, don't buy this rally, right? But as we speak, each and every one of us as an investor is saying, sure, buy Bitcoin. But I don't think any of us are rushing to buy stocks at the moment. I'm not. But I want to understand the difference is, I mean, you know,

I'm not a dollar cost averaging, you know, is what people are talking about. I think that there's a lot more DCA entry into Bitcoin than there is spec, you know, wild speculation. And that makes that that's healthy. I mean, if the market itself is still so small relative to the money in the fiat world, which look, it's big for a lot of reasons. I mean, all you have to do is look at all the deficits running by all the G's, just accumulate the amount of debt that's been taken out by pretty much the entire G20. And you get an idea of why financial markets are bigger. It's hard. I mean, if you really want to go back farther,

I mean, what's the percentage of the S&P that's financial markets right now compared to where it was in 1980? I think it's what, 3X, 4X, something like that. I don't know. You have it at your fingertips, Mike. It may only be 2X now. I don't know. I haven't looked.

It's certainly a lot bigger. And when you take shadow things like the off balance sheet stuff into account, it's much bigger still. So that's a large part of why you want to understand Bitcoin bullishness. You want to understand where crypto is and why resistance to it will happen. Because people like Jamie Diamond, we talked about him a couple of weeks ago. With one hand, he says, oh, it's this, it's that, it's whatever his du jour comment about it is, because it threatens his margins. On the other hand, he's not stupid and he's investing in infrastructure. Yeah, 100%. It's interesting. Mike, right here that I have pulled up that says that 70% of investors believe that the market has

not hit low stock market and that we'll see lows and that 35% of them think it won't still be until the end of the year. Darn, that's foolish. I was going to say that's a hell of a lot of I was going to say so maybe it is time to buy everything. I mean, 70% have not put in a low. That's pretty aggressive. Well, so this is the thing I'm afraid of. So what we've seen is that massive shakeout in the crypto market that's cleansed it. We got rid of some of the bad players and some, unfortunately, innocents get hurt. But it really cleanses the market for a good longer term run.

We haven't had that in the stock market. I mean, Dave and I have seen, I mean, the real ones. We remember the 87 crash? You remember all the, I can mention in the past, you know, all the little things that the correction that cleanse and make it a better opportunity for the long term. It hasn't had it. Orderly 20% because the Fed tightened the most in history. That's just too easy. And particularly if you look at how expensive it was historically versus so many measures um income global stock sales there's so many different things um that it's it'd be i'd be disappointed if we don't cleanse it better and be wonderful it's just if it we doesn't get that

cleansing and then it just means at some point it's still going to get it because obviously it always has some form of cleansing and this has not been a cleansing there's been an orderly bear market i like to point out, look at that VIX. It's been going down. I mean, up a smart late, but started going down as markets going down because every single time it went lower, it went closer to those concentrated put strikes.

Why? Because everybody's buying puts. Because of what you said, that sentiment. 70%. That's a lot of people expecting lows, but that could be the decoupling though, right? Maybe they're actually right here, but Bitcoin just continues to hover and has put in the low. Think of that demographics too.

I mean, the boomers have had an exceptional rally the last 10 years, a gift. And any prudent person who's 70 or so a boomer and who's not going completely to your note where they can guarantee almost 9% for two years is irrational. That's the big difference. The boomer, to me, that flipped the switch, that this is going to take a long time.

And if it goes back up again, it's a speculative frenzy. And it's like, oh, gosh, here we go again. The Fed's going to keep tightening. Yeah, I mean, the words to close to understand, given what Powell is likely to say on Wednesday, essentially the most bullish scenario is kind of, you know, a middling market. No big drops, no big, you know, no big moves to the upside. No more stories about, you know, IPOs that, you know, going crazy, you know, for six months for the Fed to be able to declare victory as inflation drops. That is undeniably the thing. I mean, I've said it before. I know this is political, but the fact is when they decided to give out stimulus checks and they broke 30 years of policy of promoting

asset inflation while controlling consumer inflation. So you want asset inflation and you want consumer disinflation, which is promoted by more technology substitution, more outsourcing, et cetera. When they broke that, the inflationary response in terms of what people are actually measuring, i.e. the CPI, became relevant. The wealth effect was there, but the wealth effect going up, even the biggest bull market in history, did not cause consumer inflation. That happened when supply chains tightened at the same time as we gave money to people. So that's just worth keeping it. So the fact, to think that it could go back to the other after it's broken, it's not crazy. I mean, it's certainly what they want,

certainly what frankly most of us want, because that's kind crazy. I mean, it's certainly what they want. Certainly what most of us want, because that's kind of the best scenario, right? You know, and if you're in the financial markets, it may not be great for wealth inequality, but it's certainly great for the financial markets. And it's clearly what people want to have happen. So to me, that's the almost 100-year event that we have to rope in when we're looking for just a normal little correction in a market that has hundred year nuances all lined up. Remember, we had this cheerleader and chief president. Then we have this unprecedented, all the fiscal monetary stimulus, the COVID, obviously, the war in Ukraine, all that stuff, massive pumping commodities,

it's dumping. All that stuff typically means that we're going to just not get out of this easy. We're going to have a normal cyclical market, which I think the ease of easing that we've seen or gone accustomed to has gone forever. And that's just the lessons of human nature. The Fed's going to have to really hear the clamoring of things like death threats with Volcker got before they really lighten up. That's just normal human nature that I think we should expect. See, I sort of disagree. I think that, well, first of all, let me be clear. I'm not talking about the quantitative easing from 2020. I'm not talking about that. You're right. That will never happen. In 2020, quantitative easing was literally insane, right?

You know, pushing interest rates, it was insane. But the policies that worked more or less with an interruption from the global financial great financial crisis from, you know, post, you know, 87 until now, I think can continue. And more importantly, from 2009 through 2019, that kind of environment can continue after they believe they've squelched and sterilized, to use monetary terms, the impact of everything that was done and everything that happened in the pandemic. And I think that you and I both come from the opinion that generally when you try to do that, you overreact. And generally when you try to do that, you'll kill things worse. Yeah, we completely agree on that. And the question is, if they don't overreact,

then that's really the question is, do we want to bet on them overreacting again? Yes or no? And I honestly don't know. I think they tend to do that. But the kinds of things that it's been going on, I wonder and I wonder about what's happening. You know, the Russia situation is a wild card. There was another thing on the geopolitics. That's another big one. You know, there was an article out saying, you know, from people talking about the virtual certainty of a war over Taiwan by 2025. That's the other way. Do you think China would actually, anybody actually consider an invasion now after what Russia did? That's the probability of China invading Taiwan, I think, is completely diminished. What are people missing about what Russia just

failed to do? Now, if they had succeeded, the probability would increase. But that to me is just less of a fear than it was a year ago. I agree. But those are the sorts of things people are talking about. Yeah, but it doesn't make sense. No, no, I understand. I'm just saying we got all these animal spirits going on. I kind of believe that politics will take over. I think this year, as I've said it before, the Fed is going to act unencumbered. But I don't think there's a snowball's chance in hell that they're going to be allowing unemployment to spike going into a presidential election year.

Okay, so we got a little time for that. But that's the key thing is I look at just a simple one thing that we might have. You look at things like the yield curve, it's almost a guarantee we're going to get a recession. If you get a recession, the stock market goes up, it takes only one way that for that to happen, the Fed to ease aggressively. Otherwise, it's got to go down, which means recesses go down. So maybe we'll get lucky we won't get this recession. But that would be a very, very low probability situation the way I look at it. I think we all agree with that. Obviously, we're here against time. I appreciate you guys staying a couple minutes extra. And I appreciate that very, very subtly, Monday is becoming our by far

most popular day on the channel. And I think that's really nice that we're differentiating with the macro. And it's a testament, certainly, to Mike and Dave specifically, because all I do is sit here and listen and learn, like hopefully the rest of you. I do want to mention really quick, Dave, you're kind of opening coin routes to everyone. Yeah, we are. We are. Put a link in the description, which is amazing that you're doing that for our people. But you're much better to tell them about it than me very quickly. We'll be making bigger announcements later on this year. But for now, people who trade,

you know, active traders, even if you're an individual, can leverage the platform. And, you know, that definition of active right now being the millions of dollars per month, that definition of active is going to dramatically fall as the year goes on. And, you know, you can sign up on our website. And if it's not quite ready for you yet, when the mega launch, right now we're in sort of soft-ish launch goes in, we're going to take every name and put it on a wait list to be able to use the tech. And, you know, the fact is, if you look at some of our videos,

you'll see we're talking significant dollars if you trade anything reasonably. Yeah, it's going to dramatically improve your execution as a trader and reduce your costs, right? It's all about. Yeah, perfect. Thank you guys. Yeah, awesome. And we're going to talk about that a lot more. Maybe we can make some sort of video or something to show them how to walk through or we'll start sharing yours. Mike, Dave, thank you so much for the extra time. Thank you everybody for tuning in. And I will of course be back tomorrow. I will see you guys then. Bye.

Thank you guys. Let's go.