The Wolf Of All Streets - Fed Hikes, Inflation, Commodities & Bitcoin: What To Expect In 2023 | Macro Monday With Mike McGlone & Dave Weisberger

Episode Date: December 12, 2022

Two of my favorite people in crypto join me for the Macro Monday show: Mike McGlone (Senior Macro Strategist at Bloomberg Intelligence) & Dave Weisberger (CEO & Co-Founder of Coinroutes) Mike McGlone: https://twitter.com/mikemcglone11 Dave Weisberger: https://twitter.com/daveweisberger1 ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen  GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! ►► https://thewolfofallstreets.info/bitget   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 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.

No matter how much we want Bitcoin in the crypto market to behave as a completely uncorrelated asset class, I think we all know by now that we are very much still at the whims of central bankers and specifically, of course, Jerome Powell and the Fed. Now, we're starting to see a lot more sort of solidifying of the arguments for a recession in 2023 and what might come, but still a lot of question marks as to what will happen with inflation. Janet Yellen had a massive head scratcher of a comment. I believe it was yesterday where she basically said, we don't need inflation to come down. It's fine. Right. And basically already

seeing cracks in the facade there of inflation returning back to 2%. But as usual, on Monday, we're talking macro and I've got my two favorites to talk about it with Dave Weisberger and Mike McGlone. You guys do not want to miss this. We're going to dig in deep. Let's go. What is up everybody? I'm Scott Melker, also known as the Wolf of All Streets. Before we get started, Let's go. And crypto, in my opinion, still very much in a very boring range formed after, of course, the FTX collapse, which now unbelievably is roughly a month ago. It feels like it's been some days. I feel like it just happened yesterday and I'm still processing it. And some days I feel like it was a year ago and we just absolutely need to move on. And if I never heard the three letters SPF together, I would probably live a happy life and be able to move on. I wish we didn't have to continue to talk about him ad

nauseum, but he continues to put himself into the center of the narrative, a narrative that he is crafting himself. I was talking to Dave Weisberger, today's guest, right before, and he was making that point. Actually, I'm going to go ahead and bring Dave and Mike on right now. Gentlemen, how are you today? Hello. It's Monday. Okay, listen, I didn't intend to just dive into SBF, but you were making sort of a great point there. Could you give a little bit clarity of what we were talking about right before? Yeah, I mean, I for one have never been this angry in my entire professional career for lots of reasons. Both Mike and I go back a while. I don't know how you feel, Mike, but I've been in this business since the 80s.

And I, for one, cannot believe that people in the media keep giving Sam a platform to speak to make his narrative out, as opposed to questioning him on the real key things, because we know enough now to have a pretty good idea of what went on. And there's really only two or three questions that remain that he hasn't answered and won't answer. I mean, Frank Chaparro got close, which of course is kind of amusing considering that, you know, the news about the block that came out over the weekend. But the fact is, is I just wish people would stop giving him a platform and we could actually forensically figure out what the hell was going on and move forward, because I think that's what the market wants. The reality is the biggest single problem that we face right now is FTX was, for better or for worse, the number one platform for professional investors slash

hedgers. And lots and lots of funds got kneecapped because they lost their assets. So when you tell your clients that your assets were stolen, that's not a good thing. And professional hedgers were using it. So now they're migrating to other platforms where there are all sorts of questions. And another one of your favorite guests, Mike Alfred and I, we're kind of going at it this weekend, not disagreeing so much. It's just trying to get to Binance, which is the biggest. And there's lots of questions with Binance. To my knowledge, there's no questions that involve the use of a proprietary trading arm that might have lost

billions of dollars, but there's still questions. And we're in this incredibly uncertain time. And the professional market is therefore paused. So the interesting thing about crypto is the prices kind of have been sitting in the same level for a month. And I think it's now a macro asset. And on your recent podcast, Mike, I heard your spirited defense of crypto in the future, which I share. Larry Tabb and I, who you were on with and have been friends for a long time, and he and I have had this conversation multiple times. The truth is the long term feels very far away right now. I don't think it's ever felt farther, although I'm not sure that it is farther. It's just I don't think it's ever felt farther.

Mike, go ahead because obviously uh you you're forced to defend us so i would love to hear what your argument was i i love that dave and i have kind of can be the old codgers i respect him partly because he's kept his hair um having both been in the market since the 80s and one thing i have have to admit is there's always a wealth of information. If I click through my podcast and one of yours is one of the main ones, Scott, then I feel like I want to learn something this weekend or today or tonight or when I'm working on a thing. I'm always just absorbing. I have to admit lately, every single headline I've seen with SBF or FTX, I ignore completely because it's over. To me, it's done. Move on. And that's for

me. I have to look forward to this is where the market's going to be minimum 12 months from now and why. But the key thing is Dave and I learned over time is it bleeds and leads and you're going to get hits off of it from a leadership standpoint. Media is going to keep covering. Bam. That's that simple. And that's the key thing that we do. And we've learned to separate that nonsense sometimes. That's the key thing I like doing in my job. And it has a little value. I think to have some have attained some wisdom. It's my goal in life to attain some wisdom.

It's part of the reason that I was so bearish crude oil a few months ago and was a complete idiot for a while. And just the lessons of death and divorce. I've seen it happen so many times when people get out of their skis in markets that they shouldn't get out of their skis, and it goes the wrong way. And that's part of the reason I was Bears Cruel. Now we're back at 70, a little more comfortable. And in the big picture, I look at these markets, big picture, long term, from trying to look back from the futures, I don't see what keeps the price of Bitcoin down in the big picture. And I don't see what keeps the price of things like crude oil up in the big picture. And to me, this year was a major shift.

So that's the macro kicking in. And right now, but what matters is I'll give you my levels of micro. So the key thing right now is we have the world clearly tilting towards recession. That's just not my view. That's from Bloomberg Economics. In Europe, it's probably already happened. In the U.S., it's inevitable. China, who knows? And the Fed's tightening this week. Not only 25, 50 basis points. Then they're going to tighten

more next week. So I enjoyed publishing the history of Fed hikes. We usually get to near 5%. This goes back to 1970. And crude oil often peaks around $40. But since early 2000, the bottom's near $40. but that shows a lack of pricing power and so this is the macro that's what's happening if you expect risk assets to go up in that environment i say good luck they barely typically what it takes for stocks and commodities and maybe even crypto to go up you need a lower plateau get really cheap which we've probably done that in cryptos and or feddies and be aggressive we're not near there in FedEasy. The key thing I want to open, I'll end with this one little final layer of micros. This is the last big trading week of the year. Former options trader,

I'd like to say I've learned a lot of ways to lose money in options. And most of the time, I did well covering clients. The key thing you watch this week when you walk in is, okay, big option expiry, where's the concentration? So right now I see very good support in WTI crude around $70. That's a concentration of puts. And there's very good support in the Qs right about current levels around $2.80 because that's a massive amount of puts. Once those expire, that support's gone. That's what happens this week.

You're going to lose that level of support. Now people roll them down, but it's just the way it works. You have to allow people who own puts to lose money and then markets go down so that's why i think after we get through options expiration that the uh it's riskier for markets to go lower now cryptos are a little bit harder to to measure that and it's less significant because i look at it is they're just part of the that ebbing tide yet they're the fastest horse in the race and once at some point, they're going to come out ahead. It's just not now. Just thinking about this based on your comments, obviously, it will be a hard environment for risk assets if we have a recession and the Fed

is continuing to tighten, even if they're slowing down. And you've made the point in the past that the Fed pivot is not going back to easing. It's just slowing down, tightening, right? And I think people need to understand that. But could an argument be made, and I would love to hear both of your opinions here, that because of FTX and because we had that black swan and because we basically leveled down an entire trading range on Bitcoin and crypto, that if we do start to see things flatten out, crypto could have more upside because at this point, the floor is lower than it would have been before we absorbed that news. Because I think we were very comfortably trading between, let's call it 17.5 and 22, but really the mid 18s and 22. And now it's more 16 to 17.5.

But that's strictly because of FTX. So do you think that we can at least kind of recapture the level we would have been at, the floor we should have had once this SBF and FTX news is absorbed? Dave, you first. I think that the best analogy that I can come up with is a forest fire. And when you have, there are good fires and there's bad fires. There's the Australian fire, which was catastrophically bad because, and then there's cleansing fires that clean out the undergrowth and allow the forester to renew themselves. I believe that the odds are overwhelmingly tilted toward this being the latter, not the former, but we need to get that to be clear. At the end of the day, there are lots of green shoots and things going on, and I don't want to promote specific companies, but the fact that exchanges

are all starting to show reserves in any shape or form, the the fact that exchanges are all starting to show reserves in any shape or form, the fact that multiple exchanges are looking to sign up with custodial solutions that separate out what they do, the fact that people are actually talking about bipartisan regulatory clarity is important. Now, why do I go there? I go there for a very specific reason. Crypto is infinitesimal relative to the rest of the financial economy. And there are lots of really smart people who control lots of money who have been looking at this for a long time and sitting on the sidelines. And the one thing that gets people off the sidelines is understanding that their money is not going to be stolen from them. That is a very big deal. Very helpful. Yes. And, you know, it's like, so if you're me, I can own some Bitcoin

and I can have it on a ledger and I'm comfortable with self-custody. But, you know, that's something that's measured in thousands of dollars. When you have people who want to measure in billions of dollars or even hundreds of millions, they're not holding it on a thumb drive and kind of creating it around their office. It's just not going to happen. So the truth is, is people need to have institutions that they can trust. And under the covers, we've seen that Bank of New York, Fidelity, et cetera, being in this business are big deals. It just hasn't happened yet because at the end of the day, if most of the crypto funds all suffered severe losses because they were hedging their activities on FTX, it's a problem. So as the market starts to heal,

I think that you get that as a backdrop. Just keep in mind, it's a very, very small market. And if you look at gold as a proxy this year, and gold hasn't gotten crushed during this tightening cycle, it's more or less where it was when it started, right? Whereas Bitcoin is obviously down a lot, but you know, it was well on its way toward being significantly higher. You know, we could talk about valuations, you could talk about all sorts of stuff, but the metrics on the on the actual network are so strong. It's one of the reasons miners are in such trouble. So I think that that's an important thing to understand. The other thing to understand is the Fed is, I mean, they're doing

what they want to do, which is what they want to do is engineer the long end to not go up as much as the short end, despite that people look and say, oh, my God, this means recession. What it means is the government can fund itself without massively increasing the deficit, too. And people forget that, that if you're at the Fed, the outcome you want is to squelch inflation without causing debt service to go dramatically higher and and they're kind of doing that and you know that's not such a bad thing and i don't know how long they can continue it or what will go i really am curious what you think about that mike because that that's a big deal right you know debt service among it's not just the us by the way it's it's pretty much most of the g20 has that problem well i like to point out the um us has

an enormous privilege which we know and cryptos have added fuel to that privilege the base layer of foundation or never most widely traded assets in cryptos are dollar tokens. And we know that. I mean, there was an article on Bloomberg Joe Weidensol did recently about Tether. I mean, I got over Tether in 2018 realizing this is a revolution. And people in the rest of the world who don't have access to the book, they don't care. They're getting it through cryptos, through this technology. So to me, this is part of the macro.

And you mentioned FTX, Scott. I like to point out, well, what the Fed is doing right now is classic arresting inflation. That's their job. But they were part of the reason for the inflation. But it's not they weren't guilty. Remember, we just only two years ago, we didn't have vaccines. And now we're vaccinated. This world, we went through a hundred year event. And that's to me, we should have that type of reciprocal effect in prices.

So the key point I wanted to get to is you look at what happened in cryptos and Bitcoin with FTX going there. To me, FTX is just part of the noise of the tide going out. Something was going to happen. There's probably going to be more going to happen because prices went down, stupid people get over leveraged. They commingle funds, they speculate too much. And they, come on, how many times have we seen this day? It's reprints and repeat. It's just so much easier to do it in cryptos globally

and sampling. But you know what's gonna come out of this is, we still talk about things about like, you know, having to worry about securing your assets. There's gonna be a point in the future, we still talk about things about like you know having to worry about um securing your assets there's going to be a point in the future we're not even care about that because you'll be able to click a button and you'll feel completely secure about this is part of that transition so part of the reason we long to launch a bloomberg galaxy crypto index in 2018 was at some point if we expect an etf to track this index and people have a push a button and

never have to worry about custody it's part of that transition this is just what people are going to look back and say you know what really can help solve this is blockchain so i look at what's happened now let's look at this compared to like lehman going under and bear stearns going under and just when we had this major bear market 2020 remember locked up we had to stop trading and i never saw bitcoin stop trading i never saw bearing it's just i've never seen that and no one controls that and there's no one's probably responsibly no one's liability so i hate to say i'm more of a zealot but i see this asset let's start with bitcoin that is showing it's yes it's down this year it's down from the peak but it's showing its relative value

to some of the older people out there who realize, okay, five years from now, I've seen this stuff happen in my lifetime. This is something that seems unstoppable. Sure, FTX went under, but okay, guys with hoodies running trillions of dollars probably have to be careful with that. Remember, it's just the compliance things that ingrain. When you're in financial markets like we are, you sit at Bloomberg, you get compliance. Oh, I had to say that, scott because i forgot to get a smile on it oh i know we talked about mike's tie and my hoodie before before yeah like i got to take this off because i would not trust me but i had to do tv and my mother would get mad at me if i didn't wear a tie but that's good so no the key point the key point is how do we get through this just here's one good example is lesson i've learned

working in trading fits they're gone poof working in as a voice broker in New York, poof, it's gone. Don't underestimate advancing technology. And just the headline today, commodity traders worry about this next fusion break for you. It's going to happen. Maybe not today, maybe not 10 years. But I think most people get this, okay, I got to have a piece of this asset. Potentially now it's an asset. And at some point it's going to be a higher price, ultimately it'll be low. And yeah, maybe it's only 1% of my investable assets now, but I sure expect it's going to be a problem later when I have to readjust my risk models because it's too greater. But what stops this is the way I see it. And I always trickle back to things like headline on Bloomberg today.

Oh, Tether might be somewhat legitimate. Well, it's not so much legitimate. It's just there's a dozen wannabes that there's a better way to do this. Futures. I remember when I started in the futures pits, it was kind of nascent and people now like accept futures as a better way to mitigate risk. ETFs are pretty nascent. Now we all know it's a great way to invest. What's the difference with tokens? Yeah, I mean, there's a lot in there in that to unpack. I mean, I'll start with the obvious, which is I've said it many times on this program.

Bitcoin, in my mind, trades like an option. It's an option on its own future adoption to be the base layer for the digital economy. And if it achieves the base layer, the number is dramatically higher than today. It's not even in the same zip code. I mean, even just to be where gold is or to be a digital version of gold would be dramatically higher to where trading ranges are what they are. So that's one thing to keep in mind, but that's a long-term view and things will trade, as you said it really well, Mike, in the beginning. When markets get over their skis, be very careful and vice versa. We're now in the vice versa moment where everybody common knowledge. And this is the reason I'm bullish is common knowledge is, oh, my God, Bitcoin needs to drop down below 10,000.

That's common knowledge. Look at this. Except for I looked at it just again. It just regained 17,000 again a few seconds ago. And so, you know, look, the reality is we're looking in a world where we had something that was so much worse than Lehman, so much worse than Bear Stearns, that it's hard for you to appreciate sitting in the suit and tie in Bloomberg. But we're at CoinRoute. We, you know, we have clients. And I could tell you that a double digit percentage of our clients were either wiped out or have to do a great reset or sitting on their sidelines because through no fault of their own. We have multiple clients that were professional quantitative trading firms who were making money, who had really good returns and their

investors were happy with them, who had substantive percentages of their investments stolen from them and from the exchange that they believe was the least likely for it to be stolen from them and then from the the exchange that they believe was the least likely for it to be stolen from the the Legacy of Sam is that by putting names on stadiums by everyone who watched the World Series or watched any baseball I'm a Met fan so you know I guess I I didn't get all the way through but every major league umpire had FTX on their fricking vest and you got to see it on every pitch. So if you were an investment firm and you were trading using derivatives to move in and out of positions and do hedging, you felt they were the safest derivatives place to trade. So they caught many, many people. That's never happened in any financial market that I've seen where

double digit percentages of professional institutions were either wiped out or kneecapped. So that's going to take time to recover from. That's the kind of the point here. That theft is different. Now, the reason that Mike is right is because net of everything, it's still a very small percentage of assets. It truly is. And people, if you have a track record of making money and you have a track record of understanding how to navigate the volatility, you will attract assets and will be able to get back in the game. It just is a time where you have to demonstrate that. So it's important to understand that the fact that Bitcoin, Ether, and the higher quality

cryptos have all kind of hung in here for the last month after the initial black swan is extremely important. People are keeping money on the sidelines because they're worried. Oh my God, is Binance going to fail? Oh my God, is Tether going to fail? Oh my God, is this going to fail? Yada, yada. The biggest concerns being DCG and those two. Personally, I don't see that the risk is, I think the risk reward is more to the upside. But frankly, I mean, you would expect me to say that. I'm sort of, I worry, am I talking my own book? And as a trader, I hate to talk my own book.

Therefore, I try to take it away. Because as you know, Mike, once it's gone, it's gone. And you have to level set at that point. And that's the biggest difference in traders and salespeople. Traders know that today is a new day and your assets are marked where they are. And let's look forward. The market needs to look forward and it's going to take some time to get there in the crypto world. That's a very, I think, profound statement. I just want to follow on that real quick, Scott, because as an ex-trader, I fully have respect for the traders who still trade now. Like you, people have to do it rather than just say it. And that's the key lesson you learn in futures. It's called the power of the margin call.

View no fault of your own. You get flushed out of a good, solid position and you lose money. This is the problem sometimes with being right and still losing money. This is the problem sometimes being right and still losing money. So I completely have to show my empathy for those kinds of people, but that's one of the benefits. I enjoy my spot here is I am neutral. I have to follow editors, but that's where it helps. I think I can say, okay, well, I would have lost money, but that, that position, I probably would have lost money there and won money there. So it's a sense of where the market is. And I think that's the pain you're describing right now, Dave, that's going to pound out that foundation it questions when and how and i look back over the macro yeah um we should expect cryptos to come out and i have to be careful about cryptos remember we both we all know there's 20 000 is ridiculous maybe 100 matter

and the rest are just speculation machines if there's anything i didn't focus enough on is pointing to how silly, stupid Shibuino was. And when it got to that, I regret that, but this is just stupid. But their machines are perfect for speculation. Now it's like, we're going to rebuild this business and we should not ever expect the kind of silly, stupid we had in 2021. Remember, that was the biggest pump in liquidity in history. But the lessons of booms and busts are they always come on the back of massive liquidity and the bus come on taken away

we're living that real time this is 1929 a big picture so i fully expect like you said dave i still i see there's a good chance we could get to 10 000 in in bitcoin i hope not but there's a good chance we can then at some point we're going to recover and head back to that upward trajectory which is in the six figures yeah the real question in my mind from a macro perspective is I've been saying that the Fed is more or less trapped in a certain sense for a long time. And I think they are in the sense of budget deficits are very large. And there's a limit to how much to when you hit a tipping point everywhere, you know, through Japan, they did it in a different way. Most of Europe is in a different sense. The UK is certainly in the

same problem. There's a certain level of interest rates where the government cannot, where you literally, your entire budget based is taken up with debt service. So there is a level where you expect some sort of washout that has to happen. I don't know where that is. The fact is, yes, I'll betray my Austrian monetarism and why I'm a big Bitcoin fan. But at some point, we need to understand we are 51 years into an experiment of pure fiat. It really is 51 years out of human history. And the question is, is it a writable ship? And is everything that you and I have learned over 30, 40 years in the markets, all within the fiat regime, is there a new regime? And so that's

where you start wondering about that. And honestly, I don't know. And, you know, I kind of hope the regime lasts for another N number of years, enough for me to be able to, you know, be retired here in Miami, as opposed to working every day, because it's a beautiful place and there's lots to do. But the fact is that we, you know, monetary printing is a big deal. And you talk about crude oil. I mean, I think 70 is the new 40, to be honest, just because the amount of dollars in circulation, not because of anything else. It's just because of the denominator. But you're right. Obviously, you know, there's this oil more than anything else has been the commodity that's the most sensitive to boom bust in terms of real demand. And so people, yeah. So just pivoting off Bitcoin for a second, although it could be part of the answer. If our base case, I think we've established very early is that 2023 is going to be probably rough, will likely be in a recession. I do think inflation will probably come down, Mike. I'm assuming that you agree that that eventually will come down.

How can your average person determine when to enter the market? And I guess in that question, the next question is, what do you buy during a recession? How do you protect your money? Is it just bonds at this point and you take the yield that you get and run? I've been early and I've been wrong, but I fully expect US Treasury long bonds and bonds, the whole curve, are very attractive for people to purchase. You can buy to your note, and in two years, you get 8%. A little while ago, it was 9%. That's guaranteed you're done in U.S. government debt. Now, yes, the big picture macro makes a lot of sense. But right now, we're at that stage where

the money supply is being reduced. The Fed is taking away that historic tendency to print money. That's just being, that's not happening right now. That's going to go back to the big picture. So the key thing also remember is typically markets don't really bottom until a significant period after the Fed first starts tightening and starts easing. We're not even near that. So that's the key point I like to make. Commodities, it's a year and a half.

Stock markets, it's a year. Cryptos, probably be ahead of that game. So what I fully expect, my base case is we're heading to the biggest global macro reset of our lifetimes based on what happened with this 100-year plague and what really was before that. Remember, we had the cheerleader and chief president, which has been gone. That set the whole foundation for just the normal reversion of risk assets stock market and going down bond markets going down so this year i think it's going to be a foundation for significant deflationary forces i point that out when we point out what dave said 70 is the new 40 in crude oil but that's the key point i like to make about commodities that's one of those significant signs of deflation on the planet

the fact that this price now is the first trade in 2005, yet GDP, money supply, gold have been up exponential since then, it's because we create more of it. Why? Because of technology. But you can't do that with Bitcoin. So what I see is what's going to happen is I fully expect what's going to come out of this is gold and long bonds will be one of the better performers next year. And at some point, Bitcoin is going to transition from risk on to risk off and trade more like gold long bonds and i fully expect an enduring recession part of

the reason is the fed will never ease with the ease they have in the past because of what we will go through every single one they start easing would i didn't say if they'll be clamoring like oh you can't use too much because of inflation we never heard that we have barely heard that in the past now we know we've know we hit that inflection point. Too much liquidity gets inflation. That's worse. So that's the new paradigm shift that Dave and I saw first started in 1987. Anytime the market's going down, that's over.

So we have to go through the pain. But the key thing that's going to come out of this is some really good things. No longer will people like me say the only thing that matters is the Fed when I'm bullish anything. I have to wait for the Fed. We can go back to the true underlying organic fundamentals that really matter and make assets rights go up not just the fed anymore and we're going to have that migration tipping over to say better forms of currency now gold yes key thing to remember there's no better way to transact on a global basis than the dollar you don't want to you know

it's a great way to do it as long as the U.S. doesn't mess it up. And then the things you want to hold and never sell. Gold, probably Bitcoin in there. At some points, they get expensive. You sell. And there's stock market you want to buy or sell. But to me, that's the key thing to look forward to. And, you know, in the one country I think is fully, I'll end with this.

The country I think is fully at the top of the ladder to come out of this ahead, and that's the U.S. I mean, China's peaked, I think, peaked just like the Soviet Union and a combination of Japan in the 90s. I remember living through both of those, Dave did. We see what's happened with autocratic regimes. Who's the technology leader? And why is the world going to dollar organically? So much good that's come out of this, and we just got to get through the pain. But as far as getting overall your skis and long things like the stock market expecting the kind of performance we had

the last few years with easy monetary policy forget that um yeah but it just said in the last peak took 13 years i mean i remember it it was kind of silly stupid in 2000 and 1999 dave remembers it why not have something similar and that's the key thing is the psychology's typical sell site analyst hasn't figured it out yet, I think, or they can't say it yet. But some of the real people you talk about off the market, you say, yeah, well, the Fed ease is gone. The Fed put is gone forever until it gets that bad. And hopefully at some point, recessions always do. Markets always get really cheap. Question is what stops that trajectory as we go into next year yeah I mean I'm not I agree with most of that I think that I I wonder I think the Fed is more political now than it's ever been and so I'm not 100 sure that uh that that we can you know rely on it being completely divorced and I think that it very much depends what's going on but as we go

into the election cycle a year a year out I I wouldn't be surprised to see things looking fairly different. But it's too early to worry about that because for 2023, I think that Mike is right. The Fed's not going to be accommodative. catastrophic reason to do so, which is much more likely outside the US than inside the US. To be honest, I mean, you know, there's issues going on in Europe, you know, food crisis, shortages, there's all sorts of possible macro things that are there. But the other point that you made, which I really want to come back to is that I think Bitcoin is separate than the rest of crypto in terms of at some point it will if i'm if my thesis is correct transition to be a i won't call it risk off asset but we'll we'll say that it it's different i think that that there is a lot of stuff in crypto that is complete nonsense that are you know i always say birkenbagger beanie baby is the way i look at it you know things that have value because other people

ascribe value to it uh every time i've mentioned Shiba on this show, I get, you know, hundreds of angry comments. Oh, my God, it's a brilliant community. What do you know? You know, who knows? I mean, maybe I'm wrong, you know, whatever, you know, communities are powerful things. But I remember most of the communities in the 2000 bubble and there were lots, you know, basically went the way of, well, they didn't survive. So I don't really put a whole lot of stock and faith in that. But what I do know is there's a lot of technology

being built, that decentralized finance is very, very real, will be a very powerful force. And large amounts of what DeFi was being funded by during this last boom cycle was bullshit. I mean, yield farming turned out to be something that was real in a low rate, high liquidity environment where you could get a better yield from speculators because of various inefficiencies of the market. That's gone now. So now the question is, is an automatic structural way of financing something that's going to survive? And the answer is yes, but it needs to be structurally financing things like repos, like interest rate swaps, like securities lending. And we do not have the technology to do that just yet. And there's still a cartel that's holding on to those things.

There are, if you go through the Bloomberg terminal, there are many, many markets that are basically cartel-like, and there's a lot of economic rent being earned. That's the future of DeFi. We're not there yet. There are many other applications for smart contracts and many other things that matter that have real value. And then there's, as you said, 20,000 cryptos of those. I mean, the vast majority, I mean, I've always said like 95% of them will ultimately end up with no value. And there might be ones that have, there will be ones that have not been invented yet that will have value. And so it's, we are looking at a technology that can, I mean, what Mark Yusko, who's on this program a lot, will say, is we're looking at a technology that will be truly revolutionary, but is there a need for tokens for these technologies? Tokenization of equities, real estate, that I believe in for lots

of reasons, but do we really need native tokens for most of these platforms, right? Or is it something that the technology itself can be, you know, the economic models can work out? There's a lot to be done. But Bitcoin and a lot of what's going on has real value. And the market seems to be saying that, given everything we've been through, where the prices are. So, you know, that's what makes me more long-term bullish. But understanding the short term is difficult. I had Arthur Hayes, obviously everybody in crypto, I believe, knows who Arthur Hayes is at this point. But I had him on the podcast. Actually, we put it out yesterday and Cointelegraph picked up on something he said there during that. He said,

looking forward, pretty much everyone who could go bankrupt has gone bankrupt. That's what he said to me. I don't know that I agree with that, but I think the larger entities. And they said, when you look at the balance sheet of any of these of the heroes, there's no Bitcoin on it because what do they do? They sold the Bitcoin as they were going bankrupt. They sold the Bitcoin during the wave before they went bankrupt. It was a very interesting point he made when we were having the conversation. He said, you know, there obviously could be more selling pressure at some point, but the Bitcoin was the thing you could sell. That's why you see on these balance sheets when it all goes down, that all that's left is a bunch of speculative assets that are worth nothing, like the FTT on Alameda and FTX's balance sheet. And

that's why there's no Bitcoin on those balance sheets anymore. So, I mean, do you guys believe that as far as the contagion, even if we see more collapses, that largely there's not that much selling pressure coming from it? I think I listened to that. That was a good point. I really thought that made a lot of sense. Yeah, it's a lesson that Dave and I learned the hard way. And I've learned too many times the hard ways.

You don't sell what you want. You sell what you gotta. It's called gotta. You sell what's liquid. And Bitcoin is the benchmark in this space. But there's one thing that I want to just open over the macro a little bit. I still view a lot of this stuff is the noise. And it's a lesson I learned first day in a trading pitch, having conversations with some senior people, really focused on little noise.

And I'm just the guy who didn't know much. But here's the macro. Now, me and the macro is there's a book I read recently called Boom and Bust by William Quinn. They kind of just reiterated things I've studied and learned my whole career being a student of financial history. And that is this situation right now to me is one of the biggest, most extreme examples I've ever read or heard or seen in history. And that's why I say it's like 1929. And cryptos were a key part of it. The boom was led by cryptos and the technology and people in Singapore being able to trade at the same time on a Saturday night at the bar with people in Manhattan. And just that's the ease of being able to get access to this has never happened before

in history. That's why I like to say, well, what's come out of this is Bitcoin is now the world's most fluid 24-7 trading vehicle ever, by far. There's nothing disputable. You saw a trade this weekend. It didn't move much. But the key point I like to make from this is that foundation for where we are now. We're in the early days of just the normal cyclical pendulum swinging in financial markets.

Cryptos were a good leader on the way down. They're a leader on the way down. We're still trying to look for bottoms. And I say, you got to, I mean, yeah, that might be it. But bottoms usually come in extreme pain. And particularly when you have something that's basically measuring in a 100-year event, which is what we're doing. The most liquidity we had pumped ever, which pumped up cryptos in 2020, was the most ever. I mean, when you can say something like that, you have to expect the hangover to be pretty bad.

And we're in the hangover days. That's why I like to say early on, yeah, I'd love to see the stabilization process in Bitcoin. I thought it was bottom around 19. It's 17 now. Even with FTX, that's great. Key thing I'm watching is Ethereum is holding $1,000. That's great. But the lesson I've learned is, yeah, when you're running a lot of money, which Dave does,

you have to expect your value at risk model at these levels. We're still in a bear market. And maybe it's the bottom, but expect the pain. But when that gain starts, you've got to be involved. And I just don't know when. That's the key thing is I look at the macro, and I just have never thought I'd ever see this. But we have, and that's tightening in two days. And every signal I have is that we're 100% we're going to have inflation by our economics model,

Bloomberg's economics team. And the Fed's still tightening. That's just what happened in 1929. And it's not just U.S. It's worse than Europe. And then there's China, which is supposed to be something my colleague called it's a collapsing pyramid. He's our EM expert, Damien Sessauer.

So this is global. Cryptos are a good leading indicator of how they're going to be looked at five years from now and i think that's where okay we're going to say 20,000 was really silly but we're going to say those top 20 or 100 they really made a difference in our lives and that's why the prices will go up yeah i think that that arthur's article the medium post which is basically what you were talking about which is called pembas because the order of operations from math i thought was brilliant but i always think his his medium post, which is basically what you were talking about, which is called Pembos, because the order of operations from math, that was brilliant. But I always think his medium post

was brilliant. I thought that was very, very good. And I think that you've seen is a classic, to use what Mike was saying, I think that Bitcoin is at the vanguard of this. It's a lead lag thing. But basically, those who could sell, those who had to sell sold. And so we've seen a classic weak to strong hands move. And I will continue to make the point, and it's just really important to keep this understanding, is it is a really small percentage of assets from really smart people. And those really smart people or really zealot people are the ones who are holding it now. So who the, excuse my language, but who the F is going to sell it at a point where it's already there. There's clearly people interested in owning it long-term

that are kind of averaging into it. These are people who do not push the market up. They're like, hey, it's coming to me. I'll get it. But it's slow. And the fact is that the dollar-based economy around Bitcoin, whether it be Tether or USDC, is very strong. And you're right. People want exposure to that asset. People in the United States always miss a simple fact. My co-founder, Ian Weisberger, always makes the point. He says, listen, 30% of the world lives with currencies that you cannot trust at all. And quite a bit of the world lives in currencies who you don't want to trust at all. And so Bitcoin is not getting its bid in terms of number of people from the US. And so, you know, Bitcoin is not getting its bid from, you know, in terms of number of people from the U.S. In fact, we're the least likely country for people to feel we need Bitcoin

to preserve the purchasing power of our dollars. But it's everywhere else that matters. And when you look in the third world, that is a big deal. And that is not going to change anytime soon. God forbid, there became a even whiff of fear that the purchasing power of our dollars was in trouble. Yeah, Bitcoin, that's a very big difference. The other point that I'll make is if you look at gold historically, look at gold in 2008, look at gold at every one of these markets, it tends to be correlated on the downside and break its correlation three to six months later. And I know you've probably studied this, Mike, but the fact of the matter is, is I don't see Bitcoin doing anything differently. The difference is right now,

we've had this exogenous shock that, and I think Arthur's point is all the people who are affected by that exogenous shock have all been shocked out. So now what happens when it recapitalizes and people say, okay, it's safe to get back in the pool. We're a long way from FOMO setting in, but we all seen what happens when FOMO does set in. And so the real question is, my advice to anybody is, listen, if you have long-term assets that you're trying to save for a long period of time, now is a really good time to start building those small percentage, non-leveraged positions over a period of time. Is now a good time? Yes, I would say now is a good time. If you're saying, oh, I want to go 100% allocated and start leveraging now because the bottom must be in, I think you're a lunatic.

Yeah, I agree. And I know that we're up against time here, of course. I love having you guys, especially together on Mondays. I know for everyone I'm putting this out there to these guys, but we're talking about bringing these guys sort of on as de facto co-hosts and doing this much more regularly is something that I would absolutely love to see happen. I think the overwhelming point there is following up on what Arthur said is that nobody wants to sell now. It's just people who have to sell, right? I think the only selling pressure is what's forced. I don't think anyone who believes, of course, sometimes you do get those capitulation events where people finally give up.

But I think we kind of saw that before FTX, right? I think the 17,500 bottom was sort of when people capitulated and gave up. And I think the lower bottom from FTX was when they had to. So I'm hoping that that's the case and we'll see us rise out of it. But I have a feeling that we're going to be having these conversations, my friends, for a very, very long time. And I don't think that we're going to be having 100K Bitcoin celebration parties in the next quarter or anything. I think we can all agree there. So guys, everybody, you can follow both Mike and Dave Weisberger. They're tagged on Twitter. I can just pull up and say the names here so I can make sure that I get them right. Of course, it's MikeMcGlone11 and DaveWeisberger1.

You guys both have numbers. I like that. Thank you so much for joining today, guys. I will, of course, be back tomorrow at 9.30 a.m. Eastern Standard Time. Not sure who I'm talking to tomorrow, but it will be trading focus. Guys, thank you once

again very much for joining. Thank you, everybody, for watching. See you guys soon. Bye-bye. Cheers.