The Wolf Of All Streets - Has Crypto Bottomed? David Duong, Dan Gunsberg, Mark Yusko

Episode Date: March 2, 2023

My special guests today are David Duong (Head of Institutional Research at Coinbase), Dan Gunsberg (Founder of Hxro), and Mark Yusko (Founder of Morgan Creek Capital).  ►►GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! 👉 https://thewolfofallstreets.info/bitget   ►►NORD VPN  An essential crypto product to protect your privacy and keep your crypto safe!  Sign up on my link below & enjoy the benefits of NORD VPN from just $4 a month.  👉 https://nordvpn.com/WolfOfAllStreets  ►►CoinRoutes Trade spot & derivatives across CeFi and DeFi using your own accounts with our advanced algorithmic platform. 👉 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 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.

If you've been looking for an end to the negative news cycle and talk of crypto contagion, then you probably need to go back to bed for a few months and hibernate through this crypto winter that everybody has deemed that we are in. Of course, talking about the news about Silvergate Bank, their stock plunging over 50% overnight, Coinbase pivoting from Silvergate over to Signature. And in the midst of all this, of course, a lot of FUD about Binance. Elizabeth Warren leading a group of senators writing a note that they are a hotbed of illegal financial activity. So the question then becomes, is the market bottom in? Is any of this bad news priced in? Is it actually bad news or is it just FUD? I'm going to discuss that

with today's incredible panel. I've got Mark Yusko, Dan Gunsberg, and David Young. We are going to get let's go what is up everybody i'm scott melker also known as the wolf of all streets before we get started please subscribe to the channel and hit that like button i don't want to waste any time i'm going to go ahead and bring on our amazing panel right now we've got mark yusko from morgan creek dan gunsberg of course from, and David Young, head of research institutional at Coinbase. I was going to make a joke that he was the CEO of Coinbase that we were talking about before. But now I'm just going to tell you that I was going to make the joke instead of make it. Then he was going to run out and say he had more important things to do. But gentlemen, so as I said, we've got this endless, seemingly negative news cycle.

But it hasn't, for the past few few months really rocked the price of Bitcoin. Even the FTX collapse in November, which I think a lot of people didn't see coming, was basically retraced fully in two months. The price of Bitcoin rose back to above where it was before FTX. Mark, the last few times we've talked, even starting last summer, you said it's not a crypto winter anymore. It's crypto spring. You still have that opinion? Winter ended June 15th last year. We're in spring.

But spring in summer, right? I mean, spring is muddy and windy and choppy. And actually, if you look at the four-year cycle, it's pretty much flattish with a lot of volatility. Now, I will acknowledge that, look, I didn't see Hurricane Sam coming. So I live in North Carolina. And every 10 years or so, we have a Nor'easter that springs up in March. And we get 10, 12 inches of snow. We can't deal with one inch of snow, let alone a foot. And it doesn't happen very often, but it happens. It's still spring. That

didn't make it winter. It's still spring, but you had a bad storm. So I think that's what Hurricane Sam was. The fact that we're right back where we were before, it's perfect teacup pattern is really good. The resilience is good. In fact, that was my word today was persistence. And, you know, I think we all just need to persistently and diligently, you know, keep moving our strategy along. But I will argue spring, summer, right around the corner. My guess is May-ish, June-ish, nine months before the halving. And that's the way it goes. So is it really as simple as the classic four-year cycle? I mean, can we eliminate all of this noise that's news and just the signal is simply, this is what happens literally every time? I mean,

if you look at the halving chart, we in December and January is exactly when the market should have followed. Look, humans are human. And we are very good at doing two things, like extremely well. We buy what we wish we would have bought and we sell what we're about to need. And we're spectacular across every asset over and over and over. And this asset has a built-in cycle, right? You know, the business cycle used to be seven years pretty regularly, again, because there was a cycle of liquidity and loosening from the Fed. They suspended that in 2009. And we went into the QE era. And that screwed up everything cycle-wise in the traditional world.

But it's hard-coded into Bitcoin that every four years, you're going to cut the block rewards. If you cut the block rewards, in theory, a whole bunch of miners would go out of business unless the price adjusts. And the price adjustment creates movement. Guys, right? We're all, I mean, you know, gender problem here. Is guys see movement, right? Hunter gatherer, it's in our DNA. Like my wife says, Mark, go get the ketchup. I open the refrigerator door. Honey, there's no ketchup. She walks up, grabs ketchup bottle. If

it ain't moving, I can't see it. That's just the way it is. And so once that price starts moving, the people come. And look, I've talked about this with you before. There are four types of market participants. There are investors, people who buy about this with you before. There are four types of market participants. There are investors, people who buy things below their fair value. We like to do that. Then there are traders. Traders don't give a shit about fair value. They just want to make money up or down. Then speculators. Speculators don't care about anything except number go up. But the problem, and this is a big problem in crypto, is the degenerate gamblers. The gamblers come in with leverage and they push prices way above fair value. And that's what causes the cyclical collapse. Anyway, I talked to him.

David, I mean, Dave, do you think that this is simply the four-year cycle or do you think that there might be some important movement here that could change things for that? So my remit is broader than just Bitcoin. And what I'm seeing right now, I mean, in terms of just the flows that we're seeing from our institutional clients on exchange, like 55% of this is still on Bitcoin and ETH, but that would mean that the remainder is still in altcoins. So there's still a lot of attention being paid to what's happening in the rest of the ecosystem outside of just Bitcoin and Ethereum. That said, of course, Ethereum with the next big event risk on Shanghai 4, still on people's radar. I think what's happening right now tends to be a lot more macro focused insofar as I think what people don't realize is this is just seasonally a weaker period for a lot of risk assets because we're in between that period where people have their bonus payments, putting money into their 401ks.

And right before we're getting a lot of checks being cut for like tax season. So we're in this kind of like weak period, but we're trying to draw conclusions about what's happening with the Fed or what's happening with other things, a correlation, which, by the way, is coming down between crypto and other risk assets. So, you know, I think that has been what's driving this. Now, on the upside, there's been some better liquidity conditions created by, you know, the Treasury winding down its Treasury general account because otherwise we can't pay the bills. We've seen that, you know, the first repo position has been coming down because there's greater availability of like front end T-bills, for example, so they don't need to park money at the Fed. So that's helping.

But, you know, I do think that this isn't the end of it. I think if anything, macro conditions are actually neutral for, you know, risk assets, including crypto at the moment so i i actually think that you know seeing these levels i wouldn't expect it to necessarily come down substantially over the next three months let's say but of course then we're going to hit into the real debt ceiling issues that's when you know the economy could potentially be weaker as well. That could be an issue later into Q2.

So we are still heavily talking about macro. I mean, Dan, what do you think? My take is, first of all, those were excellent takes, both of them. You know, what I like about what both Mark and David said is that they're kind of taking a step back and removing the noise, kind of looking at things that, you know, a much larger perspective and kind of like minimizing some of the narratives that kind of the crowd is trying to, or even like whether it's journalists or crowd or anybody who's talking about crypto is trying to hang their hat on. And if you look at it, you step back, you step back to the technical fundamentals that Mark is talking about. You step back at some of the points that David's making.

I'm going to take a little bit more of a technical approach and say, look, the Bitcoin futures curve is still in contango. They're looking at higher prices further out. There's actually a yield being delivered, something that we haven't that we didn't see for a while and that to me and i've been in crypto since 2015 has always been ever since they started actually having trading futures which maybe was like 2017 2018 um it's always been a good lead indicator for me of seeing like is price higher out in the future and you know much like how the bond market works um and the bond traders usually get that curve right for the most part, I think you're starting to see more and more of that in the Bitcoin curve. And that is a very strong indicator for me. A couple other things that I like, you know, Mark was saying just it is so crowd based. And what he was kind of referring

to was this kind of concept of reflexivity in markets and once you see like higher prices and things are moving the crowd comes and takes price higher and it kind of has this very powerful uh a feed on itself that the feedback Loop on itself that can drive price high but then it also drives by price lower. And that is what to me, what embodies so much of this kind of longer term volatility that you see in crypto and why these like these kind of peak to valley 80, 90 percent Gartner style cycles exist over and over and over again. It's almost become a meme, you know, a meme more or less. And so I'm taking the the the I think we're maybe in the in the seventh inning of a of a bear market. And I think that you're starting to see some unlodging from negative news and the price of Bitcoin in in other things like, you know, David was referring to there still is interest in the altcoin markets, although most of the interest seems to be in Bitcoin and Ethereum, especially Ethereum with Shanghai 4 coming up. All coin market lack a narrative right now, bottom line.

Like I think I think things like liquid staking derivatives and decentralized derivatives are going to start kind of maybe coming to the forefront. But that to me is also very much like a non-Western market. You know, a lot of the narrative that gets captured there is outside of, you know, of North America at a minimum. And so I think the combination of all that, eventually you see it come together. That ball starts moving. The wife comes, finds the ketchup. The guy says, I don't know where the ketchup is, but I see a nasty 800-pound bear in my backyard that's moving. I'm going to go shoot it, and we're going to eat for the winter. Let's go.

Interesting, the point about the altcoin market. We've seen these sort of mini narratives, China coins or AI-driven coins, but they seem to be much smaller and quicker bubbles than the altcoin narratives we used to see in the past, a full DeFi summer or six months of NFTs and metaverse. I get the feeling that, David, even to your point, obviously, there's still interest in them, but this is that old sort of washing machine cycle of crypto native people just moving in and out of altcoin narratives with no new money coming in hot ball of money is that accurate i don't have the data on that it just feels like this is the old crypto traders doing crypto trader things i i will i merely admit it does feel very

hyper cyclical compared to kind of what we've seen before um And it's kind of odd, particularly after 2022, to kind of see some of these patterns still continue to emerge. And they're not all together isolated. I mean, like the AI movement, yes, kind of drove Fetch AI and the graph. But of course, the graph also has an announcement about new developments that are coming on board. But yeah, it's odd to see like Aptos, Contos, Graph, like all these things kind of just circulate. When generally, I would have thought that we would have retrenched back towards,

you know, tokens with just sustainable kind of tokenomics, things with a mature ecosystem, something with just like good liquidity. It is kind of odd, not something I wouldn't expect. But yes, it's at least, I think, moving very quickly. And it's kind of we're moving into it and then kind of out of it pretty, pretty, pretty fast. So, Mark, that begs the question, then, you know, we see movement, we all pile in, you both talked about it. What's it going to take where this isn't a washing machine anymore and we get real interest from new money? No, Scott, I think that is the question. And, you know, we could unpack and I love that, you know, you go by Gunny. I love Gunny's points. I mean, I could spend the next five hours talking about the points he made because they're so spot on, right?

The futures curve, right? The futures were created. Let's just call a spade a spade, I believe. The futures were created and the ETF futures was approved to beat the shit out of this market, right? We are in the then they fight you phase. This is not an accidental kind of, oops, we messed up. This is beat down by the incumbents, by the banks, all that nonsense with the useful idiots. Yeah, but the futures are still resilient. And as David said, there's real money like now embracing this asset.

Asset, you know, it's primarily Bitcoin and ETH, but a little bit more broadly. But we're talking real people who are in the business of managing other people's money, embracing this, and you can see it in the future. So that's an amazing insight that most people aren't paying attention to. Then you got the point about reflexivity, which again, the whole, we could talk about Soros forever. We can talk about the sinister side, but then we could talk about just the genius of reflexivity. But your question about the washing machine in the top, look, the speculative nonsense, like Dogecoin, why does it even exist? I mean, my mind hurts.

And I said the bear mark will be over when Doge is zero. And I want to stand by that, but I can't because stupid people are going to stupid. And great. I get in a debate with this guy, and he's actually a friend and I respect him. He's like, no, memes have value. I'm like, no, memes have value. I'm like, no, they, they don't. I mean, and, but reflexivity would say, yes, they do. So I'm, I'm struggling with that. And maybe if the value lasts long enough, and then a developer comes along and says, Oh,

I can do something with this, then, then I'm wrong. But I break it into two pieces. You've got the institutional quality, real assets that people are realizing they're uncorrelated. Bitcoin is the most uncorrelated asset I've ever seen in my career. And I'm old, right? White hair. I've been around a long time. I've seen every promise of diversification, international stocks, 70% correlated. Bonds, 30% correlated. Hedge funds, 50% correlated. All these things that we're going to promise you on correlation, Bitcoin 0.15 to stocks, 0.0 to bonds. That's uncorrelation. Oh, no, no, no. In November of 2022, it was 100%. That's called a liquidation event. In liquidation events, correlations go to one. Yeah. Okay. I got it. But look at the long-term correlation. It's still really, really low. And it's because the asset derives its value, not from traditional assets. Traditional assets drive their value from GDP growth, interest rates, and economics. I mean, the economy. Crypto,

that's not about it. It's about millennial adoption. There's $37 trillion with a T, $37 trillion going from my generation to my kid's generation, from the boomers to the echo boomers. That money is not staying at UBS. That money is not going to stay in mutual funds and ETFs. It's just not. I don't care what Larry Fink says. I don't care what, no chance. And the alpha, the Zoomers, the generation alpha, the kids are being born right now. My grandkids, my granddaughter, okay, just born a few months ago, will never have one of these. She will never have a leather wallet. Not ever. She will have a digital wallet. That's the only wallet she will ever know. And she will walk around, not with an iPhone, but I hope with a ledger. Okay. And it will be your primary connection to the world.

And Web3 will have everything of value underneath it but you know i could go on and i told you i talked too much no i i think those are actually brilliant points and uh i love when you talk about the futures because dan sort of said well i don't remember exactly when it was that we got futures well we remember exactly when it was because one day before the top of Bitcoin in 2017. December 18th, 2017. It was literally the day. I remember the day and I remember the number. I remember the time. I remember the announcement.

I remember the tweet. That was the day that this all started. And look, there is no question, right? 2009, at least no question in my mind. My wife says I'm frequently wrong, never in doubt. Occasionally wrong. Okay. But never in doubt. I got that. But 2009 to 2015, first they ignore you. Nerds and geeks playing with your magic internet money. Who cares? 16 to 21, then they laugh at you. Oh my God, you guys are idiots. Play with your magic internet money who cares 16 to 21 then they laugh at you oh my god you guys are idiots playing with your magic internet money get a real job 21 i mean i was 22 to 27.

problem is that's a long time then they fight you and the fight is only starting well you know what what was incredible to me we we knew in 21 that you could see it coming because we're all in it day by day right we get the arthur hayes needs to pull the plug on bitmex to keep things from from cascading down to zero for a minute and we hit this you know three thousand something bottom in bitcoin dead ass low and then literally it was like correlated to qe you know there was just in lockstep just like the spoons were 17x up up up up and yeah and it wasn't till like maybe somewhere around 35 40 000 bitcoin that like jamie diamond started to flip like his narrative started to flip right exactly and so And so it proves your story of like movement.

And that movement and that confirmation movement, the amount of sludge that, you know, a large institution has to go through to get to the point where their PR team can start changing their CEO and chairman's narrative. No, it's so, it's so important for disaster though, in a way too,

isn't it? Like, why aren't they there buying, buying blood in the streets? Look, anyone who thinks that JP Morgan isn't actively engaged and behind this whole thing, I don't know what they're smoking, right? It's abundantly clear.

I mean, to your point, if a billion dollars leaves the banking system, who gives a crap? Who cares? That's like pocket change. Who cares? Ten billion. I'm not even paying attention. A hundred billion. What the fuck? Now you stop that. Now you're now now I need to stop you. So what do I do? I create a fictitious company called FTX. I back it with a bunch of sludge money from bad people. I then get them to be friendly with the regulators and go after everybody else. Oh, the whole thing was a fraud and a money laundering ring to, I think, wow. And people are surprised by this. And everyone was, you know, Jamie Dimon at WEF, okay, a couple of weeks ago, 10 minutes talking about Bitcoin. It was like, oh my God, I hate

that guy. I'm like, whoa, stop. Think about this. One of the most powerful people in the world. You don't have to like Jamie Dimon, but you have to acknowledge he's one of the most powerful people in the world. Full stop, right? I don't like him, right? I think he's a nasty creature, but I probably shouldn't say that out loud. But I don't like him, but I respect that he is one of the most powerful people in the world. Probably shouldn't say it because he can come get me. But, or he wouldn't do it, but his black hat would. But here's the thing. He had his 10 minutes of fame at WEF. He could have talked about anything he wanted. Anything at all. And he chose to talk about Bitcoin. He said, no, no, no. Joe Kernan baited him. I'm like, no, no, no,

no, no, no, no. We've all been trained. Someone asks you a question, you deflect and redirect. And you talk about what you want to talk about. You don't have to talk about anything. He chose to talk about Bitcoin. I'm celebrating that. That is awesome. When one of those powerful people in the world is talking about an asset that didn't exist 14 years ago, good for us. And that's why stage four, then you win. If you're here, if you're listening to this right now, you've already won. That's the cool part. I agree. I mean, Dave, do you have a take on that? No, I think that Mark actually covered it really well. We already know that JP Morgan's been doing their own thing in this space, regardless of what Jamie Dimon has been saying.

They're not necessarily sticking to that route anyway. If anything, they're diversifying themselves. Like they're building out an intraday repo market on Project Onyx, for example, which, by the way, couldn't exist outside the blockchain anyway. So people wanted this, people needed this. You know, they're doing things under Project Guardian. So like, they're obviously not putting their eggs like in one basket on this stuff. I mean, to be fair, that's the right approach. You know, like I think that what we're missing as an industry is that like, you know, not just David Morgan, but many of these like large institutions are actually in here building out their piece of the infrastructure,

thinking that like they're just kind of doing their small part. But like soon all this stuff is going to be connected. Like we're not going back to 2017 where we say talk about tokenization and nothing ever happened. Like if anything, people are actively tokenizing now, actively trying to look for ways to do permission, DeFi, all these things. And, you know, like probably we're not going to get to $100 trillion worth of capital assets on blockchain by the end of the year. But we're definitely not going back in the world. No way. And look, if you haven't watched it, you gotta watch it. And Mr. Robot, okay, very violent, gratuitously violent. I almost couldn't watch a whole bunch of it, but it's unbelievable. It is life imitating art. It is evil corp is JP Morgan.

JP Morgan coin is evil coin. Okay. If I would have watched it in real time, I'd be way richer because it is unbelievable that what they tell you about how Bitcoin is going to take over, how JP Morgan coin is coming, how central bank digital currencies are coming, all of it. I mean, some of the most brilliant writing in television you'll ever see is that with the excessive drug use and gratuitous violence. But if you can get past that, brilliant television. But the story is ripped right out of real life. And I'm like, the evil corp CEO is Jamie. And the evil corp token is JP Morgan coin. And look, there was a tweet this morning. You know, the Treasury is working on the CBDC, right? Pure evil is coming this way. And if you don't see it, you're just not paying attention.

Is there a case that the central bank digital currency could end up just being a private form of cash rather than insidious? You know my opinion on this, by the way, but I have to throw it out there. No, none, zero. You're not supposed to say that, but no. It is private cash and it is fiat, but it's fiat cubed or to the fourth or to the fifth power with all the negatives, right?

It has all the negatives of fiat, right? Which are inflationary currencies designed to steal wealth from the masses and give it to the few. But it's on steroids with surveillance. And the worst, like, look up the, you know, people got to watch. I used to call him Jabba the Hutt, but he doesn't look like Jabba the Hutt. He actually looks like Kingpin from the Spider-Verse movie. But, you know, Augustine, whatever his name is, find his video.

It's a minute and 47. It's not the head of the IMF. This guy. Carstens. I mean, he's Kingpin. He's five. Oh, he's not 500 pounds, but he's four something if he's an ounce. And I'm not making

fun of him. I'm just saying the dude is evil. And when he says, of course, we should control your money. Whoa, whoa, whoa, whoa, whoa. No, no, no, no, no, no. That's my money. But imagine this dystopian world, right? You get paid on Friday. You get paid tomorrow. You have a few cocktails and you drunk text about the president and your money is worth 85 cents on dollar next day. Or you jaywalk and your money doesn't work. Or this is the part that I know is coming. Target pays the government a little extra something, something and your money doesn't

work at Walmart anymore. It only works at Target. What the fuck is that? That's coming. That is coming. And that's why you got to opt out. That's the most important first step is to have the running money that you opt out with.

All the other stuff to try to make life better and Web3 and all the stuff that we're doing. Okay, that's gravy. But we got to stop the sinister stuff first. I thought that Augustine Carson's comments were also inconsistent because on the one hand, he was saying that Bitcoin basically

has failed in its mission. On the other hand, he said that there's demand for having money on the blockchain, therefore CBDCs need to exist. I'm like, well, you're saying that demand exists, and why are you saying that the rest of crypto shouldn't be around?

Like, it didn't make sense to me when I heard those statements. That's because he's talking to a bunch of people at WEF and he's talking to people who are not crypto native and don't understand. I think it's probably just an easy narrative for him to push for a bunch of people who have no ability to fact check. No, Scott, I'm going to disagree just a little bit. They understand completely.

You think all of them do? Yeah, that's fair. Oh, no, no, no. This is all from, this is from the top, right? They understand completely there i agree they're not digital native but they understand completely what decentralized store and transfer of value means for the cabal and i'm not supposed to use the word cabal because i i was told i did not realize this that that's a trigger word for people of the jewish faith i so i apologize i't, I didn't know that. Someone said I should use the word cartel. Like, well,

I'm Jewish and I did not know that by the way. I'm Jewish and I had no idea. Okay. See, so you're aware. I had no idea. You're not part of the cabal. I'm sorry. Apparently I'm not part of it. Yeah. So now they said, I'm like, well, then I'm going to piss off people down South. So I'll just say the, the group, the group, well, then I'm going to piss off people down south. So I'll just say the group, they are not digital natives, but they absolutely understand. And listen, nothing that happened since November was an accident. Nothing.

Nothing in this FTX saga was an accident. And you know, my point of this, Sam and Caroline, not the masterminds, zero chance. They are the masterminds of nothing. This is way above their pay grade and some big, big, big people are involved. So is it a, is this a war of attrition more than anything? Like, is it just a matter of of a gender of turning over another generation of politicians and people that are in leadership roles and the things that like I I spend a lot of time very carefully for on many levels as a parent, as a you know, just as an entrepreneur in a very advanced technology driven business, watching my children. And, you know, my wife and I talk about this a lot of like,

the things that are normal to them, there is this small generational gap, things that are absolutely normal to them are things that to us, you know, maybe are feel a little awkward or not right. Or in the same way that, you know, my grandparents, like, would never have read the news on an iPad. And it's just, it has this kind of exponential effect where it's immersing more and more into our everyday lives, and the things that feel normal to them. So getting it into the hands of those masses where, like you're saying, it's, you know, your life is on a ledger. Sooner that they're just, the world is operating like that, it's going to just naturally bleed into society, which is going to bleed into government. It's going to bleed into

politicians. It's going to bleed into our everyday lives. And it's going to bleed into the masses of, let's say, voters, who obviously politicians are in the job of, you know, if you follow Brad Tusk, like, you know, he has one of the greatest quotes ever of saying, like, a politician's job is to get reelected. Yeah. Amen. And Gunny, again, just brilliant insight. Think about the average age of the politician when the framers created the republic. Yeah.

They were in their 20s. Right. Republic. They were in their 20s. Think of the average age of the politician in the 1920s. Was in the 40s. Today, it's in the 70s. That's messed up. It's messed up. And that's not ageism. I'm getting closer to that. The reality, everything great is built by young people. Yeah. It's just a fact, right? And that's, it doesn't mean that an older person can't do something cool.

They can, but everything great. Because young, you don't know what you don't know. And you don't know that it won't work. So you're willing to try it. And think about all the big innovations, right? Mainframe computers, a bunch of punks in Boston, Massachusetts, fiddling around, 1968 around the microchip. And then in 82, ever seen a picture of the original Microsoft 11? Oh my God. Okay. They were young and they were, I mean, Bill Gates in that picture looks like he's 11 years old. He looks like he's 11 years old and his glasses are like this big. And, but they built this amazing business. And to your point, Steve Ballmer's mom said,

honey, why would you work for that company? No one would ever want a computer in their house. He has 18 billion reasons he's right, mom was wrong. And fast forward to 1996, we invested in this little company called Google, created by two 20-somethings. Our board at Notre Dame said, you're idiots. Google, it's a stupid name.

Now it's a verb. We all Google things. That's a verb. Every entrepreneur's goal in the last 25 years has been to become a verb. Yes. You know, we put in half a million bucks. We took out 200 million. There should be a quad at Notre Dame back there called the Google Quad.

And then in 2010, or actually in 2005, Google bought Android. And people said, you're idiots. What do you know about operating systems? Oh, 80% of all the phones in the world run on Android? 80? 8-0? Yeah. Okay, that's valuable yeah it's like by the way guys get out of the u.s and see what's going on in the rest of the world it's not the iphone exactly and one thing we haven't talked about is i think this bull run as i said it's

coming is not gonna be led by the u.s that that was gonna be my next i mean that that was the next question china china, China, China, and everything's China's dead and China's uninvestable and China banned Bitcoin. China just traded a trillion, a trillion with a T. And see, the trillion number is lost on people. And you've heard me say this before. A trillion. We have to sit here together for 31,710 years. As much as I like y'all, that would be most unpleasant, right? A dollar every second for 31,710 years. That's a trillion.

China just created a trillion of those babies. And post-lunar new year, they are finding their way into the digital asset markets. And that's what put the floor in. And that's what's going to create the next run. That trillion dollars is coming. Mark, do you think that's why the change to the regulatory structure insight is observing something that seems normal and natural that is actually a big deal. And that's a great insight that David just brought up. All four of us are presumably sitting in the United States right now, though.

And I think that Mark and Gunny, the future that you guys have described is inevitable. Obviously, all of our children will never know a world without Bitcoin. They'll never know a world without digital wallets. But that doesn't mean that Americans will be able to participate. And I think we're going down an extremely slippery slope with, obviously, regulators. I mean, David, maybe it's, you know, Coinbase looks like you could be the last man standing in the United States, and that's how we all access this. By the way, before you ask,

can we get like a serious round of applause for Coinbase? I mean, before the show, I said Coinbase is, whether anybody wants to admit it or not, if you're full DeFi, you're doing whatever, Coinbase is your leader right now and we are looking to coinbase and a very heavy war chest and a ceo who is willing because he came from early og crypto world yep and understands what the mission is in spite of becoming the largest, you know, institution in crypto, which is, we love everything about that. Like, let's talk about,

I'd love to hear from them. Let's talk about that. And so much so that, I mean, I don't think people realize the sort of importance of base, right? But I mean, that's effectively admitting disruption is coming and deciding to disrupt yourself in advance of allowing somebody else to do it. That is bold. And it's Coinbase saying, listen, DeFi is real, right? David, I'm gonna let you talk about it, obviously. Yeah, you know, I think a lot of people have in the past asked Coinbase why it wasn't building its own blockchain, why didn didn't have its own network. And it wasn't because we didn't consider it.

I mean, we thought about it in 2018. We thought about it again in 2020. But, you know, it just didn't feel right. We didn't want to silo our users on a blockchain network that we created, for example, that wouldn't have the effects that we wanted to do. I mean, at the end of the day, we want to make using these networks, using crypto as friendly as the way we actually allow people to onboard and buy and sell the tokens itself.

Like we wanted to make that experience easy. We want to make the experience to onboard easy. So, you know, the way we thought about it was, you know, there's, you know, like 300 million wallets out there. But really, on a day to day basis, only like 10 million of these unique addresses are actually using this stuff. You know, many people kind of buy the tokens, but we want to get people to actually use this stuff. And I think what people miss is that technology is actually rapidly improving to the point where it will happen like you know we

kind of look at these individual upgrades that happen on say the ethereum network we're like okay there's like uh the merge and there's shanghai fork or there's proto-deng sharding but no one it really is making the connection of like why all this stuff is necessary and what it gets us to because what we need are like things like a base like L2 that actually has super cheap transactions. So that it isn't costly if you want to have a decentralized social platform, for example. Because I don't want to pay the gas fees just to post something all the time. But if they're like fractions of a penny on a dollar, well, then this is Web3. This is actually how to get there so like this is

when we were talking about base and which is which is why we did it on the op stack or the op stack uh you know building it with optimisms open source code so i think that the feedback on this has been great you know like i i am actually so glad to hear when guys like mark and and you know dan like kind of come in here and and say what they have to say about Coinbase. And hopefully we're doing the right thing in terms of following the principles of permissionless, decentralized platforms that we are trying to get on board that next billion users. Sorry, go ahead, Mark, please. No, go ahead, Dan. Oh, yeah. I was saying you're, you know, you're working like top down almost in many ways.

Like you had the centralized exchange. You captured, you know, I don't know the exact numbers in know, from the inception of Coinbase to today and through GDAX and Coinbase Pro and everything else that you've done there and just the applications done pretty damn well with it, right? And you've captivated a large enough audience that now you can introduce these new technologies into them. you know coinbase has the war chest and the ability to hopefully educate um you know what is a large you massively large user base on some of the benefits of this and there's there's also this you know it i come from the more pure d5 side of things and um there's there is a lot of this kind of like web two and a half kind of um building

going on right now where there's a lot of hybrid exchanges popping up um where maybe they're using uh more of centralized like matching engines um which is for people that don't know like where trades effectively match but then settlement is happening fully on chain uh and then using some things like mpc layers and some other security protocols around wallets to kind of have this hybrid of where you can actually have your own wallet and your own keys but still operate in a um in an exchange that um that you know isn't gonna uh suddenly um disappear and and uh you know do the the horrible rug or whatever things that happen which we try to at all costs to avoid and stay away from but um it really is you have the platform now and you know and we started this

discussion more on the regulatory front which you know is like you have someone like brian with a with a massive war chest in it and and a a very talented legal team to to a regulatory team to go to bat. And like that scares a regulator, in my opinion, like there because like Gary Gensler is only in office till 2026. And when you have a shorter, maybe shorter. Yeah. Yeah. They usually last two years on average. I'm not even saying that in a like he's going to get fired or something's going to happen. That just they usually move on. No. Right. Well, and we know. Right. Who knows what's going to happen in 2024 and what comes out of that? But but we also know that, like, you know, a lot of there's there's a lot of turnover of those regulators and like the lot of their job at the end of the day. And you can't fault them for it is to have an interpretation of law and to try to apply it.

And and which means that there's lawyers there and a lot of the and to try to apply it. And which means that there's lawyers there. And a lot of the regulators, it was made up of lawyers. And those lawyers often like to go spend a little time in the public sector and then go to the private sector. And there's turnover. And when turnover happens, it creates friction there. And so when you have somebody that you're going up against, look at Ripple. Like it's another example like that you're that is willing to go to bat for an industry and say it like. It's it's a scary undertaking. It's a you know, that that large U.S. regulator like suddenly has to think twice about what they're doing. And I think that pressure kind of over time is something that is needed. And I really, again, commend

Coinbase for stepping up. And then back to the L2 side of things, having this massive audience that you have and now being able to educate people on the basics of what it looks like to operate in a DeFi context. It may take a couple more years, but huge for the industry across the board, I think. Yeah. It's just, it's so important to have great leadership, which clearly is the case here. And more importantly, to have a leader who has courage. It is tough to stand up to injustice and inconsistency, you know, to the point that Gunning was making about,

look, I should never say anything negative about the three-letter organization that I actually am registered with so they could, you know, make my life miserable, like more miserable than they do every time they come and do a regular audit. But here's the thing. Under the former chairman's leadership, Jay Clayton, that organization was consistent, measured, and prudent. Those are not words I would normally associate with that organization, but they were consistent in saying these things are not words I would normally associate with that organization, but they were consistent in saying, these things are not securities. They were measured, not saying everything else is illegal and a Ponzi. They went after the bad actors and, and, and actually created some clarity, right? Which is regulation's not bad. Right. Think about kids. Right. The kids who are bad are the ones who have no rules. Right. No curfew. They can do whatever they want. OK. Those were the bad

kids. OK. Because they don't understand boundaries. And so as a parent, you put in some rules and same as the regulator, you put in some rules. The problem with the current leadership at that organization, I will argue, governance by enforcement, bad. There's this thing called NIGI SOB. I don't know if you ever heard the term, NIGI SOB. It stands for now I got you, you son of a bitch. And the way it works is your better half, you know, whoever that happens to be, says make me happy. And you're like, okay, take you out to dinner. Oh, that doesn't make me happy. Niggi sob. What do we mean?

You said make you happy. I didn't make me happy. So now I got you. And that's kind of the way it works. If you don't lay out the rule for people to follow, and then you come back and say, oh, you broke that rule, which is what they did to BlockFi. They tried to do to Coinbase, and Coinbase is like, what are you talking about? We didn't break any rule. And thankfully stood up. BlockFi tried to stand up, but they got some, I'll say, bad advice

to just pay the ransom and put them in a tough position. Go ahead, sorry. I want to go back to one other thing. Getting off regulation, what Danny talked about, sorry, not Danny, David. Sorry, David.

Talked about that I think is so important. People don't understand and appreciate what we think of as money, right? Which is not money. There's only one money in the world, and that's gold. Money is an asset that exists in the absence of a liability. At the root of all monetary systems is gold. I believe Bitcoin will replace that, but that's money. Everything else is currency, which is debt or credit.

That currency system is 70 years old. Let that sink in. The Swift system, ACH, Fedwire, 70-year-old technology. Written in COBOL. Written in COBOL. Yes. And that's a really important point. Not COBOL. He did not say COBOL. And it's a really important point. MasterCard and Visa run on a mainframe computer coded in COBOL. And I asked the guy, I said, how can that be? And he said, well, it's kind of a moat, right? Because no one knows how to hack

COBOL. I said, but when the computer breaks, we got to put on a light at the Sunnyvale retirement home and some 80-year-old comes over and fixes it. I'm not joking. Because my dad, who's 80, about to be 85, can code COBOL. No one else can. But the point there is when we all spend, okay, we flip out our little plastic card. We don't have money anymore. We take out this plastic card and we charge. We don't interact with Fedwire ACH every transaction. It gets

batched on a mainframe computer for 30 days, and then we settle up once. And what Danny was saying, why would I want to do gas fees every single time when I can have this layer two and ultimately even layer threes and layer fours that allow us to function in that batched world but can still settle to truth? at the end of the day, this is my view, is the thing that Jamie and all the other banksters are pissed off about is their 800-year reign is over because we're going to replace trust with truth. And the most amazing about this technology is all the little things about it are great. But the main thing is we don't need trust. We have truth. And once you have truth, you can do a lot of great stuff. And that is why, to me, you go back to the main chain, Bitcoin, the proof of work as the core. There could be a lot of other things that are great, but at the end, that truth, that base layer truth is why this is so inevitable and why I'm still here despite

getting smacked in the head with a two by four like everybody else over the last few months. It's been fun. Yeah, I want to really quickly talk about all of the companies that have sort of bowed to the SEC, all these lawsuits, obviously, the Ripple case ongoing. Before we go with these eight minutes left, nobody seems to be talking about the fact that Grayscale is suing the SEC to convert GBTC to an ETF. Like this week, in five days, that lawsuit starts. I don't have high confidence that they will win. this week in five days that lawsuit starts, I don't have high confidence that they will win.

But if they somehow did, in my opinion, that would be the most bullish thing we've seen literally ever in crypto. So is there a chance? And why is nobody talking about this? Dave, do you have any thought? I think it's really unlikely you know I will say that I don't believe the SEC is necessarily a monolith I mean I think when you know like uh we we specify Gary Gensler that's one thing but of course Hester Pierce

has her own opinions I mean everyone can tell opinion, right? We just have to recognize that it's not dispositive for the issues that are at hand here. Now, with respect to Grayscale, I mean, you know, they're also making pretty penny just kind of where they are right now with kind of like the way the trust is kind of set up. But I don't believe that it's going to be at all in the purview of this particular SEC run by Gary Gensler to ever see something like that happen. I mean, it's come up multiple times now to get a spot ETF, and I just don't think that they're willing to do it. But this is a court case, right? So in theory, it shouldn't matter what the SEC – That's fair.

They're not litigating on this, right? Oh, come on. Scott, Scott. Listen, I get it. Trust me. Okay. Okay. In theory, okay. Theory is great. But in theory, right? The original judge that was assigned to SBF's case

that was impartial probably should have been the judge instead of the wife of the lawyer who set up FTX. Look that one up. Yeah, no, it's- How does a judge get reassigned? So yeah, in theory, it should, look, David is much more politically correct than I am. I am not uncertain that there's zero chance, zero, that they win this case.

And BlackRock will be approved for the Bitcoin ETF. So it's not a matter of a Bitcoin ETF being approved. It's a matter of giving it to the favored, anointed son of the... But when is the question? And not until not until and and this is completely analogous to GLD if you go back and look GLD years not approved not approved and people like I wanted my gold what not until JP Morgan was fully short and needed the longs to offset their shorts, did they allow GLD to get approved. And you can look this up. J.P. Morgan paid,

I don't know if they actually paid, they were fined $962 million. So think about these fines, these big splashy fines, most of them never actually pay. So they got fined last year $962 million for spoofing the price of gold. And everybody's like, wow, that's a lot of money. Yeah, but we made $20 billion. It's like a cost of doing business. Who cares? So 5%.

So look, I think there's zero chance that the good guys get approved. I think it goes to the group. But not yet. Because right now, it's more important to artificially put pressure downward on the price by spoofing in the futures market. Yeah. But we still are reacting or not reacting, I should say, to negative news. Right. So that that gives us the four minutes left. And the topic here has crypto bottomed, which is sort of how we started.

Mark, I think you think so. Yeah, I think so. And my opinion on that is basically based on the fact that we retraced the entire FTX drop in two months, which was, I don't see anything worse than FTX. I mean, nobody has to go on record on a price or anything, but I mean, Dan, do you currently think that it's likely, not uncertain, the bottom could be in? With all known information, yes. So without any massive black swan, something that we are, something that has like come out of uh, facilitated a 20 ish billion dollar fraud inside tether. Yeah. We'd, we'd make new lows, but with all available information, I agree with Dan. Well, but the, the other, other, the other FUD that people, well, there's two, right? So you just mentioned sort of the silver gate. I think they're rapidly going to zero as we speak.

Obviously, Forbes had the article about Binance the other day, which to me seemed loosely vetted. But I can't speak to that because I'm not an on-chain analyst. And then, of course, the DCG saga, right? But Genesis's bankruptcy didn't move the price a penny to the downside. So that one seems somewhat priced in if there's an expectation that DCG has a problem. Genesis is tiny. I mean, I hate to say this, not that $600, $700 million of lost money isn't a lot of money. It is. But in a $400 billion asset, it's just not. And even, I mean, I hate to say it, even GBTC, everyone's like, well, what if GBTC were to crash? All right. It's $15 billion. So if you liquidated that, everyone's like, oh, the price would crash. Well, not everybody would actually sell i people would take the bitcoin and hold it some would not sell so but even if all of it sold you're talking you know sub 10 percent of assets so i i just don't i don't see it being as big a deal um

but there there's some there are some black swans out there. Yeah. I think this market's more efficient than people give credit for. I think the DCG thing actually got kind of priced in towards the end of 2022 already. Like a lot of those shorts that got squeezed in January, for example, I think that already kind of folded in the DCG to the point where once the bankruptcy with Genesis was kind of officially announced, that structure, if anything, actually seemed more amenable than what people were initially expecting. Yes. As far as like the, you know, proceeds of how the shares of DCG were kind of going to be contributed, all that kind of stuff.

So by that point, if anything, it just kind of supported the rally higher. Yeah. So I think we're all in agreement that absent a massive black swan we actually have a good chance that's bottoms in i also think we're going to chop sideways and it's going to be really annoying for quite a long time i think yeah one last thing again that i've spoken so well of uh i should get a uh a thank you from the coinbase pr team here but look at that look at coinbase bonds i'm gonna give him a call like later no like uh show them this stream come on i really think i would like yeah i worked for it um no but i i'm just i'm just trying to keep it uh keep it honest uh but like look at coinbase bonds i think um but maybe like as as far back

as like late december they were trading at you know 45 cents on the dollar and they're trading i think close to 65 or 70 cents now like there there's some return to stability like i think that is a good representation also along with other things obviously do your own research i don't know what i'm supposed to say there but um it's a it's a good to me it's another good proxy like i thought like 45 cents on the dollar like looking at their balance sheet, like you're out of your fucking mind. Like that thing was way- Math is hard. It's my hashtag, right?

Math is hard. You mean a company should actually have cash? That's crazy. People are really bad at math. Which is why guys like us are allowed to exist, right? Yeah, that's right. That's right. Why?

Because we're marginally good at math? Marginally. Hey, hey. You don't need combinatorial matrices. right that's right yeah why because we're marginally good at math marginal hey hey matrix matrix matrix math to uh all you need is a marginal edge my friend a marginal edge a marginal edge and and get out of your own way and have a little have some balls well i think that all three of you have given our audience a marginal edge today. So we can, we can consider that a way to die. This is one of those conversations I would let go for three hours if I

could, but I know that we all have to go. So thank you, Mark, Gunny, Dave, you can follow everybody here on Twitter. Of course,

keep up with them tomorrow. It's Friday, which means that I just show up by myself and rant about random things with no idea what the hell I'm going to talk about. So if you guys enjoy that sort of thing, show up once again and Gunny, it's cool. I, we made the joke before, but this is my favorite background that you've got there. That's a Bill Barheitz living room.

I'll just only because Bill Barheitz uses the same background. I had Kent Horovich for formerly a Falcon X also used it. So it's weird that you guys are on some reality show living in a commune. Right. But I want to see you play that piano. I know you can, you can rock it. I mean,

the only one better than that is the closet that Jack Mallers always uses, but. Yeah. They're like a shelf, like nothing on the shelves, right? Nothing on the shelf. The empty closet.

I like that. The one I normally use, it's literally like just a gray wall. It looks like I'm in a, in a Romanian jail cell. Well, I will tell you it's going to be hard for you to play that. David's got to be rocking the gray wall. Are those the bars back there?

And, Gunny, it's going to be really hard for you to play that piano, and every time you go like this, your hand disappears. It might disappear the wrong way. There it goes. Really hard. Well, okay, guys. We're in the Matrix, and I'll see you guys in the Matrix tomorrow. Thank you, all three of you.

Thanks, everyone. Pleasure. Thanks. Thank you. Let's go.