The Wolf Of All Streets - Imminent Market Pullback? ETF Analysis | Crypto Town Hall

Episode Date: November 27, 2023

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Hey, Brian. I made co-host. I can't believe it. I was quick on the draw. I arrived early. I was quick on the draw. And I made co-host. And I think I deserve it. I think I deserve it. How are you?

Good and you, Brian? Good, man. Good. Scott is last in the space today. So pretty shocking there. Scott, everything's okay with the fam? Everything's fine? I was actually first. I was actually first. They just didn't see my request. But it's fine.

Oh, come on, bro. Come on. Come on. Come on, Scott. Let's be realistic here. I was here before you. You were on your show like 30 seconds ago. Quick on the draw, bro.

Quick on the draw. What did you cover on your show uh the fact that i think that this market's getting very very frothy and that there's going to be a pullback and that when there is a pullback you just shouldn't panic you should probably buy the dip and then i gave like a whole buy the dip strategy but i'm seeing signs in this market that just make me feel very uncomfortable like um i'm seeing too many of those buy but screenshots with people posting like their 9999 percent uh gain in the last 24 hours i'm seeing a luna c and ustc ustc by the way which is by the way it's the old luna ust i was just i was just look i was just looking at it i was about to ask you about it. Just looking at it now.

I mean, it's trading at... Makes no sense. It's gone up 500% today because it's getting listed on Binance. Now, what's getting listed on Binance? Basically, hot air. Hot air, derivatives on hot air. That's what it is, right?

I mean, the chain is a dead chain. The coin is a coin of... It's the remnants of a failed experiment. And it's up 500% today. Fred, my partner, walked into the office. He bought a thing called Antibot, okay? A meme coin.

He made 1000% in 12 hours. And my whole office is buying a token called Dreams. I don't know anything about it. It's Dreams Quest. And they're all up today 100%. And I know when that happens that it's just too frothy for me. We're getting to the point where it just feels too fucking frothy. And I also know…

Hold on. Are meme coins blowing up? You gave two examples. I'm guessing a lot of meme coins are blowing up now. Bonk's up thousands of percent. Grok, which is the meme coin around the grok ai i mean uh that one's up like a couple of hundred percent in the last two days um bonance there was a meme coin called bonance that one exploded which is b-e-n-a-n-c exploded um you want to hear you want to hear the height of of? I'm going to tell you something that's going to blow your mind, okay?

There is a Layer 2 protocol being launched. It's called Blast. Now, what Blast did is what it does, and the concept is not a bad concept, but what it says is that by virtue of the fact that you have money in your wallet, you should be earning interest on that money. So if you've got like 100 ETH in your wallet, you should be earning interest on that money. So if you've got like 100 ETH in your wallet you should be earning interest on that money without having to physically stake it, right?

Which is like similar to having money in the bank. So listen to this. This is going to blow your mind. You want to talk about Frost. So what they did was they gamified locking up money on this layer two which by the way doesn't exist yet. It's a layer two that's only

it's a one-way bridge to a layer two that's not really working yet. And when you transfer money, you lock up money for three months, but you earn these points, which give you a drop, which give you an airdrop on this layer two, but no one knows what this layer two does. They just know that you earn fancy points for a free airdrop. If you lock up money and you get, you get like these invite codes, like friend thing. You get invite codes where you can invite five friends to stake on this protocol,

to stake their money on this protocol so that they can earn points. And when they earn points, they're also going to get this airdrop, okay? Now, how much do you think this protocol managed to lock up? Give me a number. God, John, take a guess on that one. 500.

I have no idea. A hundred million dollars in five days. It's the, it's the quickest protocol ever to get to $500 million TVL. Okay. It's quicker than, than Ethereum, Solana, Binance, BNB chain, whatever you want. In five days, you've got $500 million on a one-way bridge that people can't take out for the next three months for a layer two that, in fact, doesn't even exist yet.

So people have locked up their money on a layer two that doesn't even exist yet on a one-way bridge, which is by the way, secured by a multi-sig wallet. I mean, you want to talk about lack of security. This thing could get hacked tomorrow and it's bye-bye. In exchange for points, right? In exchange for points. And the points will give you like an airdrop in this layer two, when this layer two actually launches.

That's where we are in the market, ladies and gentlemen. That's where we are now. I don ladies and gentlemen. That's where we are. Now, I don't know. Look, you know, the madness can continue for a long time. I mean, the FTT token is still trading at $3.50. The FTT token, just hold on. Let me give you a perspective. The FTT token the night before FTX went down was trading at $21.

Today or last week, it was trading at $5. That's one quarter of what it was at arguably around its, you know, I won't say its peak, but, you know, when it's still valued at a lot of money. So trading at $5, obviously I took a big short on it because, just because, and that short's in the money at the moment, but it just shows the irrationality of the market at the moment. And for me, I'm just starting to feel a little bit like uncomfortable i don't know you guys i don't know how you guys feel and i don't know if we've got any chartists here or no i just feel i just feel like i'm completely

disconnected because i had no idea the meme coin market is blowing up i had no idea that there's there's protocols locking up 500 million dollars within days i thought that the market you know is slowly picking up out coins i don't know how outcoins are doing because they've been relatively well they've done well last week but they've kind of been let me see now how they are i'm sure the market market is relatively stale today in the last seven days down today but they've been up in general. Yeah, no, down in the last seven days. Everything, you know,

Bitcoin stagnant over the last seven days, but everything else is down. Chain like 6%, Avalanche 7% in the last seven days. Look at the small ones where people are making 100% returns in two days. Like, I can give you probably 10 tokens that have made 100% in the last couple of days. It's crazy shit.

What's going on is crazy. Hasn't that been happening this entire cycle though? What's different about that today? There comes a point where Bitcoin's going to take a 30% correction. I need to remind you because a lot of people seem to have forgotten, but that 30% correction, when Bitcoin takes the 30%

correction, and in every single bull market, I'll give you an example. In 2017, the market, Bitcoin went up 2,300%. But it went down 1, 2, 3, 4, 5, 6 times it went down 30% or more. Now, I need to remind you something. When Bitcoin

goes down 30%, and it goes down 30% in the span of like 3 weeks, altcoins go down 60, 70, 80%. That's the ratio here. And I think right now people are so euphoric that they've forgotten what happens when this happens. And they've forgotten that in a bull market of, say, 700 days or whatever it is, you're going to get six of these. Six of these. You're going to get six of these. Six of these.

You're going to get six of these pullbacks. Most people have forgotten how big these pullbacks are and how scary they are. Is there a possibility that we don't see that pullback? What determines on whether we do or don't see a pullback? When do you see a pullback? I see it soon well, obviously, and when do you see a pullback?

I see it soon. I see it soon. I can't see if it's a month or a week or I can't see if it's a month or. Oh, that soon? I think it's any day now, to be honest. It's just, it's getting too frothy and too crazy. Rand, do you have any metrics on altcoin open interest right now? I haven't looked, but I saw that it's relatively,

I saw that actually it's kind of net short on Bitcoin so there's no real problems to be flushed but what about the metric that i looked at on my show today was the dominance by open interest so in other words the the bitcoin and eth open interest versus the altcoin open interest now what we know is that every time that that every time that the total market altcoin interest has been above 35%, and I'm saying the other two components are the Bitcoin open interest and the ETH open interest. Every time that the altcoin open interest

has been above 35%, we've had a correction. Today, we are at 34%. Bitcoin has got a 42% of the market share of open interest. ETH has got 24%, and of the market share of open interest. ETH has got 24% and all the rest have got 34%. And every time that we've been above 35, in fact, I can't find another time where we've been higher than... The last time was in April 2022.

That's the last time that we were above 34%. Yeah, that aligns with what you're saying, obviously. It's frothy. It's frothy. Most people just can't believe this market's going to go down. Sam, do you agree with Ryan's position?

Your bottom left corner. Sam, can you hear him? Let's go to Mike. Who's there? That the market's really frothy right now? Yeah. Yep. And that will pull back in the next week or two.

It's not next week. It shouldn't be surprising. Yeah, I know. It's had a pretty good run up right now in terms of the altcoins you know i i focus primarily on bitcoin um and i'm kind of looking at the broader macro picture right now and and to me um there's just been a lot of kind of shifting in sentiments with institutions and around bitcoin specifically and i like i've said a lot on the show i think altcoins typically follow

Bitcoin and they work as beta to Bitcoin. And so I see a lot of increased interest in Bitcoin as more of a macro asset, you know, flight to quality, what like Larry Fink was saying, there's excitement around the ETF, as well as people are looking at the broader macro picture. You know, the deficits are starting to matter again. It's starting to come into the public discussion and people are looking for hedges to the broader system that they are increasingly looking at and saying this isn't sustainable anymore. And so I think Bitcoin in general is becoming more popular and then altcoins typically benefit from that. And so I think the macro picture can shift pretty quickly here. I do

think this has been a really large run up in risk assets in general, and there could definitely be a turn back. But in terms of the longer picture of what we're looking at in terms of the deficits, in terms of the debt, I think Bitcoin value proposition, just these institutions are starting to understand it better. And altcoins will kind of benefit from that, just being beta to Bitcoin. So yeah, we could see a pullback in the next couple of weeks. I don't really focus on short-term price

movements as much. But long-term, things are looking pretty good, in my opinion. Speaking of drawdowns, potential drawdowns, you guys obviously saw the story where LaGarde admitted her son lost his quote-unquote crypto cash, as Reuters saw it, right? Did you guys see this? She literally made a quote that said her son lost, quote, almost all of his

investments in crypto assets despite copious warnings, said he ignored me royally, which is his privilege, and lost almost all the money that he had invested, then went on to say he lost all of it, I mean, 60%. Did you guys see that? If he's only down 60%, he needs to start a paid group. I tweeted at Christine Lagarde and I said to her, there's two things that we learn about your son here. Number one is that he's been in Capo's Telegram group because those must be the only people who have lost money in this market.

And the other thing is that he's got paper hands because if he had just held, Bitcoin has been the best performing asset this year. So it's one of the two or both. Well, that was the question. Did he lose it or is he down? That's the question that I would ask Christine Lagarde because it's so disingenuous to say that I lost my money if you're still sitting on those assets. I mean, Bitcoin down 50%. You wouldn't say you lost all your money if you're still holding the Bitcoin that you bought at 69,000. Well, yeah, exactly. Even if he bought at 69,000, he's either got paper hands, as I said,

or he's in the wrong telegram groups. I think he's probably been following Katsuo. That's the only way I see that he could have lost all his money. Well, I think most people who are heavily invested in altcoins from the last cycle are still probably down that much since they're all-time high of their portfolio but that's not not even that's not how you more much much more but that's not how you do but that's not how you do right but that's not how you do it like uh it's uh yeah speaking of disingenuous to compare whatever your current uh value of your portfolio is only to the all time high is just a huge psychological trap. Right. Because it's more important to say, Hey,

where was I at five years ago? Not what if I had sold everything at the dead top, the moment that it was all worth the most, but I have a feeling that her son is still holding all this stuff and it's just down 60%. And this is just a complete nonsense. I love the way that she blames it on crypto and doesn't blame it on her son and his trading strategies i love the way it's like you mentioned that was a dig at crypto but like actually is uh is is it's um uh uh it's a dig at her son how How about her central bank policy? What about that? That probably has nothing to do with it, right?

Does she say when he lost the money? Does she give any more information or that's just what you read? No, she just used it as a narrative as Rand said to just sort of broadly shit on crypto, which works for her, right? Nothing better. The annoying thing from a narrative, what better the annoying thing and from a narrative

what sucks the most is that from a narrative perspective these things work people have that perception that people everyone that had money in crypto is just pretty much broke can we get her son on here do you guys do we have a connection to her son i feel like that's a layup we got to get her and then uh shift son on here together uh her son and shift son and have a have a spaces what do you guys think i will ask romey let's let's see where that goes we have a message now we know her son had had held crypto in some case uh back in 2022 when lagarde was interviewed and she kind of laughed at him for buying it how to talk him out of it and he would be up right now from that video. And in the same interview, this was in

front of like a presentation in front of a bunch of people. She was asked about the expansion of the ECB's balance sheet. And that was when she said, it'll come back down. Don't worry, it'll come back down. And then the interviewer said, how? And she said, it will come, it will come and just dodged the answer completely. And so her son would be up right now from that video. Yeah, I mean, Sam, that's the way that they answer these questions, right? I mean, everyone remember when Silicon Valley Bank failed, and they asked Powell repeatedly if the Fed had anything to do with it, and he was completely dismissive. Like at no point did he say, yeah, these rate hikes at a historical speed to a historic level had anything to do with the fact

that now banks are defaulting because they can't afford the interest payments, right? There's zero responsibility, obviously, taken. But if they orchestrate a soft landing in some way, shape, or form, which I don't believe is possible, they'll certainly take the credit. Mike, we've been talking about macro all morning. Mike and Dave sort of, I guess, echoing on Rand's point about this upcoming drawdown, certainly in altcoins. I think that echoes, Mike, what you've been thinking about in general for markets. Yeah. Credit to Rand. He nailed that. I mean, most people knew how cheap Bitcoin was at 15K, but pushing 40 now with all the expectations for ETFs

and the bottom line is all risk assets are up this year and Bitcoin is just the riskiest. It's up the most is almost the exact opposite of last year. Reads me to believe the risks are that risk assets drop for normal recession next year. And that's a key thing crypto traders have never experienced is a recession. Now, 2008, 2009 was pretty bad, but it was just normal. It was typically how it works. This one could be worse. Now, it's been delayed. It's never going to happen as most people thought. I want to know about this recession. Sorry, Mike, I really want to know about this recession. I'll tell you why. I was also expecting this

recession because everyone used the word recession, but the Black Friday sales are up 7.5% on last year, and the weekend's not even finished. That's only part of the story, though. Yeah, that is true. But I don't know if you saw the fact that Buy Now, Pay Later was up 47% in the same period. So obviously, as with any of these sort of news stories, maybe it overstates the truth, or maybe it's just whether you choose to take a bullish or bearish perspective on it. But people buying things at an extreme discount early on

high credit, with no intention of paying immediately might not be the most bullish narrative. So it could go both ways. I think that's it, Scott, thanks for that response. I think that let's simplify this. The expectations a year ago were that we were going to go into recession. Everybody's traded for it and priced for it. It didn't happen. Now the expectations is completely for the soft landing. The market's priced for it. The market's expecting the Fed to ease by 90 base points a year from now. And that means the risks for traders are tilted the other way. i think rand just nailed that you know the other thing you know the other thing that worries me is that everyone has priced in the fact that this etf is a sure thing and there you go yep we were talking about that

this morning everybody to be honest i did something I did what you want to call maybe the unthinkable that I bought puts today. Before, Ryan, how can you make such a conclusion? How do you know it's all been priced in? How do you know what the market has priced in? What if the ETF approval has not been fully priced in? We thought it was priced in. He's not saying that it's priced in. He's saying there's an assumption that it will absolutely get approved.

And if people like taking a counter narrative or trading against the herd, which is a very obvious trade to take a trade that it's not going to get approved. I don't think that's necessarily going to happen, but you have to have it on your radar that we have this sort of just consensus. Everybody agrees that this approval is coming by January and consider what would happen if it doesn't. Dave. Yeah. I think that, you know, we talked about this this morning.

I think that we are definitely in the when not if stage, but there is clearly downside if they delay it again. Right. The issue that is the current issue that according to the tea leaves and, you know, not just tea leaves, what people are saying is this whole cash versus in kind, you know, question for creation. And without getting into it, although I'm happy to, it's kind of a big deal. The fact is, is if it got delayed again, yeah, you'd see a retracement. But there really isn't a lot of long-side speculation out there right now. And I do think that you're seeing some people shorting it now because they realize that we probably have, you know, a full month before we get any definitive news. And so you're seeing a little

bit of shorting activity, but not a lot. And I'm saying that based upon what you've seen in terms of the premium on the various perpetual swap markets and on the CME. Just to put it in perspective, the CME premium to December is now around 400, a little bit less. And it was 800 last week when people were forced to buy December and sell their Novembers or let their Novembers expire. That means that there is still some long speculation, but not a lot. If you look at perpetual swap funding rates, they're all negative or flat to, you know, basic, you know, baselines, meaning there's not a lot of long speculation, which means that, you know, any sell-off will be, look, it's Bitcoin.

It could be a 20% sell-off, and we just kind of don't care about that so much. But the truth of the matter is it's looking like the professionals are probably leaning short for the next four weeks until there's news. That's how the market sort of looks. I don't know if there's news. That's what it feels. That's how the market sort of looks. I don't know if that's actually going to be true or not. Right before we go to Matt, Ran, I want to ask you a question because you were just saying at the end you did the unthinkable.

You bought puts on Deribit. I'm assuming with that – I don't think that's unthinkable at all, assuming that with the case you laid out, I'm assuming that those are hedges. Yeah, 100%. They're hedges. The way I see it is if the ETF for some reason doesn't get approved, the case you laid out, I'm assuming that those are hedges. Yeah, 100%. They're hedges. The right now, the way I see it is if the ETF for some reason

doesn't get approved, the price goes down below $30,000. Right now, a $30,000 put at the 26th of January will cost you $600. For me, it's a great trade. Yeah, that seems like a very obvious hedge. Matt, as you had your hand up.

Yeah, I just wanted to add one thing so the audience is super clear on it. Everyone's focused on this January date, but it's important to remember that two things have to happen for the ETF to launch. They have technical names. One's called a 19B4 approval and one is called an S1 or S3 approval. But it's like a nuclear key situation that both keys have to turn. And the January date only applies to that 19B4 decision. The S-1 is on its own in unspecific timeline. So you could have the 19B4 approver or disapprover on January 10th, and the S-1 could be approved or not approved. It could stretch beyond January 10th. I can't speak to any specific filing, but that's just how it technically works. There are two things that have to happen. And I think

the market is exclusively focused on that first thing because there's a hard date in the sand of January 10th without recognizing that the other one is necessary as well. And so it's important to keep those those two things in mind. So where does that then? I mean, I know you can't really handicap it since you're at Bitwise. But when you hear James and Eric say 90% chance of approval by January 10, sounds like it's more of a 90% chance of one of those things happening, but not necessarily pricing in the other. Yeah, I think, you know, I mean, the consensus feeling, I think, from Eric and others is that they'll likely align. I just want the market to know that they don't have to. So I think the Bloomberg people are being reasonable when they discuss it that way, but they're being too easy in not separating those two things.

And it's entirely possible that one happens and the other one takes weeks after it, or conversely, that it happens beforehand. But just to monitor those two factors and understand that the timeline is not quite as specific as maybe the market is interpreting. Matt, we've had this sort of anecdotal stories that I think we've seen from the outside about a change in tone or, I guess, strategy from the SEC where they're actually engaging pretty directly with a lot of the filers, you know, asking deeper questions. We know that, you know, ARK and BlackRock have been in talks with the SEC.

They've been there. Are you seeing a real change in the way that the SEC is talking to Bitwise, speaking to you guys about these? Are they being more proactive about asking specific questions? Is that really happening? Yeah, great question, Scott. Obviously, I can't talk specifically about Bitwise, but you can see from what's being filed that they're engaging with all of the issuers, right? You can see not just one prospectus update, but two prospectus updates from ARK. You can see the diagrams that BlackRock shared about cash versus in-kind creates. Those are very in-depth, long ways down the field, red zone style questions. And to see the sort of public

documentation around that, I think gives you an indication of the fact that the SEC is deeply engaged with issuers, you know, both big and small across the spectrum. You know what, Max? Yeah. Max Payne sounds like to me that for some reason they delayed this thing and they find some legal reason not to approve it on the 9th and 10th of Jan and they, they land up approving it March, April next year. And I don't know how, and I don't know the legal, and I don't know what can and can't happen, but that sounds like Max Payne to me. Why, why, why is that? But why, why is that?

Max Payne is an outright rejection, isn't it? Yeah, but why, why is is that Max Payne? I would say Max Payne is an outright rejection, isn't it? I mean, it is Max Payne. Yeah, but why is it delay Max Payne? Like what's the problem with delaying it? How is that bad for the Eagles? The way that everyone's expecting this 10th of January thing, if you look at the options market, the options market is completely priced in around that date. And, you know, all the hedges,

all the options are all priced in around that date. And then if the SEC find a way to do it, all those options expire the wrong way or the right way, depending on how you played it. Everybody gets completely demotivated. The price of Bitcoin goes down only to recover because in March they actually end up approving it. And then everyone hates this market because they called it right, but they called it right at the wrong time. That's Max Payne, is when you call something right, but you were two months early or two months late. Yeah, that's the problem with leverage.

When you get washed out and then the trade goes your way, right? You're the swept stop basically. I think that's accurate. Matt, did you have something to say? No, that was it. I agree that that is a painful thing to imagine, but it's entirely plausible. So markets are like that sometimes. It would be interesting to see one of those two steps actually get approved for January 10th and the confusion it would cause the market if then the ETF didn't launch, Matt, sort of the process you described, being in that purgatory waiting for the second approval. 100%, 100%. Yeah, that's what I want people, being in that purgatory waiting for the second approval. 100%, 100%. Yeah, that's what I want people to know, that there are those two factors.

So that purgatory, you know, is possible, maybe not likely, but certainly possible. And you said that there's no timeline for the S1? That's right. The 19B4 runs on a specific timeline whereby the SEC has to make a final decision by 240 days, yes or no. The S1 is a more iterative process where there is no regulatory imposed deadline. Now, you know, it would be really anomalous, highly unlikely, and I'm not sure it's ever happened for the SEC to sort of pocket veto an S1 application. So I don't think that's a plausible thing, but it doesn't run on that regulatory fixed calendar timeline. There's no 240-day count.

Yeah, I had no idea even having spoken to you 100 times, Matt, that that was the case. I appreciate you presenting that nuance because i think it's probably over a lot of people's heads the other one you just mentioned was you you sort of mentioned in black rock smiling this uh in kind the debate over how these will actually be structured i know dave weisberg you had some pretty uh strong feelings about uh the two differences and what that could mean. Maybe Dave first and then Matt, but Dave, you were saying this earlier that it really does matter that they get this right. Well, yeah. And by the way, how's this microphone? Is it different?

Good. Good. Good. Okay, good. Yeah. Look, if you accept in kind, that means that people can deposit Bitcoin with what's called the authorized participant and get through an authorized participant and get shares in the ETF, which creates a very easy arbitrage mechanism, meaning it will never get too far ahead of the price. And similarly, you could if you could request in kind, then you can sell Bitcoin on the spot market and keep it so it never gets too far below. So you won't get what's going on with a premium or discount. Now, if you require it to be cash, it'll still work from an arbitrage perspective. But now you have the only people who can trade it are the people are basically is the I don't know how whether it's the authorized participant or the actual creator. I mean, Matt, it probably differs from one to another. But it means you're going to have extra trading cost embedded in the spreads. And it'll be a little

bit more expensive, a little bit more, you'll get a little bit more of the tinfoil hat crowd saying, Oh, this is these are paper Bitcoin, they're not real, etc, etc. And I think that it does create some more frictional costs. So it is an interesting debate. I think it's not surprising that BlackRock is pushing for in kind, and it's not surprising that the SEC wants it all to be cash, because they don't want a lot of these financial institutions to be touching spot Bitcoin. So I do think it matters. I don't think it matters a lot relative to what this audience really cares about, which is the price of Bitcoin, but I think it does matter. I mean, Matt, I'm curious what you think. Yeah, I think that's right. The in-kind creation is the more elegant of the two, right? That's

what's made ETFs so tax efficient and so cost efficient over the years. I agree that the big picture is do we get an ETF or not? So I would take a cash create ETF over no ETF. But, you know, we'll see how it plays out. I think the biggest difference even beyond efficiency is the tax consequence. The big the big issue with a cash-based creation is that if someone redeems from the ETF, if there's a redemption, the ETF has to sell Bitcoin and it could realize capital gains in doing that. So a cash ETF will be less tax efficient than an in-kind ETF in most circumstance. But we are fiddling with the 10% and the 90% is whether we get an ETF or not. Hey, Dave, Matt, do you see, what do you think the next generation of products that come after the ETF?

Do you think the trad fly institutions are going to start doing the borrow against your Bitcoin ETF style products and things like that? What do you think the next gen product is as a result of having this? Yeah, I mean, I could throw out a few. First, you'll see a plethora of all different kinds of ETFs come to market because we've seen this in the gold space. You'll see ETFs that try to figure out

how to allow redemptions on an individual basis so you can get your Bitcoin directly from the trust. You'll see ETFs that try to differentiate on where they custody the Bitcoin. You'll probably see momentum overlays. You'll probably see basis trades. So the financialization of Bitcoin for different investment outcomes is something that will almost certainly occur in the aftermath of this approval, just because those are all interesting differentiation points that will attract some investors and not others, and you'll be able to build businesses

off of them. I don't know, Dave, what else you think we'll see, but those seem obvious. I think the big one will be options on the actual ETF. Don't be remotely surprised to see that. There will be huge clamoring for it. I mean, I'm sure the CBOE is all over it, although I haven't talked to them about it in the last year. The fact is, is in the U.S. economy, it's important to understand options are the go-to way for retail to get leverage. And that's why options volumes are so large. In crypto outside the U.S., everyone uses perpetual swaps, but those aren't legal in the United States right now. So I would be absolutely surprised if the first big product launch post ETFs was pushing for options because how do you deny having an option on

something that's a listed equity? So I do think that's a big one. And that, I mean, I understand we're signing- Are they leveraged options are there leverage options on well options no options are definitionally like yeah but i'm saying like right because you're what would be the closest product to like like i mean i'm what i'm trying to look forward i'm look i'm trying to look a couple years forward and saying right now you've got these altcoin degens that are doing 50x leverage into Solana and 100x leverage into whatever the token is. And I know that that's not legal. I know that as crypto becomes more and more legalized, that's the first market that falls away.

But what replaces that? I mean, is it just options? Is that the best that there is? Well, you need to understand, ran that that there's this thing after the if you read reminiscences of a stock operator and get an idea of the amount of leverage that used to happen in the u.s stock market uh it was that dgen market and the sec when it was formed and the you know when all those rules were passed in the 30s and 40s basically said you had to have get no more than 50% on margin. So you couldn't

really do that much. So options allow people to get a lot more leverage. Of course, it's much more expensive. And while it's also a limited loss to what you posted, if you're buying options, there's unlimited loss if you're selling them, of course. The way around that is by professionals. And professionals could do something called portfolio margining. And while they can't get more than 10% to 20%, it's 10% to 20% leverage on portfolio margining, the reality is a lot of hedge funds use that. Now, yes, there are degens that do more than that. But I think that if you look in the crypto community, and remember, FTX was number one for a while, and they didn't offer any more than 20 times. So effectively, the difference isn't nearly as

big as you think, except for on the edges, where there are real degens going on. And I think that that is not really the professional or large volume community. I mean, yes, it matters, but I don't think it matters that much. Yeah, so this brings to market regulated Bitcoin yield. You could do a covered call on your Bitcoin ETF at some stages. It will all come. And to some degree, Simon, I think even without the ETF side, I think institutions are probably doing that just with spot and CME futures for kind of cash and carry trade.

And a lot of those things absolutely had to do with the beginning of the last bear market. But yeah, I think that there's going to be a lot of optimized strategies for institutions once we get these ETFs. So forgive me for asking, but these, these perpetual futures with like 100X leverage and 50x leverage. Is there any other asset class other than crypto that's had this kind of market?

Were there perpetual futures, 50x leverage on Tesla stock, or is that never existed? I think BitMEX, I could be wrong, but I think BitMEX effectively invented the real-time perpetual swap, like a futures that can be traded in that manner. Peter would know.

There's your guys' hand up. Perfect. Peter. Yeah, I mean, I'm a lifetime futures trader. I mean, that's leverage. I mean, we margin up as professionals, house accounts at maybe 2% of the underlying value, 3% of the underlying value. So in futures, there's automatically a 20 to 50x leverage profile. Especially in Forex.

Yeah, well, I mean, Forex. Did you guys lose, Peter,eter is that just me no i thought it's my end because i was uh riding i'm in the car peter are you back yep i'm back anything to add on that point but before we move on to the two other points to discuss. Scott, you done on this point? Yeah. Actually talking about the ETF, there is the ex-president of the New York Stock Exchange.

It's not a story worth discussing, but he was saying that he expects to see a massive influx of capital into crypto. ETF gets approved. I put out my agenda to discuss because I'm like, holy shit. All right. So we've got someone from Tradfire coming in and saying that. And then when I read up on him, I realized he's the CEO of a crypto company.

So then again, everything he said no longer mattered as much because of his bias. So probably we could skip that one and move to the incredibly exciting story of where is Richard Hart? Have you read the story about him about the SEC trying to serve him? And he's apparently living in Finland, but apparently he's not being served. And the case has been delayed till January. I'm not sure if that is as common or that means he's intentionally avoiding. So that means he's, can we say he's on the run

or is way too early to make such a statement? I think it's too early to say he's on the run or is way too early to make such a statement? I think it's too early to say he's on the run. Maybe they just haven't tried that hard. I mean, it feels like if you really want to serve somebody in this world, you just serve them. Although I think Shaquille O'Neal hid from the FTX guys for a very long time, and he's one of the largest humans on the planet.

I've had difficulty serving people as well. It's not that uncommon. In one case, we had to get private investigators. It took us three years to serve someone. It's still ongoing since 2018. We had to get private investigators to find out where they live and where they move to, find their car, and eventually serve them. I've had two cases where it was very difficult to serve someone. Another one was three.

All of them, actually. Most of them. He struggled. One of them was served to the person's mother another one to his person's girlfriend um so yeah i i don't uh it's not an indication but then you're saying it's not an indication that he's on the run at all no no exactly exactly exactly so if he oh well then again the people that i was trying to serve you could say they're on the run they don't want to be served um but not on the run as in, you know, Do Kwon on the run.

There's no federal crime involved. It's just the SEC. So, yeah, that's it. And Do Kwon is about to serve his sentence where he is. He's going to get extradited too. And I believe the United States and South Korea are both trying to get him and they haven't made a decision to which country he'll be extradited to i and it's i believe the united states and south korea both uh trying to get him and they haven't made a decision to which country he'll be extradited yeah um what happened with the with the guys behind um sorry i'm horrible with names even the most obvious people

that we've had on the show many times but the guys behind um the fund i forgot the fund's name as well one was arrested is it three arrows and Three Arrows and Kyle and Suzu? Wow, you were dropping on your head. No, no. I'm very bad with names, man. I have a condition. I know what they call it. What's that guy, the President of the United States?

What's his name? What happened? What happened to them? One of them was arrested. Is he still in jail? Kyle, I think, was arrested in Singapore. Is he in jail still? It was Suzu, man. You need some rest. He was arrested. Is he still in jail? Kyle, I think, was arrested in Singapore. Is he in jail still? It was Suzu, man. You are...

You need some rest. He was arrested. This is biohacking. He tells us this is good for him. He's the... I mean, you sound like a guy who's been smoking too much weed. Also considered biohacking by many. If this is me biohacking, imagine me not biohacking.

I'll be in the audience right now, not on the co-host. But yeah, so is it, so Suzu, is he still in jail? I don't think we know. He should be based on when they gave him the sentence, but I don't know. Yeah, I think he is. Good. All right.

And what happened to his project, the project, the exchange that they both launched, OpenX, whatever it's called. Is it still functioning? Ryan, you probably know about that one. How's the exchange doing they both launched, OpenX, whatever it's called. Is it still functioning? Ryan, you probably know about that one. How's the exchange doing? The exchange is functioning. The exchange is functioning.

They're holding back on any big announcements. And I guess that's just, you know, what I actually speculate, what I actually speculate is that when he does get out of jail, the price will actually, I'm not going to say skyrocket up but you know it's like that's it done finished and so we actually in the office we're actually keeping tabs i think it's in january when when he comes out so we're actually watching him very closely but aren't they aren't they also sort of on the wrong side of regulators in dubai at the moment as an exchange, not even just as themselves. I think they paid a penalty, if I'm not mistaken. Why is he in jail? Do you know?

He's in jail because he didn't cooperate with the liquidators. Remember, it wasn't only footage. He didn't cooperate with the liquidators. Look, their version of the story is that they did cooperate with the liquidators and it just is nothing more they can give the liquidators the liquidator is not happening um he's not

happy not happy with what what they have and haven't given them um and you know that's that's that's where they stand right now and in singapore that's that's uh a crime and so he landed up here he's landed up in jail for four months. Yeah, it sounded like he literally just wanted to get his butt in the seat, right? Like, literally, like, if we put you in jail for three months, you have to answer our questions finally, and you can't dodge. Go ahead, Simon. Yeah, I think there was actually a Celsius connection there.

I think Judge Glenn served him, and he didn't turn up. And it related, it seems like a while back now but i seem to remember it being something to do with um judge glenn and celsius case and uh connection to 3ac and then he pushed it further and then um yeah it led to something being in content the court for some reason can't quite remember the full story though i wonder if we're going to be still talking about the same cast of characters at the peak of the next cycle. No, no, of course not.

Look, every time, who talks about Bitcoin Jesus anymore? Yeah, Roger Verde. No one talks about Roger Verde anymore, even though, you know, at the time he was, Bitcoin Jesus, I think they called him.

All the crew, the crew changes every bull market. Just a quick question, guys. On the Binance side, I was watching the video that CoffeeZilla did on Binance. Obviously, it's not as comprehensive as what we've covered, etc. But does anyone have concerns? Travis, is Travis still here? No, he chopped off.

Travis would have been good for this one. Travis, if you're in the audience, if you can come back up, be good. Send him an invite. But is there any concerns that Binance will not be able to pay the $4.2 billion? No, I think that's a – Because I remember – and I'll tell you what Stephen mentioned, what CoffeeZilla mentioned. He said when Binance, when CZ – and I know it's not evidence, but it's a question worth asking. When CZ was asked in an interview on CNBC, hey, if there's a clawback, the FTX clawback, can you pay back $2 billion?

Instead of just saying, yes, we can, or yes, we're able to, CZ on two occasions avoided the question, say, we're financially safe. He's like, we understand, but can you actually pay $2 billion? He's like, look, let's just say we're financially safe. Him avoiding that question kind of got some red flags for CoffeeZilla. So I'm not sure if anyone else has looked into it and whether really how much does it matter if Binance can't pay it because, you know, we could just as well just raise the money, I guess. But that's maybe something you could jump in on.

Get a payment plan. Complete speculation, but I think it might be a BNB play, the reason he didn't want to answer it, because we don't know what they hold their operational reserves in. Obviously, they would have to have a certain amount of dollars to meet the thousands of staff they have and all those types of costs. But they would earn most of their commissions in crypto. And you imagine that they'd have a whole treasury management service

and you'd imagine that a massive i remember just before i don't know if you guys remember this i think it was just before all the crypto crashes and binance was going to be bailing out the companies and ftx was still around and he was pretending to be the white knight of crypto. I seem to remember him saying they had 42 billion of operational reserves at that time. Now, how much of that is BNB? And then once you start to answer that question, because no one's going to hold reserves of four and a half billion in dollars or tether or something. He probably has it invested. And how much of that is BNB? And then he doesn't want to say that

because if he needed to pay that down, it might mean that he has to sell a bunch of BNB that's on the operational balance sheet. All speculation, got no information there. Yeah, I don't think you would answer that question with we have enough BNB to sell without spooking the market and sending that to zero that's a clear lesson from ftx yeah so it may it may require selling bnb in order to meet meet that demand i can't imagine that when did he when did he mention the

when did he mention the 42 billion dollars uh that was i just remember it um i couldn't point to it but i remember ball market ball market was ball it was just no it was going into the bear market everything was collapsing you know i don't think many were in chapter 11 yet um and he was the the sentiment was you know in order to survive as an exchange the reason everyone should use us is because we're here for a rainy day we've got you know 42 billion of reserves on our operational balance sheet in order to in order to survive the bear market michael michael you i see jumped up and put your hand up have you have you looked into this is that a concern that you share as well or four billion should be to be easier to pay for

finance no to me it seems like the whole purpose purpose of how this played out with them paying the fine and essentially just getting rid of the charges. I mean, to me, it seems like that number that they're willing to pay was probably a number that Binance knew they could afford to pay. Or like we have seen, they could have taken this entire thing to court and fought and probably would have been able to at least get some things thrown away or whatever. But to me, it seems like typically when you have a settlement like this, it's not a kind of settlement that's going to bankrupt the company. So as soon as I saw that, I was kind of under the assumption that despite the fact that they might have to sell some stuff or claw for some assets, it was likely an indication that Binance was going to be fine going forward. And if you look

at CZ's tweet specifically, I mean, it seems to me like he's really alluding to the fact that this was all done right, this whole agreement with the DOJ to preserve Binance and do what was best for the company. So I have a feeling regardless of where it comes from, I think he put like a billion dollars that was followed by another billion dollars on chain for the distressed company fund, which got a bit of criticism because I don't think it made many investments in the end. And then there's obviously the whole insurance side. So I'm sure someone's done a bunch of all this on-chain analysis to try and figure it out i know there was some on-chain analysis showing the amount of stable coins they had in reserves was around like 3.7 billion um and the analysis i saw i can't forever exactly tweet it out seemed to show that they had a large cash position on hand and stable coins that could be used to pay the fine but i'm just going off someone's someone else's research for that yeah it's also not all being paid

yeah that's a great point scott a lot of people are acting like this is all going to hit at one time it's going to be paid over a portion of time and i wouldn't be surprised if cz himself has the money to foot a larger and again again they could always raise the money. We shouldn't discount that as well. Sam? Yeah, some of the points that I was going to make was just made. They paid it over time. I've heard they have substantial cash balances in the form of stablecoins. And then the last time they reported profit was actually in 2020. And it was between $800 million and $1 billion in profit in 2020. And their estimated annual revenue that year was only $5.5 billion.

In 2021, that exploded to $20 billion. And so even if you just assume similar profit margins, their estimated profit in 2021 was $3 billion. Can't you work this out by looking at the BNB burn? Because wasn't the BNB burn a certain percentage of the operating profits of the exchange? Yeah, that's a great point, actually.

That's what I was going to say as well. You know, from the BNB standpoint, they allocated 40% of the token supply. And if you look at on-chain analysis, they still control the Binance team around 40% of BNB's supply, which makes it a market cap of about $16 billion worth of BNB. But as

somebody pointed out, that'd be highly illiquid if they try to sell that into the... What is that actually worth if they tried to sell that BNB is a whole nother question. But to my point, if they have a runway to pay this off, it seems like there was a cash cow during the bull market, you know, Binance. And so I think they could pay this off. And to Mikkel's point, when the authorities make this settlement, you know, they expect to get paid if they don't want to bankrupt the organization, they'll not get paid. So, yeah, I don't think this is going to bring them down. I think they have the funds. And importantly, you know, it just seems like user funds are protected on Binance. If they have enough cash on hand, this is different than FTX, which was insolvent and user funds were obviously affected. It's a good thing that it seems like Binance could actually, insolvent and user funds aren't

going to be impacted. At least that's what it seems like right now, if there isn't any kind of shady things going on. But yeah, so I think Binance survives and they pay it off and they kind of continue forward from there. Yeah, I think to Michael's point, I just don't think that Binance makes a settlement about this payment or about insolvency, any of those things, Sam, without knowing exactly what's coming, right? You don't agree to a three- or five-year monitorship

from the United States government over your books if you're insolvent. I wonder how much a $4.3 billion OTC trade from stable to U.S. dollar into the U.S US government's bank account costs, or whether they'd even honor that as a free redemption on a stable coin. I'd be very curious to see that. Simon, wasn't there speculation last week that people saw, Rand, you talked about this, there was a wallet, a Binance wallet, that had moved $4 billion in stable coins in a single transaction, and people were speculating that they had paid the united states government i might uh

first of all we know now that that couldn't be true it was this sort of crypto nonsense because the payment's not due yet and i don't think they'd be paying that forward but uh yeah it's nominal fee to to do it i just don't think the united states is going to take a stable coin and we wouldn't see that redemption why not just pay all that print and basically. I just don't think the United States is going to take a stable coin. And we wouldn't have seen that redemption. Why not just pay all that print? I suppose you don't want to give the government... They should just put it in treasuries and get 5% until then.

The obvious reason. Yeah, I suppose so. The tether strategy. You know how much money they can make just sitting on that $4 billion right now instead of paying it up front? Quite a bit. Yeah, buy Bitcoin with every coupon. Well, one thing too is, I mean,

they've probably been known about this price tag for a bit now. They've probably been preparing, right, to pay it. A lot of people are, I think, acting like this came out of the blue on Binance. And I'm sure this is something they've been preparing for and knew it was going to happen. And the other thing I just want to say real quick is if you listen to all the Binance doomsdayers over the last couple months or so, it was always that there

was market manipulation and that essentially they were lending out customer assets. Neither of those things were essentially alleged in this case. And to me, those are the black swan scenarios, right? If they have the assets there, then like we were all saying, this settlement was probably structured around them being able to pay off whatever the fine is. And then from there, it's just whatever the new wherever the new CEO wants to take the direction of the company. For me personally, it seems to me like if they can actually get some good leadership in there and start working with regulators in the appropriate manner, a lot of this will kind of be left behind them and they'll kind of move forward as a more regulated entity in a market

that needs entities that are regulated. They have the right man for the job. I mean, there's been some interviews with him recently. I think it's going to take a long time for us to get to know him. But he's not CZ. He's not a cowboy. This is a guy whose speciality is compliance and regulation.

And that's exactly what he's going to do. He's been hired to do a job and he seems like he's the best man for the job and um yeah i reckon i reckon randy the only entity that could get like a couple of billion into the bank account of the u.s government from a stable like they'd have to get it into usdc and it could only probably it probably could only be circle that could get that that actually make that bank wire. Why not Tether? Because Tether is not operating in the United States? Well, yeah, Tether is not going to bank wire to the U.S. government and do an OTC trade for Binance.

That's just asking for shit. Yeah. Yeah, either way, I agree with you, Rand. Richard Tang is, A, the right guy for the job and i think the story people aren't telling is that with that monitorship and people seeing this somewhat resolved at this point i think the institutions are going to flood back into binance as a platform i think it's going to be viewed like uh for better or for worse i think it's going to become you know sort of the offshore equivalent of coinbase and that people will believe it is the trusted entity where you're safe and i think they're going to just

see massive massive inflows of institutional capital yeah they still got to get that international regulator that that regulates and understands the entire group that's what they got to solve i mean that's what they got us over right I think guys I think we've covered it what do you think Ran Mario all good I'm happy happy man awesome and we didn't have to talk about Richard Hart

or Lagarde too much which were the original titles so I think that means we took great strides to make it a better show than anticipated alright everybody we'll obviously be back tomorrow morning 10.15am We took great strides to make it a better show than anticipated. All right, everybody. We'll obviously be back tomorrow morning, 1015 a.m. Eastern Standard Time. Thank you, all the guests.

Everybody give them a follow. Otherwise, see you tomorrow. Bye.