The Wolf Of All Streets - Jeff Booth: Abundant Future W Tech & Bitcoin Awaits! | Crypto Town Hall

Episode Date: October 5, 2023

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Scott. Can you hear me? Might be some background noise. Yeah. Are you through security? Yeah, I just got through TSA. Where are you flying to? Coming to see me in Dubai?

Back to Florida. Yeah, obviously. I'm flying back to Florida. Cool business? Bit of both. Yeah. Man, you know, you have more holidays. You've had more holidays this year than I've had in the past decade.

But did I miss work? Was I here every day? Surprisingly, no. It's like now, for example than I've had in the past decade. But did I miss work? Was I here every day? Surprisingly, no. It's like now, for example, I was going to make a joke. You just messaged us in the group, guys, just pass security. I'm like, all right, cool. I'll start the space. Ryan will be late as always. And Scott will almost certainly be late because he's in the airport. And on some way, you joined the space even before I started it for some reason. I don't know how you did it. That's correct. Magic.

I start the space and you're there waiting for me. It's like I started this for some reason. I don't know how you did it. That's correct. Magic. I start this space and you're there waiting for me. It's like I started this space and Scott is there. Cool, man. All right, so we've got Jeff and Ottavio on stage already. We've got three special guests today and two of them on stage already. Gentlemen, it's a pleasure to have you. I think it's for the first time on the show.

Thank you very much for having us. Appreciate the invite. Pleasure is ours. So we're pretty casual here. Obviously, we'll have a lot of questions for you. You can go back and forth. You can jump in anytime or put your hand up if you've got too much manners. But you feel free to just unmute and jump in as we kick off the discussion, which we'll do in a bit. But Scott we kick off the show did you see the news on there was an interview with the with the ex-managing directors of BlackRock on the ETF did you see that? I did I mean I think that there's a consensus that it's a matter of you know when not if when not if the ETF yeah I think they were I didn't see the exact date but they

were sort of conjecturing it early next year, right? In the next three to six months. But then it goes to my point that if it's already been, everyone's expecting it to happen. It's a matter of when, not if. So it's not really that exciting. Like if it's already been priced in, they talk about having inflows of over three years, $150 to $200 billion worth of inflows into the Bitcoin investment products, into the ETF. But then over the next three years, but then if these are the predictions, that means the market has already factored that in. And maybe that's why we're at the prices we are at today, not significantly lower considering what we've went through.

Yeah, I mean, I tend to agree with that. something i've sort of tossed around quite a few times here i think the black rock application for a spot etf with net cent price from 25 to 31 that's sort of the expectation that you can see uh for an actual approval right because that was the market saying this is going to happen this is likely and then you saw it go up and kind of come back down so maybe it would go back up in there but i think honestly i think that that's a very sort of low time frame thinking and obviously if you have a lower time preference and a longer time horizon you see that 150 200 million billion of inflows and the institutional pressure and the ability for investment advisors to recommend this asset to their clients, both retail and institutional is huge. I mean, it kind of like

reminds me of the having, right? People expect the having to happen that date passes and they expect this massive move in price for some reason, but it's a fundamental event that takes many, many months to start to really be baked into the market. And I think the ETF is even a bigger version of that, but we're just taking a very long time, but very, very bullish long term. Yeah, I like one thing they said, and Ryan's here as well. But one thing they said on why, initially, their prediction was going to be within an ETF within nine to 12 months.

And that changed to three to six months, so more than halving it. And the reason they gave is the SEC's recent decision in delaying the recent ETF applications. And they said that's unlike other delays they've had or other delaying tactics that the SEC's had before. And they say the following. Instead of completely rejecting the whole list, they've asked for comments, which is a marginal but significant improvement in the dialogue. So it's according to sean field there's also the grayscale lawsuit which the sec lost which means they're most likely going to have to allow the grayscale bitcoin trust to be converted into an etf so these two developments

the the delay of the recent applications and the uh the the grayscale win changed their prediction from 9 to 12 months to three to six months, which is a big positive. But yeah, right now it's unique. It is a big positive, but again, who cares, right? Three months, six months, nine months, utterly irrelevant if you think that it's going to happen and you've been here a while. I think that that's for people who are trying to trade it for some reason. But the inevitability of it, I think, is what really matters and what it will mean very,

very long term. Rather be bullish and wrong with your timing than be bearish. That's what we spoke about the other day. No, I've got an open bet with Rob from Digiflash at News. If it doesn't happen by Q1, I've got to wear an I Love Machinsky T-shirt. Oh, that would be... Well, I hope it doesn't happen. I wanted it to happen in Q1 earlier. Now I do not.

I'd much rather delaying this great news for the industry just for you to wear that t-shirt. But, guys, we do have Florian as well on stage and obviously Ottavio and Jeff. It's a pleasure to have all of you. Maybe go to – or maybe, Ryan, you can kick it off because your agenda was pretty detailed today. And you kind of listed – or your team listed, I'm guessing, covered it in your show. Just all the reasons why one should be concerned. I know there's the other side to that coin as well from the credit default swaps and the four big banks are widening pretty quickly. You've got the China's holdings for the past decade.

They're falling pretty sharply for a decade now. Obviously, the US national debt. Consumer spending is not doing too well. And the list goes on. You've obviously talked about the CRE loans. The demand is back at 2008 levels and even broke 2020 lows. And obviously, the housing market is deteriorating as well. So maybe, Ryan, give us a quick overview on what you've covered earlier.

And I would love to get our speakers involved. I mean, I think the biggest news this week is the treasury bills and the fact that nobody wants treasury bills anymore. And so the prices of treasury bills, specifically long-dated treasury bills, are starting to collapse. And people are worried that's going to cause some kind of collapse. So maybe a banking system collapse,

you know, maybe something bigger than that. But that's what people are starting to worry about. And I think the encouraging thing is that while this is all happening, Bitcoin's actually going up. So, you know, if you look at it, Bitcoin's like gold's going down, the Dixie's going up,

stock markets are going down and Bitcoin continues to grind up. Now, I actually spoke to Arthur Hayes today, and he reckons it's almost preparation for Bitcoin to become this huge alternative asset. And it goes back to what we spoke about a second ago, which is the reason why Bitcoin hasn't been this huge alternative asset is because there's been

an institutional wall where institutions couldn't get in no matter how hard they tried. It was just too difficult for them to get in. But as soon as that wall is removed, as soon as that barrier is removed, all of a sudden they've got access to get into it. And so he reckons that with all those things in place, if we do get some kind of collapse, Bitcoin goes to $750,000. Now, again, I don't like, you know, those are headlines, those are soundbites, those

are whatever you want to call it. But I think the point that he's trying to make is correct. Let's put it that way. Tavi, I wanted to go to you with a question. The first question is going to inflation, which has obviously been probably the thing we talk about the most and for good reason. And you've compared the recent wave of high inflation to the historical charts of inflation in the 30s, 40s, and 70s. So, my question is, and obviously, we're going to find out and get indicated this week and over the next few months, but are we done? Have we seen the peak of inflation?

Have we seen the worst? Or is there more pain to come? Certainly not my view. I do think that policymakers should be using the 30s and the 40s and the 1970s wave of inflation as a model to uh conduct policies here and you know the main reason for this is is today and i think it's a big discussion in the macro environment is is it cyclical or structural. And I think there's enough evidence to make the case that is very, very structural. I mean, we're seeing fiscal, you know, spending in a reckless manner, I don't think we've ever seen the amount of spending in many, many other decades outside of wars. And it's not really coming from military spending. And you can

also exclude interest payments for, for the crowd who thinks it's mostly coming from that spending. And you can also exclude interest payments for the crowd who thinks it's mostly coming from that. It's about 10 to 15%. The rest of it's coming from all sorts of things from green revolution, reshoring, social programs, and so forth. We also have something that I think was touched on a lot in a lot of ways in the next in the ways in the last two years or so, which is the chronic underinvestments in natural resources. I think that's a real problem. I think some of those industries take a while to readjust the supply. And you can look at mining, metals and mining, oil and gas and so forth. Those parts of the commodity industries certainly take a long time to be readjusted. things in terms of logistics and companies going above and beyond, despite the increasing prices, in order to secure their production of their goods and services. And so, that is a huge part of this

that we haven't seen in two to three decades ago. So, most of the research on the cyclical side of inflation is focused on the last two to three decades. And, you know, to me, that's just nonsense. The wage price growth is another one. If you look at labor costs as a percentage of corporate earnings, it's near record low. So, you know, corporations can indeed pay more to their employees. And that is likely to be a long-term trend as well. The wage and salaries growth is, it tends to be secular trends, not very short ones. And I'll throw one more pillar that I think it's very important

that will become a discussion and likely create innovations by the government, which is the housing supply. The fact that affordability of housing has been such a problem, there's only one way to fix that issue. Well, one, you can crash the market, which I'm not necessarily of that view, I think we're going to see a large increase of supply. And, you know, subsidies, there's a reason why Warren Buffett owns a lot of home builders. And what is

interesting about all this, if you are indeed in a in a secular trend for inflation and so forth and this is you know there there will be other uh waves of inflation let's assume that that's the right um that is the right or maybe maybe just historically above uh uh levels that we've seen in other decades in terms of inflation levels. Why in the world are investors so skeptical about owning hard assets? And when I ask that question, a lot of folks say, well, I don't think they are skeptical. Well, look no further than 60-40 portfolios. They own 0% of hard assets right now. These are popular asset allocations that we think are poised to go through a severe restructuring.

They're going to look more balanced, more diversified, you know, five out of 10 years from now. And I think that that's that under allocation over hard assets is also should be a significant portion of this of this view. So, you know, that is the answer of how I think people should be positioning to this. It's just my view. But, you know, it's certainly very linked to this inflationary structural problem that I think we're facing in the U.S. and other developed economies.

Jeff, I would take the same question to you, actually. I mean, I'm sure you agree with quite a bit of what Tavi just said. But do you believe that we have more inflation to come, or do you think that we could actually see deflation at least in the short term yeah i agree with a bunch of what toby said but but i'd say um he and probably many others in this call most people i talk to um are looking at this through a system that is failing and and because we're so used to that system our whole lives have been in that system that system is failing that system today when i wrote my book by the way everything

that i wrote about in the book is just happening about the speed that i said it would happen everything in the existing system and everything on bitcoin There are two different systems competing in the world. And why that's happening is because you have exponential tech moving one way, and the output from the exponential tech should be exponential price declines. That's what would happen in a fixed money world. Prices would be falling. Probably today, you can't, I always, you can't, you can't measure the unknown, but I would say that the increase in wealth generated to the entire world would be about a negative 5% deflation rate. If you let the productivity normalize, forget

the inflation environment or the default environment we're in now. Normalize and let the market work. Every year, people would get richer by about 5%. And that would get faster and faster over time. That's what the free market should provide. And so what's happening in one world where you have the only way that that could happen is you had fixed number of currency units that would force the product of product capacity of the world into people of the world instead of concentrating it in government and big big tech and big companies but the problem is we have about 400 trillion trillion of debt in the world.

We had about $250 trillion only four and a half years ago when I wrote my book. And now we have $400 trillion. That debt is insolvent. So Tavion is right. There isn't a path out of this from the existing system that is a massive financial repression. They have to steal your money from you at an increasing rate. And why the communication channels are getting so locked up? Because they have to trick people and lock them in because people rise up when you try to steal their money at that rate.

Inflation is created by creating more monetary units. That's the primary result of it. That's the primary input to inflation. And so they have to do that. And people are measuring in a currency. So inflation is deflation or is wage deflation. So what it means is as more and more tech is taking jobs at a faster and faster rate

and it will so in the future, governments are forced to print more money or destroy currencies faster to be able to save the currencies that they're in. Most people are pricing their world in that world. In fact, when they say Bitcoin priced in X,

you're automatically defaulting to pricing in that world. You're measuring Bitcoin from the mismeasure of a system that has to default. Two questions. Sorry, Jeff, just two questions. Could we get to a stage where the technological evolution to improve the improvement of productivity

outweighs the increasing money supply? No. So the point is, here's the point, and I think this is very missed in my book. The rise of debt and then the rise of short-term debt cycle, long-term debt cycle, and then misallocation

and rise of government spending to people to offset that and then ultimately break currency is the opposite side of technology gains. So the productivity, more productivity means lower prices. How much Mario do you pay for your calculator app? How much do you pay for what we're doing right now on, on this that's can touch millions of people. The point is it's not taxable because it moves to free.

It comes out of GDP. How much do you pay for photos? How many photos do you take today versus photos you took before um the point of technology is to give us more for less that's the point and that technology is moving at such a rate today um you can't even imagine it so that so that the mirror image of that technology moving at that rate to be able to live in a system that that steals that productivity from us has to be exponential rise in debt and most people are measuring from that system and and why i use all the time if bitcoin stays decentralized and secure and i say if um which i think it's almost inevitable i say if to run the thought

experiment because because most people aren't used to living in this new world i to to run the thought experiment of if it stays decentralized and secure, it imposes that discipline. And governments don't have a choice. BlackRock doesn't have a choice. Nobody has a choice because the incentives accrue to the people that are carrying Bitcoin. So it just, it continues. And so you could, the only thing you could argue on what I just said is because every economist knows prices fall to the marginal cost of production over time i would i would suggest every economist also knows that we're living in a world of massive

increased productivity gains and so the derivative of those two things ensures prices fall forever unless if if bitcoin stays decentralized and secure and 21 million cap. And so what's happening today is most people are measuring Bitcoin from their systems that are failing and not able to see what I just said. Jeff, you keep saying if, so it seems that you are not of the camp that Bitcoin is inevitable to some degree. Why do you say if? So I just say if because I want to get through the biggest thing

first right so i obviously you you know scott how much now i'm investing all of my time and energy created a bitcoin only fund investing in entrepreneurs on top of this i think it's inevitable but but i'm not i'm a realist in this too so so so when i when i wrote my book i actually had assigned about a five percent probability of it failing at some point but as i did dug deeper and deeper and deeper and tried to say how could you possibly kill this um i realized the only way you could kill it is us. If we chose to change, if the node holders to Bitcoin, the people running nodes chose to allow that to happen. And I don't think they're going to.

So I kept on decreasing my probabilities of failure of Bitcoin as I was trying to disprove my hypothesis to a point where I'm almost certain it stays and it becomes the new financial, it becomes the rails of the entire new world. Everything is moving over to there. It's pricing everything. But that's why I use if because I think in probabilities, I'm constantly trying to disprove my own hypothesis too were you able to find any incentives for node the node runners to to kill bitcoin and was there any path towards that whatsoever no because they would have to go

against their own incentives right they would have to they would have to they would have to say, I want to lose out. So other than that, like a global, so we had a debate, me, Ryan and Scott, a while ago, on whether you put all your wealth in Bitcoin or real estate. And I think me and Ryan were disagreeing on that. And then the argument I would make for not putting all my wealth in Bitcoin is if there is a global government crackdown, for whatever reason, if it's became disruptive enough, you don't think that's enough to... Absolutely not, Mario. So I love that you just said that.

Let's use real estate as an example. My lake house three and a half years ago was $1.5 million where I live, maybe $1.3 million. Pricing Bitcoin in that same time, it was 300 Bitcoin. My lake house now is 50 Bitcoin. And in fiat terms, it's $2 million. So it's showing what I just described.

If you measure over the long enough term, Bitcoin is repricing every single thing because it has to abundance and money if you just created more monetary units you create more scarcity tavio said you're you're going to need more housing of course you're going to need more housing because you're creating so much monetary supply creating so much scarcity people are trying to race to more housing and housing has become a store of value against the debasing currency so it's you have you have a loop that's that's funding more and more housing but people don't realize that that's anchored to the same system and it's being repriced too

and so and and that's what allows the debt to expand the housing and the real estate. So, so you're all caught in this loop that keeps on moving back and forth. So what's, what's happening. And that's why I keep coming back to if, but I believe it is almost certain that Bitcoin is repricing this and what the entire world and what's happening is if you're living in the Bitcoin system, you're already living in the Bitcoin system, you're already living in the future every day,

every day, or it's volatile. So not every day, but you can count on, on a long-term basis. What I just said about prices falling to the marginal cost production, that's happening for you. You're getting the benefit of that.

And if you're trading, going back and forth and trading Bitcoin to a fiat instrument or a different altcoin or something, you're gambling on that. After hearing this, if I were to ask the same question, if you had to put 100% of your wealth with a 10-year time horizon into one asset um last time we broke the assets into gold bitcoin and u.s dollars i think that you said you're going to go into dollars u.s dollars was it the dollars are really i can't remember dollars if there's a yield obviously treasury it was dollars not just yeah but not

like dollars sitting in a in a safe or a bank so but but look at what's happening to dollars versus bitcoin right now and look at so people think that this is one day going to come and it's a light switch it's not a light switch this is going to take this is going to take decades for it to come and all of these signposts that you're talking black BlackRock being inevitable, this is others, other countries using this. They're just signposts along the way as more and more people understand this. And so, but there, and I know many people into that organization now, they know a bunch of what we're talking about right now on this phone. So do a lot of people all over the world because this is open technology,

open for anybody who wants to learn about it. Can I ask you, and I'd love to go to Florian afterwards, but Jeff, just a question, a simple question. If governments had the ability to shut down Bitcoin, do you think they will in the next decade if they had that ability? Do you think they would? If governments, depending... the next decade if they had that ability do you think they would uh if governments uh uh depending

oh i'm talking to all of them east west enemies allies if they all see it and my enemies enemies my ally so so everyone sees it as as a risk to their to their grip on power in their country could they work together to shut down bitcoin if that was a possibility not a chance in fact it would grow faster look at look at underground currencies look at the us dollar and systems that try to try to make that uh not work you have an underground economy that explodes try to stop this that's an open technology that anybody can use uh use and and and on different layers it's becoming more and more prevalent. But don't you need to just track down miners if you have that ability? Like this is the one point of failure.

So I love it. It's great. And that's actually why I say I try to do the same thing, Mario, everywhere. And so those miners are chasing abandoned energy all over the world. And those miners are in little pockets of Africa, mining for free energy, and then powering a village from the excess. Those miners are in Iceland. Those miners are distributed all over the world. I know many miners are running on tour.

You'd never find them. You'd never find enough of them they're not these people talk about the set of miners um you'd never find how much how many miners there are look at look at what happened to china china huge crackdown the miners it just decentralized further because that was that risk factor that people talked about before. What if China had over 51% of the hash rate? Well, some massive crackdown, there's still over 10% of the hashing power in China. I think also the notion that all governments were together on a common goal. I can't remember when the last time in history that happened. But I mean, I think just the notion that they were doing around Bitcoin is just, it's, it's most absurd, to be honest. Yeah, Ram, I just wanted to let other people talk. But

here's a here's a way higher probability. The US cannot win against an authoritarian state like China by copying China. They can't. China would win the AI game, everything else, if you're going to move to authoritarian state versus authoritarian state. The free market always wins. The free market is more productive. And so there's a way higher probability here that all the things we're talking about inside the existing system and bitcoin that this has been engineered by the u.s because they realize this and china is trying to create a dominant current currency and move more and more trade to themselves and then a bricks type of currency by using a peg rate to the U.S. to keep funding that growth through the U.S. consumer.

And if it goes on for too long, then China could win a geopolitical or strategic battle. And when Octavio talked about 30s, 40s, which I totally agree, there wasn't another geopolitical adversary like China at that time. So the U.S. could impose this. Also, technology wasn't moving as fast, so they could impose financial repression, and everyone else had to go along with it.

In this case, they can't. And so by pushing up interest rates, they make China fail, that debt spiral fail faster and stop the Belt and Road because all of that debt starts to fail. There's a higher probability that the US understands why we needed neutral reserve currency around the world. And they're allowing all these actions to happen and then go to Bitcoin. Florian, I'd love to go to you as well and get your thoughts on,

before asking you specific questions on the discussion so far. Pleasure to have you. Yeah, thanks for having me. Well, I totally agree with Jeff. And I think the most important statement really from him was that it will take decades. I think the whole setup is so complex and it will take a long time to play out in full. I'm a little bit worried over the next few years when it comes to the Bitcoin spot ETF. I think in the short term term it's creating demand already and it very likely at some point will push prices higher but then the largest money manager in the world basically has too much control about the spot etf and we've seen that in the gold market

for years and years where there was lots of questions whether um the gold would be really there what did they buy it immediately? Are they buying five weeks later? Did they lend it out? And at the same time, they basically are the largest shareholder of the five largest mining companies, Bitcoin mining companies. So these are challenges

over the next five to 10 years that I see coming. That's a good point. Hold on, before you move on, Florian, that's actually a good point. So you could see with the ETF, the BlackRock ETF and them owning shares in the top miners, I don't know, how big is their stake in the top miners?

Are you talking about very small stakes or pretty substantial? I think there is one thing that really people have to understand with all these ETFs. BlackRock is managing your money via these ETFs. You don't go to the annual shareholder meeting anymore and vote for anything. This is BlackRock doing for you. And you're not even aware of what's actually going on. And that's why BlackRock has such a power nowadays. And I think they will do certainly similar steps once they run the spot ETF and want to change something or whatever kind of ideas they come up with.

Sorry to interrupt. I just want to be clear for people that the narrative that BlackRock owns a ton of Bitcoin miners is passively because their major business is indexing. So it should not be confused with them actively managing positions or being involved in the businesses of these miners. That's what BlackRock literally does. So these are passive rebalancing investments that have nothing to do with any active strategies or belief in Bitcoin miners for BlackRock. Just for clarity. It's true, but still somebody is holding the rights

to vote on the shareholder meetings. Yeah, that's fair. How big are their stakes, Scott? How big are their stakes? I? How big are their stakes? I mean, I can't remember exactly what they are, but they hold pretty sizable stakes in a majority of miners as well as MicroStrategy, of course. You know, 15%, 20% of MicroStrategy, something like that.

But again... Guys, they own the majority of almost every single year on the stock market because they are the biggest investors first. Passively. Correct. Passively. Hey, Ram, can I just jump into this? This is one of these really important debates.

You've got a hot mic, Ram. Sorry. Go ahead, Jeff. So this is what people do when they're predicting the future, right? They predict the present forward instead of the future and all the different things. So if you look at why BlackRock looks like that and why any company looks like it does,

all a company is is an individual of people aligned to a mission, aligned around incentives. The incentives of the world today, including our incentives, have us trying to outpace inflation that we can't so we chase we try to do that in whatever way we can and we give more of our money to blackrock to do to do and the incentives of them chase those assets that are more scarce real estate some of these bitcoin miners and everything else because we we don't

have a choice and they get bigger and bigger as a result of this. And we get less and less as a result of this. So that is the world we live in. You're describing perfectly the world we live in and why BlackRock has so much power. But when the incentives change into this and more and more people can self custody and more than people could do BlackRock's incentives and their entire business get smaller as a result of the change. And we get stronger.

That's what's happening. It's just happening slowly and people are carrying their baggage. Just like they think governments are almighty powerful and those people are going to use this against us. Governments are supposed to be in service to us. And the only reason they're not in service to us is the incentives of the system are designed around the theft. You have theft in money. And if you have theft in money, who would win out of that theft?

Just what would be the emergent complex behavior of society? All the incentives would race and you'd get bigger and bigger and bigger and that stuff ask the alternative question on bitcoin what are the incentives in bitcoin and the incentives are cooperation the incentives are truth and what you're seeing slowly it's more and more people understanding that, breaking the incentives of the other market. And remember, I know some of these people inside these companies, and people look at them as BlackRock, this big evil company, instead of the individuals who have already changed their incentives,

that are hardcore maxis, that have already moved. And if BlackRock doesn't move, they'll move. Florian, I did interrupt you earlier, so I want to give you the mic again before asking another question for Tavi and yourself. But I'll let you finish off. You were talking about the concern with the centralization that we're seeing with BlackRock among miners in the ETF.

Yeah, again, I mean, in the end, it's to the point that Jeff made. It just will take much longer. And I mean, this whole process probably takes two, three decades. So what happens in the next couple of years, like with what we're seeing, the whole situation, the macro situation that we're seeing, how could the next two years play out for Bitcoin? Are we going to see the same cycle all over again? Well, I mean, I think that the Fed has already most likely broken something in the system. And we're going to see, I mean, we are in a risk-off environment right now. I think at some point they will have to change 180 degrees and they will have to print more money than ever before so we're not talking millions and billions anymore we're talking trillions

quadrillions and at some point quintillions and and obviously that puts us on a even more not just psychologically speaking on a even more inflationary path over the next let's say a few years how fast it will happen i don't know It all depends on how big the pain will be. It's starting to grow the pain, but right now it's not enough yet, I guess. So, obviously, since Bitcoin is also a pure play on fiat liquidity, it will profit tremendously just looking at the price once the Fed is coming back to the market with liquidity injections on a scale that we have never seen before. But we are not there yet. Obviously, we learned this year that it can

happen over one weekend, like it did in March. So if there is any black swan showing up next week, it could be that in a week later, we're talking about a completely different macro picture. But it could also mean that this drags on, grinds on for another few months, maybe into the first or second quarter next year. And I think by then the pain will be too huge and the pressure will be too huge and they will have to change. And that obviously should start a new bull market in fiat terms for Bitcoin. And that would also obviously start a bull market for gold and other hard assets. So that's basically the outlook.

Davi, I wanted to ask you that same question as well, just the next two years and kind of linking it to the current macro situation. And kind of a specific question would be, did the Fed already break something? And if so, when do you expect them to pivot? I'm of a similar view. I think the collateral value destruction happening in fixed income markets globally is is uh it's it's kind of an understatement of how how things could potentially become more problematic very soon and the treasury yield staying where it is even if not

rising which i don't think it's going to be the case. I think there's further movement to go to the upside, becoming a large competition for equity markets and the discounting mechanism of businesses as businesses produce cash flow, you discount that to the present value with higher yields. At some point, that should have an impact on the equity markets as well. And looking at just doing an analysis of what's happening in the actual the stock market at transports is a good leading indicator starting to break down. You see micro caps already down significantly, small caps down significantly as well. S&P 500 equal weighted is doing the same thing. So, you know, there are

very strong signs of things starting to break. What is probably the next shoe to drop? You know, I think it's credit spreads. I find it hard to believe that yields would stay where they are, and we're not going to see a real problem in corporate bond markets and corporate spreads. I mean, just looking at junk bonds and other things, those things look really problematic. I really think, you know, to recall, and back in 2020, March 2020, the Fed had to step in and buy LQD ETF. You know, look at that ETF today. Just take a look at that chart. It's been terrible. But if you look at LQD relative to treasuries, meaning the credit spreads, what you're going to find is that credit spreads are still a historical low level. So when we think about, I think people are

prematurely thinking that the Fed is going to step in and start buying treasuries now. But something needs to break first. And although I think the Fed has done enough to break something, nothing has really been broken just yet. So a question for money managers and any investor should be what is likely to break? Well, it could be in FX markets, it could be in the credit spreads. Like I said, I've never seen something break without creating high volatility and credit spreads blowing out. So seeing credit spreads up 2% today, well, that sounds like a very compelling macro idea. So that's why I'm referring to that. So at some point when we see all that really unfolding, that's when it creates the real need for the Fed to step in and do something. And that dilution should be very, very positive for hard assets at some point as well.

I think in order for something to break, it's got to be something that has broken before. Because I think what we're watching the Fed and the Treasury do is they're plastering all the things that have broken before. So, for example, we would have had a banking collapse if they hadn't had a banking collapse before. We would have had a bank collapse now because they went and insured all the depositors and said to the depositors, look, your depositors are going to be made whole. You've got nothing to worry about. They averted a bank collapse. And so I think what's going to break is something that we all don't expect to break because if we did, we would have already had the plug in place, if you know what I'm saying.

Well, Ren, I might offer another idea, if you don't mind. I totally agree that there's something that we don't know it's likely to break. Corporate bonds have never really broken just yet. You know, when they were about to break, the Fed has stepped in. But let's just say something else

that is not even in the horizon here, that maybe the Fed doesn't even have control over it. What is it? Potentially a currency deepak. What if, you know, what if who is selling those treasuries is actually a central bank was in deep trouble selling treasuries to defend the pack? Now, that's very possible. You know, and, you know, in the 90s, in a higher interest rate regime, that is something that happens quite often. If you look at the history, and I'm sure you guys have all done work on this, looking at the history of currency systems, they come and go. We have been through the last 20 years or so, a very stable

period of monetary systems that haven't really changed. And so a currency deep back could certainly be a thing that could potentially create even a spike of volatility in FX and potentially create a problem in financial markets overall. So I think that that's something maybe not a lot of people are looking into that potentially could be a real problem here very soon. Yeah, I just want to build on what Tavio just said, because I think it's important. Just keep saying in your head, the existing system, 400 trillion in debt all over the world is already insolvent. Say that five times in your head and say it over and over and over again. Because all the three letter acronyms to be able to bail out banking system, all of the things that say, oh, this asset doesn't matter anymore. We're just going to paper over it in the balance sheet that's what's happening and it's been happening for a long long time to be able to give more liquidity to this eventually

that breaks um no matter what physics imposes a break there or you transfer all of the wealth of the world into very few hands. And other people don't like that very much. So no matter what, it's already unsolvable. And what I'm kind of suggesting on Bitcoin is it can't be touched from that system. So all of the things, watching what Powell will do, watching what different governments are going to do, watching what China needing to create more liquidity to save their housing, which is 25% of their market, and otherwise everything fails. Everything all over the world is a derivative of a financial system that's already insolvent.

And you can move to a solvent one. You can move to one that's repricing that financial system. It doesn't matter how's repricing that financial system. It doesn't matter how that repricing comes. The governments won't allow a cascading, deflationary collapse because everything would be gone. But they might allow it to go on for some time. And if they do, Bitcoin is repricing. Prices will come down according to Bitcoin. Bitcoin might stay the same. It might even fall. But all other prices would fall relative to it. Or when Tavio just said,

there's a repricing of a currency in an event in one day, Bitcoin would blow up in that repricing. It doesn't care. All it is is a tick-tock next block. It just keeps going, and it's untouchable from that. So the events we're talking about are in relative to existing system being insolvent and having to take more and more drastic actions to be able to pretend it's solvent. By the way, and this carries forward to a different thing, to what Florian said. Why I think this is going to take longer is if it wasn't going to take longer, people say, well, how much inflation can we deal with?

And you look at Argentina, and there's a whole bunch of people that don't own Bitcoin in Argentina who still believe in their existing financial system, even though it has plus 100% inflation. And so why haven't they moved? And so it shows how much power an existing system has over us to be able to continue to actually reinforce that system, even while it's stealing more and more money from us. So that's why it takes longer, because it takes longer for us to understand that. And I would venture to say many, many people on this call don't yet understand that. And you're going to be measuring the system from the system, creating the problem, getting more mad at the system, giving more of those leaders and everyone

in that more power than they might deserve, instead of walking across the bridge to the new system. And what would it take in short to medium term? I know we talked about this briefly yesterday, but how long would it take for Bitcoin to stop the correlation with risk assets, and the correlation between Bitcoin and the equities markets to break. And are we seeing signs of that already? So you're seeing signs of it already. What I think is happening, but it's so early to tell,

there's just so much noise. And that's why I go back to first principles. Like you're trying to make measure, essentially in both systems, you're trying to make measure, essentially in both systems, you're trying to measure chaos theory through an event and people look at the event and right or wrong on the event,

but it's tons of different events that make up a complex system like this. So I think what's happening is this, that Bitcoin is forward pricing the lag in liquidity moving through the market. Just like when Bitcoin was 2020 was $4,000 and the printing and the massive printing happened. It's shot through the roof because it was forward pricing the inflation that was going to come. And just like now it's holding steady. And while there's massive liquidity draining, it's forward pricing the deflation that's going to come.

That's what I think is happening. I can't be sure, but what I keep saying, people are waiting for the event that triggers a Bitcoin rise in the price of the distorted currency. They're waiting for an event like a deflationary collapse to be able to pick up assets in the distorted currency instead of what's actually happening. It's repricing slowly all of these events. So I've got one question for all three of you. Ryan, I'm not sure if you've got any more questions. I know Scott is on a plane. But Florian, I'd love to go with you as well.

What can we expect over the next year or two for Bitcoin? And the question that everyone would like to ask is have we seen the worst? Have we seen the bottom of the bear market? I know you can't know for sure, but what would be your prediction if you had to make one? Florian, Tavio, and then Jeff. Well, I think I said it before already. It really depends on when the Fed makes the next move in terms of the fiat price of Bitcoin, right?

If you look at that. And I think they will flood the system with the liquidity again in the next six months. That means with the halving together next year and the spot ETF, there is enough reasons to expect a new bull cycle in Bitcoin over the next, let's say, two to three years. And it will most likely take Bitcoin

to a new all-time high of 100k um until the fed uh pivots um i mean it would not be a surprise uh looking at the past cycles for bitcoin that that we test those those lows again meaning maybe another pullback towards 15 to 20k in dollar terms i think that would be a great buying opportunity if it really happens this will only happen if we really get more deflationary pressure in the short term due to collapsing stock markets etc etc but if it would happen that would be obviously a good opportunity. Right now, it looks more like Bitcoin will continue to basically consolidate somewhere between 25 and 28,000. Maybe you can say 31,500 at the upside. And that range might also just prevail for another few months.

And then at some point bitcoin should move into the next higher level i mean if you look back we had a nice recovery since january until july in comparison to the past bull cycles it was rather shallow we haven't even seen the 38.2 retracement of the former bull run which was around 45 46 000 so so far this bounce or recovery since over let's say over the last 10 11 months has been rather weak um but that is not necessarily an indication for the future um i i think the next few weeks and and months you want to be more defensive and and risk off keep some cash and and wait for this whole mess to play out and then once the fed starts to print money again i think it's time to to to be all in in bitcoin tovi um i'm of the very similar view as well of Florian as I think it is,

is, is highly likely. And the hard landing is, is something that has been a probability has been reduced drastically. We're seeing now, you know, very, very deep yield curving versions.

And, and after that, now we're seeing the steepening of that, that usually coincides, the steepening of that that usually coincides the steepening of that process coincides with the downturn it's hard to believe this time will be different tyvee speaking yeah go ahead sorry ryan can't hear you but all good continue you can you hear yeah we can everyone can hear just right now fix the signature and so i i do think uh crypto assets and Bitcoin would be caught up in those issues.

We can hear you, Tavi. Can anyone hear me? Did it just crash? I can't hear you, Tavi. Yeah, I think Tavi glitched out. Jeff, all good. So, Jeff, I think Tavi dropped it. Tavi glitched up. Jeff, all good. So, Jeff, I'd love to ask you the same question as well. And it's more of a short term.

Have we bottomed? And what do you expect to see? Yeah, and I think anytime you ask that, Mario, it's what I keep saying. When you're talking about that, you're talking about bottomed in fiat price. And what I realize is the system is already insolvent so so so when you're talking in the fiat price I don't know like there's so many different things that are going to happen the existing system we live in based on that feel the world is going to get worse if you're measuring your most of your wealth by

that system that means it's going to get worse too If you're measuring most of your wealth by that system, that means it's going to get worse too. If you're trying to pick up pennies in front of that steamroller, it means you're putting a lot of risk into your own hands. So I just choose not to. I'm measuring my world in a stable system that can't be manipulated. And as a result, over the time horizon i don't care

what it does tomorrow i could care less over because i'm not trading to get back into a fiat instrument i'm looking at this new financial system changing the world as a result of it and if it stays decentralized and secure like i said it's not if it will it it will and it's just a time frame and and the time frame is solely dependent on how many others decide to put more of their energy into the new system and stop wasting their time in the other system so it's a pretty fair answer i think scott agrees as well um ran is glitched out and tarvey as well but Scott, I know you saw on a plane before we wrap it. I think it's a great discussion. I really enjoyed today's space.

Anything to add, Scott? No, I know these are my favorite conversations always over breaking news. I love evergreen, deep intellectual conversation about what the future holds. I think these conversations are just exceptionally important. Cool. We appreciate it. Everyone, I appreciate you coming in today. Jeff, Tavi tarvey and florian it's a pleasure to have all three of you on stage uh ryan i know you've glitched out as well would have loved to get your thoughts before

wrap up but since ryan's glitched out we'll see you all tomorrow and make sure before you jump off there's a red icon let me co-host it again since ryan is off and i can't co-host it but make sure you follow that red icon on stage we'll be hosting spaces from that account very soon instead of my account. So make sure you follow it. And we'll see you all tomorrow, same time as always. Thanks, everyone. Safe flights, Scott.