The Wolf Of All Streets - Market Predictions: When Will This Stagnation End? | Crypto Town Hall

Episode Date: August 13, 2024

Crypto Town Hall is a daily X Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in crypto and bring the biggest names in the space to share their insight. ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘2MONTHSOFF’ WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/    ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉  https://www.okx.com/join/SCOTTMELKER ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL  - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets    Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.  Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

All right, let me change the title. I think my team has a reputation of coming up with titles where I have no idea what they're talking about. Joe, how are you? I'm well, sir. How are you? I'm good. I've got perfect timing for Robbie. So I'm actually going to – the discussion today is – when Scott is not here, I'm pretty selfish in what I want to discuss. And today I'm really keen to discuss in kind of predicting when this, or Rand calls it capitulation, I call it this kind of stagnation in the market is going to end and which direction it will end.

And we do this slightly in every space. And I want to dig into various strategies. Like if it ends on the upside, so that's like, you know, kind of stagnation, kind of we have a breakout, we start hitting all new

all-time highs. Where will that liquidity be sucked into? Will it be sucked into meme coins as we've previously seen? Will it finally get into the VC-backed coins, the ICOs that I think

has just been left, kind of ignored for too long. Or will it get into a whole new asset class that we haven't talked about yet? Or will NFTs be revived? Or will it be none of them? Or will it be just Bitcoin being king, the Bitcoin ecosystem being king, and we don't see anything move towards

any other asset classes? So Joe, we've done spaces together. It's been a while we haven't spoken. We'd love to get your thoughts on the markets. We're kind of starting to dig into starting with Bitcoin, the markets in general, and we'll get into a macro discussion as well.

And going down the different layers with meme coins, altcoins, and different blockchains as well, talking about Solana, talking about the attention that Linear is getting. Yeah, good stuff. I mean, those are a lot of good guesses. I think just looking at the market, we're going to see a lot more of the same.

Even just looking today, we're still ranging on Bitcoin. We are ranging a little bit lower. I think there is some uncertainty right now in the market, you know, especially with the US election coming up, you know, Trump being very bullish, and you're seeing a little bit less of that coming out of the Harris camp, and prediction markets kind of swaying in a couple different directions, I think is giving people pause as to, okay, it's not going to be just a landslide victory for Donald Trump. There's going to be some competition here. And so there's some uncertainty. And I think the markets are pricing that specifically for Bitcoin and some of the kind of top, you know, blue chip alts that are out there. You know, when you look at,

you know, the altcoin market, you're seeing some interesting things today, even, you know, you're seeing, you know, runes like Ordi and Satz, you know, in the top 10, you know, from us on our side and social. So there's something going on over there. People are pricing some stuff in on that side. But, you know, when you kind of look down at the market, you're just seeing a lot of the same, right? You're seeing, you know, some of the meme coins that have been out there this year, you know, doing well, you're seeing, you know, Injective or Caspa, you know, kind of towards the top and people are just kind of trading what they know other people are going to trade. And that, you know, means that there's liquidity in some of those like alt projects that they think could have kind of that outsized, like standard deviation, couple standard deviations upwards versus just investing in Bitcoin, you know, meaning, hey, it's a little bit of a multiplier and a higher beta, you know, if I can get into something like an injective or something like a stacks, and Bitcoin starts to move up. But I think it's just a lot of people positioning chips still, and we're not in a spot where anyone's taking large bets to either side. You know, that yen carry trade was scary to people,

right? Like how levered up is the entire world economy based on Japan, you know, basically printing money and saying, hey, go invest this globally into other markets, you know? And so, I think people are trying to figure out how much of that is going to get unwound and how much of that impact is going to be out there. Sure, they've changed their mind to say, hey, we're going to hold off a little bit and we're not going to raise rates, but that's just one person's decision and anything can change at any time. And so how many more of those landmines are out there?

I think people are starting to kind of get a little bit of an understanding for. But so that is something we dug into it heavily yesterday in the space. Those landmines are out there. I think people are starting to kind of get a little bit of an understanding for it. So that issue, I know we dug into it heavily yesterday in the space, and we had a bit of a debate into how levered up the financial markets are and talking about whether we've seen the worst after the carry trade liquidations. But my question is, this has been an issue for years. I remember since getting into finance in 2008, after being obsessed with the GFC and what that did to the world. The discussions of, hey, we're too levered. This is just the beginning. There's going to be significant other bubbles that will be popping, and we'll just kind of delay the inevitable. This is all Band-Aids.

It's been, what? What are we now, 2008? Another four years. We'll be two decades since that event. So it's like, this is a constant issue. And it's an argument as well that not many people on crypto make is that the markets, we could be living in a time where levered up markets are just a new norm and doesn't need to lead to implosion as long as it's all well balanced. Now, I'm not technical enough, I'm not deep enough to discuss it. But all I'm saying is that this isn't anything new. It starts to feel like we're trying to find something to talk about to blame for the current state of the market. Yeah, it's a good thought. I mean, it was a 24-hour to 48-hour event, right? And the market started to reprice back up,

which means that, hey, we're not too worried. What I'm kind of making the case for is, is there something else that's like that that could have some sort of reverberation that's out there? It have some sort of reverberation you know that's out there it looks like hey we're going to just kind of keep chugging forward and hold things where they are so that's not something that i'm necessarily pricing in on my side i think to kind of get to what you're saying is like at some point what is this where is the breaking point for the markets with bitcoin right and the rest of the market are we gonna are we are we out of this kind of like interesting weird bull market that really only consisted of like Bitcoin and it's like a small subset of altcoins and then some meme coins that have now been launched and reverted back down?

Was that a bull market? Are we in some sort of other sideways market that's out there? Are we just pricing in the ETFs? Like these are all the questions that traders are asking, you know? And so I, you know, I think it's basically, you know, we're waiting for an election, we're waiting for an election, we're waiting for CPI numbers are starting to kind of come out, inflation's going down. What does that mean for rates? And people really want to see, will rates come off? And what does that mean for the market? The only implication that maybe the end carry trade could potentially have is, hey, there's $5 trillion sitting in these money market funds that are getting 4% to 5%.

At some point, that money is going to come flowing back into the market. Is it going to go to equities? Or is 48% of that going to go to pay back the end carry trade? So I think people are trying to figure out how much money is really going to flush into the market once rates start to come down. And that's really what everyone's paying attention to, because that is such a large subset of money that's out there. Is it going to going to go to ai is going to come a little bit to bitcoin is it gonna you know go to industrials like are people going to start you know investing more in like oil and gas so i think that's what people are trying to figure out yeah i think another thing that i've noticed is no one's talking about the geopolitical risks on them yeah so um on black

monday everyone was talking about the the fears in the Middle East, the Ukraine war getting out of control. Now we've got Ukraine invading Russia and no one's talking about it, which I don't think anyone should. I think that one is – what's been going on for too long that I don't think it's an issue yet for the markets. What's happened in the Middle East, Iran hasn't responded yet. So I like how when everyone's scared, these become big issues. When things stabilize, they're no longer big issues. But then going to the recession discussion, I think, was discussed heavily on Monday. And I think this is one worth discussing.

If you look at Google Trends, there's a massive spike in discussions of a recession. I looked at the chart here from 2023, January 2023, and it's gone up by 5x in the last few days or last couple of weeks. So there's a lot of recession talks. The market is pricing recession. And the market's expecting 2% rate cuts in the next 12 months. And that's the most since 08, the great financial crisis. And the global markets investor put out a tweet saying, over the last 60 years, each time the market was seeing at least 2% rate reductions, a recession in the US followed. So my question to you guys, and maybe we'll go to Jonathan and Dan on this one, is the likelihood of, Matthew, good to have you as well, the likelihood of a recession and how concerned should we be, what that means for crypto? Jonathan, Matthew, Dan, feel free to jump in.

I mean, a recession. Yeah, Jonathan, do you want to say something? Yeah, he's jumped in already. I'm not sure if he can talk now. No, I can't hear him. I mean, a recession is, I mean, we've spoken. It seems like ever since the pandemic, we've been slotted to have a recession at least every year, and it keeps getting missed. And I know the technical definitions of what a recession are, but I mean – I know there's a part of me when you – this is a little off-kilter, but –

Can I say for you, does it really matter? I think should we even really care? Recession, no recession. It's like everyone loves to talk about it nonstop. I think the markets have priced it in well in advance. It's like equities price and recession is well in advance. And they're a forward-looking indicator. Recessions are a lagging indicator.

And I'd assume crypto is the same. And I just don't think, I think rate cuts will play a role in impacting the markets. But I think the crypto market's got way too many factors to be impacted that much by a recession. Am I naive in saying this? Well, listen, if you're a proponent of the efficient market hypothesis, of which I'm not, but if you're a proponent of that, then you believe that the market, the best time to buy the market is today because it prices in all known and unknown information. So I don't know. Why worry about a recession? Maybe worry about it for yourself.

Plan for the worst, but hope for the best. Adjust yourself. If you're young, you can tolerate more risk but then jonathan what should we be worried about if nothing nothing like i really don't care like if there's nothing to worry about i just like to say like should we be worried about how leveled up the leveled up the markets are the leverage that we have in samaritan and up should we be worried about the geopolitical risk should we worry about the the the recession risk what matters to crypto from external factors outside our ecosystem?

We're talking about the elections. You're talking about Trump versus Kamala. Harris, and I believe the polls are not looking at Project 538. Harris is at 46%. Trump is at 43.3%. If you go back to,

they were pretty much at the same level in, I can't see the date, in July 28th. So less than a month ago, Harris was 44.3%. Trump was at 44.1. Now it's a pretty big margin, not pretty big, but a bigger margin between them. Polymarket places Harris at 52% likelihood to win versus Trump's 45 when Harris was first, when she replaced Trump. Biden, Trump was at 75%. Now he's down to 45%. So Simon, I'll go to you or

Jonathan or anyone else, is that which of those factors matter, if any, to crypto? Okay, well, it's an interesting question that you say, which matters to crypto. So from my perspective, the one to worry about, if you're saying crypto, is a decoupling of Bitcoin from crypto. So if Bitcoin starts behaving as a commodity and crypto starts behaving in line with stocks, that would be something the crypto market should be deeply concerned about because that means that Bitcoin's hypothesis is playing out, which would mean that all of those events you just talked about would also be important.

And so if the crypto market continues to rely upon Bitcoin and doesn't decouple, and I know some cryptos in the bull market lead the recovery, but that would be one thing. In terms of a recession, where a recession matters is that when you cut rates during a recession, it's less impactful than cutting rates due to a bull market. And so it can be interpreted very differently when we're in a recessive environment and the Fed is changing policy to cut rates to try and stimulate the economy. That's very different from a stimulus in a good QE bull market scenario. In terms of the geopolitical side, it is very hard to separate the Russia side because now they have connected themselves so because nato is significantly expanding um and now that um you know ukraine is actually inside russia russia has said a specific policy the more that um the west militarizes ukraine the more that russia will militarize iran and so now they have connected those two conflicts together in uh in in policy

but it hasn't but there's something that hasn't blown out of control like i think they matter to us especially because i know you do a lot of geopolitical spaces i think they matter to us but they just don't have the markets don't doesn't really care as long as it doesn't impact the west significantly which i know we're always talking about that ticking time bomb but as time passes like you know the risks of a nuclear war between Russia and Ukraine or Russia and NATO, it's going to pass. Like Ukraine soldiers are inside Russia now, and we still – these things are still going to happen. They're not just inside Russia. They're in Kursk. And I know unless you know your World War II history a lot and unless you're from Russia or uh or ukraine kursk is where the largest battle

in history occurred it's like referenced as one of the turning points of world war ii i mean that is a place of special uh importance historically of pride for the russians and it's i mean it just makes sense that like people we i don't live there i don't get the significance of i mean i get the significance of it's not like something that my culture grew up around so it's a i i'm watching that very closely because shit could hit the fan they're pretty heavy pretty hard pretty fast there's a reason ukraine is digging in there not just for uh uh it's it for – it's a huge middle finger. That's what it is.

Yeah. Let me answer that question, Mario. Go ahead. All right. So continued NATO expansion and continued NATO spending and continued military budgets is good for the American stock market. So you're not feeling it because the war machine benefits from escalations. Where it doesn't benefit is when a significant change in the power structure starts to impact or where it starts to have you know um inflationary impacts and so the you know the last impact with the russia ukraine situation um was when uh you know biden

tried to negotiate um with saudi arabia and saudi arabia decided to side with Putin in terms of oil. And then that led to the, you know, the gas price increases. And then that led to the Silicon Valley situation because of the maturity mismatch, which is still an issue at the same time as trying to unwind the carrier trade. So those things are still all playing out. And I get it. Like, we're just sat here waiting for something to happen. And the Federal Reserve always seems to come up with a new tool. But that tool is also creating civil unrest around the world because of significant wealth inequality. And that's, you know, whereas the Bitcoin and crypto play, we're trying to figure out how the market's going to react let me um let me bring it back to to deep into crypto robbie good to have you it's been a

while hey how are you good well we're still our strategy is still investing heavily so twofold i'll tell you what our strategy is we'd love to know yours if anything's changed which i'm guessing nothing has and maybe even small changes here and there, maybe different areas that you're focusing on. So our strategy is still very heavy in VC-backed projects, very heavy. I'm talking about 20, 30 projects a week and all high quality. We're just focusing on quality. So one thing we've changed over the last few months is not doing mid-tier projects because the days of mitigated risk because everything pumps are behind us, at least for now. So we're focusing on purely high quality projects, investing and working

with them, so partnerships and or writing checks. So that's number one strategy, which has been the case since January. And then number two strategy is going hard on meme coins. So working with a lot more meme coins, starting to incubate different meme coins. So we incubate VC Back Project. We're doing a lot of meme coins as well, partnering with a few and some pretty notable ones that we've talked about on the show. So that's what we're doing at my firm. What are you guys doing? To be honest, we watch you very closely. We keep seeing you on different cap tables. We co-invest with you guys whenever we see you on a cap table, we're going to jump in as well. We work with your team pretty closely. But has anything anything changed whether your holistic strategy

or different narratives are you focusing on more than others i don't think anything has particularly changed i mean similar to what you said for us the focus this year has really been on um you know focusing obviously on high quality deals because we're in the fortunate position that there's a lot of exciting stuff out there and so we can afford to be a little bit choosy. We're still continuing apace as anybody who follows us on socials or gets our regular updates via email. We're still very active. that has really evolved for us over the last two years has been that we really focus on trying to roll up our sleeves and work with our investee portfolio companies quite directly, whether it's providing like support with tokenomics and token design or helping them with, you know, liquidity provision or market making or, you know, you name it, go to market strategies,

just rolling up our sleeves and really getting in there to try to be the best partner to them that we can. And that's actually kind of how we came up with the Mochaverse project as well, just tangentially. So I think we like to be active. In terms of individual sectors, I think it's more about finding ecosystems where we think there is exciting growth and user activity. We have not, frankly, played much in the meme coin space. But one area where we've been continuously investing since, you know, late last year has been the Telegram ecosystem. And so we're quite pleased, you know, having launched a couple of products in-house, as well as made some investments in other builders there, as well as in TAN itself. Yeah, so interesting. Number one is I was just looking at Mochaverse, Mocha token.

Congratulations. Like it's a very healthy launch. You're literally sitting up from your launch price, 22% up. Every other launch just has gone down since. Now, we're investors. Obviously, we actually did your launch. We did a countdown space for you guys. So we're pretty closely, we work with a lot of the projects that are being onboarded onto Mockiverse. So pretty biased here, but it's a very successful launch. I just looked at it now. Volume is healthy. So on that front, well done. Thank you. But second point, the question I have is one thing that my team is telling me is that front well done thank you but second point the question i have is one thing that my team is telling me is that a lot of the vcs when they talk to them

i think it's actually mentioned on the space and they say that they for this cycle they've completely deployed capital like now any investments are for the next cycle it just feels too early um i just don't understand how vcs this cycle's been been going on for less than a year um and when i want to look atbacked projects, not talking about crypto in general, barely had a bit of a cycle at the beginning of the year. And it's kind of stagnated since most of the coins fell 80%, 90%. It's like the market already is in a bear market for these coins. So we haven't really seen that influx of retail and non-retail money into listed tokens. Why do you think, and have you had similar discussions with other VCs when you speak to them?

Are they kind of holding back on deployments, deploying capital for this cycle? And is it more long term deployments for future cycles? Now, I don't want the typical answer like every investment is a long term. Yeah, as long as it's right before TGE. So I think that I don't know. I don't know if it's helpful to think of where we are right now as a cycle. I think if I think of it, and maybe this reflects being old fashioned, but I still think of things in calendar year terms. But I think that this cycle is not by any means finished. I think that we're at a whatever inflection point or lull in the cycle itself.

And I think, you know, some of that comes from the fact that it's August. I mean, I live in Europe. So, you know, for anybody who lives in Europe, you know, August is slow for pretty much anything. But I firmly believe that we will see things get back to business as usual following Token 2049 in Singapore in about a month's time, because I think we'll have a strong Q4, personally. Yes. Oh, by the way, you're going to be in Singapore, obviously. Yes.

Yes. Perfect. Yeah, we're going to be there as well. We're doing a side event as well. So it'll be good to find the other thing we've met in person. It'll be good to catch up. Cool. Well, I appreciate the update.

Anything in terms of narratives before going to Zach, is there any interesting narratives that you're paying attention to more than others or is it still the same as previous discussions that we've had? I think if anything, one of the things that's changed in the last few weeks is that we've actually had several projects launch games of different stripes on Telegram using Ton and very, you know, very, very successful in terms of user acquisition. There's a lot of activity going on there.

And so I think, you know, it continues to be quite exciting. Appreciate that. Zach? I was going to mention in the sort of private token space, the metric that I only heard about recently but found really interesting comes from this tweet thread that I put in the chat from Jose Macedo, who's one of the co-founders of Delphi, which I think is one of the smartest crypto research firms out there.

And what he's looking at with tokens is the ratio of unrealized gains for team investors collectively in the private markets to the market cap of the circulating supply of a token once it launches. And this is a way of looking at how impactful unlocks are going to be. Right? So if you look at, okay, you have a token with a low float and super high FDV, you've got lots of founders who 90 plus percent of their net worth is in their token, but it's locked. You've got investors who on paper have an enormous multiple, but it's locked. And then you have a market price that like looks really good, but based on a small

circulating supply of the tokens. And on average, he found that the average ratio of that unrealized gain for insiders to the market cap of actually circulating tokens tends to be between four and eight X, meaning between every three and six months, the entire market cap of a token that falls into the category gets unlocked, which I think is a pretty shocking metric. And, you know, we've been talking about this narrative of the sort of low float high FTV tokens for a while. But I think that is like a really interesting a illustration of the trouble we might be in sort of late this year into next year as these unlocks roll out and you get a lot of supply hitting you know demand that we don't

know where the demand is coming from for these bc tokens on the one hand and also i think this is maybe a good analytical tool if you're thinking about investing in a liquid token uh at least to look at to see how much cell pressure relative to the circulating supply there's going to be software and actually robbie i'd love your thoughts on this. It's like one thing we look at, and I'm pretty transparent in these spaces on what we do as a strategy. And one thing we do is whenever we invest in a token that's already listed, first thing we do is look at the unlocks that are still scheduled. And we generally don't get involved in a token before all the unlocks are done,

just to make sure that selling pressure is out. And sometimes it takes a long time. Sometimes they've got short unlock schedules. And that's the first thing. And then the second thing, and there's exceptions always. Whenever a token is just getting a lot of traction, that is considered an exception for us. But, Robert, is that something you guys look at as well when you're looking at projects that are listed for an OTC? Yeah, definitely.

You want to look at unlock schedules. You want to see if you understand, you know, if you know some of those holders and the characteristics of those holders. And also, obviously, you know, for an OTC deal, it would affect the price you're willing to go in at based on what you see. I'm not sure if my audio is good, Zach. I've got another question for you. Are you there? Yep. Yeah. if my audio is good, Zach. I've got another question for you. Are you there? Yep. Yeah, is my audio better? Yeah, it says okay.

My team is saying it's good. Yeah, so just going back to that point you've made. So it's actually all these tokens that launch at low flow, high FTV, they're just getting hammered by that selling pressure. So if you've got that study as well and some of those numbers, please do share them. Send them to me on Twitter DMs. Yeah, I'll do that.

Perfect. I appreciate it. But can you tell me those tokens? Are they looking at tokens that listed this year, that launched earlier this year? Yes. These are 2024 batch they're looking at. Okay. And just one. Number two, we've already seen a lot of these tokens drop 50%, 60%, 70%, 80%, even 90%.

And I'm not talking about shit coins. I'm talking about quality projects or mid to high quality projects. You're saying there's significantly more downward pressure? Because a lot of them, it just feels like the market's already priced that in. Yeah. So, I mean, look, that's what this metric would suggest. And that ratio can change, right? As the price of the token goes down, the unrealized profits part of that equation goes down.

And so you can use that as a dashboard. What Delphi seems to be doing is they're using that to figure out which tokens to short. I mean, another way of looking at this, and this is like, I don't know if any of you read Kobe's blog post from May, but he talks about another metric that's interesting, which is the what he calls the phantom market for tokens. And you look at the delta between, again, for these high FDV low flow tokens, what is the market price of the spot token that's trading? And then what is the implied valuation to the extent there is a secondary market for

saps or warrants for the secondary market on saps or warrants? And oftentimes, those will trade at a 70% to 90% discount. And again, look, it makes sense. Locked-up tokens are not worth as much as unlocked tokens. On the other hand, if there is a huge delta, 70% plus between the market price for the token and what people are willing to sell their SAFs or warrants at, that is another signal about what will happen when unlocks happen because you know vcs are so far in the black and team members are so far in the black because they have a very low cost basis that like of course it makes sense to sell and realize some of these profits in terms of like the high quality projects i will say like you know i get this is a bigger issue for like genuinely vc back projects that have you know that are actually a project to do something than for meme coins or majors. But still, when we have conversations about these, you know, high quality projects, we're talking about narrative, right? We're talking about speculation that the token

will be able to do something in the future. We're not talking about high quality products or projects in terms of things that have found product market fit by and large so when we talk about crypto meets ai when we talk about rwa when we talk about you know d-pin and and all that stuff like it's not really working yet and these things don't generally have the user base to support the oftentimes multi-billion dollar valuations and so like this is a speculation trade and not like you know anything that you can talk about like value investing where you're you're using some actual user metric to justify the price yeah i'm just looking at some of these. I don't look at my portfolio often at all. Most of the time I look at it during these spaces. And it's fascinating. So I'm looking at one metric to see what a high quality project is,

is generally Binance Launchpad. To be on Binance Launchpad, they've got pretty high criteria. And that will determine the quality of the project. So I'm like, oh, cool. We've invested and launched most of the Binance projects this year. Let me check them out. And one of them, extremely hyped, insane metrics, and I won't mention names here, down over 90% has been only launched this year. Over 90%, again, that's a Binance launch project. The next one. Again, won't mention the name, incredible project. One that us and Anamoka, I think both of them, Anamoka's invested in. And that one's down 72%, 73%. The other one, again, 70%. And the list goes on. Over 80%. I didn't expect that one. Over 80%, again,

Binance Launchpad. And this one's 50%. It's actually considered good. These are the metrics that we usually see when a market is just collapsing. So one thing I've noticed as well, Zach, is we've got a whole team that takes care of a liquidation strategy for all the tokens, all the unlocks. And one thing we monitor is, obviously, we have different deals with different projects, but we monitor other VCs. And I should ask them for a latest report, but VCs, early days, everyone was liquidating. Every time there's an unlock, every VC, of course, over-exaggeration, most VCs just liquidate. Anamoka is not one of them. But they just liquidate because they knew that the valuation is too high.

They're like, hey, we'll liquidate now. We'll buy up later when the unlocks are done if we believe in the project. Now, a lot of these VCs are some known to liquidate, and they're very open about it. Hey, we sell tokens when the valuation is high. They're no longer selling tokens. They see valuations low. So that's why I think there's a lot of these opportunities in listed tokens. And probably I'll do this again, call my team and bust their balls again to just get us more deals with listed tokens.

And kind of call for any project that has a listed token. Do reach out to me. The team would love to speak to you to do some sort of OTC deal. But yeah, Zach, that's kind of an interesting metric that we've seen. Yeah, I think one of the really challenging things in both CryptoVenture and CryptoLiquid investments is that whatever metric becomes sort of a meme among investors as like this reflects a good valuation, that immediately becomes gamed, right? Like look at how airdrops started.

If you looked at like, you know, the way their tokens like that you know that wasn't at a time when this when airdrops were farmed yet or a civil attack and once you know people land on something like the token issuer and traders will sort of arb that out pretty quickly and so it's always a moving target um yeah yeah that was just but i would say the thing I would love to see change is maybe just different dynamics in terms of how tokens unlock like ironically, you know, I want to pin some of this on the SEC here, because I actually think ICOs, all things being equal, we're a pretty good model. Of course, there was a lot of scammy stuff happening in 2017 2018. But having a immediately basically totally unlocked supply that was sold to the general public at whatever price, you know, the auction was able to bear, that doesn't have some of these same

dynamics, where so much of the value is captured in the private markets. And the private market valuation really reflects more, like, who's going to be the highest bidder, right? And you have a lot of dynamics, or especially when you have tier one Vcs invest in a seed or a round and then you get sort of less prestigious vcs following on and just absurd private market valuations that's not necessarily a reflection of how much that token is worth at that moment in time it's just this sort of auction for like who's willing to bid up the the you know the warrants the most yeah um robbie just another quick question on that front. Do you guys have closed door discussions on a strategy of liquidating? Is that confidential? Are you guys transparent about it? When would you consider it irresponsible to sell tokens, not to sell tokens for your investors,

for your shareholders? Sure. So I think when we think about liquid positions, obviously we never want to have any impact on price. So we only consider positions where we could be able to sell into the market and it has zero effect on price. So that's important. So high liquidity is obviously preferable. And I think we leave a lot of discretion to our team.

So we have a digital asset team in-house that actively monitors and manages the portfolio. And it's their job to keep abreast of market conditions and liquidity and all of these other things to make sure that we're basically utilizing our assets in the most efficient way. I guess that's the easiest way to say it. So we don't have a set rule per se. By the way, I just saw the pinned tweet, Joe, that in the last six months, the trend of people mentioning recession is trending lower. So you don't feel bad about jumping in and correcting me.

So I was just going through another tweet that said that spiked recently, but then if you look at the general picture, it's just dropped. I thought it spiked today. Have you looked at it in the last few days, Joe? This is over time. I mean, yeah, I'm not going to jump in and correct unless I've got some data. No, please do.

Please do. I just looked it up because, I mean, with recession, people have been talking about it. But I just wanted to see, like, hey, how many people are talking about it and how many people are talking about it over time? And it looks like we're going to potentially get this soft landing here. But I'm in your camp with, you know, if you're a builder, or you're a founder, like, does it does it actually matter, you know, where we're at, and like a lot of the greatest companies are built, you know, the market is down and in the middle of a recession when your backs up against the wall. And so if you're a builder, or you're hustling out there you know it actually almost doesn't matter what where the economy is or who's in office right all that matters is like your intuition and your ability to work hard and make

things happen yeah um by the way that's your last time on stage i appreciate you being here but last matthew i want to ask you kind of final question just for the audience and for the audience do you let me know what you think of those discussions. So when I think there's not much happening in the market, Scott is great digging into different small pieces of news here and there that are relatively important. I tend to more have a general discussion about, you can call it alpha, but more strategy. I would love to get your thoughts on both types of spaces, which one you prefer. So that's just for the audience. Put it in the comments, bottom right corner, so me and the team can go through it.

But yeah, Matthew, your strategy, your thoughts on the markets? I thought just mentioning that, I think all the comments today have been really valuable, especially for new people, founders, et cetera. I just think it's amazing what the spaces offer here with experienced industry professionals talking about how they allocate capital and that kind of thing. Very, very useful, I think, for everybody.

Regarding the markets, I'm really pleased. Adwan, just before you tell us about the markets, just for my team that's always listening, make sure you clip what Matthew just said and send it to Scott so he listens to it when he's back from his boat trip. Just would love to put that in his face. But yeah, go ahead, Matthew.

Thank you. Yeah, I just saw the S&P just tick above an area that had in the spotlight. My thoughts were if we tick above this level, which was 5,400 and we're 5,401 right now, then that would give me confirmation that this was just a correction. So the correction that we had with the unwind of the yen carry trade and with those bad unemployment figures out of the US, so the bit of a sell-off we had there does appear to be just a correction now. I think it's confirmed. And I do believe we're going to be heading for a new all-time high for the S&P 500.

And we'll certainly head up and challenge all-time high for Bitcoin and other assets as well. So looking really promising. The earlier speaker I heard say he doesn't believe in EMH. Well, I've done, I actually did, most of my master's degree was focused on efficient market hypothesis. And I would absolutely agree with him. If EMH is true, then all fund managers need to go home. There would be no industry whatsoever. So there are definitely exceptions to EMH. So that's efficient market hypothesis. So the fact is,

the practical fact is that things like fundamentals can be can be predictive um certainly inside information which is the highest level um of emh can you know you can make profit from it so effectively markets can be predictable and and that's why there's no certainty it's all about odds and risk reward etc etc but very exciting market for crypto i think we're headed higher. And I think the news today, PPI news, lower than expected, will give us some more fuel for the fire to push things higher until maybe later this year. And someone mentioned about the risks. There are risks everywhere. We need to be cognizant of all of those risks, especially geopolitical. But the thing is, they're still somewhat black swan. We can predict them in advance but we just have to be aware of them and try and try our very best to monitor them

things could and probably will at some point flare up in the middle east and obviously there's massive concerns over russia ukraine and we can't be we can't turn a blind eye to them we definitely have to be uh trade cautiously um to you know and be aware of all the risks out there both geopolitical and macroeconomic i appreciate that update dan anything to add uh yeah i couldn't hear earlier when uh jonathan and uh as i was speaking so i'm not sure if i missed that's why i dipped out and came back um just um good to good to Matthew, a fellow Midlands, it sounds like. Yeah, I want to say, did anybody read the latest from Arthur Hayes today? It's always worth reading his latest updates.

He's predicting a bit of a rally in September onwards and then in 2025, as always. And he's been quite consistent about this. He says it's more an idea of the amount of liquidity available in the market. And he goes through, it's quite long, and some of his stuff can be quite complex. But effectively, he believes that the Fed and the Treasury are going to release a lot more liquidity into the market in the run up to the election. And then following the, I think, the debt ceiling in January, February 2025. So I think if people were discussing earlier what's the biggest impact to pricing and to market, I think it's probably that.

But if they release a lot of liquidity, that must be in response to something. So that's telling us that we probably are headed, there's going to be serious dangers, warning lights flashing for recession. That's the only reason they'll be pumping money into the market, surely. Potentially. It's also the election cycle. How much do they want to help

Kamala in there? And then in 2025, with a new debt ceiling. I think you have to look at his article. It's very good. But what is he predicting, Dan? So he's essentially predicting a run-up starting in September,

so next month. And what is he saying about next year? I mean, it's all a bit finger in the air. It always is. It's all a bit finger in the air. But it's like September through to August, Arthur Hayes is predicting. September till August till next year?

No, no, September till October, he thinks. With the election being in 2025, he said it will start running up probably in September. He said he'll be looking to sell into strength through October. Sell in October? And then sell out through the end of the year. Okay. Yeah, and then sell it out until the end of the year and then deploy again uh you know with size in january february 2025 um i it sounds like too much hard work it is i'll just yeah yeah that timing is it's just a fucking nightmare but then but how long is he expecting

this market to last did he say that in his letter this bull market cycle i believe he he still had a million dollars for Bitcoin as his target. In this cycle? He talked about some, yeah, I believe so. Through this, yeah, I believe so. He said he's looking at something like 3.5 trillion of liquidity on the Treasury General Account and the reverse repo. So 3.5 trillion of liquidity that could come into the market. Other Hazus posts are quite complex at times.

Look, I'm not a spring chicken, but I find them difficult to understand. But if you stick with them, he is without a doubt the best person I've read in crypto. So to kind of oversimplify it, bull market, obviously, you know, plus or minus in the next month or so um for about a month and then he's selling to those strengths and then he'll wait till january and then uh you know start going in heavy in january for for for you know big all-time highs next year he thinks and he thinks in this cycle bitcoin will hit a million he thinks i'm not sure about that point he still said he did say an article my target remains one okay for bitcoin could be the cycle could be in future kind of yeah it kind of degrades from the rest of his stuff because the rest of his stuff is very good um but yeah i think he said basically up through september october and then 2025 he thinks

you know that this cycle will kick off which kind of aligns with what kobe has been saying as well um if you look at what kobe was saying the other day he doesn't think that this cycle has kicked off yet he thinks this is still just coming out of the bear market that we haven't really seen the bull market and we definitely haven't seen the top of the bull market and he thinks it will start in 2025 um maybe january february i don't know exactly but that's the kind of stuff uh music to my ears you know is this crazy how people are so split crypto twitter and i ignore crypto twitter i only know what they're saying based on what we talk about in the space, what Ryan and Scott talk about. And this is crazy, the fear there's there and people talking about this bull market being over.

Just ridiculous for people to say, considering we're without. We've got an ETH. I've got Bitcoin ETF, all the inflows. The pivot from the Biden administration. The SEC losses that they've had over the last few months so it's just um and that's moving away from all the innovators in the space it is it is it's ridiculous and they start getting crazy bullish but dan but dan think about what you said too you're like you said his one million dollar price target kind of invalidates a little bit or degrades from it it's you know you

just said hey this is the smartest best writer in all of crypto and then you said but this one little piece i mean during when when covet hit you know bitcoin was to 4,000 now we're at 60 that's a 15x we're sitting at 60 1 million to 16x right like it's not you know it's not that crazy to think yeah it's gonna it's gonna happen and that was only five years ago the thing is that rather than long term sorry like i've been in the space since like i've been in crypto since not as long as a lot of people but since like 2015 um and i remember thinking 10 000 is like yeah maybe i don't know but if you would have asked me in 2017 or 2018 if i thought a hundred thousand dollars was going to be possible. I would have said, yeah, but also part of my brain would be like, yeah, I don't really know if that's like...

It's almost like I'm thinking about a million like I thought about 100,000 back then. But there's a lot of money left to go into this market. I mean, just think about how much can come in once fund managers, retirement planners, and all that jazz, once everybody's on board. I mean, there's trillions in the market cap, not there yet. So a million might even be too low. This is why you want to always stay invested. And even Warren Buffett, he's always moving money somewhere. He's never really sitting fully in cash, right?

You need to stay invested. Do you think that your grandparents that might have bought a house for $15,000 and sold it for a million dollars living somewhere near the coast of California, not even the nicest house, ever thought that they would have that type of appreciation? It's like asset and risk assets. They just go up. This is the game. Guys, I was in crypto in 2017. January 2017, I forget the prices. I just literally Googled them. That's how long it's been.

And that's when I launched IBC in 2017 Bitcoin started the year at $1,000 in 2017 7 years ago $1,000 so yeah a million

and I think Dan I think you believe that a million dollar target is not far-fetched but it feels like it's like exactly the time aspect of it it feels like it's like exactly the time aspect of it it's like it

feels like it's like people they want to vote for biden but they're just too scared to say it or people in the old days wanted to vote for trump even now but before uh against hillary they voted for trump but they never want to talk about it because like people just think that they're kind of there there's that misconception about it that there's that misconception for anyone that puts a high price on bitcoin that he's like oh too crazy let's not take him seriously um and and i think that's uh still there but it's diminishing as we keep hitting pretty crazy numbers. But just going back to the, yeah, everyone's bullish here. I'd like to get some, I'd like to get some bearish people for tomorrow to kind of have

that other side of the coin. But there's just way too many bullish signals right now. And I have discussions with my team. Our chairman is a traditional finance guy. And he hasn't been in crypto for long, about four years, I'd say, three, four years. And I keep having debates with him. I'm like, hey, man, look at the returns now.

And how well the business is doing now. I don't think we've even started the bull market. And I'll get him to listen to this space recording to kind of get an idea of, of, um, you know, other arguments that you guys have made that this bull market hasn't started. But Dan,

if you can send me through that letter by, um, uh, by Arthur Hayes, that'll be, that'll be great. I actually just dropped you a, a DM a minute ago.

If you're on, uh, is that on WhatsApp or Twitter? Twitter, I guess. I don't know. Yeah. Just cause yeah,

that's the best way. Um, cool. We should have probably talked about the, a lot of people want to talk about the Trump interview, um, I guess. I don't have Twitter. Yeah, I'll send it to you now. Just because, yeah, that's the best way. Cool. We should have probably talked about the – a lot of people want to talk about the Trump interview with Elon. We talked about that yesterday. You can check the recording, but I think it's just not relevant to crypto, so I skipped it. But let me dig into Cartesi. We're talking about projects that are not doing too well.

You guys are one of these exceptions. You launched on Binance. I don't know when you guys listed, but you guys are doing extremely well. You're sitting at a market cap of over 100 million. So maybe you're an example of projects that are, despite the bear market, getting enough demand for the token, for the actual utility. Let me see. Yeah, price like you've been around since 2020. Okay, you've been around for a while. You're pretty mature. But yes, very healthy chart I'm looking at now. It's good to have you guys on stage and I'm glad to be on the cap table. How are you guys? Hi, everything's good here from my site. Jean speaking here from

developer advocacy unit. Thank you for the invitation. You're French? No, no, I'm Brazilian. Maybe the accent is a little bit. Yeah, yeah, you got a French accent with a Jean French name. You're in Brazil right now? Yeah, I'm in Brazil right now. I live in Lisbon, in Portugal, but I'm currently in Brazil for this week. Nice. Did you hear I had Bolsonaro on my space a while ago? I'm very known in Brazil and unfortunately can't go to Brazil after all the trouble I've made against the government, me and Elon.

So, yeah, I'm pretty annoyed about that that but let's kick off a discussion about cartesi no pleasure to have you um let's discuss your project um first um i'm curious just before digging into what cartesi it does um we were talking earlier about um i think it's me and robbie and others were talking about otc deals and we've talked about this on stage a few times. Do you guys do many of those? I'm not sure if we did one with you. I know we're on your cap table, but I'm not sure when we invested. But do you guys do many OTC deals with VCs?

And what are your thoughts on it? You know what I mean by OTC deals. You sell a bunch of tokens with a short lockup, short to medium range lockup period with a discount. So you get some capital and then those vcs are locked up for a certain period of time sometimes they offer you value in return do you do a lot of those deals what are your thoughts on them um specifically me uh since i joined cartesi at least i don't think we did any of them uh not that i not that i remember. I think that since we launched our token, we haven't managed this much strategies

in terms of gathering value for the token in isolation. But yeah, I think it really depends. It really depends on the use case. For now, we are in a good spot where we are able to fund and invest our own projects. So we are not looking, I don't think we looked so much into it.

Cool. Yeah. I'm just, if you hear me typing, that's typing about you. I want to reach out to you and say, hey, let's do it for you. Let's dig into what Cartesi is. I'll let you give us a quick overview and I'm going to probably ask you a question

to kind of oversimplify it for the audience, for anyone that doesn't understand to make this about you guys, but also educational for the audience. Yeah. Okay. So, in general, what we do is we created this Cartesi machine, which we call, which is an extension, you can say, of the EVM. But we managed to run Linux on it. So you can basically plug our system to the EVM, and you are able to run more complex solutions

and be able to bring everything that you have done in the Web 2.0 so far to the Web 3.0, right? So essentially... Explain that again. Let's start again. I want to make it very clear. you start again exactly what what you do okay so we have a roll-up framework that acts as an execution sorry we have an execution layer that acts through a roll-up framework so you can compute compute and execute more complex solutions than you would be able to in the Ethereum virtual machine.

Can you give some use cases for people who are not technical, where that could be implemented? Of course. So in the Ethereum virtual machine, you are very limited to what you can compute there and what you can execute. You don't have some basic functionalities like calculating logarithms, for example, is extremely complex. So if you want to perform harder tasks like creating a verifiable game, or for example, running an automated market maker verifiably or even running machine learning models, which we did for proofs of concepts, you could do on Web3 through our

machine, which would be something that you're not able to do on Ethereum by default. Okay, interesting. So let's dig into, when I said use cases, you've talked about technical use cases. Can you talk about various applications? Actually, no, can you first before that? Why is the EVM right now? Why is it limited in being able to allow for that level of compute? And then how do you guys solve it? And obviously, the second question will get a bit technical. So let's focus on the first one first. All right. So why EVM is limited? It's because the way that the infrastructure is designed, you do have to separate a little bit the computation from the logic sometimes.

And that means if you're running everything on every node, you cannot require the nodes to be extremely expensive to be run, right? That way, not every application would be able to run in every node and you would limit the bandwidth of, you would limit the execution of your applications and you would also limit the bandwidth of you would limit the execution of your applications and you would also limit the bandwidth of the network because if every compute every node in the network is running every

application again you are kind of stuck in a queue waiting for other applications to execute so you can execute your application that's yeah so there's Ethereum. There's various L2s that kind of solve for that, there's various roll-up solutions that are trying to solve that same problem that you guys focus on. What differentiates Cartesi? The thing is, the first thing is we automatized and streamlined the creation of AppChains. So essentially, you only host or validate an application if you have interest in it specifically. So it's not what we call a general purpose L2. It's an app-specific L2.

An app-specific L2 makes you select the specific applications that you want to validate, and you validate just those. That means lots of the nodes are free to run specifically what they care about. It's kind of like partitioning the blockchain in multiple smaller sectors. Yeah. So, but what about all the security? One thing that gets brought up as an issue is security when it comes to these different roll-up solutions. Is there anything specific that you guys have done to kind of counter for that risk?

Yeah, actually, well, when we talk about security specifically, there is this whole history of security, right, when everything was more art than science. And then we developed, we started creating a science of security behind it. And we started designing rigorous proofs to give like ironclad guarantees that you can prove that Steam satisfies definitions and some assumptions that we have for security. And then we prove these schemes, but it doesn't mean that if it's mathematically proved,

it's secure in the real world. We have to account for what the real world is capable of doing, even in terms of real power of adversaries that want to strike your systems. And then you have to correctly implement your system to be sure that it's secure. And even if you do have these formal definitions and you provide a way to analyze and mathematically prove

that it is secure, you still have to prove it through the test of time that the implementation was correct. Right. So not only by doing that, we also try to perform this test of times. So we did a throwback to the old ways right now. And more than a year ago, we launched our application on Maynard called Honeypot, where we are incentivizing audit and we are every week depositing assets there we reached 1 million ctsi there already whoever is able to hack it and withdraw it gets the assets for themselves and it's standing strong uh until now at least and i hope for a good while because i don't think it will be cracked at all.

But what we do is the way we design our roll-ups, we not only took our security guarantees inside the roll-up, but we actually are able to leverage the security of the L1 because we're relaying everything there, right? So, yeah, we decided to reinvent the wheel in that sense yeah let me um i'll ask you one last technical question then we'll dig into just your strategy you know you're doing pretty good pretty well um um you know in terms of the performance of your token so i want to ask more about who's backing you guys are you guys listed on binance and what are some metrics um it's going to give an idea of the audience of the various milestones?

Not that you guys have planned, but also what you've achieved so far. Before that, so essentially, you essentially move the computation off-chain. But then, what are the advantages for developers by doing that versus keeping everything on-chain? Yeah, there are some advantages. The first thing is, by the way that we designed our machine, you can develop your solutions in any language and use any resource that you ever wanted to use in the blockchain. So you can use different libraries, different compilers, different testing tools.

You can code in your favorite languages. You can use every resource of Linux. So that means you have a file system. You can manipulate data in a much lower level than you would be able to on the EVM. So that expands and empowers the developer itself to be able to on the EVM. So that expands and empowers the developer itself to be able to do whatever they want. This is the great big first advantage to that. And then there is the second one that the way we streamline the process of developing AppChains. What we did is

we created this whole way for the nodes to interact to each other, in which you can scale in terms of amount of transactions you receive, amount of things that you'll process so much faster, and you can access the data inside our rollups directly. You don't have to wait for the finality time to already have confirmation on many of your transactions. So that also helps with user experience as a whole. It's an easier way for the developer to hop in. And this helps by allowing us to not only bring Web3 developers

that want to do more, but also Web2 developers that want to get into Web3 and new developers that are learning to be able to learn and use all the resources that are out there in terms of tutorials and guides and already implement in their new solutions.

Nice, man. Let's talk about some of the milestones. Obviously, having us on your cap table is an incredible achievement. Congratulations for that. I think that's a massive milestone already, so well done. Respect. Next question that's more interesting is,

yeah, give us some more interesting milestones, some bigger names that you have on your cap table. And yeah, man, I think that would be a good next step. And I'm also interested in your raise. How much did you guys raise? And what's the team like? Some of the more VC-type questions right now.

Yeah, to be completely honest, I'm not the best person to reply how much we raised. I don't know the numbers by heart, but our team currently, we have around, I think, 60 people. We went decentralized, I think it was a year ago. So right now we have the foundation working, which is a smaller group that makes kind of the biggest decisions

and orient and select the grantees that will participate and contribute to the project as a whole, right? And in terms of contributors, we do have 60. We have marketing team. We do have... And we do have teams that help us with UX. We do have teams that help us with PR. And we, of course, have a huge, huge team of developers

that are taking care of many different things that we're building, in terms of... be it in terms of maintaining the protocol or creating things on top of the protocol, right? We do have teams that are dedicated to developer advocacy, such as mine, explaining the product, how it works, how you develop, how you start on it, and teams that are working in the creating solutions itself.

So we do have Rives.io, for example. If you want to access the site, it's a really cool console on-chain where you can actually play games and verify them on-chain. So we do have the Doom Olympics going on where you can play Doom and check your current status in terms of your records against everyone else's. We do have a team taking care of our CLI, so this really helps on the developer experience side. We do have developments in infra. So we have a full team dedicated to fraud proofs right now

and studying how better we can leverage security. So yeah, I think our new milestones are basically advancing rides towards the mainnet, creating a marketplace of validators so we can even, in an even faster and easier way, streamline the process of people hosting their own validator nodes. And yeah, we do have more apps coming on.

Our objective right now is getting more apps to the mainnet, as many as we can So we have a new wave of our grants program Coming on as well Nice man, and who are your Last question I have, I know we've gone a bit over time But who are your investors by the way?

I don't know who are the early investors Let me just check for you, hold on You've got Binance Labs FBG Capital that's it you've got others but they're not listed on CryptoRank

but that's already pretty impressive but yeah Binance Labs already they've played it oh so they've incubated you guys you've been incubated by Binance

and listed on Binance congratulations thank you yeah and you've done an ICU on pools do you know any other VCs on your cap table or you're not that

you don't deal with that side of things I don't deal with that side of things at all I'm deal with that side of things at all. I'm sorry for that. All good, man. All good. Well, congratulations. You guys have built an incredible ecosystem already.

And your metrics are pretty impressive. I was going through them now. You've got a pretty solid community. So congratulations on what you built. It's a pleasure to have you. Pleasure to be on your cap table. We'd love to have you again on the show. Kind of dig into the more developments

that you guys have had. But otherwise, yeah, man, it's a pleasure to have a chat with you. And for everyone else, we'll see you again tomorrow. Same time as always.

Appreciate you being here and let us know in the comments what you would like us to discuss, what topics you want us to discuss tomorrow, assuming there's no crazy news that happens tomorrow.

Thanks a lot, everyone. Really appreciate it. And Cartesi, thanks for coming on the show, guys. Bye, everyone.