The Wolf Of All Streets - Powell's Speech Sends BTC Below $100K | Crypto Town Hall

Episode Date: December 19, 2024

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I'm glad you're here, Mike, because yesterday was quite a day and there's a lot to unpack. We obviously, I think, have a historically bad run on the Dow Jones here. Worse than 50 years, something like that. Obviously, the largest drop we've had since 2001 in the S&P after a Fed meeting. And Powell said exactly what everybody was anticipating, right? 25% rate cuts and inflation is a little bit sticky and maybe we'll be a little slower, but keep cutting rates. And there we go. What happened? I like to look at it simplistically is when markets get this stretched, sometimes it just takes a little minor catalyst for a little bit of profit taking.

And at this stage in the year, most of the buying and selling is done by bots and algos. But you're up 30% in one year. You add $13 trillion to market cap, that's most in history. It doesn't take a lot to just have a little bit of back and feel the questions. What do we do from here? And I think the key thing from it, oftentimes you just wait for a fact, wait for an event and a number to come out or release. And yesterday was a significant event, probably the last cut for a while, which means, OK, you're done with the liquidity. And it was a key thing we talked about a lot on Macro Mondays, the fact that the Fed was easing with the stock market on a record run was a little bit dicey. And they had good reasons because unemployment is going up. Inflation is going down. But now we're seeing the stickiness of inflation, which is the key thing we talked about forever.

When you get stock market cap to GDP this high and you have this wealth effect that highest in about 100 years, yeah, it's kind of silly to expect inflation to go down when stock market keeps going up. So that to me is a key macro where we are now. And it's a key thing that's really changed from a year ago. As we know, there's been the Trump transfer of market application is that Bitcoin might be now the one asset that matters most. Before I used to say, like when I was writing my outlook for 2024 for commodities, I kept saying, well, okay, commodities, definitely the stock market to go up just to stabilize. The stock market went up a lot, yet only gold was the one big one to go up. Now I look at everything I write about metals and energy for 2025.

My first thought is, well, if Bitcoin keeps going up, OK, maybe copper will be fine and stock market will be fine. You know, this risk asset is so in your face now. It's so predominant. It's so part of this new hopium for the Trump administration that the markets don't realize that. Yeah, OK, let's book some profits. And the fact is there's a lot of profits to book. So I don't think yes. And one thing I noticed is there's so much analysts, analytic views. But the key thing I think you need to think about for next year is really no reason for the Fed to cut. Unless unemployment starts taking up a lot and it's been stuck around 4.2 for a while.

And inflation drops. It's unlikely for inflation to drop much more until the stock market makes it because there's so much wealth in the system. And what could be a good leading indicator for that is Bitcoin. And I think also in the macro, people are all looking at Trump. I mean, Mr. Powell can't really talk about it a lot. But we all know that it's just logical, certain for those of us who read the book, No Free Trade by Robert Lighthizer, and you see what he's doing. The new administration has to rip the bandaid off right away, because we're going to have to think about midterms and legacy. And they're not saying it,

but we all know, just get the pain over it and then move on. You can't just keep going straight up in equities without corrections. Now, we haven't had a 10% correction since 2023. So maybe we can, maybe it's different this time. To me, that's what markets started to anticipate and actually getting it from our, like our major equity strategist, the one who really was spot on for years now, it's Gina Martin-Adams, she's our equity strategist.

And she's pointed out the market's just, I'm hearing this from a lot of sources, there's so much optimism for earnings for next year. At a certain point, you're supposed to say yeah great thanks um but so this is why i'm i'm i'll end with this i'm tilting over there's i've never seen a market this much dependent on going up i mean bitcoin absolutely has to go up next year or the implications of it not going up because there's so much optimism about strategic bitcoin reserves and the new Trump administration and how the world's changed that I'm just somebody I have to point out. It brings out my the curse of being a contrarian and still sticking with that, that, yeah, you just don't want to you want to when you see 100 grand in Bitcoin for the first time.

Some of us who are, you know, fell off the horse a little while, but looked for this for years, you're not supposed to be adding too long. You're supposed to be doing the wonderful thing we all hope to have in this business is booking some profits. I think that's what the prudent investors are doing. But remember one thing about what's happened when people all pile on. Remember what happened with ARK? Was it 21 or so? And that put in a pretty good high. There was massive inflows into ARK and Cathie Woods. And I don't think we got back to those levels.

I'm just kind of concerned now that there's just so much hope for this new administration. I think markets just are so lofty. We just need some back and fill. We're getting it right now. And the key thing is, it's also a curse of being a commodities. From a commodity standpoint, you see a global recession really kicking in, global deflation, just look what's happening in China, Germany, in Canada, in Brazil. You just go down the list. So we'll leave it there and see what everybody else thinks. Arthur Hayes kind of made the news yesterday or the day before saying that, for along the lines of what you're saying, that we would, after the inauguration or around that time, see a pretty massive drop in crypto because expectations are so high and they effectively can't be met. I mean, that was basically the gist of what he was saying. Yeah, well, I get that.

I agree completely. The thing that's always bothered me is we we all get the bitcoin thing i mean completely agree with the definable diminishing supply increasing global demand on demand in adoption price must go up over time get it we all know it's still very highly volatile digital risk asset it's the rest of the space i'm so concerned about i mean we used to talk about 10 000 wannabes now there's 2.4 million wannabes and things like Dogecoin and Farcoin with just excessive valuations. Farcoin's at 1.1 billion. Yeah. I'm hoping to be able to write some of this history because that's becoming more of what I do.

And I have to respect a lot of people on this program who are much more doers. I'm just a sayer, which keeps me more neutral. But I'm expecting to write that history. And I have to respect a lot of people on this program who are much more doers. I'm just a sayer, which keeps me more neutral. But I'm expecting to write that history. And I just cannot conceive of how we're going to look back and see these as legitimate valuations for things that just compared to things like being Y million, which is the same market cap as Dogecoin. But that's the way we are. And the key thing is on a year like this, anybody who's been on board and stayed on board, which you have, Scott, complete respect for you for that. You probably both say, gosh, it's a good problem to have books and profits and move on and see what happens next year. Bitcoiners obviously don't often view it as something you book profit on, but the rest of the market, certainly hard to disagree.

Yeah, what we're entering there, that's the thing is Bitcoin's in the real world space now, where that is, these ETF inflows are getting, assets on demand are getting pretty high, nearing gold, certainly on a risk-adjusted basis. It still is a non-income producing asset. It has a great narrative. We all get it.

Those of us have been saying it for at least six years. But it's also the prudent part of investment for-fills. Yes, getting off zero is fine, but those who've been in it and are irresponsibly long, Bitcoin, I love that quote, and have done that well, and then are tempting people um the the it's just the temps of the uh the things i remember hearing in 1999 and 2007 so when you tempt the market gods like mr sailor's been doing with buffett and some of these people are finally vindicated you just have to look back and say yeah gosh please don't do that because it's the uh it's the bad karma of tempting the market gods i'm concerned about keeping it more of an upbeat mode this morning but again it's the uh it's the bad karma of tempting the market gods i'm concerned about keeping it more of an upboat upbeat mode this morning but again it's been a great year here's a key thing i can point out is on a year like this when gold has significant competition from um from stock market

certainly from etf outflows fourth year and low and certainly from i mean is there any person on the planet who who's less than 30 cares about gold, they're all buying Bitcoin, that is still beating the S&P 500. I'm sticking with gold to beat the S&P 500 next year, too. I'm just concerned this is not a good sign when the rock beats stocks. Simon. Yeah, hey, everybody. So yeah, I think it's, it's interesting, you know, the juncture that we've hit in terms of the dual market of bitcoin you've got bitcoiners like myself that value everything in terms of bitcoin and so the concept of booking profits means that an asset needs to have outperformed bitcoin because we don't use we don't use dollars as the baseline currency to measure our wealth.

And so obviously the new people or the TradFi people would be using dollars or what they should be using is gold as their baseline currency to value the performance. And so I think it's a difference in culture. In terms of, yeah, just market breathing, the dollar value of Bitcoin changed. We'd expect this along the way. But I do think that we did get a little bit of help from two financial terrorists. We had Jerome Powell come out and I think quite manipulatively say we can't put Bitcoin on the Fed's balance sheet. And I think it was deliberately designed. And I think it's a little bit of an interesting tussle we're going to see into the future

in this next administration between Trump and Jerome Powell. Because obviously, the majority of people would read the headline and think, oh, that means the strategic reserve asset can't happen. And it was actually very bullish news because the financial terrorists at the Fed not being able to put Bitcoin on their balance sheet gives Treasury the opportunity to build an asset quickly on their balance sheet. Yeah, Simon, sorry to interrupt, but he was just speaking factually. It was literally just the factual answer to the question, regardless of his feelings. I mean, the strategic gold reserve is controlled by the Treasury, which is where the Bitcoin reserve would be, to your point. The Fed was never, it's not really a bank, right? But the Fed was never going to own the Bitcoin and the strategic petroleum reserve, which I think Trump has compared it to, is owned by the Department of Energy, right? The Fed has never been the one owning the reserve asset.

Yeah, exactly. But, you know, if you subscribe to, you know, kind of theories that while in 1933, you know, the government stole everyone's gold in America, because the Fed hasn't done an audit, there is a trail of thought that most of the collateral of the gold supply for America treasury is actually been used as collateral for Fed lending. And so, you know, but it's this difference, I really like hope that people start to understand the core of monetary reform, and Bitcoin exists, because the Federal Reserve hijacked the dollar. And understanding that Treasury can build their own Bitcoin reserves,

and potentially, if the Fed becomes as predatory as it currently is, use that in order to restructure and take back control of the dollar, should the government ever wish to do that. And I think, you know, the headlines will obviously read as if the strategic reserve asset isn't happening, because the chairman said that, and I don't think most people understand the nuance and the difference. Similarly, we had the economic hitmen at the International Monetary Fund negotiate a $3.5 billion IMF loan with El Salvador. Very disappointed that he didn't go forward with the Bitcoin bond, because especially in light of how MicroStrategy has used their corporate bond strategy, I think to have done

that at the sovereign level would have been awesome. But obviously, the economic hitman at the IMF had some leverage. And it still seems like El Salvador has to play ball. And so they managed to negotiate in the $3.5 billion that they had to limit the voluntary nature in terms of legal tender, which is nothing burger, but also wind down the onboarding and offboarding through the Chivo wallet, which also could be a nothing burger because you'd want a more free market. And at the Bitcoin office and the tax haven that they're creating for Bitcoin entrepreneurs in El Salvador, you'd want them to be creating the exchanges but it's clear that uh you know the imf is um intimidated and so both of these surface level look like reasons to sell bitcoin um but actually it's bitcoin working the way it is designed to be working um coming up against the entrenched interest of the federal

reserve and the international monetary fund Andre, you had your hand up. Yes, thank you. So I think I mean, nobody knows whether Trump will create a Bitcoin Reserve, right? I think Polymarket said 35% but we'll see after inauguration what happens but I just want to weigh in on the on the FMC meeting. I think what's most interesting about the big picture big macro picture is i mean financial conditions have been tightening since the fed has started

cutting rates in september right i mean u.s 10-year yields up right by more than 50 basis points in september um the dollar is up right mortgage rates are up so financial conditions have tightened and i think the fed appears to be somewhat stuck between a rock and a hard place because financial conditions continue continue to tighten right since the fed embarked on rate cutting cycle at the same, inflation has not been only sticky, right? You mentioned sticky, Mike, but I think it's been re-accelerating, right? If you look at high frequency indicators, like the inflation metric by a true flation,

it's at a multi-year high, right? It's been re-accelerating. So either the FED does more than is currently penciled in they've just telegraphed one more rate rate cut right in 2025 and it thinks way too low right it's way too less because if they don't cut aggressively right they risk that financial conditions continue to tighten further right dollar continues to go up yields continue to go up, right? And at some point, right, kill the economy. Or they risk re-acceleration, severe re-acceleration and inflation.

Yeah, so I think they're stuck between a rock and a hard place from a big picture point of view. But I think what's really relevant for Bitcoin and crypto assets is the dollar appreciation is bad because usually it leads to a contraction in global money supply. And this is like the most bearish chart that you can see on Twitter right now that's been shared by, I think, Raoul. Raoul's been sharing that one. With global money supply, right, lagged by, I think, 12 weeks, three months. And Bitcoin.

And I think that's actually true in the way that it's actually a serious macro, especially if the dollar continues to appreciate. Dave Weisberger, curious your thoughts. Well, I mean, the money supply lead lag is obviously, that's obviously been a very good indicator. I find it hard to understand how money supply is shrinking when all the central banks are

in the accommodative phase. So sometimes I wonder about the numbers. I mean, I think that I missed the first half of Mike's daily bearish screed, but I'm assuming that he talked about the bond yields both on the 10 year and the 30 year and the backup that that we've seen since the fed cut rates because that's rather telling and is extremely important in my opinion you know where you know we pierced the 4.5 level fairly fairly you know significantly and what that's telling you is while the fed is cutting rates, the world is saying, yeah, they're saying, you know, wait, you know, guys, you know, inflation is a real problem. And that becomes that's really interesting from, you know, from the perspective of if you listen

to Saylor talk, he always talks about Bitcoin vis-a-vis bonds. And I think that from a long term perspective, it's a pretty interesting day when Bitcoin and gold are down, stocks are up and bonds are continuing to languish. It is it speaks more about, you know, unwinding of trends and people taking a pause to me than anything major. But look, you know, it's all nothing goes in a straight line. The real issue is what kind of policies do we get after January 20th? You know, you're going to see ebbs and flows. You know, the last time, you know, we had a massive rally. You saw this exact same sort of chart pattern before the massive rally. I think Peter Brandt and I were talking about it on the spaces yesterday.

I don't see Peter here. But, you know, in terms of this is completely normal. What's really what is interesting, though, is the violence of some of the moves in some of the alts. I mean, Solana looks like it's getting ready to drop below 200. XRP is, you know, was at 260 yesterday is down to 230 now. You know, is that, you know, in percentage terms, those moves are much larger. And so what you're seeing is a lot of crypto money kind of heading for the exits. At the same time, funding rates are well below normal, sitting at like 0.08 on Bitcoin, at least below 0.08 on Bitcoin, as opposed to 0.008, sorry.

So about 20% below what a normal average neutral setting is. So that's kind of getting towards, even though the market sentiment on CoinMarketCap still says, what was it saying, greed now still? That'd be my guess, but let's find out. Let's look. The greed and fear. Yeah, it's still saying greed.

It's telling you that derivative traders are fearful. And derivative traders tend to be the leading edge. Now, does that mean we're going to turn a dime? No. But is that constructive for when the selling is over and there's a rally? Yes. And that's really what people should be looking at. But the last thing I would say, though, is in direct response to the un... Because I guess Mike would say that I am, what's the word, irresponsibly long? Well, probably not actually in terms of percentage, but it's getting close to that. Sorry, someone called.

A lot of people have a different philosophy kind of in between Simon's and Mike's. And I happen to be one of those people, which is have all your liquidity for the next year or two available in what you're going to spend it in, which in my case is dollars. And beyond that, have your wealth benchmarked to Bitcoin. That way, you're never shaken out by a downturn and certainly, you know, be exceedingly careful with leverage. I mean mean to be blunt i use leverage very little and if i do uh it's much lower levels than you know much more like trad

phi style levels than than crypto levels that makes perfect sense uh joe you haven't been on in a while what are your thoughts yeah thanks for having me up. So listen, you had expectations for seven cuts at the beginning of this year, seven cuts. We've got a few, right? But inflation, although has subsided from the 2022 peak, is still closer to three than two. And I think Powell, in his heart of hearts, thinks that the battle with inflation is done. But he can't say that politically. He thinks that this is really effectively over. So we're going to move forward with a cut. But we have to signal to the market, which before yesterday was signaling four cuts in 2025, that we're not going to move that quick.

And you need to realize that and reset your expectations. So we get the price out of two cuts. You know, now we're down to two for the next year, still clearly in an easing cycle. And markets have to react to that. They have to react to the fact that this is not like the prior cycles that everyone who's been trading is familiar with, where somebody blows up, they cut aggressively down to zero, they stop the QE, QT, tightening off their balance sheet, that they effectively just have this really quick pivot because of some shock to the market. Because growth is still too strong. And I do take issue with one of the other speakers, and you can look this up for me if you don't believe me, but one of the other speakers said financial conditions have actually tightened since the first cut. That's incorrect.

Look at the Chicago Financial Conditions Index. Look at the St. Louis Financial Conditions Index, stress indexes, credit spreads. Everything is looking pretty darn rosy, to be honest. The Financial Conditions Index in particular just posted one of its lowest levels in about 15 years, indicating very loose financial conditions. So, you know, the notion that like suddenly we're all really tight in this environment is just incorrect. It's from people misunderstanding what the M2 indicators are supposed to actually measure, which is not real financial conditions. That's why we have separate financial conditions indexes. But putting all that aside, where we stand right now, you have strong growth consistently. You have markets that have gotten way over their skis with respect to valuations. We're coming from one of the best years for the S&P 500 in recent memory.

And you need to reset consistent with rates markets, which are coming back to reality that there is no recession. You know, this argument that we saw during the summer where the SOM rule was triggered and had a recession on our doorstep was a complete bunk. It was not borne out by the data. And you've seen this in the labor market. So for where I stand, this is just a reset of investor expectations. This is Powell being clear that do not expect aggressive cuts into the early part of next year and middle of next year. If anything, you get a couple. And that's frankly what he should be doing given the strong economic data i'm not sure who had made the point uh before that you were sort of uh contending with but i can't remember if it was uh mike or uh maybe yeah if you look at goldman sachs i think they include the dollar index right and this index has been has been

signaling and tightening financial conditions. But I mean, you can cherry pick whatever you like, right? Maybe some indicates are like... Their data too. So here's the chart I refer to. Just so everybody can check for themselves. Finance conditions index for 2024.

It shows it right in the nest. David, go ahead. Then Infra. David Tal, then Infra. No, I'll let Infra go first. He was before me. Let him go first. for that's it shows it right in the nest uh david go ahead and then infra david tal and then different no i'll let him for go first he was before me let him go first i'm not going to pay attention to when the hands go up guys it's nothing personal thanks go ahead um yeah i was just going to make it kind of emphasize joe's point um you know i think i think the move in rates, a lot of it is pricing out of expected cuts, and a lot of it is pricing in higher growth and maybe higher inflation. But I think there's two separate issues. I think there's the move that we've kind of seen since September, and then there the what happens in the near future. So I would agree with

Joe that a lot of what we've seen currently, you know, up until this point is a pricing out of way too many cuts, and a pricing in of kind of, you know, better growth, like he was referring to, you know, the the Psalm rule being untriggereded but i think what's going to be important over the next six months kind of immediate you know near term is where do the the the where does the trend in rates go from here where does the dollar go from here because to joe's point the us is uh spreads are tight um personally i think they've that we've seen their tights. I think they widen from here. I think unemployment is seeing its bottom. I think it rises from here. But in general, the US is way better than Europe. UK is in stagflation. Europe is in recession. China's screwed, just go down the list. And so the rest of the world needs to ease,

they need easing. But because the US is okay, like this, this was basically a lifeline, I think he needed to send now everything is so synchronized, he had to send a lifeline to the rest of the world. I mean, the Euro is collapsing. The Canadian dollar is collapsing. The rest of the world is in severe, severe trouble. And if the dollar... Sorry, that's the story. That is the story. The story is the basket case outside the United States and U.S. growth, U.S. resilience and strengthening of the U.S. economy, which we've seen stronger data. That is the exact story. And just again, one point on financial conditions. Just look back at the chart. Don't take my word for it. What was the 10-year

trading at? We talked about this yesterday back in April. What was the 10-year at relative to today? 4.7. But then what happened immediately thereafter? It didn't stay at 4.7 and it didn't go higher. Exactly. Because of the growth slow down right over the summer that we saw. Right. Right. Yep. Yeah, I think we're I think Joe, I think we're we're pretty much in agreement 95%. Though I think the only point that we disagree is, is the trend from here, if that if these current trends continue in the dollar and rates, that could lead to trouble outside of the U.S., which could sneeze and then the U.S. catches a cold.

David, you ready? Yeah, I'm ready now. You're a real gentleman. I appreciate you. Scott, only because I'm dealing with you, who is a gentleman par excellence. So, you know, I got to go ahead and bow my head to the host. It must be the holidays. We're all being very kind. It is.

It is. Yes, correct. Even Joe's got his Santa on, which I love. But I will say, you know, certainly we have to watch out for what happens around the world in terms of cracks and fissures from this. To summarize, Joe versus Infra, is U.S. strength good or bad at the end of the day? Depends, I guess, on how strong we get and how weak everyone else gets as a result. But the other thing that I'm curious about watching is, you know, Trump definitely defines part of his presidential success by the numbers at the stock market. And he certainly is going to want to see that market continue to go higher. He defines,

I think, a good part of his presidency by that metric. And the thing that I'm less certain about is whether he's going to go ahead and try his best to make real estate great again. He comes from that world. A lot of his friends are from that world. A lot of his financial support came from that world. I don't know if he's generally divorced himself from that world. But if he does try to make real estate great again, i.e. by driving rates down to zero again or somehow getting that type of accommodative environment, there I think we're in a bit of a pickle in terms of how do you pull all that off? I don't without, you know, watching inflation, you know, just moon in a way where the, you know, whoever's chair of the Fed is going to go ahead and have a heart attack. So, you know, I'm curious to see all that on the other side of the coin. I do think that the cutbacks in government spending, the paring back of the size of government generally will be a good thing, and also the pledge to go ahead and pay down the debt.

And then lastly, and we spoke about this for a little while on the show this morning, about the government shutdown. Are we going to go ahead and in fact, get a government shutdown this time? Mike McGlone, curious if you haven't spoken about this issue yet, curious about your thoughts, whether it's more real now than it ever was before. Yeah, sorry. I don't really know how this one's going to work out, but what we should expect the market's not just starting to realize is volatility. I mean, the VIX has been hovering around 13 forever. And, you know, maybe we're overdue for that first 10 percent correction in the equity market, which might be a great opportunity to buy Bitcoin if it drops on that. But just one thing we should expect is uncertainty that Paul pointed out a lot.

And that's some volatility. We're overdue. Amen. and that's um some volatility we're overdue yeah i i again um real estate has to go up for the banking sector to not show it's not rear its ugly head again um so to think that there is even an alternative to real estate going up to to China having to succeed with America succeeding, and to even think that the Department of Government Efficiency could actually end up paying down the debt. These are inherently not possible in order to have a successful America. Structurally, the dollar does not allow for it. And it also needs to cause massive problems globally, because the dollar milkshake theory is a real thing.

The world cannot invest in its own infrastructure, all it can do is buy treasuries. And so just by the fundamental structure of the dollar, there is no alternative other than more and more people to lend to the US government, which is what's calling all this structural wealth inequality on a global scale. would do anything different and that the feds would do anything different than what they're doing it should be no surprise because it will continue until it can't continue and that's the structure of the global financial system that's been set up and so yeah the i don't know what would happen in an environment where you'd allow real estate or stock market to correct itself or debt to be paid down that would be a depression and that's unacceptable um to anyone in congress and so we'll always it will always be wealth inequality and it will always be redistribution of wealth and until it doesn't

work and that's why the next four years is the administration that we would hope has as much tools as possible in order to implement some kind of monetary reform. But unfortunately, no one wants to do it. They just want to pass the hot potato on to the next administration. And Trump may be the one that's being set up for that, or maybe he can pull it off again and pass it on. I'm planning to be pleasantly surprised. I have a bit of hope that we will make progress. I don't know if we're going to solve it. I don't think Simon certainly in the next four years is going to concede that he's wrong regardless of what happens. But that being said, I think we will make progress towards a better end over the next four years. I don't mean to sound like a hopium crazy man, but I do think that there is a chance for reform.

And that chance is Bitcoin. I hope that that's why the strategic reserve is important and the importance of Treasury buying itself a degree of independence from the Fed is, I think, a due process and a prudent process. And I hope America does it because that's what the world needs. And for us, I saw you throwing up a lot, 100 emojis. I'm assuming you generally agree with Simon. Yeah, yeah. Simon's 100% right. So this is why Trump was elected. When the dollar is the reserve currency, it necessitates an ever-growing trade deficit. The way we finance and balance that trade deficit is with debt.

And it's debt for the young people. It's not debt for the boomers. It's debt that we will have to pay back. Those dollars are shipped overseas. Our greatest export is now our debt, the debt of our young people. And then a lot of that money is reinvested into the capital account. And so if you're in finance, if you're a portfolio manager, or, you know, an insurance salesman, or something, you know, something like that, all of this is a strong dollar, a growing trade deficit, all these things are great. But if you're just, you know, formerly middle class young person, you're screwed. And this is the way as he was pointing out, this is the way the system was constructed. This is just this is how it works. And so I, I really hope to David's point, that Trump does come in and really break things and really shake things up. And if we see, you know, to bring it to Bitcoin, if we see Bitcoin emerge as a new neutral reserve asset, these currencies could,

you know, kind of correct towards a more, you know, balance of payments basis, which would mean a much weaker dollar. And so, you know, Bitcoin could fix this, you know, like the like the sign goes. You have to shake your head slightly, though, when you see these consistent rate cuts. And then, I mean, Mike, we talked about this, but, you know, and then TLT goes down and yields go up and mortgages get more expensive. Not really how this is supposed to be happening, correct? Yeah, I mean, the the, you know, I've kind of been arguing, I know it might be controversial, but I've kind of been arguing for the past, I don't know, six, nine months that the sovereign debt crisis has already started. If you look at TLT over gold, or TLT over SPY, or TLT over Bitcoin.

Underperforming everything massively. Massively, massively. It's like, if that's not a sovereign debt crisis, what is? Mike, what do you make of it? Oh, agreed. I mean, I think TLT is getting really cheap, and it's getting cheaper. And I've been wrong on that one. But we still have this record setting stock market. That's kind of the key test. I think TLT is just an ideal put for, you know, the first time we get that 10% correction, the equity market, that's kind of the key test. I think TLT is just an ideal put for the first time we get that 10% correction in the equity market. I think that's what happened earlier this year.

Equities, S&P dropped, what, 8% and TLT jumped like 10%, 15%. So to me, that's the key thing. It's all about the US stock market. It's so expensive. If it keeps going up, creating this wealth effect, creating inflation, yeah, TLP is going to underperform. But here's one key fact for you is if you look at US stock market cap to GDP, yeah, we know it's pretty high. It's like 1.3 or so. And China is closer to 300%. Japan is closer to that. But if you look at total debt outstanding compared to US Treasury and compared to the stock market cap, the stock market cap now is around $63 trillion. The total debt outstanding is only like 60 percent of that that's been trending down for quite a while so it's all about stock market cap i i think um and if stock

market keep going keeps going up why why mess with bonds but that's what's been concerning is i i love that ratio just comparing gold to tlt going back 30 years um it's so cheap the question is how long can it stay there? And I agree it's having an issue. But then I like to point out, if you compare U.S. Treasuries compared to the rest of the world, it's like we've pointed out earlier, there's pretty severe deflationary forces in most of the rest of the world, most notably China and Europe.

And how long can U.S. remain the shining star? The tariffs kicking in next year, I think we're going to have that volatility that might get a little bit of reversion. David? I'd like to know from Infra and Simon, if we actually get a government shutdown, do you see that as being bullish for the market? I don't. I don't. I think it could cause significant pain. I was just going to point out really quick, my favorite indicator is not the S&P over GDP, but the S&P over the average hourly wage. And I just want to put a finer point on what I said earlier. In the 70s, it took about 20 to 30 hours at the average job to buy one share of the S&P.

That number now is 190. So what we've seen, pull up that chart, SPX divided by the average hourly wage, and that shows you why Trump was elected. That shows you, that is picture perfect financialization. This is just a result of the system and the structure of the system. Yeah, agreed. There will never be, I mean, you could get a temporary government shutdown and then it will lead to an increase. It's just a negotiation chip. So you try to use it in order to leverage some kind of change, but that always goes up number always has to go up

no but what i'm what what i meant by the question excuse me what i meant by the question is if we get a government shutdown it's an indication that trump is ready to break things in order to get the economy right um and so also this time just to say david what i was going to say which lends that it also to some degree happened because Musk tweeted. Right. I mean, it's a slightly different situation. Absolutely. No, no, no doubt. He's the most powerful person in the country right now. It's less of behind closed doors, Democrats arguing with Republicans and pork barrel spending and figuring out what concessions people can make. They may have even, I mean, I haven't dug too deep, but it looked like they may have, this was less of a concern or a worry before a simple tweet said, you know,

anyone who votes for this thing shouldn't get reelected. It's a pretty different scenario here. Go ahead, Joe. Yeah. So we were going back, just to move back for a second to the discussion of is TLT or is the long bond cheap here or rich? One thing to think about, and I take no position on this, but is that you're getting a new treasury secretary. And for the last four years, we have had games played with issuance. So that long duration supply has not come to market. So if you're factoring in or thinking about your mental model, is the long bond cheap here or is it expensive? You have to factor in what will the new Treasury Secretary do? Will he follow the same path as Janet Yellen in relying heavily

on front-end issuance or will he return to the historical norm of, you know, not all, you're not all in the belly of the know, not all, you're not all in the belly of the curve or the front, you're sort of staggering it. Because that's a big issue, right? If there's more supply coming, basic supply and demand at the long end in the upcoming administration, that is going to push the long end up in terms of yields. All right, I'm having, as usual, I'm having some mic glitching problems where I hit it and it goes on and off.

Any final thoughts here that anyone want to wrap this, this conversation up? I know that Buzz wants to move on to a separate conversation. Buzz, I think you can take over. Cool. Yeah. We have a sponsor today,

which is a victory chain. Just before we get started, as a disclaimer, Mario's company, IBC, does marketing, incubation, and investing. Sponsors on this show are sponsors working with IBC specifically, and not necessarily Crypto Town Hall or Scott specifically. And we have Victory Chain today, like I said, and it's pretty interesting in looking at your guys' website. It's a layer two for global sports fans. And some of the investors include Six Man Ventures, Delphi Ventures, even Verizon and Coinbase. So Victory Chain, if you're up here, why don't you start us off with the elevator pitch?

Yeah, sure. Thanks for having us. So Victory Chain is a layer two built on the OP stack for the world of SportsFi. And the idea is to create an ecosystem to bring three and a half billion sports fans on chain. So that's kind of the short of it. Why did you guys choose to build on top of the OP stack? Yeah, so it's kind of in line with the way we see blockchain ecosystems being developed. If you look back at one of our partner projects, it's called Fan Controlled Football. They really tried to step into the world of Web3 by bringing a bunch of existing projects into their ecosystem.

So this was one of the first fan-run sports teams. So fans could vote on plays, draft players into their team. And the idea is that they brought in projects like Bored Apes and Knights of Degen and Guttercats and some of the original NFT projects. The idea is that if you can build an ecosystem that can share assets and share communities with other existing ecosystems, then it's kind of this rising tide floats all boats. The super chain right now is looking really nice and really interesting with projects like BASE and a few others building on there. And we really wanted to just kind of lean into

that ecosystem while at the same time building our own economy for the world of sports. It is funny when you look at how much stuff is built on top of optimism, and then you look at where it actually is ranking on CoinMarketCap right now, the 49th highest coin. And you got to think if they sort of launch a coin, it would be much higher than the $2.8 billion market cap right now, that optimism. I'm definitely a huge fan of their tech stack and what they offer to the industry. But another question is just this cycle is seemingly dominated by a lot of new layer twos or even layer ones launching. Like we've had Hyperliquid taking off recently, even Barrowchain launching in the new year. Why another layer two?

What's the exact use case for needing a layer two for the solution yeah i think that speaks more to the way the ecosystem is or the way the blockchain ecosystem is being developed um you mentioned base i think one of the most unique things about it and the reason why so many people flock to it is because of the potential for easy onboarding right coinbase has a ton of users and it's it's pretty easy and seamless to get involved. And, you know, to bring people onto the base blockchain is really just the press of a button. And I think that's why there's so many new blockchains launching, because it's getting easier and easier to get on these new chains. The other thing is that we, you know, because we're building for the world of sports, there's a lot of unique use cases for it. We have predictive burst traffic, so we know when games happen.

We know that there's going to be a ton of transactions during that time. So we can do cool things like scaling, like a scheduled incentivized scale. We do some cool app layer abstractions and this other concept called probabilistic sampling, which we're planning on bringing on chain also. And then the idea also is by creating our own blockchain ecosystem, we're planning on encouraging a lot of other projects to get involved here as well.

So, you know, when you create a space for the world of SportsFi, you kind of put that idea front and center into other developers and other users. And, you know, really hoping to create a space for global sports fans to be able to live and develop and use. So for those global sports fans and kind of the target audience of the chain, what are the key features and sort of the like what's drawing them in to be using it? Yeah, I think that one of the challenges in blockchain today is just how much friction there is still for, you know, normal normies to get involved. And so one of the things that we did was just create this app layer, this kind of Web 2.5 type interface using the control protocol, which is this app layer built on top of Victory Chain

to allow for easy connectivity, easy use case, easy development into the Web3 environment. And then another cool thing that we built was this idea of victory vault. Victory vault is kind of a play on traditional staking. So victory chain will have traditional staking as well. But then we took the traditional staking and instead of distributing rewards evenly across across all stakers, we pick one lucky wallet

and all the staking rewards from that kind of prize pool like staking system will go to that one wallet. So it kind of leans more into this idea of sports about winning, you know, instead of just

like traditional finance. This is a way to really win big even from traditional staking. And then we can actually link in really cool things into that instead of just taking uh taking rewards in the traditional aspect we can bring in real world things so you know uh by staking in the victory vault you can win sports memorabilia you can win tickets you can win uh uh real world experiences and again you know we're really trying to bridge that gap between the two.

So one of the other things, instead of talking about staking in the traditional sense, which is sending your tokens to a smart contract, we're really easing that use case from a user perspective. For things like staking-to-win experiences, I've seen a couple of implementations of this in the past. Oftentimes, it's quite difficult to actually bridge those Web 2 items to Web 3.

How are you guys solving that challenge where if somebody's entering a staking pool and winning tickets or memorabilia or whatever it may be, is that all going to be run by third party partners and some of the partners where on your website they're listed in ecosystem? Yeah, exactly. So so there's the traditional Web3 use cases that we see today, which, you know, you connect with your MetaMask or your Phantom or whatever wallet you use.

And then there's like the more traditional Web2 experiences, you know, where you download some native app and you play some game or you use some, you know, for one of our partners, Control, the Control app, which was used for real sports interactivity. Where you download this app and you can vote in real time on, you know, how to design a NASCAR, a car in a NASCAR race, or what driver is going to drive that car, or which players to draft for a sports scene. So when you're using these traditional Web2 experiences, you can get really cool, you know, it really simplifies how you interact with Web3, and it allows for things like Web3 prizes in a much more seamless way. So the idea is just to kind of abstract all of the complexities from Web3 into a Web2 experience.

Cool. And now that we're kind of at the tail end of Q4 here, going into Q1, maybe talk a little bit about your roadmap as well, like where you guys are right now and maybe what's coming down the pipe in Q1. Yeah, great question question so we're uh we're leaning pretty heavily into an ido um some of our launchpads have already leaked some news uh but we have a few launchpads that uh

that we've uh we're working with um a few exchanges also that's probably gonna be coming in the next I probably shouldn't put a firm date on this but it's coming very soon so I kind of stay you know stay informed on on our Twitter page we're finalizing some testnet stuff on our internally just making sure everything's ready to go and and coming up next year we have a bunch of really interesting partner projects that are leaning more into this interactive sports experience. So things like fan-controlled golf, fan-controlled cricket. You know, I think one of the things that all sports fans have in common is that they scream at the TV with no real logic or reason.

And I think that I can I could heckle Bryson DeChambeau as he's going up in the PGA Tour US Open. And for that last final shot or anything like that, I think you have to be there to heckle him. But but but there's going to be more unique experiences in the golf space uh you know kind of um uh unique more unique experiences maybe not necessarily pga full blown pga events but uh but you know i think that's that's some of our partners and you know we are working with uh with some really interesting sports leagues and uh some some really interesting uh projects in the space. That's very cool. I'm a big sports fan, so that definitely speaks towards me

and certainly a lot of things to look forward to in Q1, it sounds like. And just even looking at your investor list, I see Coinbase is on there as an investor as well. I don't want to want to spark any speculation there, but you talked about exchanges and not being able to talk about it. But certainly a long list of very recognizable investors there. I'm interested just from the development perspective, because that's where I personally sit within Web3. What sort of toolkits are you guys building for developers?

And what kind of stack are you hoping that people are building? Yeah, we decided to look at sports from the bottom up, kind of like what we'd like to see as developers. And historically, most of the sports stats and most of the sports data has been kind of limited to very specific companies and use cases. So we really wanted to open that up. So we're doing things like exposing player biometric data in real time on-chain. Things like real-time sports data, which is through a network of oracles where then you

can develop some really cool applications, everything from sports betting to playable games that are directly impacted by real-time stats. So by opening these things up, we're really leaning into a developer community to get more people excited and developing with real data. You look historically at EA Sports, which has had licenses to some of these sports leagues, and there haven't been a lot of other...

There haven't been allowed to be other developers in those leagues because of exclusivity and license deals and things like that. So we really hope that by opening these things up, by creating more of a decentralized experience for sports data, that we're going to see some really interesting projects pop up. When did you guys start building this? Your investors on the website are pretty impressive. When did the process start with some big players like that and how excited are they right now as

you guys are seemingly approaching a TGE here coming very shortly? Yeah, we've been working on this a long time. To be honest, this started with the idea of interactive sports. So we started with this idea on how do we get more fans involved instead of just yelling at the TV, like I said before. And, you know, fan-controlled football was one of the first projects to lean into this idea of interactive fan-run teams. And that was kind of like where the spark happened, which is, you know,

there's this idea of interactivity and of ownership from a psychological perspective for your sports team, but it doesn't really translate to anything physical. So we really wanted to bridge that gap between the physical, like real ownership and governance. And, you know, with real ownership, you lean more into rewards that the crypto world and the Web3 space are really, really good at. So we've been working on this for a couple of years, really, really trying to find exactly the best way to develop this concept of interactivity in sports. And it started with the control protocol, which was going to be an app layer. And we realized there just wasn't the right environment for us to develop, both from a technology perspective

and from an ecosystem perspective. So then we started really leaning into building our own chain, which is where Victory Chain came in. So it's been a long time coming and we're really excited to get this thing out. Just as a final question here before we're just kind of running out of time, I know for the average consumer,

it can be really helpful to kind of compare in terms of competitors, like what's a similar project. And to me, one that comes to mind is really Chili Z. Like it's a project that I was looking at even dating back to 2017, just being a sports fan and kind of seeing how fan experiences could be done better. There's certainly some things that they've done that I disagree with from a strategy perspective, but it's certainly a longstanding project that's had a lot of success in the market. Could you maybe compare and contrast to consumers who maybe are listening that have heard of Chili Z and what is different with Victory Chain?

Yeah, I think one of the things that, you know, Chili's was a really interesting concept when it came out, like you said, I think it was seven or eight years ago in the first ICO phase. So they told an interesting story, and now it's been about seven years. And honestly, I think that both their direction and, well, I'll speak more to what we're doing instead of what they're doing.

We're really trying to lean more into this interactivity piece, which is to give users not just a surface level interactivity in their sports team. So not just pick a theme song for their team, but really control their team on the field or on the pitch or, or on the court. So things like drafting players on on their, on their teams, things like real time sports betting, you know, leaning leaning more heavily into real interactivity with sports teams. And I think that that's, that's really what people want. You know, there's the, if you look at traditional sports fans are getting older and older. And, and I think the younger generation, you know, is getting more into video games and more into interactive experiences. And, and I think that's what people want. People want an interactive kind of lean forward

experience in sports instead of a lean back experience. And Victory Chain is really leaning to that idea and building the tools to allow developers to create those experiences. It's an exciting feature as well because, I mean, when I look at myself as a sports fan, I vividly remember this past summer screaming at my TV when the Buffalo Bills traded their pick to Kansas City and Kansas City selected Xavier Worthy. And now we're stuck with Keon Coleman. Ultimately worked out and maybe I wasn't the best GM to be making those decisions. But at the time, I certainly would have liked to have put my chips on the table or stake my tokens to tell whomever was making that choice that as a fan group, we should go a different direction. But in the essence of time, what are some calls to action? Like if listeners are listening in,

what can they do right now to get involved? Of course, follow the Twitter account. They're up here, victorychain underscore IO. It's the red logo with a nice V in it. Follow along. But what else? What are the other calls to action? Yeah, you can join our Telegram group.

Follow us on Twitter, like you said. And, you know, if you have any interesting projects in the world of sports, world of SportsFi, please reach out. You know, we're really excited to work with projects and teams in the space and pave the way for, for you know the three and a half billion sports fans that are currently having uh uh let's say more resistance than needed to to bring sports on chain certainly so well i i really appreciate uh victory chain joining us today i i hope we can do a follow-up because i i would really like to put my two cents into the Buffalo Bills draft strategy this coming summer.

But I wish you guys all the success in your upcoming TGE, but also really congratulate you on that investor list on your website. It's incredibly impressive. And it's not too often that you come across projects in this space that have the backing of such recognized VCs. So congratulations for that and wish you guys all the success with TGE. projects in this space that have the backing of such recognized VCs. So congratulations for that and wish you guys all the success with TGE. And hopefully we can host something again, too, because this was fun.

Yeah, thank you. It was a lot of fun for me, too. And, you know, I just got a message from our head of marketing saying, make sure to remind everybody to download the Control app also which is a good point we uh control app is is uh is the one of our partner apps that uh that is uh kind of showcasing uh the idea of interactivity in sports um so uh the control app downloaded it's uh it's another great opportunity to get involved in victory chain it's a good call out so i did just pin up a tweet um which will be there visibly for the the entire um if people were looking to listen to the recording, they'll be able to find that link to your Telegram channel up in the nest. And because I couldn't find a direct download link to the control app, but I'm sure that people can go to the Telegram channel and find that very quickly. So I appreciate you guys joining. And yeah, thanks again. Wish everybody a happy Thursday.

Thank you. Take care, everyone. Have a wonderful day. Take care.