The Wolf Of All Streets - This One Thing Could Spark The Next Huge Bitcoin Rally

Episode Date: May 20, 2024

Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto! Dave Weisberger: https://twitter.com/daveweisberger1  James Lavish: https://twitter.com/jameslavish  Mike McGlone: https://twitter.com/mikemcglone11  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code 'TENOFFSALE' for a 10% discount. 👉https://tradingalpha.io/?via=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  ►►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 #MacroMonday Timestamps: 0:00 Intro 1:50 Macro update 6:30 What will drive Bitcoin’s price? 11:00 The FOMO hasn’t started yet 13:40 Waiting for the rate cut 17:30 Bitcoin will delink to the upside 20:30 Bitcoin should be $700K  26:50 Bitcoin’s supply dynamics 32:40 The FIT 21 38:00 SEC & regulation 43:50 Stock market is overvalued 46:20 Tether holds 20% of US Treasuries 47:50 US stablecoins 49:00 Grayscale’s CEO leaves 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.

Bitcoin continues to chop sideways, but has moved up over the past few days, trading around the level of 67,000. But I think we can all agree that we haven't seen the next catalyst yet. But there's an article in Bloomberg today that Bitcoin developers are touting programmability as the catalyst for the next rally. It's something we've talked about quite a bit. Actually, a show on my channel on Saturday from Adan Yago talking about all the things happening on Bitcoin. Can that really be the catalyst for the next cycle? More importantly, what's happening in the macro because it's Macro Monday and I've got Dave, Mike, and James. We're going to dig into all of this and more. Let's go.

What is up, everybody? I'm Scott Melker, also known as the Wolf of All Streets. Before we get started, please subscribe to the channel and hit that like button. Going to bring on the gentleman right now. We're going to put Dave on mute and not let him talk uh mike james say whatever you want about dave right now he's in the perfect got anything that's a great angle we love that angle great angle very handsome so let's start uh let's start at the beginning uh we've had some obviously general news that we can dig into core CPI for the first

time, slightly down. So once again, we're talking about rate cuts and pressure off the fed huge news, obviously the death of the Iranian president. Uh, and that obviously could have some effect on markets. Mike on Monday morning, what are you guys talking about? Um, I, I'd start par chief kind of was with Anand, did mention the death of the Iranian president. But and the significance I see from it is what you're seeing on the screen. Anything that's bad internally in Iran is bad for crude oil prices.

And you're seeing on the screen WTI crude oil is down almost a percent this morning. It did bounce on Friday. So I had some shorts that covered, I think. And now it's just going back down. But it's part of the bigger picture, I think, from what you see for crude oil is it needs some form of catalyst, unexpected catalyst to keep it going up. Otherwise, it's going to be more likely to follow the example of natural gas and get too cheap. Natural gas did. And that's why it went up. And corn, it got a little cheap.

And so that's the trajectory. The key thing that's happening in commodities is we've been making record highs in copper. Part of that might be some hoarding from China. But from our morning meeting standpoint, does not expect the, let's see, what's the headline? Unlike medium for cuts to get pulled back. So we still have cuts priced in the market. Our chief equity strategist is a euro dollar is going to look like it come through, which means dollar weakness, which would be good for things like commodities and Bitcoin. But, and Gina pointed out the stock market is still quite strong, our chief equity strategist. But from my standpoint, the key thing that I see from a commodity standpoint is we're seeing what really turned me on to Bitcoin in the first place.

It's kind of more like, to me, like gold. And gold's the only commodity that really goes up over time and stays up because it has a low elasticity supply. And it's difficult to create more demand and it's monetized. It's a monetary metal. You can look at over the energy prices. So copper's made new highs this morning, both LME and CME. Now there's some nuances here we don't have to dig into, but for crude oil to make new highs, it's got to double in price. It's not going to happen. If it did, it'd crash the economy. And that's where I look at it from a commodities and investment long-term standpoint. You never want to kind of invest in things that people can create more of every day unless you invest in companies.

That means energy equities. And then there's things like gold. And the key thing I like to point out is gold and Bitcoin is obviously still doing well. But it just really scares me the fact that gold's up 17% in the year. S&P 500's up 11, almost 12%. And the rock is beating stock. So I'm still, yeah, I've been early, I've been wrong, but at some point it looks like we just get a little bit of reversion in beta. That's going to change everything. And it's not an if, it's a when. And I just, I'll end with this. I'll just look at, so I pointed out, I just published recently the copper gold ratio i'm sorry the gold copper the gold silver ratio it almost always goes up i only went

back like 20 years when you get the s p 500 over 20 percent above its its 100 week moving average because stocks get expensive and then they go back down that means gold's more likely to go up and then everything else that's related to beta goes down like silver. So this is where we are now. We're stretched and it's just a question of how we get through these. And for now, everything's fine. And it's been kind of, it's a big weekend next weekend.

And what's going to change that? Yeah. The only issue I take with that, obviously, is we're, to me, comparing Bitcoin to the other assets based on just year to date is a somewhat arbitrary date to choose when we can also go back and say Bitcoin went up four times from the lows or

even more. Oh, sure. Right? Four and a half. Exactly. Good counterpoint. The issue is, I see it so much when people do back tests. We all know lessons of back tests. You get it. But Bitcoin is no longer a baby. It is now in space. You can see that in etfs and the biggest etf launch ever we're in hangover from that but it is you know the arb is just picking up all that best performance days are probably over but it still has the big picture defining a definable diminishing supply increasing demand adoption the problem is it's just don't we cannot um extrapolate 10 years of data from something that was just started you can maybe last few years and the key thing i'm worried about is just since 2021 it's still kind of

underperforming gold and it's it's those those peaks not underperforming but those peaks versus gold and sp500 are have been declining um but overall it's just to me it's it's that everything to me it's about if and or when we get a little bit of backup in beta. And until then, things are fine. Yeah. James, I want to ask you about something then. Since we touched on Bitcoin, we have the title. This one thing could spark the next huge Bitcoin rally. In this context, it's something we've talked about quite a bit.

Bitcoin developers are touting programmability as a catalyst for the next rally. Like I said, there was a whole show on it on my channel. It's something I'm really trying to catch up on. But we see this sort of Cambrian explosion of interest in doing things that were done on other chains in Bitcoin, right? So A, I guess the first question is, is that enough to really drive this? We know it's helped miners traditionally tremendously. The other question, because he talked about the ETF, I was shocked to see this.

After all of these filings that we just got, BlackRock's spot Bitcoin ETFs over 400 holders is mind-boggling, according to Eric Balchunas. He said he would have been thrilled if it was 20. And we have 400 institutions and companies that just filed in 13F season that they're in some way exposed to BlackRock's Bitcoin ETF. And that doesn't even include the rest of them, right? That doesn't even include all the other ETFs that people have exposure to, including 0.72, who I believe only owns Fidelity or Fidelity, right? They own 77. So that's not even included. And you're talking about Stevie Cohen from 0.72. I mean, price may not be reflecting it, but there's a lot going on under the scenes, behind the scenes, under the hood. Well, there's a ton going on behind the

scenes. We are seeing, like you're saying, the maturity of Bitcoin coming through, you know, because people are realizing that this is the strongest time chain out there and they're wanting to build on it. And that makes sense. makes perfect sense you know the immutability of uh of bitcoin is i mean that that that puts in a position that people want to build on it what they do with it i mean like i'm i'm kind of i wouldn't say agnostic but you know um there's a lot there's there are a few camps there but uh you know just just looking at the like like you were saying, the institutional investors, we talked about this last week when I was in the, the DC, uh, the blockchain, uh, you know, the, when we were up in DC trying to explain to congressmen and

senators, and we had the conference and talk through all the issues. And I was on a panel actually talking about the ETF adoption and how it got created. And one of the things that comes to mind when you look at that list of investors is that it is startling. And the reason it's startling is because it still takes so much time for each of these investors to get comfortable. You know, they they'll have one or two people that are centered around an investment vehicle that are ready to invest in Bitcoin. Yet it takes a number of people above and around them to agree to let them to allocate to this separately or to choose a part of the portfolio to allocate to. So to have that many investors, that's great. We're going to continue to see 13F filings and we're going to continue to see more and more institutions that are in this.

And I saw something from Jim Bianco that was kind of trolling Bitcoiners or something this weekend about how they're looking for this gold casino coin or something. I don't know. I didn't really read through it carefully. But he's basically saying that the people who are involved in the ETFs right now are retail investors and hedge funds and fast money. And they're looking for a little juice just like they were from Kitty and GME. So I disagree. I think this is the adoption, institutional adoption of investing in this. And I'm going to reiterate, I was wrong at the

beginning when these were launched. I thought that we were going to see a lot more institutions coming quickly. And I discounted just how long it takes for them to get up to speed operationally and functionally to get there. But now talking to them and listening to the comments from meetings, like Bitwise was on that stage with me and Catherine, she was saying, look, this is going to take a while and it's encouraging the meetings they're having because they're interested. The institutions are interested and they're asking questions that have to do with the settlement and the custody. And like, how do these things really work? They want to make sure they're checking their boxes

and it takes time. But we're going to start seeing some big names come into these ETFs. And then that's when the FOMO starts. The FOMO has not even begun. I mean, it is just barely, we've just barely entered the stage, in my opinion. Yeah, I agree with you. I know we're waiting for Dave. I mean, Mike, what do you think when you hear about it like that? Outside of the macro and fastest horse in the race, and maybe it's a leading indicator and all the obvious things, does any of this move the needle for you? Like when you see how much adoption there is? I agree with the big picture all completely. And so I'm just, as we're speaking, I just pulling out the latest flows.

There's still negative ETF flows in Bitcoin this month. And there was almost 600 million of outflows last month. So yeah, I agree with James completely in the big picture, but he knows it better than I do. So it's just one thing is you learn this business, you trust those who know are in the weeds and know it. But I want to give you one example I'm concerned about that happens a lot in markets. And that's when everybody agrees in the macro big picture, be careful of the trade. That's a headline from my colleague this morning, Javier Blas. He was talking about copper. Copper's boom story has been truth and much hogwash. I'm not completely, I know other people have compared Bitcoin to hogwash, to Bitcoin, but I hear this a lot. There's everybody who's learning and getting

to copper space are saying the same thing. Okay. It's hard to create more of it, and there's a lot of demand picking up. When people say the same thing and you see record highs and you see managed money net positions way long, you look at it as a trader. I'm like, okay, well, as an investor, I might be looking at kind of nitpicking. As a trader, I'm not going to be buying that. An investor, you've got to wait for hopefully investors don't buy it and then get slammed by 30%, and then it goes up. That's what I'm concerned about.

To me, the bottom line for me and everything I look at, and that's Bitcoin, copper, anything that does not have a beta to beta, and virtually everything does except for gold and treasury bonds, is I can't ignore that, that we're 22% above the 100-week moving average and S&P 500. And if people are willing to put excessive risk online, good luck. You're not supposed to do that. You're supposed to say thank you. That's what I'm waiting for. Let's talk through that for a second because really what everybody's doing is

this week is so quiet. All we have this week is a bunch of Fed heads talking. There's just nothing going on. We had that kind of positive. Dave, what are you doing there, buddy? We had a kind of pop hey what are you doing there buddy we had a kind of you know inflation print the lines are distracting me so i can only imagine they're distracting you so so you know i i think everybody is on they're just on fed watch now and waiting for these rates to be cut how do do we know that? Well, the US stocks,

the S&P are trading, what, Mike, 26 times PE? Yeah. And so, and I read something in Bloomberg just before we got on. It's like, it's the highest in developed markets, you know? And what's interesting about that is that the follow-up comment in that article I read was that retail investor bullishness isn't yet extreme. It's kind of at that 70 value, which is it's not extreme yet. I mean, it's getting there. It's been ticking up. So that's the interesting part. And so what I'm watching for this week,

and I think that if this is a sentiment of the market and I believe you guys, I want to hear your, your opinions on this, but what I'm watching this week is, Hey, look, if, if these fed, if these fed officials come out and they're more hawkish, I don't think it really does much because there's only, it's less than two rate cuts that are, that are pricing to market right now. Right. So if they come out, however, more bullish, I mean, more dovish, that's bullish for the market. And I think that the market will react a lot more. It would have a lot bigger reaction to the upside than it will on the downside.

And that's the interesting part. I don't, I think people are kind of in a holding pattern here. And that's a significant part of where we are in this rally. So what does that mean? That means, hey, look, the things I'm looking for is possible devilishness out of the Fed this week for little reason, really, number one. Number two, we've got a small 20-year treasury auction on Wednesday. It's like $16 billion, not that big of a deal, but I'm watching that. Let's see how that does because it's small. It should do well, right? Especially on the long end of the curve here. If we really believe that rates are coming down, then that should do well. Yeah. I got one comment that

was spilled over today. I like to say, okay, I agree with that. Firstly, first thing about the Fed is it's silly for the Fed to even consider easing with inflation above their targets and massive speculative frenzy and record highs in stocks and cryptos and copper. And so that's just silly. You don't do that. And if you do, you should go down in history as a person who helped accelerate the inflation try tried to squash. It's inconceivable to me. It's just the lessons of Benjamin Israel. What we anticipate generally doesn't happen.

It's just silly. I mean, we know this started in 2019 and 2022 that we started pricing for cuts, and they still hike. So to me, that's just not going to happen. But the market's still got to believe what it's got to believe. And the Fed just doesn't want to crash the market. But it's just not going to happen. It's just dumb. Why would they do that? So I don't know.

It's just an entertaining part of where we are right now. Can I go through four different things that I've heard so far this morning? I was hoping we would get seven to eight, but we'll accept four. First, we're using in Michaelael's in mike's intro that because that it was one incredibly inconvenient fact and he knew it you knew it we knew it and that's why he was saying um and er so many times which is king copper to use the mike mcglone ism uh is generally a pretty strong indicator but when it's not cooperating and it's going up when he expects it to go down, you see what's going on. So obviously, copper's correlation

to the S&P is still alive and well. Do I think the S&P is likely overvalued in nominal terms? Yes. Do I think that we're going to be printing like a freaking mother effer? Yes. And that's why I think that things are where they are. And I think that will Bitcoin be linked to effer? Yes. And that's why I think that things are where they are. And I think that will Bitcoin be linked to the upside? Yes. All of those things, I think, and I'll explain why. You talked about why is the Fed going to act? You said two things, Mike. The first one, I agree with you. They are going down in history as the dumbest ever in terms of monetary policy because they don't have a freaking choice. They are boxed in. Now, they're not trapped in the sense of they can't do anything. They're basically

effectively saying, listen, full employment matters more to us than price stability. We're just going to pick what we say is price stability. There have been, you know, I talked about this six weeks ago, how I saw people justifying, well, maybe rates are contributing to inflation because they're driving up housing prices. We've now seen three. We saw Kashkari start talking about stuff like that. Are you freaking kidding me? These people are all setting up the justification narrative bandwagon for why they're going to do what they need to do unless they want to commit political suicide. They have one presidential candidate effectively saying that they shouldn't be independent and the other one basically saying, do what we say, you're going to get this guy. So any pretense that the Fed is politically

independent at this point is more or less tissue paper thin. So that's what's actually happening. I mean, you know, it's that simple. They can't afford to keep rates high. They're going to try to keep them as high as they can and inject liquidity on the back end to maintain the yen. We've talked about all that. None of that has changed. Literally none of that has changed. And I think the market is basically digesting it. And that's why things are doing what they're doing. I mean, Occam's razor, simple solution is usually correct. The fact is the denominator is expanding. People believe it's going to expand even more. And therefore, in nominal terms, the market will do well. In inflation adjusted terms, maybe not so much, but it is what it is. Last, you were talking about

Bitcoin's utility and why that matters and Iago and everything that he was talking about, which is a great show and people should watch it. The fact is, oh, I forgot, there is going to be a fourth. I want to basically aim a scud at Jim Bianco, because what he said was pathetic. But we'll get to that in a second. But basically, if you listen to Iago, and you listen to that, all the people, whether it's Peter Schiff on down, who say that, well, Bitcoin is just a pet rock or it's just this bullshit, it's not real, understand something. In a digital world, it is highly likely that Bitcoin will have more utility than gold as jewelry in a physical world. Now, the implications of that statement are rather massive. If you come to the conclusion

that we are moving to a more and more a digital world, and if you're not believing that, then you're asleep at the switch, then understand what does it mean to have your store of value have yet something else that people actually want to use it to pay for it for. The implication is it's like gold. As jewelry demand increases, as industrial use in computers increases, gold becomes more valuable. Yeah, it's still mostly a monetary metal, but it makes that pari passu more obvious, which brings us to the obvious. At this current price of gold, Bitcoin would need to be, what, pushing $700,000 to be equivalent? And so when we start talking about it, and I think, and I said it last week, I think my price target for this cycle is 240 or so. We're still not there. We're still one third below because then

gold continues to go up. We're still one third below gold. And I do think Bitcoin can go beyond it. So what does that mean? It means that a D-link is likely unless there's a massive crash, which case pay it all goes to one. Last on Mr. Bianco, what a loser. He put out a tweet thread that may have been one of the dumbest things I've ever seen. To use Mike, I actually quoted you, Mike. I said in a quote of Mike McGlone, this is copium. Because effectively, his thesis, and I don't know, maybe he thinks everyone on the internet is dumb and doesn't remember what he said. But what he said was when the price starts to crack, the outflows will overwhelm

and create more volatility to the downside, which is exactly the opposite of what we saw. And he thinks we're all so dumb that we didn't know that what he said was absolutely wrong. And less than a month later or two months later, he's trying to take credit for not being a dumbass. The fact is what James and I said is that the initial investors in a Bitcoin will be more likely to be long-term holders and less likely to be the people who will just puke it at the first sign. Sure, of course, there's a continuum. So there were outflows. Absolutely. Certain people buy in when they buy an ipo2 they go oh no it didn't go up let me sell but the reality is there are a lot of people who

bought it thinking that it's a long-term holding and it's done exactly literally exactly what i predicted would happen and they're still buying it because we're up at 67 000 that's right even though we've had outflows we're still still like, you know, bumping around near the all time high. We saw some inflows to get this last rally. But look, the truth is the truth. You expanded the universe of people who were able to buy Bitcoin and listen to the story and be orange pilled. That is bullish. He tried to make the argument that all these people would just rush in and rush out and make and trash it and the reality was it was absolutely destined to decrease its volatility to the downsides and the fact that he not only does he not admit that he was wrong but he doubles down

on this idiotic thesis i don't understand anyone listens to this man i mean i would love to debate we could get him ship has the same thesis. I actually even sat. Obviously, I had him when I interviewed him and I sat with him in Dorado in Puerto Rico over a drink at the golf club and talked about it as well. And I do understand even outside of the emotional hatred for Bitcoin that these guys have. I do understand where they're coming from with that argument, which was the point was if a bunch of people start selling all at the same time because they're paper-handed, then obviously it has to go to the open market and sell off in spot and there's no tether in that part of the market. That's the argument that Peter was making. I don't think it's going to happen, so it doesn't matter, but I see at least the basis for it. I mean, sure. I mean, it's like any other financial asset, right? You know, people, there's a herd mentality of stampede. I mean, if the S&P were to drop 25%, you know, in a two day span, I guess the circuit breakers won't let it drop that much in one day anymore. You're going to get something like that. You're going to get a 10% drop in the S&P in a day. Yeah, Bitcoin's going to go down. Of course, it's going to go down. We've talked about why. You're getting all the people who look like Mike and I walking onto the trading floors at a running risk saying, sell it whenever you can. And if it happens on a Saturday, Bitcoin will lead it. If it happens on a Monday, it won't. You know, Monday afternoon while the U.S. market is open. is that the base, if you were looking in first year economics, the utility curve, the marginal

utility curve of Bitcoin has been shifted up by the demand. Full stop. That's what happened. And anybody who would say anything other than that either failed or should have failed said first year economics class. The fact that a person who would fail a first-year economics class is running an economics advisory can only be said to be one of two things. Either he's dumb, and I don't think he's dumb. I think he's a smart man. Or he has an irrational belief, and just like Peter Schiff, that nothing digital, nothing virtual can have value, and is coming up with arguments to justify it. Remember, we've talked about cognitive dissonance in the past.

I was poking fun at Mike for the copper cognitive dissonance this morning. But it's cognitive dissonance. It's when a fact does not conform to your worldview. You come up with every reason to justify why that fact isn't true. And the fact, look, the facts are the facts. I mean, you know, Bitcoin could die if everybody who believes that it's a store of value said, eh, there's something better. Or, eh, we don't really believe in it. I just don't think that's very likely anymore.

That's why I'm so bullish. Let me just follow up a little bit on the facts. And that is, it's when they diverge. And that is the, I have a base case I've had for China for years, and it just started kicking in the last few years. It's been confirmed, you know, it was very much against consensus and now it's not. And I look at things like sovereign bond yield has been one of the key things I've watched my entire career and they're plunging in China. So that's not a good sign. It's a sign of deflationary forces. So typically copper and most industrials markets

will follow that. And the key thing I want to point out, Dave, you know you look at this differently than I do, is as someone, I mentioned this before, you look at a value at risk model. I'm concerned that I look at the Bitcoin S&P 500 ratio. It's at 13. It's been declining from that high, despite beta going the high from 21 and 22, despite beta going higher. That to me is concerning me that this you know fastest horse in the race is underperforming i look at the declining um bitcoin to gold ratio and it's been it's going despite beta going higher and i know a lot of people sit in front of their screens looking they might go this isn't good is it going to catch up or is it going to accelerate in this poor performance and that's why i look at it's what sticks out that it going to accelerate in this poor performance? And that's why I look at it. It's what sticks out that's going to revert back.

And that's why I just point out facts. This is true. My thesis is really simple. It's that there is, you know, we are eating through supply. There's more supply at this level than I expected. We know that miners are not enough. There's not enough Bitcoin being mined to meet ETF and traditional investor demand. We know that.

The numbers are extremely clear on that subject. And we know that the inverse perpetual swap is trading at a discount to spot has done for weeks and weeks. The longer that goes, the more likely it means when there's a rally, FOMO happens and it flips and you get one of these God candles. You get God candles, which is, by the way, I hate that term. It's just everyone uses it. What you're basically talking about is you move into price discovery. And, you know, the supply dynamics of Bitcoin are extremely interesting. But remember, it's still a small market. You were talking about what's the catalyst.

The catalyst is one sovereign wealth fund. I mean, it is exposed as or people realize or find out that they're accumulating and they want it to be 3% of their portfolio. I mean, the state of Wisconsin caused news and big news. It actually turned around for 0.1% of a state pension fund, 0.1. If nobody else followed the state of Wisconsin, by the way, the odds of that, don't take the other side of that bet, Mike. I like you too much. But there will be others. In fact, I think most will end up with some allocation. But the fact is, is just them alone, if they went from 0.1 to 1%, that's a billion dollars of demand. Well, yeah. So let's talk about that because you're going to see more and more institutions do the exact same thing where they have somewhere between 0.1 and 0.5%, a position. And you, you know, you all know, and Dave, you know, probably as well as I do that when you are an investment manager and you have something in, in your portfolio, it's on your sheets and you look at it every single fucking day. You're like, what am I doing with

this thing? It's a 0.1% position. It's a 0.5%. I've got to decide. Am I going to make this a position or am I going to get off the sheets? And I'm going to say that more often than not, that institutional investors who learn about Bitcoin, they see how Bitcoin can help their portfolios. They see how it actually, if you use rebalancing, which they most do, most of them do, like the vast majority of them do, if you're a professional investor, you use rebalancing, which they most do, most of them do like the majority, the vast majority of them do. If you're a professional investor, you're rebalancing. It actually will over the last 10 years, it would, it would push your sharp ratio of your portfolio. If you were just a 60, 40 portfolio up over one. So that, and that's, and so they, they realize that now.

And that's a hard, that like it used to be one to two sharp ratio was pretty good. Now it's like, it's pretty hard to get. So, but you know, that that's the thing is that I think they're just going to continue to, uh, to do their work. And then it, that, that 0.1% position is an annoyance and they've got to deal with it. So Sesco, I had to put a billion dollars on, right? Of course, they have $500 billion of capital, but it's still yet another indication that this is going on. Another thing, one of the things we didn't talk about, or Mike, did you want to respond to that? Sorry. No, you're on the rant. I want to hear the rest.

I was tilting to something that I didn't want to dismay for it too much. Yeah. Before we before we run out of before we run out of time here, something significant that happened last week and we were talking about a pre-call here is that when I was up in D.C., they had that vote to overturn S.A.B. 121. And so what's significant about this is not that it was done. It's that 11 Democrats joined the vote and they basically went against the wishes of President Biden, who threatened to veto it. And Chuck Schumer, the Senate majority leader, went along with the vote to overturn it, which is just the significance of this is is pretty large and so will president biden veto it i don't know it's a coin flip i don't even know if he if he's making decisions anymore who knows but i think that truly i do believe that his his his staff is on His staff, they're on notice now that, oh my God, really?

Some Warren's crypto army, her crypto crusade is putting me in a position now that I have to deal with this accounting rule? What am I doing here? And this rule, though, by the way, just for the record, it's so common sense. This isn't even controversial. Like if Coinbase is allowed to custody crypto assets for companies, shouldn't banks be able to custody crypto assets for companies? It's just so common sense. Right. And so, you know, and so they and, you know, having to put it on their balance sheet as a liability, this is just silly. And so the point is though, look, we're going to keep getting this narrative out of Washington from one pocket. And the question is just how, and I think that

that narrative is weakening. And the reason it's weakening is because we're in an election year and everybody's realized that this is a hot button. Like this isn't a 2028 issue anymore. This is a 2024 issue. Like this has been moved up on the burner, you know? So, and that's, and that's significant. So. Yeah. I think that it's extremely significant. There are two things here that are interesting. The first and we'll find out, forget who is calling the shots. I think I've made my point very clear. I think that there's zero percentage chance that Biden could even spell SAB 121, much less vote on it. So forget that. But the staffers that are in control of the administration act like spoiled children.

Remember, they didn't just threaten to veto. They wrote a memo. And they wrote a memo that had the last line of the memo was beyond idiotic. Beyond idiotic. It said that the reason they want that they're going to veto it is because they think crypto should be regulated, yada, yada, yada. Now, why does this matter? Well, this matters because, first of all, they veto it. It's extremely clear that there are Democrats who are pissed off and they're handing an issue to the Republicans. And it's one that they should not, it should not be a partisan issue. It really should not. Forget it, however

you want to look at it. It shouldn't be, but it is. It has become that way because of Elizabeth Warren. So that's one thing. But what's really happening is McHenry has the votes to bring the FIT for the FIT 21 Act, the FIT, you know, Financial Innovation and Technology in the 21st Century Act to the floor. Now that act is specifically set up to create a regulatory framework for digital assets. In other words, Biden's language in his veto-threatening memo that he sent to the House of Representatives, effectively, the House of Representatives is not just saying, you know, F you, we're vetoing this, we're giving you this bill because SAB 121, among other things, wouldn't allow regulated financial institutions to hold Bitcoin. It would only allow non-regulated ones, which is literally the opposite of what you're saying you want to do. But it also meant,

and I talked to multiple lawyers about this, that with that guidance, it would literally be impossible to ring fence customer assets because it meant you had to hold Bitcoin on your balance sheet as your own. So you couldn't provide customer protection. So it literally was the opposite. It's completely nonsensical. The fact is the staffer who wrote that should be fired. They should take them and do the Game of Thrones shame, shame, shame walk and say, you guys are right. We were wrong. We're sorry. Now they won't do that because we all know, you know, who that would be.

And I don't want to picture the mental image of Elizabeth Warren taking that walk, but really that's what it should be. Because it's literally one of the dumbest things. You went there. What? You went, you went there is what he said. I can't help it. I can't help it. It was just too good of a- It's Monday morning, man.

Bless you, David. You ruined my entire week. But no, the point is that the FID Act, the idea here is to create a framework that will work in the 21st century as opposed to one that was written in the 1940s or the 70s if you look at the last time all the SEC rules that were built and there we we could talk for an hour about things that are wrong in the current rules relative to digital assets and computers basically but this is setting up for an interesting fight Ryan Selkis makes the point that it's really up to Maxine Waters and she it's the sting of Sam Bankman Freed is the real problem here. And so we'll see. We'll see how it goes. It's really very binary.

Either the White House is going to relent and push Elizabeth Warren off to the side and say, okay, no, you're wrong on this one. You need to relent. Or they're going to embrace it and create an issue that could be a wedge issue that would be very meaningful in November. That's the bottom line. It's one of those two things that's going to happen. Yeah, but this is the thing, though. What's interesting about it, though, Dave, and one we didn't touch on is this was an accounting bulletin. This is like-

It's not a law. It's like somebody who's wrote a memo. They're not the ones who are going to sign this into law, right? But they're not. They didn't concede. It was a slight way. This is the president. People need to understand what this is and why Congress got so upset about it and why people are so upset about it.

Normally, when the SEC does a rule or an agency does a rule, it goes out for public comment. It gets enacted, and commissioners have to vote. Instead, they snuck this in a staff accounting bulletin. And basically what they did is they told the banks, listen, this is what we're going to do. We may enforce on you if you decide to hold Bitcoin. We can make your lives a living hell. Now, I can tell you categorically, I have had a half a dozen conversations with people who work at highly regulated financial institutions who have told me some version of the line, yes, we would like to do

X. Doesn't matter what X is in the world of crypto, but we can't or we won't because we don't want to take the risk that on totally opposite things, things that have nothing to do with crypto, that the SEC will make our lives a living hell. Here's the dirty little secret. The dirty little secret is at any point in time, the rules are so Byzantine in the stock market, in the bond market by SEC rules that SEC inspectors, when they come in, can always come up with a finding. Now the finding in most cases, literally most, have no, nobody's been harmed, no allegation of harm whatsoever, technical violation of the rule. It is literally impossible for a bulge bracket firm or a large financial services institution to get a completely clean bill of health without some finding from

either FINRA or the SEC. I have sat through and ran multiple TAMS exams, which are FINRA's one, and the SEC is worse. Every single time they find something, most of those things are things like, oh, you didn't stamp this ticket for the time, you know, didn't timestamp this ticket for a trade. There's one ticket that didn't get timestamped. Your computer had a packet loss and missed this. And so these two databases don't sync up. It could literally be things that mean nothing. But the fact is, and I could tell a story about my, in my own history with Dick Grasasso when he was running the New York Stock Exchange. It's worth actually the story.

We'll do it in a different time. things in crypto specifically because they don't want to attract the ire of the SEC and have them come after them on a myriad of other issues that aren't real issues that wouldn't matter normally, but they just don't want to get them mad at them. Now, you take that in the context of SAB 121, and you have a staff accounting bulletin that every bank sees the SEC does. They now know that if they were to hold Bitcoin on their balance sheet after that, they've basically given them the ability to come after them. And so that's why this was so insidious. It was not done by a rulemaking. It was done in the worst of all possible ways. It's basically, it's sort of like when a mafia boss puts out the thing,

we don't want to go to – don't let anybody – nobody should go to this particular place. Do you think people are going to that particular place? Of course not. Right. And just functionally, though, it's kind of like, you know, the quarterback steps over the line of scrimmage, makes a pass, kind of a trick play, makes an end zone run,

and then the referee in this case, you know, so the three referees are like, oh, that, that, that was no good. But then the head referee says, no, we're going to let it stand. And, uh, that's what it is. And, and just conceding that we're just going to change the rules. Now we're gonna change the rules that, you know, if you want to just have a memo, that's fine. We'll make it a rule. But it turns out that it was the best thing that could have ever happened for the industry. Because effectively, when people looked at it, now you have Chuck Schumer basically telling people they can vote their conscience. And if you think that Chuck Schumer wasn't told by all the banks in New York that this is idiocy,

of course he was. But I'm sure he had Warren in his ear. I'm sure he was in the other ear saying your constituents are in New York. They're banks, John. Don't do it. And this was just too strong of an issue. But the FID Act is a totally different thing. There, it will be really interesting. The betting is that the House will probably pass it.

If they can get Maxine Waters on board, they may actually pass it pretty heavily. And then the betting is Sherrod Brown will bury it in the Senate and it won't come up for a vote, creating a ability for senators that are vulnerable to be targeted. Now, do we like that? No, of course not. The obviously would like to see a real regulatory regime. But the point is it's a complete opposition to literally what the administration put in writing less than two weeks ago. Yeah, that makes perfect sense. Mike, any thoughts or was there something you wanted to pivot to before? Yeah, well, I'll pivot a little

bit. I just want to say that this is one of those things that I think it's the lessons that Donald Trump taught the Democrats is bashing China gets votes. And I think it was silly for the Democrats to push back recently on cryptos because it's going to hurt them in the polls. And then they're figuring that out. It's just kind of silly. They didn't figure that out a little bit before some of this, but to me in a little bit, most of that is kind of my D.I. Let's deliberately ignore because I love when you guys hash it out. Because to me, it's an overwhelming, it's on one to 10, it's at five or below. The macro is so overwhelming. I've never seen it this extreme where you have a consensus that there's a Fed put. Fed puts come when markets are at discounts, not at premiums. I mean, that's silly. And then I look over at volatility. Well,

I look at VIX volatility index and S&P 500, it's the lowest in a decade, but actually since 2007, minus the TBO8, that's shockingly silly. Then you look at the valuation stock market, it's two times GDP. Well, it's the highest since the 1930s. This stuff is a 10. And just a little reversion of that is all that matters. Everything else is not going to matter. And it's going to happen. It's just a question. So I look at for signs of that happening. And to me as a strategist, that's everything. And Bitcoin fits in that space. But it's the overwhelming, I guess, base for everything to potentially just give back a little. And the silliness when it's great. I look at it as an ex-trader. The opportunities are great for traders to put on positions. And I think that's what we're seeing. Like people buying gold in every dip. Maybe a little more Bitcoin. But all the legislation and regulation, it's going to work out.

Unless just the short term is going to just drive you crazy and get Dave on his rants. Well, I mean, look, you and I agree on this. The only issue is, I mean, look, you and I agree on this. The only issue is, I mean, we literally agree. I think the stock market in real terms is overvalued, full stop. I think that it is what it is. And that's because people, you know, the wealth effect is the only thing that's keeping, you know, things afloat. I said, when we started this show, remember when we started the show two years ago, I basically made the point that federal policymakers are doing everything they can to go back to the policy of encouraging asset inflation and trying to mute consumer inflation. And the stock market going up is part of that. I mean, you know, making money cheap so people can overinvest is one of the ways of doing that. I just think that the fact is asset

inflation is what we're seeing here. So you're right in, you know, vis-a-vis GDP, like housing, you know, so I saw a stat this morning that housing is more than, is at historic highs in terms of relative to incomes. Why is that? Why is all of this? Well, it's because the US markets and all our assets are not in a vacuum. There's all these excess dollars awash in the world and people have to buy them and do something with them. And so you get people who are investing in this stuff. People are yelling, oh my God, BlackRock is investing in houses. Well, do you think BlackRock's doing that on behalf of Larry Fink? No, BlackRock's doing that on behalf of actual investors who have dollars that they need to put to work. And that is what's going on. This isn't de-dollarization.

This is a recycling of dollars into physical assets, not into only treasury bonds. That's what you're seeing. You're seeing a tilt there. That's all, nothing more. And that's, by the way, why another one of those Trump arguments you've been saying forever, Mike, and you're right, that crypto dollars, as you call them, which I love that expression, because that's something that probably plays well in D.C. Crypto dollars mean something. I mean, Tether is what, the 13th largest holder of U.S. treasuries, including. We talked about that, too, up there in in some of the offices that we were in.

We were we were making our way through through different offices in Nevada. And they and some of them had meetings with them, you know, and Tether is extremely important to us treasury, whether or not they're going to admit it. Like you just said, they're, they're a top 20 holder of us treasuries in the world, you know,

and that gives liquidity. And what does the treasury need? A ton of liquidity. It's not, they're not the ones making the decision to spend so much. They just need to facilitate it. So if Tether helps them facilitate it, they want that. They're a buyer of U.S. treasuries.

Okay. And I love pointing that out. I was at the Bitcoin Day in Miami Dade College a week ago. And they're all talking about Bitcoin, of course, and Bitcoin. I said, on a global basis, how about his allocate? I'm like, no. The most widely traded crypto on the planet is Tether. And right now, I just take it.

The volume on 24 bases is double Bitcoin. Every single day, I love to point that out. People just, it's not, there might be some de-dialogization from the axis of antagonists starting with China and Russia. But the whole world's gone for dollars through cryptos, and that's less Bitcoin more because I can get access to the dollar versus my melting currency. And then I look at Bitcoin as more like the gold in that space.

You don't ever want to sell it. You don't want to use it to buy things. You use it for investment. That's right. That's exactly right. And so when you look at what's going on in DC, because the other bill, the other thing that people talk about is a stable coin bill. And the sticking point there is, will they insist upon only banks? Which, by the way, is the opposite of if you think about SAB 121, it basically said you couldn't hold crypto on your balance sheet. So

how the hell are you, what are you doing with stable coins, but that's whatever. Anyway, the fact that the question will be, will you be allowed to have a stable coin in the United States with that's fully backed from non-bank institutions? That becomes, that is the real question. I think there's bipartisan support for stable coins to have a place. It's too, it's literally too entrenched. I mean, it's kind of funny in a way, but many institutions like, you know, talking to Franklin Templeton who built the Benji, which is a, it's a crypto, it's a cryptographically enabled money market instrument, tokenized, you know, money market fund.

They refuse to go on a stable claim. Why? Because they don't want to go over that political landmine or tripwire. So effectively, you can invest in it, but you can't use it as a medium of exchange because they put a rule in the smart contract not to let you do that. Why? So that they don't run afoul of regulation. Not because it wouldn't work, but because they didn't want to run afoul of it.

And so there are a lot of people out there in traditional finance who understand the technology itself would be massively useful. Yeah, I think we all agree on that. I want to highlight something with a few minutes left that Mike told me right before we started to hit the tape that I think is worth mentioning. I don't know the information, can't unpack it yet, but not sure if you guys saw this, but Grayscale CEO Michael Sonenshine has stepped down after a decade-long career helping build the company into the world's largest crypto asset manager. Did you see that, Dave? Knee-jerk reaction? You know, at a certain point, you have enough money, you have limited liability, you have a good life. Do you really need the odds of it anymore? Right. You know, has this been planned for a long time?

Has it not? I don't want to make, you know, look, he's going to go off and do something else. He's not, he's not as old as I am. Right. He doesn't necessarily, you know, I don't have that much gray, but trust me, it should be there at my age. You know, I don't want to make speculation about it. We know that the whole DCG scenario had a lot of bad stuff that went on. And many, many, many people have speculated that he knew some of the stuff that Barry Silver was doing. And many others have said, no, he was completely insulated from that. I have no idea.

I mean, look, let's face it. At the core of FTX, Voyager, and all the others was the Widowmaker trade, which was the GMT. We have no idea. I mean, how much was known by who and when and what no it doesn't mean that grayscale did anything wrong frankly i think most people think they didn't uh i don't think they did but who the hell knows does that matter there's some theories about the internal loans between as i said i I said, I don't want to go into it. And Genesis did go bankrupt, largely with holdings of GBTC, which is the same company. Well, Genesis took GBTC as full collateral instead of marking it to market.

When's the last time a company that you've ever seen on a publicly traded piece, asset, took a mark on their book, that was 40% above where it was publicly traded. Where's the last time you saw anyone to do that? James, can you think of any other example? I can think of something called Enron. Fine. Exactly. But for those who don't know, Enron fudged their books and was bankrupt and was one of the biggest financial scandals of over 20 years ago. They basically said, well, we expect clouds to be in this region, so we're going to mark the book up 30%. Right. I mean, effectively, yes, it's fraud. So did Grayscale commit any of that? As far as I know, no, but I don't know. I'm not a forensic accountant. I just don't like the jerk reaction to speculation. I mean, I guess that's probably why the market took a tiny little dip. I don't know why people worry about these things. I mean,

to me, it shouldn't matter, but you know. Yeah. To be clear, I'm not comparing Grayscale to Enron at all. I'm saying that it has happened, but no, I'm with Dave. I don't think there's anything insidious here. He probably wants to sail off in the sunset with a nice big yacht. Why wouldn't he? Whatever. I'm back in a couple of years after he's cleared his head. It hasn't been the most

fun job. I had to navigate against the hostile SEC that was holding back an industry for basically six years. Hostile SEC, hostile investors, hostile potentially parent company, a lot of hostility for him. And now a whole lot of competition in the ETF space. Yeah. And you know what?

You got to give the guy credit. I do. And if you don't, you're asleep at the wheel. He created the first investable vehicle for Bitcoin, full stop, you know, for people to have in their Burbage account. I mean, you know, I told you, I own it, right? You know, I put it from a long time ago. But, you know, so be it. And paved the way for the spot ETFs.

Yeah, and had some of the greatest advertising that wasn't using Larry David and being funny. He did a lot of good for the industry, no matter how you want to slice it. So I refuse to throw dirt on someone's grave who's done that good when we don't know that he's done anything wrong. Yeah, well, what's the risk versus reward of suing the SEC? And he won, but imagine if he had lost. Profiles encourage he did. And he won. And look away, I don't know how many ETFs in Bitcoin. And that's because Michael led the way. That's right. That's right. So if you're expecting me to throw dirt, I mean, I'm not throwing dirt. I wasn't. I just do think it's a big story worth mentioning. Oh, yeah. No, no.

We mentioned it without even digging in on opinion when we don't know the fact. But that's right. Exactly. But I think that, look, we get a lot of stuff in this industry. The stuff that matters that we all talk about are it matters that that we have this this narrative shift from all sorts of comers that says the Fed has room to cut rates. As you know, I don't think rates are the problem or the issue. I think it's liquidity that matters more than anything else. That's it. And I think that we see that, you know, despite everything Mike has said, and I'm nodding my head every time he's talking about China and what's going on there, and

we can't mention China without mentioning the fact that something unprecedented happened last week. We had Xi and Putin get together and hugged it out. People don't understand. That doesn't happen. That is a

very, very big deal in the global geopolitical landscape. It's a little bit of an awkward hug, but. But the fact is, it is a symbol. They are trying to send a message that, you know what? You can't pit us against each other anymore, U.S. We are together and we oppose your economic bullying. Literally, that was their message. You could distill the message into, we don't think the U.S.

should be able to bully us. And then Putin went to the next thing and started to take U.S. company assets that were held in Russia. This is non-trivial. Can I unpack this? I mean, Mike, I'm curious. We're going to unpack the hug herd round the world next week because it's 10 o'clock. Okay. Sorry. Mike, if you have a firestorm 30 second take, have at it. Yeah. The unrelentant friendship changed the world order. It was probably going to be looked back upon as the American vernacular is going to say to Pres presidency is, dude, what were you thinking? And the economist, chief editor, you said the quote was economic incompetence. To piss off your best customers is just stupid.

And he did. Europe and U.S. I'm like, good luck. I mean, that's why I'm looking for a quote. I mean, you've been talking about the unlimited friendship, and I've watched people doubt you. But the hug is a pretty good confirmation. If everybody people doubt you, but the hug is pretty good confirmation. If everybody agrees with you, it trades over and you're wrong. It's just the way it usually works.

That's the way businesses, you have to, it's the way it is. And it's been tilting that way, but I just look at it on a global basis. In bashing China, the world's most significant country gets votes. And the lesson I learned, I've heard it from economists in the last hundred years. If you wanted to excel in economics in the world, you cozy up the U.S. And you want to fall behind, you piss off the U.S. And you just didn't. Good luck.

Just going to do a normal version that Japan did. And Japan's GDP right now, $4 trillion, is the same it was in 1990. Yeah. All right. Well, a lot more to talk about, but a lot less time to do it. So once again, just remind me next week, Hug Her Around the World. It's going to be the title.

And we'll do a Russia-China show, and it's going to be great. Guys, everybody follow Mike, James, Dave. You can literally follow Dave in his car if you have geo-tracking because we've got him every morning in there. That's all we got. Thank you. We'll see you next week on Monday. Actually, wait, next week's Memorial Day.

We're going to do Macro Monday on Tuesday next week, but we'll be back next week. All right, guys. Thank you very much. See you soon. Bye.