The Wolf Of All Streets - Time To Buy Bitcoin | Fundamentals Suggest Massive Growth To $112K

Episode Date: February 12, 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 WEEK DAY! 👉https://thewolfden.substack.com/   ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $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 ‘2MONTHSOFF’ WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker   ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►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   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  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 1:00 Super Bowl 3:10 Morning call: market update 7:00 Everything is going up 8:00 Rate cuts! 11:12 Credit event coming? 12:30 Growth of wealth & inequality 13:40 Malinvestment 18:00 Signs of a recession 21:00 Lessons from 1993 23:00 Bitcoin ETFs  25:00 We are not gonna see deflation in the USA 29:40 Money printing 34:20 People don’t understand Bitcoin 37:00 Bitcoin is Bitcoin 41:40 Grayscale report 44:30 Inverse perpetual swaps 46:40 Bitcoin ETF inflows 49:50 Gamma and Delta 51:00 Tax bills for capital gains are coming 56:00 Insiders are buying Bitcoin 57:30 Bitcoin cycle 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.

Crypto Quant put out a report saying that the upside target for Bitcoin based on ETF inflows is about $112,000 just in 2024, but that the worst case scenario is $55,000. I don't think I've ever heard a report where the worst case scenario was that price is definitely still going up another 15%. We're going to talk about that, but of course, everything in the macro, because it is Macro Monday, I am back this week. Last week, I left McGlone, Lavish, and Weisberger out here on their own to do it, but I'm back this time to hopefully get out of the way and let them say intelligent things once again. Let's go. to the channel and hit that like button. Going to go ahead and bring on the gentleman. Now I've got Mike and James and Dave heading into the office.

Look, I'm just going to click them up so you can see what's happening with Dave. Then I'm going to take it off. That was Dave. Did you see it? The audio people are going to be very confused, but we just got Dave on his phone getting in and out of his car. Good morning, gentlemen. I hope that all is well.

James, I know the Super Bowl was not far from where you were. Very exciting times. I could see it but not hear it. That was good. That's probably a benefit. That was a bit, I don't really talk about football, but that was a super boring game until the end, which seems to be the new thing here with the Super Bowl.

Did you guys see this, by the way? I literally am just bringing this up. Totally unrelated. Did you see the Joe Biden tweet right after the game with the laser eyes that said just like we drew it up is that an implication that like they fixed the game and travis kelsey and taylor swift like sarcasm because that's what people are saying it's some sort of psyop unbelievable there could be so many ways you could take that but yeah that or maybe he just got hacked because you know, it's the it's a platform for hacking recently. So, my gosh, I couldn't believe that tweet.

Really couldn't believe it. And laser eyes. Are they aware that that's a thing in the Bitcoin community, Mike? Or you think that it was just a coincidence? I don't know. We're going to. OK. OK.

So here's the outside. Here's the outside view on that. So yes, you're right. Then the, the chiefs won the Superbowl, which means that Taylor Swift won the Superbowl, which means that, you know, there's, there's a lot of people speculating that maybe this, this big party will, uh, will push, uh, them to kind of get married. And then they will have Taylor Swift announce a pregnancy soon, and then we'll have Taylor Swift announce a pregnancy soon. And then we'll have a baby boom and the economy just rips after that.

And so there we are. I love it. Perfect. And Bitcoin goes to a million, clearly from the eyes. So life is good for everybody. Gosh. Well, I guess we could move on

to the actual topic of the day. And then, well, Mike, did you have a morning call? Can you give us the review on actually what's going on before we dive into Bitcoin? I want to wait for Dave. Yeah, not much difference. Still, our equity strategy is still quite bullish. Point out the momentum and the breadth is still quite positive in the S&P 500. Thinks market, the large caps will continue to drive.

From Ana Wong, our chief strategist, expect more disinflation. She thought the CPI revisions were just a nothing burger, but pointed out disinflation, deflating expectations for inflation everywhere. I mean, that's not just U.S., but certainly on a U.S. basis. The numbers this week, expect maybe a little bit of an uptick, but a key thing I think I really appreciated from our interest rate strategist, Iris Jersey, was something that resonated with me decades ago about people asking, is this 40-year yield or bull market bonds over? And he pointed out something I remember reading in Sidney Homer's history of interest rates

that might ring a bell with you, James, that the late 70s and 80s was an aberration in spikes in interest rates. And typically they'll go down particularly. And so right now the belly is a little bit and the refundings went well. The belly's a little bit expensive typically. It's usually the place to do well, meaning five years.

So I'll tilt over to what my stuff is what I focused on is severe deflationary forces in commodities. I mean, let's go back to April 1990. That is the price of the first time the natural gas future traded. It closed at 163. And today it's 183. It's only 10% above that level. So everything in my world is severe deflationary. I look at the price of copper.

It just made a new high. It looks like it's heading back down towards three. Four is pretty good resistance. I look at the price of corn, the number one source of food in the planet. It looks like it's heading lower and there's just more and more supply. It's what your typical cycle expect. And then one shoe to drop is next is crude oil. It can easily drop 20 bucks and it's still above the price it was relative to natural gas and copper and crude just, you know, in 2019.

So from my standpoint, I also did a recent update. I enjoyed doing the, taking the average of PPIs from the top four countries on the planet, US, China, Japan, and Germany. It's minus about 3%. Okay, so that's deflation right now. If you divide, if you subtract out Fed funds, it's minus about 8.3%. I only go back 30 years, 1993, but we've never had a higher Fed funds and deeper PPI than that. So there's one things I like to look at. It's a wonderful thing now that a year ago, the stock market was at a 20% correction or discount from its all-time high. And everybody's worried that Bitcoin, we weren't going to get ETFs. And now that it's such a wonderful situation, I have to bring out

my gloom and point out there is severe deflationary forces in commodities from a global standpoint. There's no demand pull. There's too much supply. We have to wait for the Fed to start easing to get a bottom typically. And then there's the key thing I want to tilt over is I really enjoyed your podcast with the gentleman from Tether. I did repost it and quote a few things about the dollar. It's unstoppable right now. And particularly when you tilt over to what's happening in cryptos. I don't see, when you see a hundred billion tethers almost, the whole world is starting to realize that, oh, there's a better way to get

exposure to the world's safest currency, which isn't the best, but it's the least worst of all the other ones. And then of course, there's things like Bitcoin. So I look at from my standpoint, there's little hope for the dollar to go down unless the US stock market drops, because that's what's really been driving it. Unless US interest rates drive, you see all the connection there. So there's little hope for commodities from my standpoint to go up until they get really darn cheap. And they're just not there yet. But we do have something that's going up. And like you said, the dollar, I think, is up 5% since Christmas. But here you are at SPX. I mean, S&P is at 5,026 with the dollar rising, which is really interesting because since Christmas, the dollar has done nothing but effectively go up. Stocks have done nothing but effectively go up. Bitcoin now back at

basically the ETF highs, pushing into the mid 48,000s, it's like we're in the upside down. None of it's making much sense at the moment. Now, and something, Mike, that you said is interesting. You're talking about the depth of the uncoupling of PPI and the interest rates and Fed funds. And so this morning, in just a few minutes ago, I was reading through kind of the headlines and I saw something about it. There's never been so many economists calling for a rate cut since 2010. And so let me pull this up so you can see this um i'll try to share my screen

for you scott sorry to put you like right in the uh in the fire here but so but but the reason for that is pretty simple because if you go back to 2010 we we were basically, what this chart shows is where the great financial crisis was. This is what the Fed uses for calculating the neutral rate for the last 15 years. Which means, and you could see it was negative for most of that time, which means that not only was it an easing of money, not only was it stimulative, but the money was, you were being paid basically to borrow money for the last 10, 15 years. And so that's why people, they need it. They're addicted to the free money. We need more free money. And so it's not about, hey, we can figure out how to expand the economy with innovation across all sectors. And we can figure out how to expand the economy with innovation across all sectors and we can figure out how to make real GDP expansion. No, we know how to expand through market manipulation,

through monetary manipulation and fiscal manipulation. That's what we know how to do. And that's basically what you're looking at. So that is a case for rate cuts, even if things are strong. Well, yeah. See, look at where we are now today. People are very upset. Yeah. Because look at where we are today. They're upset because, oh, my God, we're above the neutral rate. God, how can we do that?

We don't know how to operate in this world. We only know how to operate in this world now. Yeah. Well, we're still in the aberration. We'll have to tilt to Dave because I think he's got some good comments on this. A quote from our economist was, as of the March meeting, based on current trends in inflation, the Fed has room to cut 25 basis points just based on normal, their outlook for inflation. The issue, as I keep watching,

is these rate cut expectations. Every single time you see the stock market go higher, there's less reason to cut rates. And if they do cut rates, they know we're in that problem where they might be goosing the irrational exuberance and more inflation. So I think they're kind of stuck and why be in a hurry to do anything? What are the odds we get a single cut and then a really long pause? Well, I think that's an appropriate thing to do. So there's also been a narrative going around they might cut 50, but why? You never do that unless there's a major reason to.

I mean, number one, typically, is the stock market going down. And right now, there's no reason to do anything because the risk is if they cut more. So that would be the test. You have to have that kind of that, that, that trial. That's right.

And so that's kind of my base case now is it either we get some sort of credit event between now and June or the, you know, third quarter because we keep rates as high, or we do have a surge in real unemployment, not, you know, include like people see right through the government cannot keep hiring most, most of the, you know, including like people see right through the government

cannot keep hiring most, most of the, uh, you know, of the, of that, those job increases, they can't be, they can't be most of it. But at some point, Mike, if we, if we do slip into, into recession, because we hold the rates, hold rates too high for too long, we will see 50 basis point cuts. And that will be, there'll be a surge in cuts. And so when people say, oh yeah, seven cuts, four cuts, three cuts, yeah, there might be two cuts, but they might come in October and December and pretty ugly period. We just don't know yet. And what you're looking in the market, in my opinion, is the market's kind of, you've got two camps of, oh, the Fed's going to cut any day now. And then you've got the camp of, well, there's not going to be a landing. We just took right back off. It's no landing.

Forget about soft landing. Let's just keep going. And I don't buy into that personally. But Dave? Well, I mean, the graph that james showed is is the single easiest way to explain the growth of wealth inequality uh and i think that's really important to understand and it's also really important to understand what the fed is trying to re-engineer because they the pandemic response what was i mean it was completely fucked up on pretty much every level, but one of the ways it was fucked up was they let the genie out of the bottle.

My favorite trick is from Dubai. It's like they let the inflation genie out. So, you know, the fact is that we had decades, decades of inflation that all these idiot economists kept saying, we didn't have inflation. Well, yes, we did. It was inflation in assets and it's what they wanted.

So the rich got richer for three to four decades. And that did a few things. And there's been a bunch of articles about this recently. I've been talking about this since as long as you've known me, Scott, but yet, you know, now all of a sudden, some mainstream economists are starting to agree with me. I mean, I kind of feel, you know, I feel kind of funny about that. The simple fact is that when rates are negative, it allows malinvestment. Now, what is malinvestment? Well, malinvestment is just an economic term, meaning that in their normal circumstances, the investment would not justify have a return ROI, return on investment that is positive. But when you make money cheaper, the amount that the investment has to be worth goes down to be there. So what's the two biggest pieces of malinvestment? Well, piece number one, unless you're in China, in which case it's building buildings that there's nobody to live in. But, you know, in America, it's to do excess automation, automate away jobs and to fund the capital that it requires, the cost that it requires to outsource instead of insource.

Insourcing is easy. You hire one or two people. You keep growing, whatever. Outsourcing, you fire everybody, you take a huge charge, you build a factory or a call center or whatever overseas, and you outsource the jobs. And that great sucking sound that we've had over those 40 years of below market interest rates, otherwise known as financialization, is middle-class jobs being hollowed out, manufacturing jobs hollowed out going overseas. And that is something that, believe it or not, it is exactly what the policymakers want, because what's Goldilocks to them? Goldilocks to them is low consumer inflation, the US being a reserve currency, so people being able to buy shit and being happy with their iPhones and their flat screen TVs and whatever, and the smaller bags, which we have to talk about,

smaller bags of junk food. But the reality is- String inflation? Yeah. What they want, the policymakers want to go back to is asset inflation and consumer disinflation, which is what we had for 40 years, relatively speaking. The reason that it ended was because of two things they did simultaneously, either one of which might have been enough to end it. One, allow the supply chains to get absolutely destroyed and therefore cause a huge problem in terms of being able to- Not allowed. They destroyed them.

Yeah, no, they did on purpose. Literally, they put a nuclear device on every supply chain. Yeah, they screwed it up badly. And look, you don't want to get me started on the idiocy of the pandemic and what does it mean. And my conspiracy tin hat theory is thinking that global leaders want to see just how badly they could screw over their population without, you know, in the name of safety. But let's not go there. What we can also say is at the same time, they helicopter money, right? You know, people, when Greenspan first talked about that in the early 2000s, I mean, Mike and James and I have been around long enough to remember it. It was in the context of, listen, you know, we won't allow

a recession to happen. Now it's funny, it was three, four years before the great financial crisis. So people kind of forgotten that, but basically what they were saying was we're outlawing recessions because we could drop money at people. The problem with dropping money at people, of course, is that it's people. It's not investment. So what does that mean? That means that too much money chasing too few goods. Right. And so there you get to consumer inflation. So now what do they need? They need to put the genie back in the bottle. So what's the best way to do it? Goose financial assets, right? You know, bring back malinvestment. But at the end of the day, Mike is right about many of the things that he's saying, because they really can't do that very easily because consumer inflation is

still raging. And so they're doing what they can do up and down. The one place where I disagree with Mike and James and I both have been saying this for weeks is that they don't care about the stock market. Not caring about the stock market doesn't mean they're happy that it's high. It means they just don't care. What they're looking at is the banking system and liquidity in the market. And at the end of the day, you have this rapacious beast that has to be fed liquidity called the federal government with budget deficits that are going nuts, and they have to feed that. And if anybody, you know, as we haven't been on to talk about it since then, Scott, anyone who thinks that Powell

going on TV and effectively saying that the fiscal path is unsustainable doesn't mean anything. Nothing effective. Nothing effective about it. He said the fiscal path is unsustainable and everybody. That is not irrelevant. So that's why the Fed's doing what they're doing. Right. This is what has everybody so confused. And, you know, I listen to Lynn Alden talk about she she outlined it so well with Mooch on his show last week or week before is that and this is what we've all been talking about here and thinking and trying to articulate. It's that we have pockets of recession in the economy. You could see it. You could see the layoff in certain areas. Yeah, exactly. You can see pockets of recession and they're occurring. I hear people trying to get jobs. They can't get jobs in their in their areas. Yeah, exactly. You can see pockets of recession and they're occurring. I hear people trying to get jobs. They can't get jobs in their areas. And it's geographical and

it's in sectors, right? It's sector specific. But at the same time that you have this very strong monetary tightening, you've got an extremely, extremely loose fiscal policy going on, which is what Dave is saying, which means that the government is spending in deficit in a time that we're not in recession. We're at historic levels of just the size of the deficit at a time that we don't need it it's it's just maddening so the if they're kind of fighting each other so as you've got this fiscal you know stimulus going on you've got the monetary system trying to tighten and you heard on 60 minutes where you're saying what are you are you are you telling the treasure, you saw that you admit that this is not sustainable. Are you saying anything to the Treasury? And Powell's answer is, that's not my job.

My job is to manage the monetary side. Jobs and inflation. Yeah, I agree. In the long term, it's not sustainable, but that's not my job. I work for Congress is basically what he said. And so you got a call from Yellen after that saying, what the hell, Jerome? You just threw me under the bus. No, because I honestly that because if you look at what he's actually doing, I mean, he has kept a lid on the long rate. Imagine where it could have been if we didn't have an inverted yield curve for the last two years, how much worse the deficit would have been. I mean, you know, it's funny because, you know, he's going to go down in history based upon the fact that he kept rates too low for too long.

But and I don't think there's any really real justification for how they did it. I mean, Mike was and Anna Wong were hardly the only people basically doing everything but yelling that they're doing it wrong. And then doing it wrong on the other side now is probably going to happen. But the simple fact is, is if you think about his most important thing to do, which is facilitate the U.S. government borrowing without causing as much disruption as it could. He's actually done that extremely well. I mean, it's a Kobayashi Maru, Scott, right? You know, it's a no-win situation.

But the truth of the matter is he's actually done it really well. Mike, you agree? Yeah, well, I want to tilt over a little bit to a lesson I learned when I first came to Wall Street in 1993. I remember one of my colleagues explaining to me, Mike, now it's from the trading pits of Chicago. We didn't care about direction so much. We just want to get the trade right. And Mike, in this country, the stock market is designed to go up. And I never forgot that. And realized that and to me they just to point out a little thing and lessons of the book um curse act from Ben Bernanke the Fed will always care about stock market when it goes down a decent amount always and that's the only time I mean the day of the

Fed the 1987 crash they cut 50 basis points that's just the way it works that's why I don't think we're going to see any type of race you know We're going to delay those rate cuts until the stock market tells them to, which is part of the negative thing I'm seeing. It's a nice thing. I think it's good to see Bitcoin to gold breakout, that ratio breaking out higher above that. It's been stuck at that 20 level forever. The problem is what I've seen in the past compared to watching Bitcoin versus gold, this ratio for least until it really mattered, 2016, 17, it's lagging the beta. So I look at it as completely juxtaposed compared to last year, and it's still early in the year. I think what the prudent, rational money managers on the planet

are doing, they're not overweighting risk assets. They might be using a little Bitcoin in place of some market caps, but they see how expensive it's getting. They know, everybody knows that there's going to be a correction and it's questions, how do you handle it? How high is it get before we have that correction? And then how does Bitcoin respond? So I see it right now as my standpoint, a commodity guy, this is a severe global deflationary reset at the moment.

And the only standout is the US stock market. It's the main thing that's holding everything up. Can it lift all boats? And it's not. I mean, it's- Yeah. And so the question is, is that the way they're seeing it? Or, and this is my opinion, is that with these new ETFs, it has become exceedingly simple, very, very simple for registered investment advisors, money managers to recommend that their clients go into Bitcoin. And what are they saying about it? What is the easiest thing to say what Bitcoin is? It is digital gold, period.

So what are they selling to buy it? Large caps? No, I think that they're selling. They're probably selling long bonds or treasuries or some money markets. Think about how much money is sitting in money markets right now, just because it can just sit there and get four or five percent. So you can start dipping into the digital gold and saying, okay, this may be a way for you to get into Bitcoin early. Get in. It's early. It's new.

You have the benefit of not just the fact that it's new technology that a lot of money is going to come into, but that it's also digital gold. And so if the economy does turn over and we do start having that money printer phenomenon again, then you have the single asset that will outperform every other asset in that class. And so that could be why we're seeing it react this way.

Now you've got the GBTC pressure coming down. You still have massive amount of money coming into these ETFs. And it's just starting in my opinion what I Scott I didn't see that quote by you just go here just basically agreeing that the debt problem obviously is unsustainable keeps rising and I mean the answer is never well to answer mark I think it's really important because you know Mike keeps talking about about deflation I mean I think those of us who go to the grocery store or pay a workman to come to the house to do anything, I mean, look, all I'll say is there's a game we just like to play. It in the United States where when we have budget deficits running

where we are and we're printing as much money as we are to monetize that debt. Deflation in commodities. And the price of computers come down. Sure. Can the price of oil and natural gas stabilize and be a non-event from an inflation point of view? Yes, absolutely. I mean, that is true because those are places where technology has allowed us to get more efficient in getting stuff out of the ground, recycling stuff, using stuff. That's all true. But at the end of the day, don't forget, since Mark is watching for Mark, the fact of the matter is Bitcoin is a vote against a system that looks unsustainable.

Words like unsustainable are catnip to, you know, to the Bitcoin investor. And the truth of the matter is every single time we talk about Mike talks about beta. My head hurts. I mean, Bitcoin, you have to really, really figure out a point in time where Bitcoin hasn't outperformed. And, you know, it's hard to do. I mean, yeah, you can pick it. I mean, you know, there was a quote over the weekend, a tweet in an almost extinction level set of events from the biggest financial frauds in US history and some of the others that were just like it to almost knock it to killing. And it caused an enormous amount of for selling. You can't ignore those liquidity flows. When you zoom out 10 years from now, it will be a blip on the chart. But right now, it's important. But anyway, the point that I just want to make just to sum up

is Bitcoin trades like a frickin option. And the reason it is the way it is, is because there are now more people who see it. Digital gold means Bitcoin is 15x this price, 1.5, not 5%, not 500%, but 1500%. That is what it means. And there are a lot of people who are willing to say, you know, this makes sense to put a small allocation in and the market is tiny relative to it. So when Mike says, what are they going to sell? It doesn't matter. Bitcoin is smaller than some of the biggest stocks. Forget the market. I got to follow up on that a little bit because they are selling gold. Gold ETF outflows have been the most extreme ever for

this uptick. I know people are buying physical. I know some of them, and certainly Chinese are and Chinese central banks are. So they are selling some of that. But I just want to point out little things of the facts of inflation versus deflation. Now, yes, we all get it when we go to the grocery store and all that. Anything you had to pay money for. So I saw you driving this way. Is that an electric car? Yes.

Okay. So let's start with the price of unleaded gas right now. It's the same as 2007, exact same. Over that time, CPI is up about 50%. U.S. money supply is up about 90%. That's a severe deflationary force in a tangible commodity, unleaded gas. It's the number one, that and the U.S. stock market, the number one in two measures of consumer sentiment in this country. And Biden got that. Actually, it was the best sale ever of the Strategic Petroleum Reserve. I can get into that. But that is, just from my standpoint, I'll point out two books. We all know Jeff Booth's The Price of Tomorrow, pointing out the severe

competitive deflationary forces of human genuity. the price of time by Chancellor pointing out just what you pointed out. When you have a severe, a long period when people can have zero interest rates, they do stupid things or do things. We're just in the early days. Now, that's clearly happening in China. It's a depression in China. And I don't see it's silly when I think people think it's going to get better. I'm like, okay, they're going to stimulate something, but who they export to? They just pissed off their two best customers with this war, the US and Europe. And they have this internal crisis. So there's a second largest country in the world. We have Europe basically in a recession. The US is a shiny star. So that to me is where deflation is still starting to kick in. And here's

the definition of deflation is when you go up too high in assets, and then you just go down from that peak. And that to me is a risk. The only thing that's holding up severe deflationary forces on a global scale right now, the number one thing is the S&P 500. The number one thing that's holding it up is rampant money printing. I'm going to quote the ghost. That's true. That's true. That's part of it. Inflation is a monetary phenomenon. The only question is, is what inflates? Right now, assets are actually inflating, which is doing what they're doing. Two things to say. In debate, we would call this a turnaround. When you talk about gas, the fact that gas and natural gas have gotten to the point where

they have, as you're right, to the point where the Republicans are no longer chirping about it, and the fact that services inflation and year on year consumer inflation and everything that insurance inflation, everything that matters to the people in America is not coming down with energy prices actually low is scary as shit, because it means that what happens if there is, if the Houthis manage to close the Red Sea or the Straits of Hormuz get closed. I mean, it literally means an oil shock would be disastrous right now. But the good news is it's not happening. So that's great. What happens to U.S. government revenues if the U.S. stops being the shining star? And what happens to our deficit if there is a break in the system and we and China

and everything else causes an actual recession where government revenues drop? What happens? Just ask yourself that question. Because at the end of the day, we have no fiscal, we literally are at an enormous deficit in a period of time when the economy is booming. Imagine where we go. Yeah, there's only one answer. And that's everybody gets more money. And so then the question will be, what will we get? Will we get asset inflation and consumer disinflation because of the way that they're trying to do more? Maybe. But what are the assets? The assets are going to be the ones that can either maintain growth

or have the fiction of growth. So it'll be the same tech companies. Guess what? This is what the market's actually doing. Or assets that people believe have some benefit to it, like Bitcoin. At the end of the day, we are seeing speculative excesses.

You're right about China. I mean, there's only so many more apartment buildings you can build to give people jobs when there are entire cities that are sitting empty, right? And so they need to build something. And we don't know what the hell that's going to be. Yes, they're going to have to print money, but what the hell are they going to do? And we don't know. And you're right.

That is a huge risk to the real economy. But a risk to the real economy in a time when the government is printing deficits the way it is, is crazy. I mean, it's completely insane. I mean, if you showed anybody and you start looking at the government budget and you start realizing that how spending is and what we're spending on as a percentage of GDP, you'd say this is insane. Now, imagine if GDP drops. Well, that percentage goes way the hell up. And that's the case for Bitcoin, by the way, because regardless of what you're saying, I'm going to maintain that. And you never see it when it happens, Mike. You never see a narrative shift when you're in the middle of the narrative shift, or it's very, very rare. Generally, you have to look back and say, oh, wait a minute.

What the hell was I thinking? I wish to God I had the ability to have one of those time reset buttons because I've made so many mistakes in my life for not seeing it. This time, there's a narrative shift. The narrative shift is we now have an asset. We had Hillary freaking Clinton making the investment case for Bitcoin. She didn't want to. But then again, you know, she's getting old, too, and didn't realize what she was saying. But when she was saying Bitcoin is the risk of undermining the dollar, what she meant was, oh, my God, we can't allow a competitor, something that the people can measure the dollar against to thrive. Because, uh-oh, what will that mean?

Well, guess what? They tried two and a half years ago. And, you know, Caitlin Long, who you have on your show a lot and is awesome, I mean, she can chronicle Operation Chokepoint, but that is the fear. You want to know why Elizabeth Warren has directed the Biden administration to go after Bitcoin for two and a half years? It's because of what Hillary was talking about. That is a major narrative shift. When you have the people who basically are running the country behind closed doors, now expressing fear that a competitor to the US dollar that is worth nothing, it is so small. I mean, what's the ratio of Bitcoin to the US dollar right now?

That's the- And they're talking about it. That matters. That narrative shift matters. Quickly, Dave. Dave, so to that end, aren't we doing Bitcoin at this point a disservice by saying both that it's digital gold and arguing that it's just a risk asset when we know that it's largely behaved completely uncorrelated? I think we need a new narrative, man. Bitcoin is Bitcoin. That's the new narrative. Yeah, but that's a good point. I think we need a new narrative, man. Bitcoin is Bitcoin. That's the new narrative. Yeah, but that's the point. That's the whole point of all of this

is that we live in a bubble. We understand the difference. I read an article on Bloomberg this morning from one of the Bloomberg writers and Bloomberg journalists, and she doesn't understand the difference. It's just lumped in with crypto it is there's so and i and i have a lot of respect for bloomberg because i've i've

you know worked with them for many years on wall street they have like really smart people like mike but this is the point is that there's so much confusion so much disinformation and really what it is we are at the we're the, just at the beginning of this learning curve that everybody has to, that has to get on this train to understand all the differences of all these things. Cause all they hear is, Oh, I own some Bitcoin. I literally heard this the other day at, at, I was at a, a party that had a lot of policemen and, you know, just regular people and they weren't academics, they't investors they're just normal people and somebody said i own some bitcoin it's the ethereum one you know it's like and people like i mean and this is not a dumb person you know and so the the point is that

we we the and michael saylor makes this point so well he's like people do not understand it when they do understand it and that's what he always says. When you understand it, you can own some of it. That shining, you know, city on the hill, when you understand it, you can own some of it, but you have to understand it. And that's the point. We are at the beginning of this where there's broad misunderstanding and misinformation everywhere. And people like Hillary Clinton and Elizabeth Warren and Jamie Dimon, you know, and, and Charlie Munger before he died and Warren Buffett now are just, they're just spreading this, this disinformation, whether or not they're trying to be disinformative, they're doing it and it's confusing people. And so all they hear out of, out of the major talking heads and these politicians,

most of them, is it's dangerous. It's used by criminals. If you use it, we're going to assume you're a criminal. That's what they hear in their subconscious. So it really deters intelligent people from digging in and understanding it. And that's where we are at this point. We live in a bubble, but believe me out there, it's not like this. Well, I can tell you that there's a guy named Donish who Mark Yusko actually had a huge argument with on Spaces recently, who hosts Mario Noffel's Finance Spaces. Huge crypto skeptic, hates NFTs, thinks Bitcoin's stupid. Over a six-month period, I effectively convinced him to buy Bitcoin. And now he's up to a couple percent of his portfolio, and he still doesn't like Bitcoin. And the reason was because I showed him basically this,

which is Brian Estes actually sent me this after our podcast conversation. This is what Bitcoin does to your Sharpe ratio. Very simply, right? The way that it benefits your portfolio because it's uncorrelated to everything else. This is provably from 2013 to 2023, right? We can dig into that another time. But why are then we talking about Bitcoin again as digital gold or as just a tech stock when in and of itself, it has this powerful ability to diversify your portfolio and improve your Sharpe ratio. Why? And then we'll go out on a limb and we'll talk about it as money or we'll talk about Bitcoin. Go back to the beginning of you learning about it and just how mind blowing it was.

For me, it was transformative. And especially coming from this world of investing and fiat investing, it was absolutely mind-blowing. So there's a lot to grab onto here. Hey, Mark. I love Mark. It's math. And it's true. It's just math. However, it is very difficult to get your head around all of that because it's a concept that, you know,

again, that same party, the same questions come up over and over. Well, why wouldn't somebody just do another Bitcoin? You know, what saves them? And you have to explain the true, you know, decentralization of it. It's very difficult to get your head around. So it makes it simple as a narrative. If you are a money manager, if you're an investment advisor to say, okay, look, it's just digital gold, get some, and then we'll dig in deeper, you know, leg into the trade and then we'll dig in deeper. But that's, that's kind of where we're at. In my opinion, that's kind of where we're at. I mean, look, it's not, I really want to hear Mike's take because I basically ranted for a while, but it is worth pointing out that we are within a very short distance where I bit and the others are back to where they opened back, you know, back in the middle of all the hype when Bitcoin was. As far as price. Yeah. As far as price-wise. It's not uncommon.

How many IPOs have we all seen where there was a big hyped IPO that was a pop on the open? Big points. All the professionals sold it to the people who bought it on the open. The next two, three weeks, months, whatever, it goes down. And then years later, it's a rip-roaring success. I mean, it hit 49,102. We're at 48,537. Right.

It's a negligible difference. We've filled it completely if you're looking at the price of Bitcoin. Right. So the point is that, you know, it's like people, there's no doubt that this has been an amazing success. I mean, by every single metric. And Eric and James are at the ETF conference here in miami you know are you know been pointing this out but the reason it's a success is because of the the steady slow inflow of money into the process and

slowed by bitcoin standards right because everyone here wants to see god candles and when moon and lambo pictures it's like you screw that shit. What we care about is the most constructive thing is a slow, steady decoupling. The reason it hasn't decoupled is because this is in a period of time where the market has been performing really well. Just to team Mike up, when you talk about that crypto quant article, that actually makes me weary and wary that we're going to see a major correction when people are saying things that are that dumb. But if you control for a variable and you said, OK, if the S&P is going to be 10 to 15 percent or more higher than it is today over the period of time they're talking about, yeah, that I do think they're probably right. I think Bitcoin will outperform. But there is a very severe risk of recessionary forces in the rest of the world coming home to roost in our market.

It just hasn't happened yet. And maybe it will, maybe it won't. But, you know, when people ask me, what do I think? I always couch it in the terms of, well, in a severe, you know know asset sell-off correlation goes to one and so could Bitcoin you know if the S P correct 25 could Bitcoin correct 50 yeah it could uh do I see something terrifying do I see something terrifying uh grayscale this is their post-halving analysis. 2024 halving. This time, it's actually different. Have you ever heard a scarier five words than this time it's actually different? Listen, everything is lining up. There's nothing but tailwinds, right? We saw this. We've got

Bitcoin eyes longest winning run in a year. Nine days in a row. Green here would match January 23. Bitcoin stronger ahead of halving. That's that same report. New spot Bitcoin ETFs amassed 200,000 Bitcoin in less than one month of trading. I mean, pretty astounding numbers when you look at it. But there's nothing I want to see less than this time. It's different. So let's put out a simple, lick your finger and put it up. Let's compare this to a year ago. There was no ETFs. Bitcoin wasn't in mainstream. It was low. There was a lot of hate. And now it's on my DI list, deliberately ignore, because it's so in my face how bullish it is just by the conversation we had. The stuff that a lot of us discussed five years ago. Now it's completely in the mainstream. And we have to have people who want to go down in history like Aaron Burr.

It's wonderful. I love that part of our country because it's free markets and free speech. But I just look at it from a simple trading standpoint. If we do get at some point that recession that's already priced out of the market, and we do get a normal correction of risk assets, as Dave said, you have to expect the highest volatility, highest beta risk asset to go down the most. Now, maybe it won't. That's my point is the rational thing for most investors now who

made good money in Bitcoin is you don't overweight here. You overweighted a year ago and you did very well. Now you have to say, okay, now that the whole world's priced for this, maybe I'll tilt the other way. How do you think hedge funds make their money? Now, if we got to keep with the beta, you just keep your stops. And that's why I think I come in, sometimes have that early view by watching ticks.

I mean, I just watch all these little things tick. You want to see that intraday move. You want to see that move. And I still have that same problem that this high beta risk gas is underperforming in some ways, the beta risk gas is underperforming. In some ways, the beta, now it's catching up. That's great. But now everything I hear, every place I say in cryptos, just like you said, is so bullish.

We have to admit ourselves, if you're running positions, it feels great, but you know you shouldn't be overweight in that environment. You're supposed to be overweight. We had the exact opposite narrative 12 months ago. And all I will say to that is a very simple point, which is climbing a wall of worry. I agree with you on the narrative inside crypto Twitter, but that's not the, but we are a insulated, very, you know, insulated bubble. That's what to use, to use James's word. But even inside crypto, if you look at the inverse perpetual swaps, that's the canary in the coal mine. And the reverse perpetual swaps are trading flat to either slightly above or slightly below spot with very low funding rates. When you look at coin

glass, you get a nice little move in Bitcoin over the weekend. Virtually, the liquidations are tiny and fairly evenly balanced balanced this is spot buying it's 100 it's spot buying for the etf right so but so which is very different when we were hitting the all-time highs in both both of the double top in both cases we had three weeks one was three and one was was 10 15 days something like that but one was a little bit less. But there was like a month of period of time during 2021 where the average funding rate on the perpetual swaps was above normal. And it was trading at a premium because people were piling in, piling in, levering up, levering up, and it became self-sustaining until, of course, that stopped.

And then it was, you know, know as they say look out below you know there's none of that going on there just isn't any and so it and i watch it like a hawk i mean you look at if you look at here this is this is the easy one this is coin glass and it's just just look at the share screen i can bring it up as well if yeah go ahead i'm just always looking at CoinGlass. Let me help you out here. If you look at, is this how that works? I love CoinGlass. It's great.

Yeah. If you look, yeah, there was some stuff around the ETF things. Oh, sorry. There was some stuff around the earlier year, but look at how low these liquidation numbers are for this entire rally. I mean, it's tiny and that matters. That really does matter because it's a different kind of rally. And so, yeah, there are a lot of people that, oh, it's late. I'll wait for the pullback. And that's actually, you know, people keep talking, oh, I'm bullish, but then they're not putting their money in. And so this is coming from new buyers. Yeah, the same one on my screen. Yeah, I mean, maybe this is a temporary thing, but I mean, we're looking at what, $7.7 billion now between just Fidelity and iBit. I mean, take a look at

this. If you want to look at the daily volumes, the argument was that this was all inflows because Grayscale was outflowing and people were switching over. This is now Grayscale volume on a daily basis. This is Fidelity and this is iBit. So this is no longer the money coming out of Grayscale and going into these. This is new money, presumably retail. Which makes sense. Presumably retail because RIAs don't have access yet.

Some of them do. Very low. Yeah. But no, the point is that they're getting more and more access. And I think that's what's happening, Scott. You got more and more onboarding. So you've got the super highways. You've got the iBits and the Fidelity built.

And now you're getting the on-ramps. And so those on-ramps are coming. And people are, and they're sticking their toe-ramps. And so those on-ramps are coming and people are, and they're, they're sticking their toe in the water. Like, okay, calm down. You know, it's no longer that hot IPO that was up 200% and then down 40%. And everybody is just, you know, dumping because it was just a, it was just a, a one day, one day wonder, you know, kind of like the one hit wonders. We, we, we live through those Mike and Dave and I live through those where you, you prayed to get a thousand

shares of this hot IPO. And then you dumped it that day because there's no way that you believed in the underlying company. Well, this kind of felt like that, right? It felt like that people going, what do I own here? What is this thing? This Facebook, I don't even know how they make money. How do they make money? Advertising. But, you know, so what happened? They dumped it, right? And then as you move forward, you now look at Facebook where it was from that IPO, right?

So it's that hangover. Now you're kind of through that. And RAs and investment advisors, money managers are a little bit, they're less shy. They're a little bit more emboldened to say, okay, let's stick our toe in now it's calmed down. So. Yeah. I mean, but the wall of worry comment is what matters to me because look, objectively speaking, if it wasn't for the narrative that I believe what Bitcoin represents, my spidey senses would be saying Mike is right. And certainly when I look at the S&P, I feel very similar. It's like, what are people buying? What's the price to sales ratio? What is this? Can this live in a world where the US is the only one?

The issue is the fundamental difference, and we say this all the time when i talk about delinking i actually it's stronger than that you know i think that that there are there are people out there who are getting more and more you know our level of skepticism in the government our level of skepticism institutions is reaching an all-time high. And while, no, I don't believe Bitcoin fixes this, as, you know, as they say on crypto Twitter, it certainly is somewhat of an opt-out and it is somewhat of a hedge. And people will start seeing that narrative happen. You know, we're, you know, what we've seen over the last couple of weeks is just, it's enough to make anybody in American politics, you know,

look at this and just shake your head in disbelief. And there's so many different aspects to that. So what's wrong with $1.6 trillion GDP gross growth that costs $2.5 trillion of deficit spending? What's wrong with that? Come on. I mean, it's the most ever out there in the net. So I see the case bullish Bitcoin and bullish that case declining demand, increasing supply, big picture. And I just look at it, there's times overweight and times late. Be careful not overweight. And that's a year ago was overweight. Now I'm just, that's all. It's not that complicated. I just want to see that divergence where it just doesn't go up as fast as the price when the fastest horse, when beta is going up. I know want to see that divergence where it just doesn't go up as fast as the race

when the fastest horse, when bait is going up. I know you don't like that term. Okay, let's use NASDAQ. And that's what it is. It's a feeding frenzy right now. So I just remember as I was running money, I was doing for clients, we'd be more likely to be structuring call positions that maybe had a little gamma than being in the underline. And then, you know, so you at least have exposure to the upside, the rally, but you know, so you at least have exposure to the upside, the rally, but you know, last year was just want to be overweight gamma and you want to be overweight delta. This is where you have to be careful. You want that gamma in your favor. So I just, you know, it's just that extreme. So I think Gary just made a point that I made a couple of

weeks ago, which is, I really think that there's kind of the interesting trade will be, I would not be surprised to see the leaders of the stock market all have a bit of a problem in March, April. It feels a lot like early 2000 to me when the tax bills for capital gains come due and people start paying them in March. You know, there was some some it was an interesting year. People don't remember this. But before the disaster of the Internet bubble really popping and everything getting accelerating, what you saw was a massive March sell off on the Nasdaq one day down 15 percent, which is insane in stock market terms.

I mean, in Bitcoin, we like, OK, that's a Tuesday. But, you know, in Nasdaq, that's a Tuesday, but, you know, in, in, in, in NASDAQ, it's, it's a big deal. Cisco's chart, it got, got crushed, absolutely crushed. And then it rallied again into the summer before a more orderly, but far worse deep sell-off happened, uh, going into the fall. Uh, and once again, it's an election year, all that, all that stuff. So, you know, will markets repeat? I don't know,'s an election year, all that stuff. So will markets repeat? I don't know. But in that scenario, what actually will be the result? I mean, sure, if there's a 15% sell-off in all risk stocks, yes, you can bet that crypto and Bitcoin in particular will sell off with it. That is true. But if it's different this time, if it's, let's say,

3% or 4% a day for a week and find yourself down there, will that be the same thing? I don't know. And it'll be really interesting to find out. But I do think that a lot of the forces that Mike talks about, people should go back and listen to that monologue again, because it bodes really, really badly for traditional risk assets. I mean, I just said this time it's actually different to like the most terrifying words, but now I'm going to say, what if this time it's different too? But that doesn't happen. I'm really like, listen, I'm not trying to be a Bitcoin maxi or be crazy about it, but I don't think we have enough evidence, statistical modeling to believe that Bitcoin is either going to trade

like gold or that it's going to trade like a high beta tech stock i think bitcoin is just bitcoin now and it has the etf now as well i agree but but if you have to get into you have to get in the minds of asset asset allocators because they need to put it in a bucket they have to like that's just that's just reality and what buck are they going to put it in and so it's its own stocks bonds bitcoin crypto tech but not yet we're not there but the thing is that's interesting about mike i'll go to you one second the thing that's interesting is that those same advisors also don't allocate to gold. They just allocate to stocks and bonds anyways.

So it's like people don't have gold in their portfolios. They're just very few people, right? You have to be a gold bug to even look for that sort of exposure. Nobody recommends to own hard assets in your portfolio, at least not this portfolio. Well, the book I've been reading is Capitalism Without Capital and points out the absolute value in tangible assets versus tangible assets. And that's why I pointed out The Price of Tomorrow by Jeff Booth points it out clearly. I mean, this is an environment where we're humans, we're improving every day and we make things better. And Bitcoin's the ultimate intangible asset.

I don't disagree with that. And I see it's really fitting in portfolios, but I just want to see it pass that test. And right now it's just, everything's going on. So let me just ask you, what would be the criteria where it passes that test? Because for then to be tested, we would have to see effectively a major stock market crash, correct? Well, it doesn't have to be a crash. So you can have time corrections. It could just be underperforming for 10 years after it's been outperforming for 20. I mean, it can do that. I mean, it's just not though. It's all time high versus MSCI X US. It's like, oh boy, okay, where are we going? It's great. I love the US exceptionalism, but

that's wonderful. At some point you always get reversions in these things. And the ultimate test is it depends on timeframe. We need to see it go, not go down as much as I hate to say the word, the stock market on a risk adjusted basis. And right now it's great. It's doing the fastest horse in the race. Everybody gets it. We all know,

but we're not at a 20% discount from all time highs. Like we were a year ago. That was wonderful. Everything was well knew as a time to buy. Some of us were not as bullish in equity markets. We found something that was better and it did perform better. But now, show me the beef. And I know I've been saying it's nice, it's breaking out with gold. It's nice, it's catching up. But right now, it's just catching up. And I just see that lagging performance today. Every single day that goes by, okay,

we're above 5,000. I don't disagree. I don't disagree. Really quick, Dave. I don't disagree. I think that, but to some degree, that's cherry picking data because it's based on when the all-time high of Bitcoin was and not necessarily apples to apples. But it also makes the argument to me that still Bitcoin is just Bitcoin because there's certain times when that wasn't the case. There's certain times when that was the case. Go ahead, Dave. I'll let you jump in.

Sorry, because we got to finish up in a minute. In November of 21, Bitcoin was at 63,000. The hash rate of the Bitcoin network was 160 whatever trillion tera hashes. It's now 4x that. There's your beef. The Bitcoin network itself, the insiders, I always want to phrase it this way. Insider buying has been one of the strongest signals in the stock market for our entire lifetime. And the insiders in Bitcoin are buying. Now they're buying by CapEx, et cetera, but the network itself is four times where it was when last we hit the all-time high. Does that mean I expect $240,000, which would be four times the all-time high price? Actually, no. I expect half that in this cycle, and maybe it'll keep going. But the fact is, is this is where the beef is. The beef is in the actual insiders. And

that chart, if you look at that, you just look at the chart of the hash rate, it is one of the strongest up and to the right. It actually looks like it's going into a blow off top right now, which is kind of strange. But the price hasn't done anything, relatively speaking. We are way, way, way early because the people who actually have to spend the money are basically saying, listen, we are going all time highs and we're going well past it. That's what they're saying. So whether they're right or wrong or not, we'll see, but it's impossible to dismiss that. Yeah. Go ahead, Mike, please. Just one note, when you have people with a vested interest writing things like, it's different this time for having, that's when you have to put up your radar and be careful.

I agree. That's a huge warning sign. But just to finish my thought, if you look at the Bitcoin four-year cycle, which we all know is statistically irrelevant, Dave has pointed out many times, we've only got three, Bitcoin was different each time. But if you do have this similar cycle and it does play out once again, we'll all just look back and go, why did we talk about stocks? Why did we talk about gold? It's just this cycle that Bitcoin travels in that's a random walk in the park compared to everything else. I really am starting to believe that Bitcoin is just Bitcoin. If you look from the bottom to where we are now, then Bitcoin has wildly outperformed the stock market. But if you correctly look at the all-time high of Bitcoin versus the current

price, you say, well, SPX is over 5,000, is now making you all-time highs. Bitcoin's still well down from all-time high. It's obviously underperforming. So I think it's just very hard because it's so date dependent. And when you zoom all the way out, we just have an exceptional low correlation to everything else, including gold. So maybe the digital gold narrative needs to die as well. I'm not really sure. And I just realized it's 1002. So I didn't mean to rant there at the end. I'm just starting to, you know, we have these arguments over and over, not us, us with the rest of the world. And you try to convince them it's digital gold. They don't get it. Try to convince them that it's

just like a Tesla stock and they don't get it. So maybe it's time for us to just show them what it does to your Sharpe ratio and not compare it to anything else. That's what I'm starting to believe. Guys, that's it. Great to be back. You can it to anything else. That's what I'm starting to believe. Guys, that's it. Great to be back. You can tell that I missed it last week because I was much more animated this week. We've got, of course, we'll be back next Monday, 9 a.m. And I will be back tomorrow at 9. Mike, Dave, James, this show is just amazing.

Testament to how good it is that we've got guys like Mark Yusko and Gary Cardone following along on Twitter because anyone who watches a show on Twitter knows how difficult it is to watch a show on Twitter. If you scroll once, you lose the entire thing. Right, so they really dialed in. Just an amazing show here, guys. Loved it today. Thank you guys so much.

We'll see you next week. Bye. Thank you. Let's go.