The Wolf Of All Streets - Total Cap Hits $3.1T! BTC Dominance Still Climbing | Crypto Town Hall

Episode Date: May 2, 2025

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Well, good morning, everyone. It is Friday, May 2nd, and we are here for Crypto Town Hall at 10 18 seems to be about par for the course. Bitcoin kind of hanging out, not doing much. Other markets up a bit on strong data ish. Interesting data, actually. Maybe we dig into that later. But since we have a guest speaker

fresh from Dubai at the airport, Mr. Scott Melker, I'd be curious to get your quick wrap on all the festivities at Token out in Dubai and what the vibe was like. It gave me extreme FOMO that I was missing the show every day and couldn't discuss it. So after a 15 and a half hour flight, I decided to jump right on here. So then I get into a car from the airport. It was very interesting this year, to be honest. You know, we've talked about the circumference circuit in the past and how I use it generally as a gauge for the vibe of the market.

And you'll all remember from listening to the show for the past years, every time we'd have a conference in the United States, obviously in the past administration, it was almost like going to a funeral. I remember Consensus last year, maybe it was two years ago, and most of the booths were lawyers and accountants, instead of being NFT projects and new protocols. And the vibe was absolutely for it because nobody knew what they were allowed to do. Nobody knew if it was allowed to be a sponsor. And then you'd go to Asia, Singapore, Dubai for token 2049 or a conference in another country. And it was like, none of that existed. There was no SPF, there was no Derek

Gensler, there was no contagion. Everybody was building and excited. So it was like a funeral in the US and Coachella on the flip side. Now I would imagine that you'll go to Bitcoin Vegas this year, and it'll be exactly the opposite. And to be quite honest, it's still a great vibe abroad. But I think that there's a healthy level of skepticism now that wasn't there before, probably because of how poorly the altcoin market has performed, and how popular memes have been and how the veil has somewhat been lifted on people's interest in projects that are actually building and utility and sort of the realization that coins move largely because of speculation and not because of underlying fundamentals.

So I would say that this year, you know, everybody comes up to me, obviously, hey, man, let me pitch you my thing, you know, 200 times. And in the past, it would be like, let me pitch you my thing, man, I would love for you to invest a couple 1000 bucks, like crowded rounds. I don't generally do that, by the way, but crowded rounds, invest, you know, promote it. Now it's like, hey, we're trying to raise around, can you fill the whole round yourself? I'll give you the whole thing. Like you want to spend $200,000 instead of $2,000. And obviously, I also say no to that.

But it seems like there's a lot of trouble fundraising for a lot of these things. And just a healthy level of skepticism that there's too much being built. A lot of it will be brilliant. Dave, your mic is going a little crazy, by the way. But I'm going to mute. But I think it's maybe a healthy level of skepticism and everybody's not at full FOMO

abroad at the moment. That's cool. I met your co-founder and by the way, I hung out with your co-founder for like 30 or 45 minutes. Yeah, well, we'll talk about that this weekend. He actually wasn't a co-founder. He was a later co-founder. He joined us about a year after Ian and I founded, but that's okay. I shouldn't have said founder. I should have said partner.

There you go. Yeah, there you go. But anyway, yeah, it's all cool. The thing that'll be more interesting to me is I'll be really curious to see the Bitcoin conference this year in Vegas and being in the United States. The timing of this particular year for consensus to be in Toronto is curious, but I guess we'll see. Nobody's going. I couldn't find a single person that was excited to get a consensus. Nobody's doing consensus.

I literally could not. Cool, then I don't feel bad for not going myself for the same reason. But you know, the Bitcoin conference for me is cool. I booked my room at the horseshoe because that's where the World Series of Poker is for a week, you know, past it. So I'll be there one way or the other. But anyway, so as far as the market goes, the other big event yesterday, which thanks to Mario's Roundtable account, we all got to listen to Sailor's earnings call. I don't know if you caught any of that, Scott, but honestly, it was very impressive. He basically explained their strategy, and forgive the pun, in very simple terms, very,

very clear where it was going from, answered a lot of the questions. I'm sure we'll still hear Fudd from people talking about how over-leveraged they are, etc. But I thought that he did a great job. I was curious, am I the only one who thought that he explained the strategy well, or what are people thinking? But the bottom line was, if you wanna distill it down,

is they're not highly leveraged. That he talks about it in 10 year time horizons for a reason, because he really can't be shaken out of his position. It really boils down to what you think the price of Bitcoin will do over the next 10 years. The way he expressed it, I thought, was really well, is he said, listen, you have, will it perform as the stock market performs, 7% give or take?

Will it be a 10% asset? Or as Max know, will it be a 10% asset or as Maxis believe it will be a 30% you know, return asset and you pick your you pick your poison whichever you think and then you understand which product or what makes sense and I thought that was a pretty good way of framing it. Anybody else have any comments on on on that particular thing because I know several of you were listening with me. I can weigh in if you want, Dave. Sure. I have to be here.

So I think it's a 50% KGAR asset. So if you look at standard models like the BIRM, which is the Bitcoin Auto-Correlated Exchange Rate model, it's a quantitative model that just accounts for having supply shock, but also the fact that they are diminishing returns to that supply shock, right? So it's a rather conservative model. You still get around 50 plus keger, right?

And over the next 10 years. So I think it's rather, yeah, it's higher than 30 definitely. I mean, if you really, if you believe that, then it's, it's, if that turns out for forget 50, if 30 turns out to be the case, which is still rather rather high, over 10 years, then MSTR is essentially like, you know Bitcoin on steroids And yeah, I you know, I'm a holder. I'm not gonna lie about it

I mean if that's what happens, you know over the next 10 years then you know I will have a very very comfortable retirement We'll leave it at that full retirement as opposed to retiring from one company to do other things. I Mean MSTR is Bitcoin and steroids, right? I think since the Bitcoin ETF launch has outperformed Bitcoin by a factor of 2.4 or something, right? So it has a beta of 2.4. But of course, it's like downside and upside beta, right? Yeah. Well, and the volatility is there.

And arguably, the most important point that he made is that they are able to harness Their volatility the volatility of MSTR and the volatility of Bitcoin You know it with financial engineering. He didn't use those words He used other words, but you know to me that that's important because every time people get into these conversations And and I'm gonna call on you Gary Gary, in a second, so don't be surprised. Every time people get into these conversations about micro strategy, the question is, well, others are gonna come in,

we know what 21 is gonna come in, and they lose their edge. I think they have two edges. One is scale, but the other is something that I think, Gary, you articulate really well. Your psycho line yesterday, I think, deserves some commentary. Which line? The cycle?

The psycho, when you called him a psychopath, but in a very constructive way. I thought you expressed it better than I could. Well, you need, like this guy's one, how old is the sailor? He's 60, 70, 65, what is he don't know he's been he's been he's been beat up by every large monopoly software company for 20 years dude like he's been eating second-class meal and he's a very bright guy so I think with a guy like guys multi-'s a multi-billionaire already, I look at, okay, what's driving this cat? This cat wants to, look, this cat's putting on a once-in-a-century trade.

And I think he wants to go down as a monster, monster player. He told my brother he was a pussy for launching the coin, launching the first real estate deal. And then Grant comes in and does 13 of these deals. That's the kind of guy we need, I guarantee you. Okay, complete psychopath. And I say that with really so much admiration. I don't use that as a bad term because I was hearing some other people. In fact, that XRP army thing that they did this debate, which was really poor, but the guy just kept talking about sailors, a psychopath. I'm like, what are you talking about? I mean, this is you want, he reminds me of a good Jeff skillings. That's an interesting one. He does know he does. Hey skillings was

fucking genius dude. I mean very very smart man. He just went you know he was probably always pretty toxic but uh I think I think this is a I mean just to be able to watch it. Like I own a chunk of this stuff and I do think that's what he's doing and I think he's got a bigger and better moat than these new players. Well I guess we'll find out as far as motes are concerned but the truth is that it is exceedingly clear if you have good eyesight that his strength of conviction is unmatched. You could argue that Jack Maulers has the same strength of conviction, but he doesn't continue to put his own money there. Maybe he does, I don't know. What is very clear is if Michael Saylor is correct, even if he's off by a factor of two, he will be the richest person.

He will have built the biggest, the highest market cap company on the planet. That's just fact. And he may end up being the richest guy on the planet. I think that's the play we're doing here. Now, obviously, what I just said is fascinating because it's basically what I said is even if he is off by a factor of two, so let's say his predictions, his 10-year prediction of Bitcoin is double what it will be, it ends up being half of that, that's the strength of conviction. Now, obviously, it could be hyperbole. We don't know what he really thinks.

We don't know what will really happen. Personally, I think that the, and I get a lot of flack for this. I'm called the permable for this. I think Bitcoin is destined to, at a minimum in 20, $25, reach the level that is effectively gold market cap. So I think that you're talking about a easy 10x from here. I think it's much, much harder from there beyond simply because the financial world

will fight very hard not to be measured in Bitcoin. And so there's going to be a lot of twists and turns in that race. But you say Dave 10x on the one point eight two billion dollar Bitcoin valuation today. So you see that doing 20 billion 20 trillion. I mean, yeah, I'm thinking 20 trillion. That's right. I think that I think it's if you think of it, if you think of this as a race, as a long term race and Bitcoiners, you know, and Bitcoiners always think about it this way, then I think that at this point, we've reached escape velocity to get there.

When we get there, I hate that. I've been early in pretty much every one of these predictions that I've made in my entire career, yet they've all ended up being basically right, so I'm pretty confident in that sort of thing. But I think that all of the real things that could have happened to stop that are done. They're gone. I think that that matters. The difference is gold, for those who remember, gold used to represent somewhere in the north of 80% of monetary aggregates, and now it's somewhere around 8%.

Well okay, so the question is Bitcoiners think that it will be the denominator for all of finance and that is what effectively we don't have one of those right now. Whether or not that will happen is an interesting question. I mean personally I think the world will be a better place if it does, but I think it's going to be very interesting to get there. The point is I think the risk reward on Bitcoin, at least for that kind of a rally, is ridiculously high. And I think, by the way, that there are a lot of people piling into Bitcoin for that

reason. As it starts to approach gold, I think that the hodling phenomena will reverse unless there are, depending on what's going on politically at that time. So that's kind of my thesis, and it's a bit different than sailors, but it works out to the same for at least the next few years in all likelihood. I don't know what people think about that. Come on. I think it makes total sense because it doesn't need to, like Bitcoin doesn't even need to disrupt

gold technologically, right? Just needs to match the market cap, right? You could have some kind of 50-50 percentage share until the end of this decade. Then you end up with like 1 million US dollars per coin, which makes sense in my view because it's a competing store value, it's a competing reserve asset. It doesn't even compete with gold alone, it competes with US Treasuries. US Treasuries are the post-1971 reserve asset, the de facto reserve asset and gold is like the pre-1971 old reserve asset. So it's competing and I think the potential for Bitcoin to reach 1 million is quite high, right? Just in terms of gold, but I mean,

it's also competing against other stores of value, right? Well, that's an interesting question. I don't know that that's true. I mean, the notion, I got into a debate with a lunatic Bitcoin Maxi on X yesterday, and I was just in one of those moods, so I decided to get Snarky, I don't know if anyone saw that exchange but you know when I listen to people who are Bitcoin maxis there are some that are intelligent about it because they understand that Bitcoin

to be a Bitcoin maxi in my mind should mean I believe Bitcoin is the measuring stick for the economy. That's what you believe will happen. And there's nothing wrong with that. That is a perfectly rational way of looking at it. And if that's what your belief is, that's what you're working toward, more power to you. But that is a far cry from those. And Scott, I don't know if you can still hear this, you'll probably laugh, but that is a

far cry from those who say that means that any other token has no value whatsoever. There's no reason for a native token on any other blockchain or any other representation of financial assets because the entire world will be Bitcoin. And there are people like that. And I find it amazing whenever I encounter them because it makes no sense. It's sort of like, you know, it's the argument that because I strongly believe that every single equity, you know, I don't care, you know, Nvidia, Apple, doesn't matter, Tesla, whatever, will all be eventually

represented by a token on a blockchain. Why? Because it'll allow for a multi-currency trading natively for 24-7 clearance. It's much more efficient than the paper certificates that they are represented by today. And yes, they are represented by paper certificates in a vault held by DTCC, and then it's represented on a computer in street name, and you can go through all that plumbing. It doesn't really matter. But once you understand that every asset will be...

I hate when I get calls. It doesn't make any sense. So that's really, you know, part of the interesting thing. I mean, Scott, I don't know if you can still hear this or still comment. I know you did. Did you see the news that the DTTC, we didn't even talk about it, I don't think. But on April 2nd, the DTCC announced a new platform for tokenized real time collateral management.

Yep. Not only that. It's the largest story ever that was completely missed by everyone. As it turns out, I am speaking at a panel in Boston with Robert from DTCC who runs that team. We were talking about it yesterday on our prep call. They are all in on the notion of real-time collateral management. And that is a huge story.

And I will talk about that after, because I obviously have the chance to sit down and talk with Robert about this, and get a really good idea of what it will be and what it won't be. They also have a video, which I have yet to watch, but I'm told is very interesting. And I'll post that as well, after I have a chance to look at it but what

nobody really understands I think in traditional finance what Bitcoin is pristine collateral will mean and what tokenized collateral can do in terms of velocity of transactions and that is you're right it's a very big story I just haven't talked about it yet because I'm not gonna know much. I'm gonna learn so much about it next week. Yeah, it's the way that the puck is moving and even the largest institutions in the world know it. I had a hundred of these conversations at Token 2049, obviously,

and I was sitting with people from BlackRock and there were a lot of institutional people there. But nobody wants to be Blockbuster and Kodak and Sears Ro Robuck. And they see it and they know it. And so you can take, I guess, a cynical or a positive view on the institutionalization of the asset class or of the industry. But the visas and the mastercards and the DTCCs realize that there's a technological revolution happening here. And the way that doesn't mean your token goes up everyone you know for whatever project you believe in but they are going to be utilizing this technology to improve

settlement times and collateralization they understand all that the question is whether they'll co-opt it or whether they'll still be something left for us well I mean I think that it's extremely clear two things that are extremely clear and then a lot of fuzziness. The two things are extremely clear is number one, all of this is 100% going to help Bitcoin because the impediments to the use of Bitcoin as a store of value are all falling away. So that's number one, right? It's extremely clear with the president calling it a strategic asset, the likelihood that there's some other,

people throwing rocks at Bitcoin. If you think of the path that Bitcoin has been rallying, I use the American gladiator analogy. It's not exactly been a flat race, right? People have been dodging and throwing things. I think they're at the point now where there's no one being thrown at it. The second thing that's very clear is that stablecoins are going to dramatically increase the velocity and remove

the friction in money transfers. That has lots of implications. That is implications for AI. That is implications for a lot of what's going on in the token ecosystems. But it doesn't necessarily mean that layer one of choice is going to win in its vertical. Exactly. Those are the different things. What's going to happen is we're going to have this is my new theory on what causes our next contagion because we know that something will blow up at some point in crypto, is that we're going to get stable coin legislation, we're going to see

a thousand stable coins launch, they're going to cannibalize each other, half of them are going to de-peg, and that's going to be our next issue. Yeah, I don't think that the de-pegging, well, I don't think any of the new ones will de-peg, because I think they're all going to be fully backed. The only thing that could cause a de-peg, and it's curious, it's the fact that they're going to allow bank deposits. And then you have to worry about, is there gonna be a bank contagion?

Because if you think about it, you know that people don't know. By deposits fractionalized, the biggest risk will be the actual banking system. Right. So before I say anything, Alex, you put your hand up. I was kinda hoping that you would. Yeah, I'm curious, I'm like,

Scott, you think that we'll get a thousand scalable coins that actually cannibalize each other when I think people are going to stick to the top couple ones for the liquidity and the trust. I think, well, just from conversations I had, there's not a single person I could find that didn't have some sort of plan to launch some sort of stablecoin when we get clarity. Every single bank will launch private stablecoins and they will be basically the banking system on steroids. If you believe that there's an issue with fractionalized banking and you saw what happened with Silicon Valley, then you have to worry that all of these

banks are going to be able to sort of supercharge that. And so think about every bank in the world launching their own stablecoin, trying to A, make money and B, hypergrow their deposits and the speed at which everything moves that could end up being a negative. There's a lot of people who are worried about the proliferation of stablecoins if it's not just the main ones, like you said. And obviously there's a path there to CBDC, but that's a whole other sort of conspiracy theory. Well, my conspiracy theory, which I think is a real one, is that JP Morgan Chase, Citi,

Bank of America, and Wells Fargo, all basically issue their own stablecoin and then they say, okay, we're going to allow interoperability. We'll allow free transfers among our four and put that underneath the cell and try to tell people that no other stablecoin could participate and so continue to back it up as a closed system. That's what they're going to try to do. It will fail. It will fail miserably unless they manage to work the lobbies because what will happen

is that the functionality of why people use those money-centered banks so much by payment systems, et cetera, will all get replicated in all the other firms that are now capable of doing the same thing without having to worry about Swift or any of the other firms that are now capable of doing the same thing without having to worry about Swift or any of the other crap that's going on. All those other firms will issue, will have savings accounts that won't be stable coins. It'll be money market funds. It'll be tokenized. That will be instantaneously available when you don't need to use your stable coin.

So then that will be a big difference. That's how it's going to go down. We'll see who wins, but we'll see. Yeah. I mean, I'm with you there. A private stablecoin network between the big banks in the US is absolutely zero difference in functionality from where we are today with that. They're still going to have all kinds of limits on it because they because of the risk management side, which they're not going to give up. I can already transfer the amount of money that they are comfortable having me instantly transfer today. And so if it can't go internationally, right, if it doesn't interoperate

to everything else, it's not deployed on other services. It's not really any different, which is why I think I'm sure they will try and push it and do it because like they're financial institutions, they wanna make money, but I don't see it doing particularly well. I think the one thing that does potentially get interesting if the market opens up is it definitely puts, I think a pressure on Tether in particular,

and USDC to a lesser degree of having to start paying interest on at least some of it because someone's going to come out and start to eat away at that margin. They can't keep getting a free 4% on all deposits without someone saying. But right now there's almost no legislators that want to allow yield on stablecoins. That's been kind of a battle between the industry and legislation sort of alludes to the fact that we might not get the exact legislation we need or that's very forward thinking.

Yeah, I think someone will find a way to backdoor it one way or another. Right, so put yourself in Coinbase's shoes or Kraken shoes or Revolut shoes. It doesn't really matter. I mean, any fintech oriented bank is going to offer services to people where they can use stable coins for payments and have a tokenized, because it'll be easy and quick,

money market fund that provides real interest, right? Now, that's going to become an offering. I mean, the notion that $5 trillion in today's checking deposits is needed from the banks, yeah, okay, I understand why they feel they need it, they make money. But why do people keep that money there? Well, because right now, it is a pain in the ass to move money and it doesn't necessarily clear it could take the bank and hold it. You made the important point, you said Alex, is the amount of money they're comfortable with. Well, people hold money in checking accounts specifically because

there are no facilities to have it in a... Banks still offer enormous amounts of CDs or they force you to get below market interest rates but hold it for 12 months to get close to market. Just think about that. Those are anachronisms that are not gonna survive. Now, there'll be death rows for a while. It's not gonna happen immediately, but those will not survive. And so people are thinking about the model.

The smart people are thinking about how to go upstream to the consumer and offer a better model, because what person wouldn't say, I'm better off Instead of using city or wells or whatever and getting a blended average of less than a percent on Their their their expenses for the next year and all of a sudden now they can get in today's environment for four and a half percent That's good. I I disagree there. I don't think that's actually that big a difference from where we are now like

Most of the banks already make it pretty damn easy to move money into a brokerage or a money market account. Now, they're playing a lot of games. The favorite one is, I want to say, is it Citi who the CFPB was going after? It wasn't Citi, it was another C-Bank. Or basically introducing a new savings account that paid a higher rate that people could go into while leaving the original people at a lower interest rate on it so that they didn't have to pay out for it. But the reason they were able to do that and that was effective is because a lot of people don't care that much and they're, you know, they have a bank, they know that it's safe, they like the services that they get from it. They have a bank, they know that it's safe, they like the services that they get from it,

and they just want a thing that works and goes. I use a couple large banks and I optimize somewhat, but I also leave more money than I probably still have been is quote-unquote optimal in a savings account or in my checking out there just because it makes my life easier on it relative to the larger services and interactions with the financial service system that I care about. So I'm not sure that just because there's more competition out there, there's already a lot of competition, a lot of options, a lot of neo banks and various things that people can do. And we still, as you pointed out, have huge sums of money sitting in these super low yield accounts.

Right. Well, I mean, look, it's the larger conversation about fractional reserve banking in general. Fractional reserve banking was absolutely necessary as a companion to capital formation for capitalism. It just was. But why was it that way? It was because capital was local, regional at best, and information was very hard to transmit. So now we have global capital and global information at the touch of a button, and as AI continues

to improve, it gets better, better, better. You'll end up with AI agents in a pure stable, where when you have stable coins, you know, underlying the system, that can make these transfers and moves so easy that people won't even think about it. It's kind of like, what can you do with Google Maps today versus what could you do, I'm old enough to remember, when you had to buy a road atlas if you were taking a road trip. It really is that big of a difference. It's just, it's not gonna happen tomorrow,

but it is going to happen in the next few years. You're gonna start to see it. That's sort of my thesis, and I'll probably expand this at some point, but what does this mean for crypto? Well, it means that projects that are really building rails, that are really building in these sectors have a real chance. I'm not saying all of them are gonna win.

In fact, very few of them are gonna win, but the winner's gonna be worth a lot of money. And I think that's really the key. Yeah, I definitely think that the end state that you're kind of going to there is basically the financial services AI agent that sits on top of everything else. And if you look at you, again,

if you look at like a lot of the neo banks, especially on the business side, like Brex and Mercury and stuff, none of them are actually banks themselves, but they're paying pretty damn good interest rates on a lot of these deposits by just being a software services layer that sits on top and moves your money around for you transparently. You don't have to think about that. They give you really good interfaces, really good tooling for doing stuff, and then they just go on the back end and figure out where is the highest yield still FDIC-insured accounts that they can stick all the money in for you. So I definitely think that's what it ends up looking like more than an actual

bank or an actual financial services company trying to optimize their yield. Yeah, I think that's right. That said, here we are in a crypto town hall and people are trying to optimize their yield. Yeah, I think that's right. That said, here we are in crypto town hall and people are trying to figure out what's gonna happen to their bags and the industry and where it is. And we put in the title about Bitcoin dominance. It seems like Bitcoin's path is pretty clear. I think there are a lot of people who are on the ETH side.

I know Scott, you think that ether has bottomed and it actually did I think Scott we lost Scott Dave probably whatever but I know there are a lot of people who think that ether is bottomed and I was just looking to see yeah and That's going to be you know a major theme over the back half of this year and I have a strong opinion about that but the notion of all season or what all czar is I think major theme over the back half of this year and I have a strong opinion about that. But the notion of alt season or what alts are is I think, I always hate it because it doesn't characterize what alts are.

I mean, look, today everything crypto is doing well, hell, Doge is back up over 18 cents. So I don't know what to make of any of this stuff other than the fact that when Bitcoin starts to do well and risk markets are doing well, and they all are today, that people will put back money into all of these things. So it'll be really interesting. I know people have thoughts about what's happening. Sorry, I muted myself. Hey, Bruce, I noticed you requested to come up.

Anything in particular we were talking about that you found interesting? I guess not. What about David? I see you unmuted. Thanks for the Double Dave now? We're back for the Double Dave show? Look that way. Okay, cool.

As opposed to the four Ashley's, but we won't go there. Yeah, in terms of what's going on right now, yeah, every bank coming out with their own stable coin, I could see them start bundling stuff with like meme tokens. JP Morgan will come up with their diamond meme token. I'm all for the diamond, actually. I'd rather have the diamond than the Trump, but you know, that's just my opinion. You know, maybe we'll see people if we don't get regulation in here that someone will try to revive the algorithmic stable coin experiment much as we saw with the crash of Luna, but yeah, it's gonna be interesting. It's gonna be interesting

Well, you know look I've been a skeptic of algorithmic stable coins as a concept since basis. I think they're that it's trash for a lot of reasons because effectively what you're doing is your, it's worse than selling volatility because effectively what you're doing is you're saying, okay, I'm gonna create an asset that people are gonna put faith in. And as long as that asset retains people's faith,

it's stable. And so effectively what you're doing in any algorithmic stablecoin is selling their tail risk. And that's what Luna was. And there's no way around it. That is literally the only way you can do it. The only alternative to that is massively overcollateralizing an asset that has real value.

So you want to build a quote algorithmic stablecoin that's backed by Bitcoin? Yeah, I can see that working. But once again, you have to understand there's ways of doing it and ways not. But those sorts of models, I think the one thing that we know is that the regulators don't want them to be called stable coins. They'll let them be called something else and they'll be like a stable coin. They'll be a fund, right? And you can have fund with risk characteristics and that sort of thing.

So I think that's the the direction will be going in. Can we call them your mama's stablecoin? Call them whatever you want. I just think they don't want the word stablecoin. I mean, I know it's ridiculous, but you have no idea how much literal political infighting happened over the term money market fund and regulation of money market funds. In 2008, that was a huge deal when money market funds broke their dollar peg and not by a lot, but it was a huge deal because the expectation of people

were, if you have your money in a money market fund, it can't go below, you can't lose your principal. Yep, yep. So, I mean, Mark, you know, oh, looks like Mark dropped again, so let's see. Let's get him back. Okay, I'm not the only, the point is I'm not the only old guy on this panel. So Mark, you remember that, right? Yeah, yeah, I was at a hedge fund

Yeah, I was at a hedge fund and we had cash at Morgan Stanley and then had to put it all into T-bills because we got really smart on what was property and what was not, but it didn't matter because Morgan wouldn't give us our T-bills back. They didn't know where they were. True story, after Lehman failed. But you're right, everything at the front end at T0, T1 demand deposits, that stuff gets real tribal as far as language and possession. It's collateral for some people. So I agree. Back to Ethereum and people's I agree. Back to Ethereum and people's running where it's going to be, is there a threat to its position as a stablecoin carrier, given what XRP is trying to do with Circle and that? Because I think that would be a real blow if somehow there were more viable alternatives to ride rails in Ethereum.

Well, I'm no expert there. I actually just invited William who I know has strong opinions on this subject. I mean William, you want to answer that one? Sorry, I was trying to respond. Can you repeat the question about comparing XRP to Ethereum? Is that it? Effectively, I guess I did. What I said is the competition for stablecoins about whose rails,

because I know currently the Genius Act states that they have to be a public blockchain in order to be approved, I guess, to have treasury backed, if that's the case. And Ethereum is a front runner, you know, among, you know, the top three, I imagine. Is there a chance that Ethereum loses that because of their current status, the success of layer twos, the way fees are being done, and the threat from XRP? No, I don't think so. I mean, again, when people think about Ethereum, it's really about the whole Ethereum ecosystem, L1 and L2s included.

I don't know why some people want to single out L1. Specifically, both are improving at the same time, at the same speed. There was a bit of kind of giving back to the L2s momentarily, but this was a temporary thing. I think Ethereum is very well positioned at this point. It has the largest market shares in, I don't want to repeat it, but it's obvious when you look at the numbers, whether it's stable coins or real world assets or DeFi, the activity and the volumes are all on Ethereum. And I said something a few minutes ago.

If Bitcoin today is at three trillion, I am not kidding in saying that Ethereum should be one trillion because Ethereum is delivering on many of the promises, whether they are philosophical or realistic promises that Bitcoin is making. A lot of the activities on Ethereum. It is vastly undervalued. David, I agree. I'm actually curious, William, you had mentioned this temporary giving up value to the L2s. How was that temporary? The L2s have exploded and I've personally felt a negative UX consequence of the L2s with users getting confused. Where are their tokens?

Where are their funds staked? People getting sent assets on the wrong chain. How do you see that unwinding? And when you say temporary, do you mean that we will now revert back to using the L1 primarily? Because unless you revert back primarily, it's not temporary. No, no, it's an evolution. There are lots of applications on L2s,

and there are lots of applications on L1s, on the L1 specifically. So they all keep advancing and they all keep growing. If you take BASE, for example, it doesn't have a token. Some others have a token. We should focus more on the activity and the underlying significance of what is happening and not say, well, this is happening on the arbitrariness or optimism. Going down further in the next few months or years, you may not, a user doesn't care

really what the underlying infrastructure is. What they care about is what they are seeing and the value that they are getting by interacting with a blockchain. And I think you're going to see more and more a melding of L1 and L2, especially that there are interoperability standards that are going to be prevalent. They are talking now about a common address system that will cut across this layering. So it's all going, it's all advancing in the right direction.

So from a trading perspective, and we see a bunch of people. Sorry, from a trading perspective, Mark, you had dropped, I just had to get you back up again. I'm sure you had a follow up. So. Yeah, thanks, David. And William, thank you for that. You know, I haven't followed it as closely since the Denken upgrade and focusing more on Bitcoin. But and I guess I've been not lazy, but focusing

on the reason I distance myself from Ethereum and it does have a tremendous, you know, interoperability and what they do with the upgrades is undeniably constructive for the space in general as scaling. But how do you or others address the fact that when the hack happened, the Ethereum hack a few months ago, that it was entertained and even possible to roll back the chain? So just from a decentralization standpoint, is that something that should be dismissed because it's unlikely to happen from a control standpoint? Or how would you look at that existential?

Let me jump in there, because I am by no means a particular Ethereum fan. There was zero credible or real discussion about that happening. That was like random people on the internet. I think you can even say to a degree false flag from people trying to undermine confidence in Ethereum by implying it's literally not even possible

for it to happen. And nobody at all serious was suggesting a rollback. Okay. Yeah, well, thanks for that clarification and it is not possible to roll it back or it is highly improbable to have a consensus to do that. So I don't know if you know others have a night. Right, I mean this there was a lot of analysis about what happened and you can't deny that a part of that was the human error. So you can't call on whoever to just fix that unfortunately.

I would jump a little bit on this, on the human error. Let's say Ethereum is 10 years old and a lot of crypto is getting old and old. And this kind of security issues shouldn't exist anymore. For a company with all kinds of DevOps and everything, you should have all kinds of supports, automatic support for actually seeing what you are signing and not blindly thrusting the microservice which gives you. And this is one of the big issues. There were a lot of critical points and all those points added arrived into this kind of super critical

vulnerability and it is still there. So you still have blindsigning, you still have to trust the microservice to do it, you don't have a transaction manifest created by your device. I think yesterday Ledger has announced that they built into their new Ledger system transaction validator manifest which runs on a Ledger system outside of the microservice, which is giving you the information. That's cool, but that's again, it's only one wallet. I think that right now, Ethereum is still stuck in the same place

it was like a few years ago and these kinds of hacks. If Bybit is hacked with all the security teams around him, it is super easy for anybody to get hacked as well. Well, let's be careful here because from what I've read, I'd be curious, the Bybit hack was real human error. There is a lot, I mean, there are a lot of things that are going on, and it's not just in crypto, it's in the traditional financial system too. There are phishing attacks every single day, newer, better, more. It's effectively, if you do not have good cyber hygiene, you're screwed.

Now, the good news is there are firms working on AI defense against this sort of stuff to put into their systems. So you're basically seeing an arms race between cyber crimes and firms which rely on humans doing things as opposed to you know just you have a wallet it's sitting there you're not touching it and so when you talk about a hack there it always amazes me because I talk with a lot of normies and effectively the first thing that they say is well if I'm not touching anything can can someone figure out a way to steal it and the answer to that is

generally no it's when you start doing stuff that matters. So you're making a transfer, you're using a cross-chain bridge, you're validating transactions, you're agreeing to sign a transaction, that sort of thing. So I think it's really important to understand what you're talking about. I don't extrapolate from if Bybit could be hacked,

anyone could be hacked. I think if we had someone from Coinbase here or Kraken, you know or hell probably finance They'd say no, that's absolutely not true for a variety of reasons. I've heard them say that so I do think that matters Yes, Robert what I wanted to say is that yeah, it is an actual human error But in order to limit those kinds of errors you can design systems better In order to limit those kinds of errors, you can design systems better from wallets, from everything, from bottom up. Because as crypto and in a cyberpunk era where we are speaking about to people that you own your real money only if you have on a wallet, on Bitcoin, on Ethereum, on a layer one, on a

decentralized network. And we are saying this, while having this kind of hacks and this kind of super easy to fall into this kind of traps, these two things don't work together really well. And yeah, it was a hack on the Bybit in case of the Bybit team it was an error but they there are daily people are getting drained daily and people are signing hundreds thousands of transactions blindly by trusting not a chain not their wallet but what a website is giving them to. Because that's how the system is built up right now. So I'm just a little bit arguing that after 10 years or 15 years of crypto,

and with all the security firms, with all the minds here, you need to create a system in which safety for the users is by design at all levels. And that's possible. That's the only thing I'm arguing here. Oh, I don't think that's much of an argument. I think you're right. And I think there are like, I know, like I'm actually talking to somebody about this, you know, there are firms who are literally trying to do exactly that.

So, you know, I guess, you know, stay tuned is the sort of answer. But to go back to Scott's point from Token, it's like, you know, if you have a project and what you're trying to build is that. And, you know, if you succeed, it will be very successful, I think is kind of the point. Right? So, you know, here we are.

It's almost 10 after 11 on a Friday afternoon or Friday, you know, for those of you who are over in Europe or further in the morning here. You know, markets, I don't know if anyone's been watching, but, you know, Bitcoin is sort of caught up to gold and the other risk markets today. Everything's up like 1% now. It didn't start that way. But here we are, you know, correlations kind of go, you know, as you get toward the weekend, they tend to get a little bit, you know, a little

bit tighter. Anybody have any final thoughts about what they think they expect anything over the weekend? Or are we just basically going to be doing the same thing? You know, are we going to have if markets hold here? I think it'll be the longest winning streak for the you know, for we going to have if markets hold here, I think it'll be the longest winning streak for the, you know, for the S&P, at least for a long time, which is kind of amusing if you think of where we were two, you know, two days ago, or two weeks ago, excuse me. Yes, David.

Yeah, I would just say that we're going to get more news coming out about price increases. I think obviously the run up into the Fed meeting coming up next is certainly going to be unfavorable. We didn't really see anything in today's jobs report that would scream out for anything along the lines of interest rate cut. So don't expect to see any moves from the Fed and just more news about higher prices. And I would argue, you know, we're going to see lower stocks in May. You know, it's funny, Joe is giving the thumbs down and I would happily invite you up to

say it. In fact, Joe, if you feel like coming up, I'll let you defend it. All I would say is markets climb a wall of worry. And my point would be that it seems like most of the worrying has been overblown. So, you know, I guess we'll see. I will say one nugget from the jobs report, I haven't heard it myself, but Zero Hedge mentioned it, is extremely important politically,

and people will always underestimate this. If it is true that over the last quarter that the job growth has been refocused on that you've seen non-native born jobs in America go down while native born Americans jobs going up, if that is in fact true and it looked like that was statistically significant from what Zero Hedge posted, that is a massive, important political point. So everyone who thinks that the midterms are dead if we have a recession, blah, blah, blah, and talking about all this stuff, if in fact the economy is being re-engineered as they are trying to towards voters, that is not small. And just watch that trend. If that

continues for the next nine months, I think that your people's sense of opinion polls that are dominated by the coasts will be wrong again. I don't know, Joe. One last thing I'll say is that I'm looking forward to having Mark Carney visit the White House and basically for all those Canadian hockey fans out there, basically give Donnie a big headbutt.

Yeah, we'll see. I think that Canada is probably, well, I'm gonna save this one, but I think that, because I lived in England for a bunch of years and I know enough about where he's coming from. I would say Canada loses this trade, I'll say. Okay, thank you.

Anyway, Joe, you jumped up. I want to give you the airtime on, on for the, for the bullish case for markets in general. Yeah. Thanks, Dave. Um, look, I don't know how many times we have to go through this cycle, but, uh, rate cuts would probably be more bearish for the markets. The fed came out and said in May, you know, here that we need to cut

rates because growth is slowing, the folks that are following that will perceive that as a bearish reaction. So this has been the common thread for the last several years and I've put a couple tweet threads about this. The guys who have gotten this wrong in the macro sense have been focused overtly on the Fed and the Fed has really you know sort of taken a back seat to the era of fiscal dominance. We're still running structural deficits that are equivalent of wartime deficits, 6 to 7 percent deficit to GDP. Please explain to me how a 25 or 50 basis point cut amounts to anything.

So folks that are like, oh, well, the Fed's not going to cut, they're going to hold Pat. You know, there is research out, University of Pennsylvania, several other reputable institutions that have said that the higher rates are actually stimulative because you're, there's huge amounts of people sitting on a lot of short-term paper and they're getting money from the government doled out. You know, the entire boomer generation who is, you know, loaded up in T-bills and, you know, short-term fixed income there, that's stimulative. So you know, the folks that keep saying, oh, the Fed's not going to come to help, and that's really

bearish and the run up to the FOMC, they're out of the game. I mean, in an era of fiscal dominance, their effects are muted. And this is what people keep getting wrong. They keep looking for rate cuts to trigger some bull market when arguably the cuts are going to be negative for markets. Look what happened to the 10- year when they started cutting last year. You know, when last summer when they did the first cuts, the 10 year yield started to rise, which was not bullish for asset prices.

Now there was a Trump trade on that ran up, you know, in anticipation of the election. But to me, like I don't, I still don't understand the overt focus on the federal reserve when you're running these types of deficits. It makes no sense just based on pure math Mark yeah quick one. I know you want to wrap up here Dave Joe everything you said is accurate about the fiscal dominance Great point to bring up and how it's not about the price of money It's about the supply of money and that when they keep it high, they're actually pumping more money into the system after 15 years of low rates. All that's true. I think the Fed has a back door to supply of money

also, though, from working with the FDIC to do the SLR so that Treasuries can be purchased. So I think that they're leaking they're strip near leaking or breaking boundaries into the fiscal side as well by fostering higher supply. Well, can we talk about that for a second? Just for you, Mark, it's a great point. Okay. So if this SLR exemption, just to make you got to make things real simple for people, because it can get kind of wonky, right? The SLR exemption, if that goes through, what that's going to mean is that every single bank in the United States is incentivized to hold more treasuries. And by incentivizing them to hold more treasuries, that is not bearish, right? That's very bullish. That provides more liquidity to the marketplace. And the reason is because right now, treasuries are counted in what's called the supplemental

leverage ratio. Basically what you're talking about is that there's a disincentive for holding a certain amount of treasuries. They're gonna remove that. And that will not be counted against their leverage ratio. And once you do that, that is a positive liquidity catalyst for markets.

What it does in the practical sense is not just on the fiscal side of the federal government, on the banking side, it makes it easier for them, because their leverage ratio is really what they're focused on, it makes it easier for them to lend and provide credit to the marketplace, which is bullish. That's a positive liquidity catalyst for the real economy. Yeah, I've been making the point, sorry. Oh, yeah, no. Go ahead. Absolutely, absolutely true, Joe. And it's fun having a, I don't know if you were a litigator, but you know, a person with a a legal mind delving into the into the Byzantine financial fiscal side. So thanks for the clarity. made repeatedly on our macro Monday call with James and Mike and Scott is that everyone

focuses in markets, I think, wrongly on the rate setting part of the FOMC and they ignore what's going on on the fiscal side. And that to me is the bigger answer, the bigger question. And we've seen it, there was this thesis earlier this year that Doge was going to come in and make so many fiscal cuts that we were going to restore fiscal sanity. I mean, I can't possibly express enough derision to how that could happen. You know, it's just nuts. Now, are they, is Doge doing really important work?

Yes. I mean, there are some pretty good interviews over the last couple days of what they're finding, but it doesn't change the fact that our Congress refuses to address the spending side of the situation. And that's just fact. I mean, I wish that wasn't the case, but it is. And as long as we're running here, what does that mean? Well, it means if we have a recession or if we even close to a recession and tax receipts

are smaller, that our deficits are going up. And what does that mean? Well, that means more money is going to have to be pumped into the system. It's just, it's as simple as that. You disagree, Joe? No, I think that's true. But again, there's like, you can't stare at any one thing in a complex and dynamic system. So you're exactly right.

We go into a recession, there's automatic stabilizers. They're going to blow out the deficit and the revenue side goes down. However, growth is collapsing in that environment. So that's not bullish. This is like, if the Fed comes out tomorrow and says we're cutting rates to zero and half the country's unemployed, yes, over the long run, markets are going to come back and they're going to come roaring back and they're going to do more stimulus. But there's that trough in between where people take a 50%, 60% decline. So that's not bullish. The best thing for markets right here, in my mind,

is you continue with these massive fiscal deficits and you have the rates remain stable. You don't cut because there's no real reason to cut. And again, think about the inflation argument, right? The Fed will tell you they can't model these tariffs and the effects it's going to have on inflation. And they have told you they're going to remain pad. They're going to remain stable because they want to see how the data is going to react. I was in Chicago with, in the same room with Jerome Powell, and he was speaking to the Chicago Economic Club, and he was saying this exact point. He's like, listen, nobody can model this. Nobody knows how it's going to take effect. I don't think the administration even knows what their policies are going to be. So why would we be cutting rates?

Tell me the explanation with 4.2% unemployment and with generally a strong consumer, why are we cutting rates? And I think the market, yeah, I mean, that's been my base case as well. So I guess we'll see. I mean, there's 7% of the people think they're cutting next week or whenever it is. I think they're wrong. Frankly, I'd be really surprised to see anything on the rate side. The only thing I really think they want is they want to try to figure out a way to get the 10-year below fork and probably towards three and a half. I think that's what they want and we'll see if they can get there.

But I don't think it's going to be by I think you're right. Cutting short term rates is not likely to achieve that. Probably the opposite. The easiest way to get the 10 year down is to bring inflation down. I mean, honestly, that's when you're buying a 10 year, there's you're forecasting growth, fiscal deficits, and inflation. Those are all factors, right? So what's the easiest of those to take care of? It's not fiscal deficits, unless you're forecasting growth, fiscal deficits, and inflation. Those are all factors, right? So what's the easiest of those to take care of? It's not fiscal deficits, unless you're going to touch social security, Medicare interest, and, you know, military spending, which they're not going to do.

You have to bring inflation down. And how do we bring inflation? Well, you know, that's not an easy thing to do in the short run. Yeah, it takes a long time of keeping rates, you know, elevated. And also, you really got to deal with something on the housing front. I mean there's a shortage of housing in the country which is a serious problem for many regions. Okay, Gary then Zach. Well, this inflation thing, I'm really struggling where this is coming from. We have a crude print at 58.32 today, down 1%. We have gasoline at 202. And if we go back just two and a half years,

gasoline prices were 265. That's where they, what is that? That's April 20, excuse me, July 24, a year ago. We're at 260. Now we're at 202. Now I don't know how crude oil being off in the 50s, which I don't think anyone predicted, and gasoline being down 40 or 50 cents that's wholesale. Where's the inflation coming from? Egg prices, food prices are coming down. I mean, okay, maybe you don't have as many t-shirts from China to buy. But can someone explain where the inflation is coming from? Well, I will say this. Mike McGlone, my friend who I disagree with vehemently on Bitcoin, did get oil right. that We have too much energy all over the world. And now you have all the construct, all the all the oligopolies have broken apart. Now people are trying to place.

They're trying to monetize their assets right now. Right. That's exactly what's happening. Everyone's trying to, I just don't see where the inflation is coming from. The Joe may be worried about, or maybe there's something I'm missing, but I don't see the influx. I don't think Joe's worried about it. He jumped down, so he can't defend himself. I think his point is that it isn't there, and that's part of the bull case.

Anyway, Zach, you would jump up first and then Mark. Yeah, thanks. I mean, I got to run in a minute, and apologies for changing the conversation. I just wanted to remark on a sort of breaking policy thing that the Genius Act, which looks like the most likely version of a federal stablecoin bill to pass sometime this summer, had an update today that is sort of basically a ban on Tether in the United States. It gives the OCC, the US banking regulator, the ability if it doesn't like Tether's management, if it thinks that there's illicit finance risk, if it doesn't like the disclosures it's made, to, as a foreign issuer, force all US exchanges to delist Tether in three

years after the bill is passed. So it seems like this is some quite effective last minute lobbying by Circle, Coinbase, and Croup. I think we're going to have to dig into that next week because we're getting close to wrapping, but that is interesting. So thank you, Zach. Mark. Hey, thanks.

Just getting back to Gary on the inflation side. Yeah, oil has been overlooked as a big deflationary lever. In the work I've done locally looking at CPI versus different regions and in Europe and the US, shelter has been sticky on the way down and I think operating a apartment you know multi-unit complex has not gotten cheaper so those rents are not coming down, rates aren't coming down so there's no refi opportunity. Totally agree. And I think, well, who am I speaking to? I just remembered what business you guys were in.

No, this was Gary. No, I agree. I agree rents are not gonna go down. Now, Grant will disagree. Grant will tell you rents have gone down. Okay. But I think rents go up from here. And then the other part, which is in our brains brains is that we look at CPI as the basket. When

rent is 50 to 70, well 50 to 60 percent of someone's budget sometimes. Not you know it's not 30 like the CPI basket. So that's another you know reality about what's hitting people is it's a bigger part of their actual budget, not the Fed's perceived allocation. OK, well, now we're 1123. There's no other final thoughts. I guess we can all think about enjoying the weekend, although some of us are on the East Coast. But I'd like to thank you all. I think people should remember to follow all the speakers who are giving up all their time up here. And we will be back

probably with Mr. Melker on Monday morning at 1015 on Crypto Town Hall. So thank you very much, everybody. Thanks, Dave. Have a great weekend, folks.