The Wolf Of All Streets - Why Bitcoin Is Breaking All Time Highs | Mark Yusko

Episode Date: November 9, 2021

Fan favorite Mark Yusko returned to give an update on the state of crypto and where it fits in the context of global markets. Mark provided a thoughtful case as to why caution is necessary in the current market conditions. This episode includes a number of priceless tenets investors should consider regarding the crypto market and managing risk. -- Sorare: Where fantasy meets reality. Collect, trade and earn weekly prizes on https://thewolfofallstreets.link/sorare. #OwnYourGame -- HBAR Foundation: Fund your project quickly and easily with the HBAR Foundation. Apply for a grant and be put on the fast track to success at https://thewolfofallstreets.link/hbar --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is sponsored by the HBAR Foundation and SoAir. Stay tuned for more information on both of them later in the episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of Wall Street's podcast, where two times a week, we talk to your favorite personalities from the worlds of Bitcoin, finance, music, trading, art,

politics, basically anyone with a good story to tell. Now, usually I give a long-winded introduction, but I have the opportunity here not to because I've already introduced this guest twice. We've got a hat trick here from one of my favorites and one of our fan favorites, Mark Yusko. Mark, thank you so much for coming on the show again. Oh, thanks for having me, Scott. And I love that it's a hat trick as a former soccer player. So it takes me back to those good old days. That's right. Well, three goals. We got it.

We finally got it done. I have a feeling, though, that it won't be our last. So maybe we'll go for four, five, six, seven on the road. I like it. So listen, one of my favorite things that you've ever told me on a podcast before, and I've referenced endlessly, is that the best performing accounts at Fidelity are the deceased, right? People who have died and didn't touch their money and their accounts have grown. So I love that. Do you think that that will apply to crypto as well for crypto

investors? Of course. And we all know these stories, right? We all know tons of people who bought it at $100 and sold it at $1,000 and kicking themselves because they just can't get back in. And we know people who bought it at $20,000 and watched it go to $3,000 and then sold. So we've got those bad stories too. But one of the challenges of this particular asset, Bitcoin in particular, but Ethereum and others, but Bitcoin in particular, is it's engineered so brilliantly to create a rising nominal price over time as adoption increases, right? It's a true fixed supply asset. So simple supply demand, if demand actually does rise with a fixed or even dwindling supply, because some coins are lost or stolen, you have to have a rising price over time. That's just the way economics works. So the buy and hold or buy and hodl or whatever you want to call it is the preferred strategy. And it doesn't mean you can't trade these things. You can, if you're a great trader. I'm not a good trader. I don't

trade. So I like to buy things, lock them in a drawer and protect myself from my own emotional thing. And Scott, one of the things that I was very fortunate in life, I had this great mentor, Julian Robertson, when I was the CIO at University of North Carolina, and he's a Carolina grad. He kind of took me under his wing. And I don't mean I was there like in his office all the time, but I got to see him anytime I wanted, and he would impart such incredible wisdom. But one of the best things is I got to interview all these young guys that left Tiger to start their own firms, whether it be Maverick or Lone Pine or Blue Ridge or Tiger Global. And I asked them all,

what made Julian so great? And like two things. So one, he would always say, live to fight another day. Don't press a losing bet. Don't try to prove you're right and the market's wrong. Just get out. Just move on. Live to find another day. And second, they said he had an uncanny, uncanny ability to double up. Most people don't have that ability, right? They want to double down. They want to prove they're right. And they just destroy more capital. And they can't let their flowers grow. They want to pull them right away because they're afraid they're going to lose their gains. What you want to do is press your winners. Actually, I made a hashtag for it, hashtag winners press winners. And then I stole the hashtag from Paul Tudor Jones dorm room sign, losers, average losers. And so it's

not that trading is bad in and of itself. You just have to have the right gut for it or the right instincts for it or the right discipline. It's really more about discipline. Those topics seem so conceptually obvious, which makes you question why they're so difficult to enact in the real world, right? Cut a loser short. Yeah, duh, let your uh let your winners run right pilo sell high all the beams that we have but nobody can do it so i mean it's unbelievable i mean you think about we can say it over and over and over again and and it's so hard it's even hard for ourselves i mean i'm i'm horrible very hard that's why i don't do, because I can't get over the emotional side of me versus the logical side. So it forever asset, right? Even I. It's not my retirement account. It's my kid's retirement account. Okay, maybe I'm in a position that I can hold it forever.

But a lot of people who have seen these unrealized gains that may eventually get taxed by our government anyways, but we can talk about that in a minute. But these people who have seen these unrealized gains, maybe they want to buy a house or maybe they want to, you know, their real world thing. So I guess for your average person who's seen this amazing run for crypto, what's the appropriate balance there for them? Well, and again, that's a fantastic point, Scott, in the sense that that shouldn't cause you any emotional damage, right? If you need to spend some fiat, then by all means, convert some of whatever asset. It could be real estate, it could be stocks, it could be bonds, it could be crypto, whatever it is. Now,

a thinking person would say, well, let's convert the lowest opportunity cost asset to fiat to spend. But this idea that we're going to hold everything forever, no, that's not realistic. We do have to live in the countries in which we choose and spend in those currencies. And that's why we get in this debate of, is crypto, and in particular, Bitcoin or others, going to be the World Reserve asset? Is it going to replace all currency. And aren't the governments going to ban it? Like, well, look, I actually don't think we're on that path. I think we're on a path to be a better store of value than physical gold because it's more portable and more divisible. And it doesn't mean I don't like gold. I like gold because it's tangible and it can do some things that Bitcoin and other things can't do. But I do think that your point about I may need some capital at some point to spend, and whether it's buy a house, whether it's to buy a vacation house, or put your kids in college, yeah, you're going to have to spend in fiat. And I don't get this whole thing about, well, we need everybody to accept Bitcoin. Like Tesla saying, oh, they're going to accept Bitcoin again until they realize that if they

do that, then they're going to have to take the accounting right down and they're not going to do it again. But I view them as coexisting in terms of a fiat world and an investment world. And if we keep our investments as investments and our fiat as our spending, we're much more happy. And don't second guess yourself saying, oh, if I would have left it in, we could have gone the other way. I mean, you don't know.

I don't think I want to live in the world where we're the only ones left, because to me, that's sort of this Mad Max dystopian future if the dollar collapses anyways, right? But I think there's something unique about the crypto community that makes this even more challenging, I think, for us than others. You don't have bond maximalists in the same way you have crypto maximalists, right? But I think there's something unique about the crypto community that makes this even more challenging, I think, for us than others. You don't have bond maximalists in the same way you have crypto maximalists, right? I feel like a lot of people are really, it's all crypto and nothing else. So we talk about sell something else first, but for them, they have to really find that balance where they're comfortable. But like you said, it's absolutely inevitable and it can absolutely go the other way. And will go the other way for meaningful periods of time. And, and look, I don't, I don't think that you should not take those opportunities to, you know, buy the dip, so to speak. And but but Mark, you just said losers, average losers. there's a difference, right? A trade where you're buying it because the price is moving,

you have no knowledge, you've done no analytical work, and there's no fundamental reason why you're buying, it's just movement. That's different than a long-term investment where you attribute value to that asset and determine if the current price is below or above. So I actually have this model that I track and I've been tracking it since really 2015 that says this is what our expected value of each network is. According to Metcalfe's law, we can value what a network is worth. And whether that network is Amazon, that network is Apple, that network is Bitcoin or Ethereum or any other asset, we can value the network. And then we can decide, is the current price above or below that value? Because price and value are not the same. We've talked about this on previous pods. The price is a liar. Price has nothing to do with

value. And the internet, in fact, it's funny, I was just thinking about tweeting this and now we're gonna talk about it. So it'll be on the internet this way, is that we live in a world where the internet has created a place where we know the price of everything and the value of nothing. And we don't think about value the same way we used to. And so price is just what you and I decide to exchange

a small amount of some good or service for. The value is something very different. And so when I look at how I think about digital assets in my own portfolio, I actually don't have enough, believe it or not, digital assets yet that I need to sell them. I still have plenty of legacy assets, either private investments, or I don't have any bonds, but equity investments, and even a little bit of cash. And I still have a little bit of income. That's the thing that people forget. Your income from whatever you do, your job or your gig or whatever it is, is a form of a bond, right? It's a fixed income that's coming and maybe it's variable, but it's an income. And so I still use that income to fund my fiat needs so I don't have to disrupt my overall portfolio. Yeah, I approach it almost exactly the same way, actually. And something I sort of joked about a little bit earlier, let's talk about taxing unrealized capital gains. Obviously, it's the hot button topic this week.

Janet Yellen came out and said, just for a select few billionaires, as if it matters who you do it to. And this is obviously the way we're going to raise money. We're going to punish capitalists for being entrepreneurs and doing a good job. But talk about the, I mean, I know the implications, but talk about the implications of a policy like that, especially when you dwindle down below billionaires into your average person. Because once they go for them, it tends to find its way, I would imagine, into the tax policy for all of us.

Yeah. I mean, it's mind-numbing how stupid really smart people can be. Now you say, well, maybe they're not so smart. No, they're smart, right? We're not talking about dumb people. We're talking about people with PhDs. We're talking about people who have graduated from prestigious universities and written extensively and proven that they have some intellect, they have intellectual firepower. But the stupidity of taxing unrealized gains on a cohort of people, to your point, that have been the most successful, not just creators of wealth, but creators of jobs, creators of growth, creators of hope, creators of philanthropy, creators of a better world. And this virtue signaling of saying, oh, we're going to punish

billionaires. For what? For being good citizens, for providing good jobs, for making people's lives better, for getting up in the morning and running like you're supposed to, it boggles the mind. Now, part of the problem is we're still stuck in this idiotic framework that was supposed to be temporary. Income tax was assessed to fund, I think it was the Spanish-American War in the 1800s, and it was supposed to be temporary. And now we have it still 170 years later. And that's insane. And so why do we have it? Well, because a lot of people's jobs depend on it. And so every time we talk about changing it, the accounting industry says, oh, but I really like getting paid to do tax returns. And the

IRS agents say, we like get paid to enforce these 800 pages of nonsense. But let's think about it for a second, Scott. If you were designing a program to raise money, would you want to encourage or discourage innovation and the creation of wealth? Pretty simple. You would want to encourage that action. Okay. So if you think about taxing income discourages the creation of wealth and the creation of income because you just hide it. And we know all the loopholes that all the very wealthy go through to pay less tax than, quote unquote, their fair share because they can hire expensive lawyers to set up structures and do all kinds of things to get around. And they can lobby to make their thing. Like, think about, why do we get to deduct mortgage interest and not interest on other debt? That's funny.

Why would that be? It's called lobbying or corruption. So it's a long-winded way of saying income tax is stupid. A progressive income tax has some logic to it in that from the people of greater means, more is required. I'm actually okay with that. If I fundamentally accepted the income tax, I can kind of get to a progressive tax as opposed to a regressive tax. Fine. And in fact, a whole bunch of people should be exempt because they don't make enough to be taxed. But the problem is you get to a point where then you disincentivize that incremental creation of wealth, right? Because it's just not worth getting up and going to work anymore. Now,

the real problem with now what we're talking about is taxing gains that you haven't actually realized is now you're going to incent flight. Literally, people are going to flee this jurisdiction because now you can do business from anywhere, you can live in another jurisdiction and you will find a tax regime or our own government will allow us, if we move to Puerto Rico, we can pay only 10% of our tax burden. Perfectly legal, perfectly acceptable. And we used to do it in the Virgin Islands, and now it's in Puerto Rico. But it's actually worse than that. You don't even have to be there half the time, which is, you know, the rule says you have to be there half the time.

Oh, no, there's a little codicil. You need to be there. This is great. The maximum percentage of the homes that you own. So most people think, well, I only have two homes. I have the home in the U.S. and the home there. So it's 50-50. So I have to be 51%. Oh, no, you could have 13 homes and have to spend only a month in Puerto Rico to be a resident. Incredible. Now, they may have closed that loophole, but it used to work that way in the Virgin Islands. You could have 13 homes,

spend one month, and you were good. And you got the 90% off. So the really wealthy are going to find a way around that anyway. But here's the real problem. Taxing gains at all is even dumber than taxing income. Because we want to encourage investment. We want to encourage risk-taking. It's like this nonsense about taxing carried interest. No, it's not W-2 income. I put capital at risk as a venture capitalist. I put my own capital at risk side by side with my partners. And if and only if we generate long-term gains for them, do I share in those gains? If I don't make any returns, I don't make any gains. That's not income. I can't depend on that. It's like being a commissioned salesman. Of course you get paid.

Yeah. And so it's so phenomenally bad idea to tax gains and discourage investment. Now, they say, well, but how do we fund the deficit? Well, same way you're doing right now. You adopt this stupid theory MMT. In fact, I'm doing a big presentation on it tomorrow. I mean, the idiocy of modern magical theory. And you just print the money and destroy the value of the currency, which is the plan all along to siphon the wealth up to the 1% because the assets that you own at the 1%, real estate, fancy cars, scarce assets, soars in price as you devalue the currency. And look, that's why crypto is doing great. It's not that crypto is getting better. Crypto didn't get better. Now, there are things in crypto that are getting better. We're introducing new chains and we're getting new technology. But the core crypto, it's not that they're better,

it's that the asset we've priced them in is turning into toilet paper. So the dollar is getting less good. And so the Bitcoin to dollar price or the Ethereum to dollar price is rising. And so that's a long, long-winded way of saying taxing gains of any form is stupid. Taxing unrealized gains is beyond stupid. Virtue signaling that you dislike billionaires is popular with voters, but idiotic. How many jobs has Amazon created? 4 million by last count. 4 million people. Or my nephews, I have two nephews that they tried to go to college, didn't work out. People would say, oh, they're in trouble. They're not going to be able to do anything. They are making huge amounts of money running a business that puts tape on the floors of Amazon warehouses so the robots know where to go. It's awesome. It is awesome.

They've built a business and they are locking up and now they're extending into sign printing. Turns out that Amazon warehouses have a lot of signs like go left here, go here. And so they're printing the signs for them. That's awesome. That's entrepreneurship that we should be encouraging that. In fact, what we should do, Scott, is we should print a bunch of that funny money and we should put it in a national venture capital fund. We should hand it out to entrepreneurs who want to build, forget build back better, bullshit, build new better. How about build new better? That's what we want. We don't want the old, we want the new. Let's give money to entrepreneurs to build businesses, to build technologies. And then let's forget taxing income and forget taxing gains. Let's tax consumption.

It's perfectly fair. You want to spend on a multi, you want to buy that super yacht, you're going to pay a lot of tax. You can't cheat. If you and I went out to a bar and we had a beer, we pay tax. If we bought a beer, we pay tax. If we bought a shirt, we pay tax. There's no haggling. There's no, oh, I want to deduct my mortgage interest against this shirt. You just pay the tax, right? No cheating, no IRS. We could get rid of all of those unproductive jobs and put them into creative jobs that produce something in the future. Yeah. The first bankrupt billionaire who pays on their unrealized capital gains two days before the market crashes, 50% would be a real experience

to see. Wouldn't have any billionaires left if the market went the wrong way. Correct. Maybe that's the goal. Well, okay. Now you're going to get me down in the rabbit hole, Scott. So look, if your plan was to create money illusion, okay, by devaluing your currency and pumping up the price of assets that are owned by a select few, then tax those same assets to bail out the profligate spending government, it sounds like a really good plan, right? It does. You mitigate the risk. You give them the assets, then take it back. Yeah, give them the assets and then take it back. But here's the problem. What if those people are smarter than you, which is reasonably likely assumption, and they front run you. And they start selling the assets before you get to take them. Because someone said the other day,

so what's the date on which we determine the unrealized gains? Is it December 31st? My guess is that every November and December now are going to suck. Yeah. A lot of selling. Because there'll be a lot of selling and there will be no gains to tax. And then they'll just buy them back on January 1st and sell them again the next December. So the gaming of the system will be inevitable, but ultimately taxing income and gains is dumb. Taxing consumption is better and we could solve all these problems, but that's not what they want, right? Governments want to siphon the money to the top. They want to increase wealth and income

inequality, which they've succeeded in doing since 1913. And that's why we all need to opt out with a portion of our wealth into crypto, which is why you and I keep talking. Exactly. So to that end, you and I have talked with Bitcoin at effectively every price, but certainly well under $10,000. We talked, I believe, for the first time in April or May of 2020, something like that, maybe June. Now we're talking just hairs under another all-time high, right? When we were at effectively the yearly lows at that point. So are the things you just described, are those the reasons that we're here? Is it simply that the denominator is going down? Is it a wholesale understanding now about inflation and people buying into that? Is it ETFs? Is it institutions? Is it all these things? What's the narrative for why we're sitting

near all-time highs? Here's the interesting thing. It really is all of the above. Although I will argue that in the past year, a huge portion of it is simply the devaluation of the currency. We printed 40% of all the dollars created in the history of the republic in the last 18 months. So that's just an unfathomable number. And because of that, right? I live in North Carolina in Chapel Hill and my daughter just moved here. She wants to buy a house. Impossible. House prices, you can't find a house to buy first of all, and prices are up 18% quarter on quarter. I mean, it's just, it's unbelievable. I took my parents to look at a house,

literally, okay, this house was not livable. Literally, you needed to spend 100 grand to make it livable, like to, you know, the porch was slanting, and there were cracks. And, you know, the bathrooms were old and moldy. And just to make it even bearable for an 80-year-old couple to live, we're going to spend 100 grand. Maybe you can get by with 60 grand. But 17 offers, all above the asking price. People were putting down $50,000 in diligence, which is non-refundable. I was like, this is incredible. This is insane. And that is money illusion, right? That is this belief that the money is getting better and it's actually getting worse. And so a big portion of Bitcoin prices being near all-time highs is that. Now, the other parts are real too. Look, are there

more institutions? Absolutely, right? We were blessed to work with a handful of institutions, the biggest being Fairfax County. And they were the first municipal pensions to invest. And they have tripled down, right? Or tripled up, I guess, up, because they're up a lot. But they tripled up, and they're leading our third fund. And now they've been joined by another pension fund up in Michigan, has joined my friend Dan Tapiero's fund. And then we just read about the Houston firefighters actually buying direct for the first time. So there will be others. So institutions are definitely coming to the party. Advisors at Morgan Stanley have been allowed to buy for their clients.

Now, still not at UBS and Merrill Lynch. In fact, it's just crazy. Merrill Lynch, as I understand it, they can't even take you as a client if you made your money in crypto. Yeah, they'll actually block you if they see crypto on your portfolio. Yep. My head just exploded. I mean, just insane.

And yet, their parent company, Bank of America, has amassed the largest portfolio of blockchain patents on the planet. So something doesn't make sense there. But part of it is institutions coming. Part of it is just the natural growth of the network, right? If you look at the model that Parabell Trav made it popular, I don't think he actually did it, but it was the Metcalfe's Law model. And then Tim Peterson. But you follow that. That just means more people are coming to the system. The one thing that happens episodically, and we're in a trough now, and I actually hope we don't get another spike, but the leverage in the system

from the Binance and the Wobies and all that, stupid, right? 100 to 1 leverage. I have a friend who shall remain nameless. He called me up and he's pissed. He's like, they stole my Bitcoin. Like, what are you talking about? He says, well, you know, I was in this account and they seized my collateral. I'm like, what account? Dude, you were 100 times levered. You lost your fucking Bitcoin because you're an idiot. And I'm sorry, you are my friend, but that's stupid. 100 times leverage on an 80 vol asset is stupid. And now here's the thing. If that company sees the collateral because that's the normal course of business, okay, that's not sinister. If the plan was to lure people in

on the promise of get rich quick and seize the collateral, ooh, that actually might be sinister. And I'm not accusing anybody of that. No, and there's obviously a third option there that a lot of people say, which I'm not accusing anyone either, which is you take 100X leverage and then they counter trade you from their own desk and sweep those positions themselves.

That's a whole other level. I'm not saying it's true. But again, I'm not accusing anybody of that. And look, I do think that over leverage is as old as dirt, right? Making money is addictive. Making easy, fast money is more addictive. And people have been using futures to lever up in treasury markets or in the stock market forever.

And people have done dumb things day trading for centuries. So that's not new. But I do think that this type of activity might have some sinister elements behind it. So that said, I do think that we have a trough now in that a bunch of people got liquidated in April, May, from my estimates, like 1.7 million accounts. Those people aren't coming back. And people aren't going to take as much leverage probably in this cycle. uh, pomp and Jason don't actually agree with me on this, that, um, and just so everybody knows. So pomp, Jason are my full partners on my first two funds. They're now my, my venture partners on, on fund three. So we still talk every week and we're still friends and we still work together, but they are, they, you know, they are doing other stuff and I'm doing other stuff and, and all that good stuff. But, but they, they think we're not at the peak of this cycle. I can argue that

maybe we're, we are close to the peak at this cycle and maybe this cycle got truncated a little bit by the Michael Burries of the world who, who got short. And yes, he, he probably got carried out in the most recent move up, but my guess is he has some staying power and he and others might be back in. Look, I am not a fan of futures-based ETFs. I am super happy for the ProShares guys. And I'm super, super happy for the Valkyrie guys because they are good people. I love them. I'm an investor in Valkyrie. Yeah. Yeah. And I love them, but I'm just not a fan. And I believe cynically, there's a reason that the futures-based funds were permitted first. And it's not a good

reason. I think it's exactly, if I were a bank and I was worried about disruption of my balance sheet from people moving deposits on chain, what would I do? Well, first I would try to stop them. I would have my chairman call it a fraud. I would try to lobby to get legislation passed that makes it illegal. I would try to nudge, nudge the SEC to make it a security. They didn't make it a security and they didn't make it illegal. I mean, China's tried that, but we'll see how that works out. But they did try all the other stuff. So if all the other stuff failed, what would I do? Well, I would encourage, nudge, nudge, wink, wink, pay, pay. I would encourage approval of a futures-based ETF rather than a spot-based ETF.

Why? Well, anytime you have a market for a commodity where you can create out of thin air a paper version of that commodity, you have the potential for manipulation. And you can see it in the oil markets over the years. Anytime the number of paper barrels of oil exceeds the number of physical barrels of oil, we get price spikes and collapses. And in the gold market, since the advent of GLD, which allowed people to get short gold in the futures market on the other side, we've basically seen a weird phenomenon where the money supply has gone like

this and the price of gold has gone like this. Well, that doesn't make any sense. And it's causing Peter Schiff's brain to explode. But it's because JP Morgan and others are spoofing the price because they can. So if you go back to December 18th, 2017, what ended the speculative blow off of the Bitcoin bull market in 2017 to the day was the release of the futures contract, which allowed some big players who shall remain nameless to go short. And once you seed the clouds for a bear raid, it will go longer and further than you think because you're unwinding all the leverage speculators that came in at that parabolic move. Now, we saw that in April, right? People were getting liquidated like crazy. But then somebody, we'll figure out who it was, but somebody came in in July and triggered this most recent move. But the fact that, and I said this a week ago, I said,

I really think that the ETF approval, because it's futures-based, is buy the rumor, sell the news event. And it appears so far that that may be the case. And it's because I think there's a whole bunch of very large malintented incumbents that really want to put pressure on this market. And I think because now we have this futures market that is deeper, they can do that. Now, I hope I'm wrong, actually, And I hope that they don't have sinister intent. But it feels very staid, very set up, and very perfunctory celebratory while they're kind of rubbing their hands together saying, hey, you guys think this is good watch. So that, that does worry me a little bit. In the worst case scenario there,

is that a bear market or is it the death of an asset? You know? Oh, no, no, no. Great, great question. No, there is no death of an asset, right? This technology is here to stay. And I ask people all the time, name it, name a technology that got to critical mass that got put back in the bottle, right? Horseless carriage, air travel, trains, computing. I did this presentation the other day

about investing in innovation. And, you know, you had the telegraph. And then the guy who found Western Union saying, there's no commercial viability for radio. And then the father of radio saying, there's no commercial viability for radio. And then the father of radio saying there's no commercial viability of television. And then the television guy saying there's no reason anybody would watch cable TV. And then the cable TV guy saying there's no reason that streaming would ever work. And, you know, the head of DEC, you know, saying that I can envision a day when a computer will only weigh 3000 pounds.

And in 1977, saying, there's no reason that anyone would ever want a computer in their home. And then he got bought by a personal computer company 20 years later, which is kind of ironic. Or Bill Gates saying 637k memory should be enough for anybody. And so it's just that I think there's zero probability, and you should probably never say that, but I actually believe it. I think there's zero probability that blockchain technology is going back in the bottle. I think there's zero probability cryptocurrency is going back in the bottle. I think there's zero probability cryptocurrency is going back in the bottle. I think there's zero probability Bitcoin is not digital gold. And do I think there's going to be volatility? And do I think it's possible? It's possible that we're at the tail end of this bull cycle, and then we got another bear cycle before the next

halving? Certainly possible. What could mitigate that? Institutional adoption could certainly mitigate that. So if more people like the Houston firefighters start to buy the asset on chain, that would be- Literally, it was my next question is, can that negativity be offset by the ETF actually giving enough people a vehicle to buy the asset? Everybody in cryptocurrency already knows about Hedera Hashgraph. It's one of the fastest, most secure and trusted networks on the planet. But what they might not know about is the HBAR Foundation. With a budget of $2.5 billion already,

they are funding entrepreneurs and projects that want to build on their blockchain and build within the ecosystem. Absolutely incredible. And they're not only giving them funding, they're actually helping them to develop it and then to get the word out as well. You guys should check out the HBAR Foundation and what Hedera Hashgraph is doing.

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and all built on Ethereum. You truly own your collectibles. They are productive gaming assets that will generate rewards if you're a good fantasy player like me. Join SoRare and connect with your favorite teams, live the game with passion, and earn weekly prizes. You can do all of this at thewolfofallstreets.link slash SoRare. Yeah, again, if they approve a spot, yes.

Well, yes, for sure. There's no question, but there's a reason they didn't do that, as you said. The problem with futures is it creates booms and busts. When you get too many paper assets, and look, at a billion dollars, it's not going to do it. If it starts to be multiple billions, and again, we can't compare it to the total asset, which is a trillion two. You got to look at the free float, which is only 15, 20%. So now we're talking hundreds of billions. So it wouldn't take that much with 99 times leverage to maybe be problematic.

So I'm not calling for a bear market. I'm not calling for a big correction. What I'm saying is the likelihood that we're going to see the same parabolic craziness that we saw in 17 and 13 is probably less likely than it was a year ago. And we just did. I mean, I tend to agree with you. I think we can go much higher, but I don't think we go from 60 to 250 in the same way we went from 10 to 60. I just don't see it, but for the same reason. I had a less, I guess, a slightly less sinister thought on the futures. I do agree generally with what you're saying, but it seems like the cash and carry trade is so obvious. Maybe they just passed it so that people could get free yield, especially with GPTC trading at a 20% discount. Now 12% in a week, that gap has been arbed away 8%, probably by Grayscale themselves, you know, buying GPTC.

But I mean, that's free money, right? You have a futures that's, you that's 15% sort of expected premium with a 10%, 20% discount GBTC, buy spot, short the future, free money. At least that has you buying spot. Yep. Yeah. And as long as you buy the spot, then it won't put downward pressure on the market. If you happen to miss weight that, so to speak, then you could get a little bit of negative pressure. And look, I said, I, I think most people will do the pure arbitrage, you know, the GBTC arbitrage. It's funny. It used to be the arbitrage the other way, right? You bought it in the private markets,

you sold it at a premium because there was limited supply. And then that completely went away and became a closed end fund and closed end funds always sell at a discount, which is the way it is. And I do think that there's some chance they could get converted into an ETF, although they have the challenge that all the emerging market. In no way, shape, or form is South Korea an emerging market. But if they didn't keep lobbying MSCI to keep it in the index, they'd have to give back 30% of their assets, and they'd lose a bunch of revenues. So if you convert to an ETF, you're not going to get a 2% management fee. It's just not happening. And you can say, oh, my fancy Cayman Trust is worth the 2% management fee. It was, past tense, when it was the only game in town. Absolutely worth 2%. But the way the world's supposed to work is as you scale your business, whether you're a buyout fund or a venture fund or whatever, your fees should

fall as you get bigger asset base because you don't need the same level of fees to do the work. However, asset management business hasn't always worked that way and people hold on to high fees as long as they can. And so look, Barry's a genius. I think DCG is absolute gold standard in this space. They've done a great job in every way. And a lot of people owe them a lot for having a vehicle that they could invest in when others wouldn't let them manage the direct ownership. So I think that's cool. But I think they'll probably resist converting to an ETF at least as long as they can. And if that discount can close a little bit, then they'll rationalize and say, see, it's not a disservice to investors. They're getting their fees either way, right? So I mean, the discount, as you said, if you can collect 2% into perpetuity, the discount probably doesn't

matter to them as much. It definitely doesn't matter to them, for sure. For sure. But I think they had, and maybe it's past tense, but I think at one point they had an application to convert to an ETF, which clearly would mean lower fees going forward. Right. And I've definitely heard the argument that, you know, with the futures approval now, the hope for a spot ETF is years away, especially with the structure that regulators are pursuing now. Nobody wants to obviously be the one to make that decision. And it seems like we're going to end up with a cryptocurrency regulator. And you know how fast the government moves. That'll take at least two or three years for anybody to take a serious look at it. I think futures, the future CCF is what we're getting, and we're going to get a lot of them. Yeah. Full disclosure, we're in line too. So everybody wants to be in on the game. And we're going to try to do an active versus a passive. So

either cash or Bitcoin, and we'll see how that flies. I like that. Yeah. Well, I mean, Bitcoin's a few people haven't been talking about this so much. We talk about Bitcoin versus gold all the time, but I think another 10, 15% up in Bitcoin price and it surpasses the market cap of silver. I wouldn't have been thinking of that as a possibility until very recently. Absolutely. And then right behind silver is diamonds, and then eventually gold. And look, Bitcoin gold equivalents for sure is going to happen. And when I say that, I mean the monetary value. And people always quote the full value of gold. And now the jewelry part probably doesn't

count. The monetary value of gold, probably somewhere around 5 trillion-ish. So from here, round numbers, it's a five bagger. And that to me is in the bank. And to your point, I don't think it happens by the end of the year like some people do, but I think it's three to five years. And why wouldn't I own that? Now, I can be compelled and I don't, you know, you should actually have Murray Stahl on the show sometime. Murray runs a firm called Horizon Kinetics.

He is amazing. He's an old time value investor from the traditional world. A few years my senior was way early to the game. He's one of the biggest Bitcoin miners in the country too. And he does the old-fashioned way. He buys all the machines from the bankrupt miners in the crashes and then use them as spare parts so his machines never go down. Wow. That guy's a genius.

Oh, that guy's a genius. He makes a case that makes me sound like the most bearish guy in crypto. I mean, he absolutely believes fundamentally that cryptocurrency, and particularly Bitcoin, are going to replace global M2, and that that is a 100x from here. And I can't argue against him, especially when he actually presents the argument. It's nearly impossible to argue against because he's so elegant in his theory. And he's forgotten more about the markets than most of us will ever know.

But I just think the time horizon is tough. And I think there's one interim step. I think the renminbi ascends into a more dominant place, kind of replacing the dollar as the most dominant. And I think the e-renminbi will be a step in that direction, depending, again, how sinister they make it. Look, I'm sure you've seen the BIS guy, you know, talking about CBDCs and how, of course, we need to be in control. And of course, we need a program. I mean, the dude is frightening to look at, first of all. I mean, he's just humongous. And it's uncharitable, but it's just fact. And truth is an absolute defense. But when he talks, it takes on a sense

of evil in that, well, of course, we should be able to control how and when you spend your hard earned money. On what planet should that be the case? On no planet. Should someone work hard all week to get paid? And then you say, well, if you don't spend in these four areas by next week, your money disappears. That is absolute insanity. But that is what is in these people's brains as to the benefits of a CBDC. And that's why it's even more important that you opt out for a portion, not all, but a portion of your wealth to get it into a decentralized form.

Is Bitcoin the only decentralized form worth getting that money into? Or do you believe that we're seeing a lot of others emerge? I love Bitcoin. I actually like Ethereum. I love Solana. And the reason I love Solana is I love Kyle Simani and Tushar Jain. And I tweeted about it last night, what they did. And we invested in their fund. And I thought they'd do well, but I had no idea how well they would do. And they're going to end up with their first fund being one of the best venture capital funds in the history of venture capital. I'm just saying a lot. And I've seen some doozies, you know, when I saw benchmark one of 96X

and, you know, multi-coin capital one is going to eclipse that, maybe by a meaningful amount. And so I'm a huge Solana fan because of that and how they've executed. Now, I like Polkadot too. I like Cosmos. And I think to me, Bitcoin is the base layer. And I think it's one and it is. I think Ethereum is like the www dot. I think Filecoin

is the best thing for file transfers. And then there's the middle part. And in the internet, we have HTTP and SMTP. And I can make the case for Polkadot. I can make the case for Cosmos. I can make the case for Solana. I can make the case that Solana becomes an Ethereum killer. But a lot of things have tried to kill Ethereum. And so I don't need to be right on that. I'm going to own a little bit of all of them.

And then beyond that, I think there's tons of decentralized stuff that you want to own from play to earn. I am the biggest Axie Infinity fan on the planet. I think what those guys have done, when I say guys, I mean guys and gals because there are gals involved. Not enough, right? I mean, crypto actually has more gals than my old regular investment world, which was all guys. But there's just still not enough balance, but it's getting better. So when I say guys, I mean guys and gals. But I think what they've done is absolutely extraordinary.

And I think it actually makes the world a better place. What are you talking about? It's just stupid game. Like, no, we've changed people's lives. All over the emerging world. I mean, crappy jobs. Go play Axie Infinity. I mean, the adoption in the Philippines

by people who've never heard of crypto before is absolutely astounding. And again, it's just they have better lives. And people say, oh, but they're being exploited. Like you make a dollar a day working as a migrant laborer or you make $50 a day playing Axie for, most people don't know this. There was a time in the United States. We may have already talked about this, but where every African-American doctor or lawyer in the United States was a son or daughter of a Pullman Porter who were basically indentured servants. Right. And it's pretty amazing. Well, that was a really challenging life, right?

You rode around on the train and you were owned by the train, a concept. I can't wrap my head around that people were were owned. But what did they do? They saved their money and they made a better life for their kids through education and upward mobility and those kids. And then eventually we had an African-American president. And that's awesome. And the same thing here, right? These people, some of them have saved some of that money, have bought their own Axies, are now converting their time into value, taking that value and selling it to people like me who are willing to exchange value for time because I don't have the time to breed Axies. So I'll just buy an Axie. I tried to convince my son to breed Axies. Like, dad, just buy one.

I'm like, no, no, I want you to earn it. I want you to build it. But he just wanted me to buy one. Then the funny part of this, guys, he looked at the price like, I'm not paying $400 for this. Exactly. Now I bet you want to breed it.

We're a value family and I've raised him to be a little value investor. And he's like, I'm not paying 400 bucks. I'm like, well, then I guess we're not playing Axie. But I love what they're doing. I just invested in a couple of DAOs. I think DAOs, decentralized autonomous organizations, changed the world.

I mean, literally changed the world. And I think about this a lot. Look, we love, love Uber, Lyft, Ola, Grab, Didi. We made tons of money for our investors in all those companies. I love them. I think they're fantastic. But now every time I get in one, I think, why does someone who wrote code six, seven, eight years ago get 30% of every ride I take?

Maybe that doesn't make sense. Maybe we should have a decentralized version where the rider and the driver share that 30%. Maybe that should happen. Probably will happen. Actually, it will happen. And that's nothing against Uber and Lyft. It's just an evolution of the technology. Their technology was better than hailing cabs right and this is a better technology for a decentralized world and a metaverse and look you know i i love the fact that you were slash are i don't know if you ever lose being a dj but uh you're a music guy and and i because of my 10 year old kind of like edm because he loves edm. And so I actually, I know just as much to be dangerous about that, that whole scene. And I love the fact that there were EDM parties going on this weekend

in the metaverse. It's just mind. I mean, and I saw again, my son and I play Pokemon Go and one of the coolest experiences I've had other than the one I had last week, which I'll talk about in a second. I went to a virtual concert of Post Malone, which was a virtual Post Malone in Pokemon Go in a metaverse. And I was just like, this is awesome. And the music was great. And the animation was great. And I think that's really cool. Now it was surpassed. I went to the stones for the first time a week ago, Sunday with Yoni from eToro and I had never seen him. And I grew up with them and you know, I'm a boomer. And so they're, they're our band, right? I had no idea that Mick Jagger was as good as he is. I mean, I knew he was good. I've never seen anything like it. This man at 78 years old

put so much passion and joy and just raw talent. I get hoarse from one football weekend. This dude is belting it out for two hours a night for 45 years. And he sounds amazing. And he can dance better than most 40 year olds and when he did the final solo with this backup singer who was better than Beyonce

they were so dazzling I mean I was totally mesmerized anyway so that was that was very cool that's a good I that's one of the few bands I still haven't seen myself oh I had the same experience I think the last time I saw Prince not long before he died at Madison Square Garden was a very similar experience. I was like, this dude's like how? And he's probably 20 years younger than Jagger or more. Yeah, yeah, yeah.

Really unbelievable. But what you just described in the metaverse and Axie Infinity and all these things are being built to me is really probably the most exciting thing happening in this space because we, we sort of rail about the ideas of how Bitcoin and, and all these things and holding, and it can change your life,

but this is every single day it's changing people's life and it can be tomorrow, right? And they're realizing the gains from it. It's not a matter of, do I buy Bitcoin to hedge against the inflation? And in 50 years, it'll, this is like tomorrow you do this and you're making more than your job and you can quit your job and you can go work in the metaverse and never come back.

Look, it's so unbelievably cool when you think about history, right? Every disrupted industry complained. I want my job back, right? Street sweepers. Think about that job, pushing horse poop, okay? We're mad they were going to lose their job because the horseless carriage came in. And those jobs didn't ever come back, okay? We have more jobs today than we've ever had in the history of mankind. But we've lost tons and tons of jobs. But they got obsolesced or obsoleted, whatever the word is. And they got disappeared. And they got Thanos, right, with the thing. So those jobs are gone. And they're never coming back. And that's okay,

because we create new ones. Now, look, I struggle a little with the idea that we can't just entertain each other. Some people have to grow food. Some people have to build widgets. Some people have to generate the electricity we're using to talk to each other. Now, the good news is technology makes the number of humans that do that lower and lower and lower every year. Like we used to have 50% agrarian employment. Now we have like three or something like that. I don't even know if those numbers are right, but close. Directionally, they're right. And so most of what the rest of the world does can be about entertaining each other and about commerce. And there is value in going out to a really nice restaurant with your family and having an experience. There is value in getting in the

car and taking a road trip to see destinations together. There is value in us converting energy, literally our body's energy into value by recording a podcast together. All of these things create value. Going into the metaverse and creating a business platform or a real estate platform or working a job to create new things that people can engage in a game, it does create value. And I don't want us to get to the wall E stage of the little fat guys sitting on the, right? I say that all the time. It's my favorite analogy for it. I don't want that. I really don't. I want to just sit at a screen and be served ads and drink my big gulps and have my bones go away? I don't want that. I want to be fully engaged and I want to live life and I want to be a productive member

of society. And so what I feel like I do is I to a better world. And it can reverse this incredible income and wealth inequality that's been created by the fiat fiasco and decentralization where communities govern one another, I believe, I truly believe, is a better form. It's a socialist. There's nothing to a socialist. It's totally capitalistic because capitalism wins. Cronyism loses. Socialism, cronyism, communism, all those are back. Being communal and watching out for each other and having aligned interests like that driver and myself owning that exchange of value rather than a third-party intermediary. If I want to send you money, you don't need a bank account. I don't need a bank account. We don't need to pay fees for the wire. I can just send you a Bitcoin. That's better. That's a better world. And we can strip out all of that trillions of dollars of waste, and we can unleash it into the creative economy. Creativity will create new ways to engage, to grow, to live more fully. And that's really cool. Couldn't agree more.

And I have to say, I don't think three hours of my life have passed quicker than the three times that we've spent an hour talking to one another. I just looked at the time and absolutely amazing that an hour has already passed. So now that leads me inevitably to say, where can everybody follow you after this and keep up with everything that you're doing? Yeah, so I'm easy to find. I'm on Twitter, as my wife says, way too much,

at Mark Yusko, M-A-R-K-Y-U-S-K-O. MorganCreekCap, C-A-P.com is our website at Morgan Creek, both Morgan Creek Capital and Morden Creek Digital. And I do a decent number of podcasts and things like that. So you can find me if you just Google me in the metaverse. But few of them do I enjoy as much. I could not believe that we've spent an hour together already as this. And you know how we got to end it, though, my friend. You're the only guest I howl with. So I guess

I'll have to do it. One, two, three. All right. Thank you so much. And we're going to get round four on the book soon. All right. Thanks, man. I appreciate it.