The Wolf Of All Streets - Will Macro Crush Crypto? Crypto Town Hall With Alex Kruger, Mike McGlone, Gareth Soloway, Jon Najarian, Eric Krown, Benjamin Cowen & Others

Episode Date: July 25, 2023

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Yo. Hey, bud. You happy with X? I'm happy that I got to let my little ADHD brain run with a whole bunch of X puns on Twitter today. Did you start trolling anyone? Were you trolling anyone? Not trolling anyone, I was just making jokes. It's too easy. It's the most generic name ever. How many things have been named X in the past do you remember the phase where like literally all you did was put X or extreme at the end of any brand yeah yeah yeah Procter & Gamble X

you know it's just yeah it's kind of laughable to me but we'll forget about it man it's fucking impossible to make you happy it's impossible to make you happy. It's impossible to make you happy. No, it's like a cool logo. They've changed it. They're expanding to the Everything app. And then you've just got Scott like,

guys, this is all you can come up with. This is it. X. Can't it just be Twitter? I don't care either way. It's the honest. Like I said, for me, it's just I got to make a whole bunch of jokes. It's fine. I'll forget about it next week. I'm just sending out the invites by the way we have a new guest coming in today his name is ryan he runs a show called crypto banter not sure if you've met him before i know i don't know who that is he's he's been on it before

and i thought we blacklisted him no no no he's he was he was as old ran when the msnbc ran but the the new run the crypto banter ran it's pretty good he knows the MSNBC run, but the new run, the Crypto Banter run, it's pretty good. He knows his stuff when it comes to crypto, especially. And one of our guys, Fred, highly recommends him. Yeah, we should test him. We should test him today. We do. Let's see how it goes.

All right, man, we've got the panel here. And let me see if the audience started joining already. So today is your show. Today is a macro discussion and talking about, one thing I want to start it off with, Scott, before you get into the discussion and the whole market update and all that, is the decoupling argument.

Remember how we've always talked about crypto should decouple, how we're very bullish when that happens? Do you remember those discussions? Of course. Yeah, and I like how as soon yeah yeah and i like how as soon as it uncorrelates and decouples but crypto goes down and equities go up it's no longer good news decoupling now is bad news the correlation never works in our favor

seemingly like the the main decoupling and sort of the start of all of it obviously was ftx right last november everyone was talking about correlations being at all-time highs then all of a sudden because of ftx crypto dumped massively while everything else continued up and uh all of a sudden you get a little bit of what you wish for and you don't want it anymore all right man so let's start with the the discussion today we'll we'll macro crush crypto what's the what's the thought process behind this? Alex, by the way, I was reading your thread in preparation for the show today. It's a great thread, Alex. So I just want to give you a quick shout out there. But yeah, Scott, do you want to

kick it off? Yeah, I think the key idea here was that obviously the stock market and markets in general have raged this year to the upside, climbing the wall of worry, but there's still an impending recession that you could argue is either priced in, hasn't come yet. Some starting to say it won't happen at all. But I think there's consensus that whether it's a hard landing or soft landing, there will be a recession of some sort coming. So at what point do stocks top and start to correct? And if so, what happens to Bitcoin? So I guess there's that partial correlation argument that you just sort of brought up. If we saw a theoretical crash in stocks, could Bitcoin swim against the tide and continue to rise based on bullish news like Ripple or

maybe a BlackRock ETF approval, something like that? Or will Bitcoin just correlate once again? Because generally on downside moves, as you said, that's when things generally all go to one correlations, go to highs and everything dumps and Bitcoin's a higher beta asset and tends to move further. So if you get, say, a 20% correction in the stock market, do we get another 30 or 40% drop in Bitcoin? And so I know that we probably have mixed opinions on this. We have to first establish, A, what people's opinion is on whether stocks are going to continue climbing, or whether we are starting to put it atop here. And then B, of course, how Bitcoin and the crypto market as a whole would react. I mean, you just kind of alluded to Alex's thread. And Alex,

I know you have a limited time today. So maybe we'll start with you. Give us the broad strokes on macro. Obviously, you did that to a degree last today, so maybe we'll start with you and give us the broad strokes on macro. Obviously, you did that to a degree last week. I don't know if anything has changed for you, but where do you think we're going on the macro side? You're muted, Alex. And as you're unmuted, if you can answer the question, because I like how you structured your thread. You structured with the worst-case scenario and then the best-case scenario and what you think will happen. So if you can structure the answer the same way be really interesting uh hey guys i think i'm i'm

unmuted now um well uh first of all yeah nothing has changed it's been just a week i mean the only thing actually we have around this fomc around the corner and we have some noise on the sec but that aside nothing has changed uh on on the macro. But that aside, nothing has changed. On the macro side, at this point, I think it's kind of late in the game. And it is those who think that the macro is going to collapse who actually have to come up with good, valid, new reasons for that to happen. Point being that everything, all the reasons that we are looking into that would justify a very bad recession. We've been talking about this for over a year. And by definition, the way we do things is we adjust our forecasts.

And it's, I mean, it sounds kind of like simplistic to simply say it's priced in at this point. In fact, I think there is more of a risk of towards small recession, doesn't matter, to actually the economy that's better than we think it's going to do, keeping inflation higher than we think. Therefore, pushing the Fed to raise a couple more times. I think that's a higher risk than the other one. You did say, look, I'll read out what you said in your summary, in your thread. You said, everyone is bearish, but the recession has been front run. AI revolution is real. The Fed is almost done and the market is cash heavy.

You also talk about how AI will likely be a bubble, but it's just getting started. But then right after that, you talk about what could go wrong. The market is estimating a 25% to 35% probability of recession in the US. A market crash would require an information shock, such as significant deviations in inflation, PMIs, adverse geopolitical developments, or dismal earnings season for big tech. So essentially what your conclusion from the thread

is that everything looks good. The recession is priced in ai is real and the only thing that could turn things around is a black swan event is that fair to say not a black swan but no i think that's that's stretching it it's more of uh let's say if you if you i mean if i if i if when inflation comes next time around, any time in the next three times. For example, I see core CPI print beat, meaning be 0.3% above the estimated number. I would literally sell everything and get net short.

That's not a black swan, but it's bad enough for me to trade aggressively big. 0.2%, same, not as big. 0.1%, noise. That's not a black swan event, but it's enough to basically say we get the number. That's enough to say

to move the S&P 5% to 8% lower in the span of two, three weeks. Yeah, so I want to, Alex, obviously give us the broad strokes there. And Mike McGlone, I know you have to leave too, and I know that you have a different take. So I want to hear what you have to say on this and then go to John Najarian, because obviously he's one of my top five macro guys. Yeah. Well, thanks. That's one thing Alex and I can mix a good tight market for people. I think we've had a bounce in virtually every risk asset that went down last year.

We have a good reason for that bounce to- Mike, I'm not sure if you can just, sorry to interrupt you, Mike. Your mic, is there any chance you can improve it? Is this any better? Oh, wow. Incredibly better. Yeah, go ahead.

Okay, so we've had a bounce in all risk assets, all of them. Cryptos have really underperformedformed most notably the last three months and i look at it as that's a typical normal bounce you should suspect and things that get oversold but the macro is overwhelming historic and negative and this is why i have to go back you know i've been off for a couple weeks i've been back and reiterated and restudied some of my history. This is the biggest liquidity event in history that's dumping in its early days. I look at what's happening now as akin to 1930 when the stock market bounced 50% and then rolled over.

And there's still a very good reason for that. The Fed is going to hike this week. ECB, Bank of England, virtually every central bank on the planet are still hiking. And the latest data you see out of Europe is still towards economic contraction. We have a hot war going on and we see one key area, one key country that's cutting because their economy is slowing down, and that's China. So I look at it as the fastest horse in the race, the most liquid acid. Virtually every single technological revolution that's associated with the bubble always has that cryptos are failing they're starting to roll over we put

in a pretty good top around 31 000 for a good reason with a hopium for an etf maybe we'll get one this year in the u.s there's etfs in other countries that work great but to me this is a whole setup for to me i look at is a risk versus reward is yes maybe the stock market stays okay and yes maybe we don't go to this recession which you know if you look at the fed model and based on yield curve is it the highest ever i guess you go back 40 years and it's the delayed reaction i think is also it's the human nature when people don't expect it that's when you should be positioning otherwise now we we've had the bounce. The key thing I like to point out from crypto is if I'm right about this being one of the biggest macro economic resets, maybe a depression of our lifetimes. I don't say that lightly,

but this is the way I look at it. I'm pointing out the big macro. Crypto should lead the way. And I led the way up in the bounce. And you see Bitcoin now at 29,000 this morning. I look at the Bloomberg Galaxy crypto index. It's up almost the exact same amount as the S&P 500 on a one-year basis, yet it has almost tripled, at least doubled the volatilities. We're seeing a major underperformance in cryptos, which to me might be indicating the next and final shoe to drop in this deflationary recession, which has already started. The producer price index down 3%. It's one of the biggest collapses in history. We'll accelerate. And the bottom line,

as I'll end with, is are you fighting the Fed? The Fed and central banks are still tight. That's why I look at it as, great, we've had this bounce, but look at the next 12 months. If we can get that Bloomberg Galaxy up another 15%, the S&P 500 up another 15%. That would be wonderful. I think it's more likely to see golden long bonds outperform. John, what do you think? Can I add something? Go ahead, Alex.

I would very briefly, I just want to add that you could easily argue that if you're fighting the Fed, if you're not long or getting long, because even if still racing, the Fed is almost done. So you could just get the exact same argument, flip it and take the other side. And that's what I'm doing, by the way. Mike, if you'd like to respond, go ahead. Well, I really appreciate that view. And you do have a vested interest in that. And that's where you have to be very careful. I'm a strategist. I have no vested interests, which is what I like about being in Bloomberg Intelligence. I just have to not be an idiot

and write things improperly. But you're talking about your vested interests, which makes sense. You should be talking to your book. That's one of those lessons you learn on Wall Street. No one else is going to talk to your book. But I just said, good luck. Go ahead. I want to jump in. I want to jump in here. Sorry, Scott. Yeah. I mean, one of the things that I think is, I mean, I've been watching this market and I think obviously I agree with Scott that the pause, the Fed's pause was not maybe a pivot as much as it was a pause. So, Scott, I think I've come around to your view here. But I think that the one thing we've got to remember is that you've had all this money that was printed during COVID.

Now, that money hasn't gone anywhere. Very little of it has actually been taken out of the economy. And I think it's still pushing up. That's still upward pressure on the markets. A lot of it went into cash and that cash was sitting on the sidelines and that cash is starting to flow in. Now, if you look at where the cash has flown into, it's flowed into seven of the biggest stocks, Meta, Nvidia, the seven stocks that have been pushing up the index. Now, I believe that what may happen here is,

I think the Fed's cycle of tightening is pretty much over. There may be one more, there will be one this week, and then there may be one more after that. I agree with the market that we're not going to get any cuts until March. And I actually even think it might even be after March, unless something breaks. But then I think that all the smaller stocks that are not in the top seven will start running and that will start causing a massive market momentum. So I think I'm taking that side of the argument.

I can say that the Fed pivot usually precedes the market bottom. So if we think the Fed's going to pivot, then historically you would expect actually to see stocks drop massively after that pivot. But as I said, John and Don, I don't know, I think Don has actually left. I know he had to go. I was trying to get him in. John, go ahead. What do you think? Well, and thank you, Scott. Always love talking to you as well as Mike McGlone and Alex. I've enjoyed the conversation. Thank you. I think the fact that so many of the hedge funds that have been flipping around in their short positions and going long, especially going long in some of the distressed areas of the market, like energy, healthcare, and finance. I think the vulnerability is still not being expressed quite right in terms of, Scott, if you're watching what happened to the regional banks in March

and why it happened. Well, because we went basically from zero very, very quickly to seven Fed hikes later where they're basically out of gas and they had to start. All you need is one little run on some of these regionals. Once again, the don't have to mark to market. Once they do have to mark to market, I think that's, you know, one of the extreme risks. It's not just the duration mismatch. It's to mark to market, I think that's one of the extreme risks. It's not just the duration mismatch. It's the mark to market. If they have to sell, some of these securities recognize the loss. If they held it to maturity, of course, it would be fine. But when they have liquidity crunch, they have to do what they did in March. And the Fed moving up with each of these, I think one of the reasons they skipped was to try to give some of these regionals a little more breathing room because

we're going to see, and we are already seeing it, Scott, you know this, and everybody that lives in a big city knows this, San Francisco, they're throwing the keys at the lenders because the only hotels that are surviving there, I have a lot of clients in the hotel space, any place with 200, 300, 400 rooms, they're throwing the keys back to the lenders. It's not worth holding onto it. The boutiques, they're doing fine. But the convention business dying in cities like San Francisco is what's really killing, uh, those businesses. And ultimately it kills regional banks that provided them, uh, the finance. So I'm looking for the next shoe to drop to be just that we get another hot read here

or there, um, not just consumer confidence, but something really meaningful that causes the Fed to say, okay, we're going to have to throw another 50 pips at it to slow this down. That's the time that you really need to be short when that happens. I don't know for sure if it will, but that's the risk. So because of that risk, Scott, I am long some put spreads out in September and so forth and a little further out, just because I think in all likelihood, we could see a situation like that. The Fed is going to be aggressive in their talk after this minor increase, this 25 BIP increase that they're going to throw at us on Wednesday. And then they'll be talking tough all the way into Jackson Hole. They'll be talking

tough out of Jackson Hole. And if the market truly listens to that, which they generally don't, but if they truly listen to that, I think you could see, you know, a setup for a pretty weak reaction in September to the next hype. And that would be, that could create a great buying opportunity, but it'll be really bad for those who are still holding longs at that point. Yeah. I mean, I, I don't often rebalance my stock portfolio, but I was a pretty big seller in the last 10 days. I mean, just like for my own behavior, I think that this rally is running out. I don't care if it continues up, obviously, I'm still an investor. But that's generally my take is that if the Fed's going to continue tightening, that there's still another shoe to drop. McGlone says it to me every day. Maybe I'm too influenced by you, Mike. But what's going to stop them besides the stock market crashing? You say it all the time.

Yeah. I think that's the key thing about what John pointed. One thing I've learned that John's good at and I'm poor at and why I don't trade anymore is the timing of puts. I'm very good at markets will go down right after my puts expire or get right to the strike and then fail. And I think that's been the sense. We have had that sense for a while. A lot of people have not agreed with the stock market rally

and have been buying protection. But also we get to the point where people throw in the foul. I think we're getting there now, but it's what now normally happens when markets get oversold. And the big picture is we have to remember what caused all this. Let's never forget from where we came from. And that is we've had the biggest liquidity pump and ever create this massive pump in inflation. The Fed was way too late to start tightening and now they're doing the opposite.

And we're getting the normal bonds. Now, if you look forward, things like the yield curve and housing and things, and we're talking about commercial real estate, it's just normal that this cash that people were flushing people is going away fast. Yet the Fed is still tiny. It's not just the Fed. You look at the numbers of PMIs out of Europe this morning, they're pretty bad. And then there's also that hot war going on. So absent some kind of wonderful peace, I just look at this as a normal cycle. And if I'm right, crypto should lead. And unfortunately, they are starting to, the last three months, they've been very poor performers on a relative basis. Yeah, I figured that that's relatively clear. David, you have your hand up. Go ahead. Yeah, I'm going to take the other side of this. I mean, it sounds like beautiful narrative with 20-20 hindsight, but let's be honest, institutional investors have been singing this song for quite a while now, and they've been abjectly wrong on all this. And I think the economy, in terms of numbers, we've shown strength in spite of really, really fast and really, really high interest rate

raises, likes we haven't seen, unemployment rate holding strong. And yes, I think there is worldwide tumult that will come to roost. And I do believe the commercial real estate space is an incredibly risky area where we're going to see massive defaults and a bloodbath over time. I don't know how much that is going to go ahead and rock the economy because the maturity schedule is broken and drawn out. Same thing with high yield corporate bonds for companies that need to go ahead and refinance at rates that they haven't seen in decades. But for now, again, I hear the narrative. It sounds like a great story with the hindsight, but it hasn't proven true. And then it all comes down, Mike, I guess, to Mike's point,

John's point about timing. And I don't think that we're going to see a straw that breaks this camel's back. Any time within the next six months, I think that we can continue to see this rally go. I agree. But David, really quick though, to your point then, if we believe that that's going to be the case, won't the Fed just continue to tighten until they break something? Oh, yeah. I think Powell's a man on a mission. He's going to go. He never changed his tone. Yeah. No, I don't... Look, I don't think the people that doubt Powell at this point that he will do what he says, I think are 100 percent categorically wrong. This man was embarrassed on his transitory inflation point to the point where he will never stray from what he says he

is going to do. He is going to beat down inflation to get to his target. He doesn't care what comes. He is going to go ahead and be laser focused on that. And yes, eventually things will get broken. I think, again, I'm betting against commercial real estate. I think to me that that is evident that it is going to go ahead and collapse in a massive way, certainly in big cities around this country, for many other reasons that those big cities don't make sense anymore. But I don't know how... Look, we're seeing data. It doesn't look like yet the Fed has gone ahead and broken this economy with what it's done. Granted, the interest rates haven't had the time necessary to work their full way through the economy.

So we can't say a soft landing is certainly happening. But on the other hand, to say that a soft landing cannot happen, I disagree with that. Yeah, I want to go to Benjamin and to Gareth, because I know both of you have about 20 minutes. You can give us a preview of what you guys are going to talk about together on your next show. But where do you stand on this? And then I want to start to transition into crypto and then Benjamin specifically, altcoins with you, because I know you have some strong views there. Sure. So yeah, I'll jump in real quick. So at least on this, as I view the data and different things, all I see is continual misses on data, except for on jobs, as well as we have decent reduction in inflation. But if you look at productivity numbers,

if you look at retail sales, if you look at all this, they're all continuing to miss expectations. And to me, when you look at the amount that the Fed has raised interest rates, there's no way that full effect has been felt by the economy just yet. And when we talk about a soft landing, I think it's important to recognize that the Fed had literally never engineered a soft landing in their history. So to be saying that somehow this time is different, I mean, yes, there's always a chance. But to me, it's the odds in this scenario where they've raised interest rates at a higher pace than at any point else in history in terms of velocity, it just seems far-fetched to me that for somehow it's just going to end up

perfectly. Just looking at a couple charts that we're going to go over later, a couple of things I want to talk about. Number one, Fed balance sheet at new lows in the last year or so. So it had a pump up during the banking crisis, but now hitting new lows, that means less liquidity in the market. Looking at a couple other things, you have the biggest concentration in capital in the top seven stocks, even compared to the dot-com bubble. So again, that's another concern that I have when you're looking at that. And then one of the biggest things, not only is the economic data starting to slip minus jobs, but you're also looking at interest payments as a percent of GDP going up substantially while Fed's ownership, while basically the contraction in Fed ownership of debt is dropping, right? So we see this divergence, and I know Ben speaks on the

divergence is quite a bit, but to me, there's just so many straws on the camel's back at this point that for me, it's hard to imagine why we're not going to see it.'s just so many straws on the camel's back at this point that for me, it's hard to imagine why we're not going to see it. And just to address jobs real quickly, for me, one of the reasons why the jobs have stayed so resilient is mainly because during COVID, employers had such hard time finding employees that they're very reluctant to fire them early on in this period to go out. If it is a soft landing, which is the narrative that's being spun right now, they don't want to have to go retire again and find those employees. They think,

hey, we're going to lose it. They're going to go find a different job. I won't be able to get this person back. So I do think at some point there will be a breaking point in the labor market, and it will spin out of control very quickly. Gary, do you think AI may have anything to do with that? Do you think that AI, you may get like a cliff because of all the jobs that are lost to AI? I think right now, everyone's kind of like feeling the water and kind of testing a couple of AI systems. But I think that when the AI systems start to work and you can fire a hundred call center agents because you don't need them anymore because they can actually just be run by a real bot, then all of a sudden you lose a hundred people. So do you think that we

could get an AI cliff? Yes, I do. I do think so, but I think it's a couple of years away so far. There have been jobs that I've already been reading that have been lost and employers are actually saying, we're not going to hire in this particular area until we understand if AI can take those positions away and we can save money on it. So there's already a start of it. But I think the mass layoffs are probably years away at this point until we get a little bit of a better AI understanding. Just referring to AI though, I do think that AI is a totally new technology like the dot-com bubble. But if we remember, the dot-coms came about, everyone got super excited, then there was a collapse, and then ultimately the big ones did survive. So I look at the psychology of the investor as being the same thing right now, where yeah, AI is going to change all

of our lives for hopefully the better, but this is still a bubble in the brewing, and I still think there'll be a flush out before we really see, just like the internet coming back in. It's just like the internet in the late 90s and early 2000s, right? We knew the internet was going to be the most powerful technology of our lifetime, but we didn't need to own pets.com and NetTaxi. But before we jump, Scott, before we jump, I want to ask you and Gareth a question. Do you think that AI will be a net creator of jobs? Or do you think AI will be a net destroyer of jobs? And when I say net, I'm not talking about the next one or two years, 10 years from now. Creator.

I think creator, because I think that so much more innovation will be born of it, as so many more companies will be created. So many more products we've never imagined will be created. And so even though the average employee will become more efficient with AI, I think that the industry that opens up will be so massive that there will be a ton of new jobs. I would just jump in and say, I think it will be a creator, but I think it's going to increase the gap between rich and poor immensely, which will then create an even bigger issue within, I mean, look at society right now and how divided we are. I ultimately think AI is going to, you know, high paying jobs of people creating these systems, but then it's

going to wipe out the, like you said, call center people, people serving burgers, all that kind of stuff. I can't remember who shared this story, if it was here or if it was on YouTube. So forgive me if I'm being repetitive. But the famous story is sort of the music industry, though, that is really kind of prescient for talking about AI. When the record was first created, the music industry itself actually rallied very hard against recorded music, because that meant that you couldn't go into a radio station as a band and play live, which is how all of the musicians made their living. But obviously, we know that the invent of recorded music and the spread of it blew up the industry by thousands and thousands of times what it was when it was simply guys driving around and going to

play at radio stations. It's very similar with AI, I think. I think that it's very short-sighted to think that it's going to just take everyone's jobs because it's going to just create these massive new industries that we can't even imagine at this point. Well, look, I don't want to go down the AI rabbit hole, but what impact will that have on inflation? And are we getting ahead of ourselves in saying that AI could potentially lead to deflation? Gareth? Oh, I mean, that's a good question. I think in the short term, inflation is going to be sticky. I think that wage increases haven't fully been passed through to the consumer over time from the employers. But I do think down the line, yeah, I do think AI is going to change things.

And when you can have robots and all this other stuff building things and changing things, ultimately it will be deflationary probably. But Garrett, why don't you say that the wage increases haven't been passed through? I'm kind of watching this. The unemployment numbers, they are declining. They're declining at a slower rate. But then I look at the PPI, which to me, the PPI is a reasonable measure

of how the manufacturing jobs data is going into prices. And the PPI has also fallen off a cliff, which kind of says, look, this has all been factored in. And even with this, we're getting inflation dropping off a cliff, which kind of says, look, this has all been factored in. And even with this, you're getting inflation dropping off a cliff. Yeah. So I think inflation, I mean, naturally, it's going to fall because the supply chain has been, for the most part, fixed, right? So I think the big drop, that's what we've seen. It's that last little bit. I always use that analogy as like, I can get in shape, but for me to get a six pack is like the hardest thing in

the world at the end of the workout, just to push that extra mile. So I look at is like, I can get in shape, but for me to get a six pack is like the hardest thing in the world at the end of the workout, you know, just to, just to push that extra mile. So I look at it like employers, they had to start doubling and we're talking about the lower income ranges, right? The, the people that were paying, be paid, being paid five or $10 an hour going to $20 an hour now. And that's, you know, the McDonald's employees and so forth. Those, the, You didn't see McDonald's able to jump and kind of offset those massive inclines in payments. So I think that's what over time will have to be passed along so these companies get their margins back in line where they wanted them. Guys, I want to go back to why crypto's lagging equities. And if you don't mind, Scott,

I want to go to Alex because I want to go back there. Do that, Mario. Ben only has like five more minutes. I can't see Ben. Oh, Benjamin. I didn't see you on stage, Benjamin. My apologies. Benjamin, can you hear me?

Right before we go back down. Yeah. Yeah, yeah, yeah. Well, Benjamin, I want to ask you the same question. Why is crypto lagging equities? Like, you know, we're getting all this good news.

We're seeing BlackRock potentially, or not potentially, we're seeing BlackRock and others enter the market the herd is here and we're seeing innovation we're seeing you know everything is pointing in the right direction so why are we still seeing crypto lag well i think there's a couple of reasons first of all everything's not pointing in the in the right direction you have net net liquidity is trending down. And the things that are further up the risk curve, which is crypto in general, including Bitcoin, but then altcoins are even further up the risk curve. Those things are more dependent on net liquidity or excess liquidity than say the stock market is, right? Like, you know, altcoins don't have the luxury of having,

you know, earnings reports where they can still say that people are still buying their product. So they're more so a function of excess liquidity, and the Fed is sort of sucking that liquidity up. I'm of the opinion, and I have been of the opinion for a long time, that the rally by Bitcoin that we've seen is fueled more so by the conversion of the altcoin market to Bitcoin. And that's what's led the Bitcoin dominance higher. I mean, the Bitcoin dominance is now sitting like 50%. It was sitting at 40% half a year ago. Now, what we normally see is the dominance rally on a Bitcoin pump, and then we see the dominance continue to rally on a Bitcoin dump. The issue is that the altcoin market bleeds

back to Bitcoin during both the pump and the dump. Right. So at some point, I think and we could be approaching that point now. At some point, I think there's no longer sufficient liquidity in the altcoin market to to support the price of Bitcoin USD. And that's where Bitcoin USD rolls over and crushes the altcoins again. You could have I mean, you already have an example right now where a lot of altcoins are near their lows, whereas Bitcoin's 2x off its lows. So Ben, you're talking about that horrible situation where basically Bitcoin crashes in price, but Bitcoin dominance rises. Exactly. Yeah, I think that is coming. We've had the rally. So the rally served as the purpose to break the altcoin market

off their Bitcoin support levels, like their pivot points. And most of them have broken down. I think we still need to see Ether drop. The Ether Bitcoin dilation, it looks like a massive distribution phase to me. And once that drops, I think that'll mark the end of it. I was just saying it's interesting that even now in 2023, this is effectively the same washing machine of liquidity from Bitcoin to altcoins. Go ahead, Scott. this is just the same money cycling through well exactly i mean yeah look at it you can see that i mean look at the altcoin market it's just been putting in if you look at like total three there's putting in lower highs and lower lows for for a long time it's actually tracking uh quite closely

to what what happened in the dot com so yeah i i think that and and by the way for you know if you're curious like why altcoins are are lagging or why crypto is lagging the stock market in general, look at what happened in 2019. It was actually the stock market that climbed the wall of worry the entire year. We had an inverted yield curve back then too, but it was on one of those like five or 10, there's one of those like five or 10% corrections by the stock market that led Bitcoin and the rest of the cryptocurrency asset class to go down for the rest of the year, even though the S&P continued to climb for the rest of the year. So I think that, I mean, I know, Scott, you were talking about this earlier, right? Like whenever we do get this like 5% or 10% correction by the stock market, by the S&P, I think that could finally

be the final shoe for the cryptocurrency asset class. And from there, you would likely see the crypto asset class likely go lower for the rest of the year. And then at some point, at some point, the unemployment rate goes up. Ben, your thoughts on this? I keep hearing, and McGlone said it earlier too, that Bitcoin is lagging this stock rally. But I think it's dependent, obviously, on your timeframe, right? Because since the beginning, I mean, Bitcoin opened the year trading at $17,000-ish. Just sub $17,000 is now still right around $29,000 or $30,000. So it has outperformed. It's just been lagging, I guess, since April, right? So could you make the argument at this point? I wouldn't, but that Bitcoin could be a

leading indicator for what's coming. That was sort of what Mike was saying that, look, we're seeing Bitcoin start to roll over. Maybe that's a sign that stops it going to roll over as well. Yeah. I mean, I think it's a great leading indicator for what's likely going to happen. And by the way, I mean, whether you want to call it a pre-election year or a pre-habbing year, Bitcoin has always topped out around halfway through the year, either June or July. That's where it's topped out. And then normally it spends Q3 going down. So I don't really see this time being any different.

And I think that certainly could be a leading indicator for the stock market. Then up to... Why are we talking like it's a doomsday scenario and is Bitcoin leading the stock market? I mean, let's get some perspective here bitcoin is down two thousand dollars or eight percent from its recent high and bitcoin is down three percent from where it was at the beginning of the weekend like why is everyone talking as if like this is the end of bitcoin was a doomsday scenario this is a i mean it's but bitcoin but bitcoin is struggling to break and i'm not a technical analyst but gareth it's not breaking your 30 then your key number of what, 31.5?

Yeah, it's been there since April. Exactly. Okay, but hold on. I mean, it's up 80% this year. The Nasdaq hit a local high and came down 3%, and so Bitcoin's taking a bit of a cool off. I mean, are we saying this is the beginning of the Bitcoin down cycle? No, but is that, but that performance relative to the news, what we're seeing with XRP,

what we're seeing with the ETF, that's what concerns me. If we don't have all that positive news coming in and then the price of Bitcoin just lagging throughout the developments, then I wouldn't be as concerned. But seeing the XRP ruling, seeing the ETFRP ruling,

seeing the ETF news, this being priced in, and then looking at the price of Bitcoin, that's what concerns me. And that price... Hold on, guys. Guys, hold on. But the ETF is not approved yet. There's still a million and one hurdles.

It's mostly priced in, though. It gets approved. I mean, yes, we maybe overreacted slightly to headlines and crypto crypto twitter euphoria that the etf is definitely going to be approved because it's it's blackrock but the reality is it's not approved yet and now the market's kind of saying okay look maybe we've got a little bit ahead of ourselves let's calm down a little bit we're still very much in an upward trend and an upward cycle and you know tomorrow we live to fight another day

or the next day we live to fight another day. I don't think it's a doomsday. I don't think anyway, I'm not saying it's a doomsday scenario. It's just the scenario that's always happened in the pre-having year. It's just the same thing we've seen every four years that Bitcoin trends back down in the second half. So I don't really see it as a doomsday scenario. It's the same thing that's always done. Yeah. And I think- And we're in the- Just real quick, just to understand too, yeah, and I agree, it's not a doomsday scenario. I

think Ben and I are both insanely bullish longer term. It's just recognizing that it was unable to break through on good news, which is usually some sort of indicator that it has a pullback coming. And then the pullback for me, I know Scott mentioned this, I think last week or so, but you have a 28.5 support and then you have a $27,000 support. So as a technician, I'm saying, okay, well, maybe we just pull back there and then we watch to see, does it hold and does it retest 31 and maybe break out at that point? But I agree with Ben in that you have to kind of look at past history to give us at least an idea of where it could go. Yeah. I mean, I think it's important to always differentiate whether you're looking for a top and seeking new lows in the major crash, or if it's a local top and you're looking for a dip to buy. And I view this as more of the latter for now. And just last thing I'll say, I just have

to jump off in a minute. But the one negative scenario that I see is that if you did have a stock market, like let's say we start testing October 2022 lows, again, let's say in the next six months, that would be a concern for me just because again, what influence does that have on risk assets? So that's my one kind of scary scenario for Bitcoin. Otherwise, if the markets don't have those big downside moves, then Bitcoin probably stalls out on a retrace down to 27 or so, and it could break out. Hey, guys, what about alts? Why is no one talking about alts? I don't understand. I get it. Liquidity is not there. But what, and maybe go back to Benjamin. Benjamin, what would it take

for you to become bullish on alts? And I'm not talking about the top projects. I'm even talking about all the, go ahead, bro. Mario, the reason why we're not talking about the top rogers, I'm even talking about all the guys. Mario, the reason why we're not talking about Alts is just out of respect for Ben Cowan, because we know he's here and it's very tough to get him and I just thought, you know, we can't disrespect him by bringing him up here and talking about Alts. Especially after all the Twitter spats we've had about dominance. I mean I talk about Alts all the time, so that doesn't really make any sense. My videos on Altcoins come out almost on a weekly basis, so I have no problem talking about altcoins.

I think that the reason why no one cares right now is just because we're seeing liquidity leave. Again, I mean, the riskiest assets get hit first. And you could even argue that in the same way that people have left altcoins for Bitcoin, they've left riskier stocks for safer AI stocks, right? Like Nvidia and Google and Microsoft, right? I mean, it's the flight to relative safety, which is what I think we're seeing. And the thing that would make me get bullish on altcoins is once the Bitcoin dominance is back above 60%. I mean, look, everyone's been fading the dominance rally for a year now, and they've all been wrong, right? It just keeps going higher. So my view on the altcoin market has not changed. It's just that they're too risky as long as the dominance is below 60%.

But what I don't understand is looking at the macro picture with the lowest CPI since April 2021, and then the first substantial drop in core CPI. Why is VC funding, is it just AI sucking liquidity away from crypto? How about the impact from AI, the negative impact from AI and gaining all the traction there? Yeah, I mean, I think that during times of increased uncertainty, people go towards safer things and the stock market and AI related stocks are going to be seen as safer than cryptocurrencies. The thing that we all have to admit to ourselves is that

99.9% of the altcoins are useless anyways, whether you're talking about good times or bad times. So that's one of the reasons. We need to actually develop projects that have more utility and then maybe the altcoin market wouldn't perform so poorly during times like this. But I have to get going, guys. I'm starting to do a stream with Garrett. Go ahead, man. Let's go to Travis. You've had your hand up for a while there. And guys, thank you very much for joining. Good luck. Have a good stream. Go ahead, Travis. Yeah. A couple of things. You guys have touched on it, but I think the way to frame Bitcoin's price action is that it was trading at 25 and was sitting at kind of major support levels uh the day before the blackrock etf was filed and then you went from 25 to 31

basically at a straight line and then you've been chopping there for uh you know a little over a month now about about a month and you know listening to the bloomberg etf guys who i know you you know and some other kind of domain expertise guys regulatory uh expert guys that i know you've had in this spaces before i you know i think the initial expectation when that was filed and people started to you know kind of guess at the timeline of approval, there was, there was, you know, I think a significant expectation that you could see a Bitcoin ETF approved in like mid to late August. And then I think over the last, you know, call it a couple of weeks, maybe, I think the market is starting to digest that that's probably not the right base case. And again,

this is not like something that I'm, you know, like a super expert in. I'm like taking information in from people that are closer to, you know, guessing at the timeline of ETF approvals than I am. And I know, like I said, you have those guys in these spaces, but it was like, you know, I think initially people were like,

oh, wow, we could have a BlackRock ETF like one month or six weeks or something like that from today, which today being a month ago. And now people are starting to look, oh, this could potentially be the end of January, which in crypto timelines, the end of January might as well be five years from now, I think for a lot of types of fast money, there's certainly, you know, I think slower, more institutional, traditional types of capital that think about these things, you know, on a different timeline, but in the very near term, I think that's what's affecting Bitcoin. And then I think kind of similarly with the XRP SEC news, you know, you had a really big pump off that initially. And then everybody,, and then all kinds of tweet threads and legal experts going, wow, this is so bullish, and this, that, and the other. And then in the days that followed, the market to be looking to appeal that. And now the market is digesting that, okay, maybe this isn't as straightforward black and white positive news as we thought, and that this could kind of the legal uncertainty around XRP. And then as that relates to the alts market broadly,

we could just be in for a lot more uncertainty around this than what people were initially expecting. And I think looking at XRP's chart is probably the easiest way to look at how the market is digesting that because it looks like it's breaking down to a pretty significant way from the initial pump. And then I think the last thing I would say is that like all of this macro chatter and how crypto relates to macro, I think is ignoring some pretty significant idiosyncratic factors for the crypto market. And Binance being the single biggest one, there's still a ton of uncertainty around that. But like the news is getting worse and worse. I think the walls look like they're closing in more and more on that so it's this weird juxtaposition between potentially very positive news with blackrock and and bitcoin spot etfs potentially getting approved you know tbd on

the timing there and potentially positive news with uh the xrp sec SEC ruling and the knock-on effects positively throughout the alts industry, again, potentially there. You have that in one hand, and then in the other hand, you have this potentially massive hammer coming down on the largest crypto exchange, and we don't know what the timing of that is or what the specifics of that are going to be. Yeah, I think the question there then, Travis, though, just like with kind of conversation with the stock market, and I'm going to go to Patrick for your thoughts right after this, is that like, is at this point the Biden's DOJ enforcement already priced in because it's been expected for so long, right? So everyone's waiting for the hammer to drop, hasn't dropped. And when it does,

everybody will be, I told you so so we knew i was gonna have there there's certainly potential for her to be you know less negative than feared but you know i do not know how to frame the likelihood of of various different types of outcomes uh i don't yeah i agree patrick are you thinking yeah and patrick and i cannot pivot the conversation to a question again i must see selfish questions as always, Scott. But David, I want to ask you and Patrick as well, and even Scott, what would it take for money to start flowing into the other riskier ecosystem within crypto? And I'm talking about alts, I'm talking about startups, I'm talking about NFTs and other assets.

I'll take a shot at that I think Move legislation And we've spoken about Court activity Talking about regulatory issues Talk about ETF To me I'm a fundamental guy I'm actually a lawyer by

Training in my practice earlier in my career And I think Activity on the Hill would certainly help. I don't know, frankly, if we have the capability in the United States with the current composition of Congress to get anything passed. But certainly there are efforts, and I think those efforts are gaining ground. Obviously, going into an election year makes things harder, and that's the practical aspect of things. And there, I think, if investors can easily breathe the fact that they are investing in something that is not going to be

claimed to be illegal, and they're going to come under regulatory scrutiny and hit the front page of the paper. I think we'll then start to see additional investment. I think that that's a very small part of it, to be honest, David, because I think that with the ripple win, whatever it actually means legally, I think we now have the narrative for at least the next year to two years until that appeal could go through that these things are not security. So I don't think that's it anymore because I think it's more impactful what people think than what the court case actually said. And I said this the other day, guys, I say, I think the answer is really simple, Mario, higher prices, higher prices, beget higher prices. And all we need

is for a little bit of a market pump across all coins to get all the haters, all the bears, all the doomsday sayers, all the people who say it's going to zero and over to FOMO right back in, and then the liquidity comes. We were talking about it right before. It's just the same money cycling in and out of Bitcoin and altcoins. So all we need to see is altcoins outperform Bitcoin for a bit, and that self-fulfilling prophecy of that same repeated cycle will happen again. Yeah, but then what triggered... True, true. But what I'm asking is what's going to trigger that, Patrick? And then I'd love to get Vinny's thoughts on this.

What's going to trigger that new money to flow into other assets in the ecosystem? Hamster racing. Apparently. And marble racing and hamster racing. Dude, I'm so... Hamster racing and marble racing. Yeah, that's literally Mario, by the way. This is the new meme coin. That's what's pumping right now are fake hamster races and marble racing. Yeah, that's literally Mario, by the way. This is the new meme coin.

That's what's pumping right now are fake hamster races on the internet. You know, I don't know. I'm super glad that we have Vinny here today. I'll tell you why I'm super glad that we have Vinny here. Because I think this question is really relevant to Vinny. Why? Because he pointed out in our spaces last week that actually in the 14 years or so since the satoshi white paper we haven't actually got a real world use case for crypto other than arguably a store of value and a

transfer of money from one person to another that's uh that that that's the one the one use case for crypto and i think that the next use case for crypto is actually mass speculation. You know, like mass speculation, whether it be through DEXs, be it through perpetual exchanges, be it through speculating on which hamster is going to win the race. So I think that that is one of, like the one thing is that we haven't got a real use case.

And I think when we do get a real use case, then maybe that will spark the altcoin the altcoin and real use case sorry a real use case of what a real mass use case for crypto that is not the store of value or transfer of money but you're saying there's no real mass use case. Let's just look at gaming for example. You're saying How many crypto games have got a million users? Okay, so you're saying the use case. You're not talking about the use cases there. You're talking about adoption. So you want to see mass adoption? Well, I'm talking about you can't say that you've got a use case if no one's actually using it. You may like, you know, we're all so excited about this DeFi narrative and this DeFi use case, but the truth is that 0,0001% of the world's population is actually using DeFi,

and when they do, they get ragged because of contract tax. And as Benny said last week when he was on the space, and he's right, he got me thinking very much around what is the actual use case for this amazing technology that is now arguably 14 years old and i think it's that's it transferring transferring dollars very quickly illegally without the bank knowing who you're transferring it to and where you're transferring it to that's pretty much the only use case that we've been able to come out i love you right you've become my disciple this is no but buddy the reason the reason why I think this is so important is because you really got me thinking.

But then today, I did a show on this today, and I think it's important that we discuss it. And I'm glad you came, because otherwise I was going to get you onto my show tomorrow. You've got WorldCoin, which launched today. WorldCoin, as much as it's very controversial in crypto, scans people's retinas and creates a zero-knowledge data proof of people's eyeballs, a hash of people's eyeballs, and is going to use this to become the biggest financial

system in the world. That's not really where it stops. The day before, Elon changes Twitter to X, and we know that he cited X as being the biggest disrupting the over 50% of the world's financial system using this all-powerful X app. We also know that these two influential billionaires have beef with one another

because Elon wanted to run OpenAI which is founded by Sam Altman and a few others, and they came to disagreement. Now, I'm wondering if these two guys using crypto as a battleground for their next thing introduces some kind of new use case. Sam Altman said with WorldCoin,

he said that solves two problems. One, it creates this new financial system where everyone has an identity, but also it gives everyone a real identity now in a world where AI can fake identities very quickly. So starting to think whether maybe this could be another narrative or another real use case for crypto.

So Ryan, as you know, I've been doing this identity thing for eight years in total. And as Civic, when we did ICO 2017. It's still around. We built on identity.com. We've been building. I think I wrote the first blog post on public identity infrastructure

and identity as a public utility. And we've been working really hard on this. We've got a lot of infrastructure around this, and great. We don't have amazing adoption yet. We've got a couple of infrastructure around this and great. We don't have amazing adoption yet. We've got a couple of companies using us, it's building up, but here's the challenge that we've had that I think that WorldCoin's going to have. Now on the supply side, sure, they can pay people all day long to go scan their retinas and eyeballs. That's great. But getting people to use this is going to be exceptionally difficult. And I'll tell you why. The existing banking system

and the existing governments or whatever else in the world, they want to own your identity. So no bank wants to go and plug into an identity network because they see their IP and the value of businesses having 20, 30, 50, 100 million customers

that they've KYC'd, they own and they know everything about. And so the zero-knowledge truth stuff doesn't really work because they need to own it, they need to hold it as well. And there's some ways of storing it, we've looked into as well. But here's the problem, here's the rub. Everything from DeFi to stablecoins,

it all is under the presumption of anonymity, because I say presumption is that people want to do anonymous transactions, and the government doesn't want anonymous transactions. So the reason that people use crypto is to avoid that, whether it's for tax reasons or other even more illicit reasons, people try to avoid government systems and they use crypto for it. And we have struggled to get, let me give a very simple example.

Let me, do you mind, before you give the example, do you mind, because I want to kind of link what you're saying. I'll let you finish off with the example to what we're discussing in terms of macro and crypto and the impacts having on crypto. Is that, is it really like,

we're talking about use cases here. Like I don't, I don't understand why we're still talking about use cases. There's a whole bunch of them. If there's no adoption, okay, that takes time. How long will it take? I have no idea, but I don't think that plays a role in where we are today.

I think there's other factors that should be blamed for crypto lagging. Mario, so run pointed out that there aren't many use cases. Right. And I think let's just caveat that. There aren't many use cases. Right. And I think this is caveat that there aren't many use cases at scale. Okay. There are a lot of sub-scale use cases for lots of things. I mean, you know, a barbershop's got a use case.

It doesn't scale. So, there's not enough use cases for crypto at scale. The biggest use case for crypto at scale is to basically evade the existing financial systems, rules, and regulations. And the example I was going to make is, as we've discussed with many exchanges over the years, and we've tried to work with exchanges to use a decentralized identity system, the year is the issue. We built a pretty high-fidelity system.

We can detect fraud very easily and whatever else. When exchanges, and the difference between exchanges and banks are this. Exchanges do not have risk on funds. When you deposit a Bitcoin into an exchange, six confirmations later, they own that Bitcoin now, technically. They're in possession of it. You can't charge it back. You can't reverse the transaction. You're at their behest, and that's how people lose money when exchanges go under.

In the banking system, the bank is at risk when you deposit a check, when you send a wire, because that can be reversed for up to 30 days, even 60 days in some cases. So the bank has to know exactly who you are. And so when crypto exchanges don't opt for the best and most high-fidelity experiences, they're not going to use WorldCoin. They're not going to use these things because the drop-off rate is too high. The moment you're able to get rid of the scammers and the forces and whatever else... I think what we'll do, Vinny, Vinny, I think what we'll do, we'll talk about WorldCoin tomorrow. I think today, let's keep it in terms of crypto adoption.

That's fine. I was just making the point that I really buy into your thesis that you got me thinking around the fact that there's no crypto adoption other than maybe a transfer of value and a store of value. And even that's a very small adoption. Mario is asking about when the altcoins are going to be ready. And then you create a free arbitrage. But that's my point.

A lot of that is regulatory arbitrage. People are just basically getting our rules and regulations to do this. And as governments are trying to create their own, like the Remembe I saw had $250 billion in transfers this year or something for their digital one. You know, show me a use case with more than a million people around the world using crypto on a daily basis for something. Fair point, fair point. Look, I don't want to go down that rabbit hole.

I know we're talking about WorldCoin tomorrow. Probably link it if you can join us as well. We'll link it to use cases and adoption of those various use cases. But Eric, I want to go back to you, man, and we haven't had a chance to ask you any questions. So first, your thoughts on the discussion so far, and then we'll ask you a few questions. Well, at the...

And linking it back and moving away from adoption and just linking it back to the discussion earlier about the macro picture, what equities are doing and what crypto is doing. Yeah, of course. So I fear what I'm going to say is probably going to piss a lot of people off. But as far as macro goes,

you know, when it comes to macro, does it matter? Yes, of course it matters. But the problem is that it's too damn complicated for any one person to fully understand. So all the discussions going back and forth there were very interesting. They sound very high intellect and whatnot. But at the end of the day for me, I don't care about macro analysis at all for my own trading, for my own analysis. It's all about quantitative analysis.

As far as what I'm looking at, we're looking at Bitcoin. Yeah, it's heavily correlated with traditional markets, mainly NASDAQ. I believe NASDAQ's headed into like a 10, maybe 15% correction from here, hit that $16,000 target, big number. Not a big deal for it to pull back that much at all. It doesn't take Bitcoin with it? Very likely, yes. So, I mean, how far does Bitcoin go down? I think worst case scenario, $25,000. Best case scenario, maybe low $0.28. And then we see things kind of go sideways for a while until the end of the year. And then we see another try to the upside.

Define sideways for me. Define sideways for me. Is sideways $28,500 to $30,500? Or is sideways $25, 30 500 or is or is sideways 25 000 to 40 000 just to find when you say sideways i just want to understand the word sideways yeah yeah so when we're talking about sideways on bitcoin in the weekly here uh we're talking about the current high basically you know somewhere around 31 32 000 bucks to the upside versus about 25 to the downside that's what so you're saying between now and the end of the year, we're not breaking $31,500 in a very strong way?

No, that's not what I would say. I would say in the next three months, that's probably what we're looking at. And then there's probably going to be a big try to the upside, followed by a pretty big correction. When I say big correction, I mean 30, maybe 40%, something like that. So it completely depends how high Bitcoin gets first. When we look at Bitcoin prior to past halvings, one of the big things that's always happened, it's always retraced to the 786 fib every time, every time before the halving from the prior cycle high to the current cycle low. Where is that for Bitcoin? Well, I don't even want to say the number because it's too fucking high and it would make me look absolutely ridiculous right now. But it would be in the low 50s. So does that happen? I mean, is this time going to be different? I don't know.

Eric, I was going to say, but on the downside, we also, in those levels up to the bottom, we tend to come in and make a slightly higher low, which we have not done. Well, I don't know if you can necessarily say that. I mean, wouldn't you call the $20,000 quick spike on one of the silver gate? I think it was silver gate. Yeah, usually it's six or seven months later, but yeah, that could be down. Certainly it doesn't have to be the same. Yes, for sure. It could be six or seven months later, whatever it is. But when I'm talking about the big pullback, when I'm talking about big pullback, I mean, 30 to 40% in Bitcoin terms, it completely depends upon how high it gets first. So what I'm looking at right now is probably a shallow correction followed by continuation, and then the big correction, and then the big correction, which is probably later this year. I think that's kind of my base

case. So, you know, while we see NAS kind of cool off here and the traditional marks go into a bit of rotations, which I think is quite obvious, and why I don't think we're going to see any like humugously nasty downside moves, you know, like I said, 10 to 15% at most, which kind of is a lot, I guess, when you think about it. But ultimately, you know, Bitcoin is going to be like the set of another base, somewhere above $25,000. I think that's the worst case scenario we see in the next six months.

And how high do things get? I don't know. I'd be very worried if he dropped significantly below $25,000 for any amount of time because that's where we got all the bulletness from the BlackRock news.

That $25,000 to $31,000 move, I would really not want to see that erase. So basically anything for me that bottoms now above those lows, I think it remains bullish. And Eric, also, your thoughts on the rest of the crypto market other than Bitcoin?

When can we start seeing new money come into that? Because as we said earlier, it's just the same stuff, recycling and it's underperforming. Mario, just a matter of interest, what are you eating? I'm just, I'm hungry. I just want to know what oh shit i thought damn it prawns prawns hey go ahead eric sorry yeah so when it comes to all coins um i kind of come from a more i guess uh old school view of them in the sense that we're not i would not expect to see any general all coin rally um as long as bitcoin is not on any sort of a humongously

strong rally. And when I say humongously strong rally, I mean, it's got to be near all time highs or above all time highs. Until something like that happens, yeah, there's gonna be a few one offs here and there, maybe a small sector, like we saw in the summer of 2020 with DeFi. But generally speaking, if you're just looking at the altcoin market as a whole, gonna be pretty nasty, most likely. Mario, does that take away your appetite at all? Scott leaves me hanging. Scott, I'm eating, man.

I don't get the opportunity to troll you very often. I just bet that awkward silence to see if you would come back in chewing. I lost my appetite with the silence when I hated it. I can get one more. I thought you lost your appetite thinking that most people on this call have been, what's the word, negative or bearish on altcoins. And I know that you've been

prodding people, asking people, what about alt? Yeah, but doesn't that bother you as well? No, I think I've become a rift. You think what? What did you say, Ryan? I said Scott set me off by becoming... set me off one day.

He was drunk and we had a very sober conversation. No, sorry, a very sobering conversation after he got drunk. And then Vinny just reaffirmed everything that I have been thinking since that conversation. And the reality is that, you know, crypto, the only use case for crypto is speculation and gambling. And therefore, you should invest only in things that promote speculation and gambling. And everything else is just too risky for me. So things like exchanges, things like bots, things like perpetuals, things like that. That for me is probably right now the only use case um the only use case that's working and so

when you talk about alts like when i look at the ai crypto like to me that's to me probably most of them going to zero most of them have zero value whatsoever uh the stuff that i think is working is the stuff that is generating fees or is going to generate fees very very very very soon and you can you know we're at a point in crypto's life cycle where you can actually gauge what those tokens are and you can gauge the growth and you can gauge the users. That's kind of like where my head space is at. I think all the rest of the alts, I think it's going to get really ugly, like Eric said. It was Eric, right? Eric had said that he thinks it's going to get really ugly. I think it's going to get really ugly. Over the course of the last 18 months, the curtain has gotten pulled back about what exactly alts broadly have to show for themselves for the last however many years we've been doing this.

And people are just looking at the market from a much more sobering perspective. And when you look at the bull markets of 2020 and 2021, now with a couple of years of hindsight, we now know that those bull markets were so heavily fueled by reckless lending, intertwined with fraud, used to heavily lever long to speculate on vaporware, that that factor was so massively present in the bull market that when you pull most or all of that away, which is what I think the crypto market is in the process of doing, pulling most or all of that away, you really can't know what we're going to have left over in terms of price action, in terms of what a bull market for alts might look like when you don't have that massive factor that's so present.

So wait, really quick then, Travis, you're implying that this time isn't that different. I'm not saying you're right or wrong, but the previous cycles, we had that, right? I mean, we had the ICO, we had the IDOs. At the moment, yeah, at the moment, it looks like this time is different. You know, now I think, you know, never bet against human stupidity. So, you know, we may just try and figure out a slightly different way to run that same playbook back. I wouldn't be shocked at that. But for right now, it looks like we put the kibosh on that market factor in a pretty major way and we don't really know what's left over.

And also, the sort of landscape is not done shifting in a seismic way. Like for a perfect example, what is the alts market going to look like if Binance.com is more or less the same as it is right now or is significantly diminished from its current point of dominance or is shut down entirely?

Those three different scenarios would paint three drastically different pictures for how any kind of alts market is going to act, for example. And that's still an unknown. I actually, Eric, the humans are going to human and demonstrate humans to get any side of it. I do think that you're right.

I'll take your sobering view, but the fact that I kind of went on a rant about this last week, the fact that Vinny pivoted to AI, both to the use case, and it's all a casino when I zoom out and look at it from the outside, it seems like that makes me even more bullish. Yeah. I mean, you guys have touched on it already here, but I mean, it is also worth noting that crypto is just not the shiny new thing right now. You know, we, the crypto industry received an incredible amount of venture capital funding

in 2021, in 2022. And, you know, I think the large majority of that capital that was deployed is like deeply regretting that right now. And in fact, a lot of people are trying to get their money back from VC funds. You're hearing about that on a regular basis within crypto. And so, you know, with as much venture capital funding as his as the ecosystem is already taken in i mean we are gonna have to have some shit that actually has some decent adoption to show people that you can kind of wave in front of lps to try and get some more money

into this ecosystem right now you do not have that i mean you got a bunch of you you got you guys you guys touched on crypto gaming earlier good you know i write this monthly update letter every month and i do you know those monthly bulleted highlights and so i kept a pretty good track of like how much venture capital funding crypto gaming took dude it took billions billions and billions of dollars of venture capital funding in. And there is jack fucking shit to show for it right now. Maybe that's going to really, by the way. Yeah. And by the way, Travis, to the core of the conversation that I was having with Rand, which he was talking about, which I think is the next layer of this.

I didn't actually necessarily say that the technology wouldn't be adopted, that there weren't huge use cases. My core argument as I was drinking wine going further down the rabbit hole is even if the technology is adopted, most of those things don't actually need tokens. That was my problem.

Right. A lot of the tokens underlying it can still go to zero. We have not figured out a mechanism design for tokens that incentivizes usage and creates a functioning token economy that has any sustainability to it. We have not seen that. We've seen things that can bring in one side of the supply demand case right you've seen things that get people to you know pump the token but it's over a very short period of time there has been no sustainability behind that so that's just still

this unsolved question of like game theory mechanism design yeah for both structures travis and part of the reason for that is like a lot of the mechanisms that have worked with the FIDO turn the tokens into securities. And that's the problem, right? So you can create this yield mechanism, but now it's a security and then it has to go through that whole ramp. I have to go, but I want to just touch on one thing with regards to to uh the cash

flows into crypto i think the alt market is heavily dependent on money coming into primarily bitcoin uh due to macro issues and maybe ethereum to some extent and i think people in crypto will diversify those holdings if bitcoin shot up to 40 tomorrow, you'll be buying your favorite alts that you know and you've been watching for years or you'll be cost averaging your portfolio or whatever. I don't think we're going to see new money in any large quantity going directly into alts. So the alt market is highly dependent

on fresh capital into Bitcoin and maybe Ethereum. And then the rest is all just recycled cash from the crypto community. That's my two cents. If I was a trader based on everything I've heard till now, I would go long alts and short Bitcoin, folks. I mean, it sounds like- I agree.

So do I. I agree. Bullshit. Everybody's agreeing on the fact that all coins are at their lows. Listen, if Bitcoin dumps, all coins are going to go lower, but they certainly don't have as far to fall as Bitcoin has to go. So that's where I would be on this trade.

I agree. I agree. It's a gravely mistake. Sorry, I was just talking to myself. Travis, I wanted to go to one thing you were saying about there's jack shit that games, Web3 games could show for all the money they've received. But I was just looking at, just to confirm the numbers,

and it takes three to five years to build a AAA game. And I'm talking about a normal, traditional AAA game. You've got, in Web3, they're trying to build a AAA game incorporating an entire economy through digital ownership and a token, you've got to give them a few years. It's only been a couple of years since the concept existed. Okay. You agree with that?

Is that the best statement though? Yeah, I'm not arguing that it does take, you know, three plus years to build a AAA game. Yeah. Right, but so we should have never had tokens for any of them. No, look, I'm not bullish on the token so we should have never had tokens for any of them. No, look, I'm not bullish on the token.

I'm worried about the tokens or the token economy. Me too. Me too. I was a big cycle like everyone else and I was a mega bull. But if we're taking the benefit of hindsight right now, why should there even be a token until there's a fully functional game? Yeah, I'm with you there.

We talked about it a few months ago that you know start with equity then incorporate nfts and incorporate token when it makes sense but a few other vcs kind of disagreed with that model but you know i'm not i'm not a developer myself so i don't know what the the best approach would be but i think you know what gradually maybe to a token nominee would make more sense you know what the problem with these tokens is those these tokens all price the game at the full value of the success before the game had even got any kind of adoptions like if i looked at x infinity's uh valuation i don't remember what the valuation was but i kind of remember thinking to myself like the price of x infinity now is as if it is a triple a game at the peak, peak, peak

of its valuation. I remember thinking to myself, I'm just trying to think, the price of Axie was $153 at the peak. The total tokens in circulation was $270 million. So to do the number, the valuation was,

am I right in saying it was $27 billion? $40 billion? Yeah, just $40 billion. So $40 billion, it was the fully diluted value of Axie Infinity before it even got any kind of adoption. And that's the problem with these tokens. The problem is with tokens, the tokens have a mechanism and a habit of pricing in full value for something that has just launched.

And that's the one game that actually will box. Yeah, and then all the other games also started to come onto the market with market caps of $1 and $2 billion. Now, if you go into the real world and you say, okay, how many in the real world, how many games have a fully diluted valuation of two, $3 billion? There's a handful of them. And on the crypto market cap, there were, I don't know, 20 in the first week that got valuations of a billion dollars. That's the problem.

Yeah. So I was arguing with your mate, Fred, the organizer of the show, by the way, you got to have a chat to him, right? He's got me fuming and I completely tuned out. So I apologize. But Scott, man, I think we could... Mario, tell us what you were arguing about. and we're going to have a fight after the show. But look, I think, Scott, we've kind of butchered the... We're kind of pivoting away from the macro discussion. I know that's something we're going to discuss tomorrow as we focus on WorldCoin. Was there anything more you wanted to add to today's discussion? No, I'm not going to crash it on you.

I'm sorry. I haven't done it in a while. No, no. The 101 every single time no no i don't want no one i actually i i i the more i send this remember i went on that rant at the end of the at the end of the uh stream last time as much as we're all so bearish and there's so much consensus here i sound just sounds like bear market uh bear market depression and that this is probably the time like david said to start buying these things.

And as you know, I mean, no matter what I say, I am buying altcoins for the long term, or at least I was a month ago, and they've done exceptionally well. Yeah. And I want to agree with one thing Eric said. Someone's got economy mute, everyone. But I want to agree, like Eric said, just ignore trying to analyze the macro economy. You just cannot do it. Try to understand equities. You can't outsmart all these different hedge funds with hundreds of employees and all these softwares.

So what I try to do is just approach the market and like, hey, the market is as efficient as it can be considering human emotions. And I'm just going to go with what the market says

is going to happen next. If the market is picking up, hey, things are getting better. The market is forward looking by a few months. If the market is crashing, no matter what I think, things don't look good and plan accordingly. And I try to do a technical analysis. That's literally the beauty of technical analysis. You can learn that and you can justify ignoring the rest of it and just seeing it all in the charts. Yeah. So I would go with my position on this is that most, I want to go with the thread.

I'm going to read out what our friend Alex said in his thread. And he said the following, everyone is bearish, but the recession has been front run. AI revolution is real. The Fed is almost done and the market is cash heavy and therefore he's bullish. But then he said, what could go wrong? He talked about CPI data being higher than expected. The market is estimating a 25% to 35% probability of recession in the US. A market crash would require an information shock, such as significant deviations in inflation,

PMIs, adverse geopolitical developments, et cetera. So that would be my position. That's why I really liked Alex's thread.