Unchained - Arthur Hayes and Will Clemente on How This Bitcoin Halving Is Different - Ep. 633

Episode Date: April 16, 2024

Listen to the episode on Apple Podcasts, Spotify, Fountain, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. The Bitcoin halving is just around the corner, expected to be on April 19 or April 20.  Arthur Hayes, CIO of Maelstrom, and Will Clemente, co-founder of Reflexivity Research discuss the rise in Bitcoin prices ahead of the halving, the impact of the approval of spot Bitcoin ETFs in the US, and the potential effects of the halving on the price trajectory post-halving. They also discuss the potential impact of a new class of investors on Bitcoin's price, volatility, and decentralization.  Learn more: Bitcoin Halving: What Is It & How Is It Determined? Moreover, they dive into the impact of the macroeconomics, geopolitical, and demographic conditions for the crypto asset industry, the potential for L2s on Bitcoin, and their price predictions for bitcoin by year-end.  Show highlights: How the approval of spot Bitcoin ETFs altered the price trajectory of BTC before the halving Whether the introduction of spot Bitcoin ETFs impacts Bitcoin's decentralization and price volatility Whether this cycle could be the "last cycle" or the "supercycle" Why Arthur predicts a 90% drawdown in the future and how they determine when the markets are nearing the top of the cycle The effect of high inflation, the election, and the termination of the bank term funding program on Bitcoin How artificial intelligence is expected to trigger a productivity boom, according to Will Why Will considers Coinbase to be mispriced Whether Bitcoin L2s have a future and if security budgets are a concern Their views on Bitcoin Ordinals and the Runes Protocol launch Why Will views DOGE as a purer commodity than ETH Arthur's rebuttal to claims that Ethena could follow in Terra/Luna’s footsteps Arthur's and Will’s Bitcoin price projections for the end of the year and the cycle Thank you to our sponsors! Polkadot Guest: Arthur Hayes, CIO of Maelstrom. Previous appearances on Unchained: Arthur Hayes on Why Bitcoin Is Money and ETH Is a Shitcoin He Loves Arthur Hayes, Former Ethereum Skeptic, on Why the Merge Makes Him Bullish on ETH  Arthur Hayes of Bitmex on Why Countries Will Turn to Digital The Chopping Block: Arthur Hayes on Why Crypto Needs to Ditch the Banks How Crypto and Blockchain Technology Could Change Financial Services Will Clemente, Co-founder of Reflexivity Research Previous appearance on Unchained: Strong Hands Aren't Selling Bitcoin. So Who Is?  Links This cycle Naval’s tweet: “The narrative for this cycle is ‘this is the last cycle.’” Unchained:  Here’s Why No One Agrees Exactly When The Bitcoin Halving Will Happen Bitcoin Miners Diversify Their Revenue Streams as Halving Nears Heatwave by Arthur Hayes Dissecting Bitcoin's “4 Year Cycle,” guest post by Will Clemente on The Pomp Letter Bitcoin ETFs: Unchained:  The Best Spot Bitcoin ETFs for Different Types of Investors Who Is Buying Into Spot Bitcoin ETFs? We'll Soon Start to Get an Idea Bitcoin ETFs Explained: What Are They & How Do They Work?  Macroeconomic conditions CNBC: Consumer prices rose 3.5% from a year ago in March, more than expected FT: Investors lose hope of rapid US interest rate cuts this year Block size wars Bloomberg: The Block War Is Still a Sore Subject for ‘Bitcoin Jesus’  Bitcoin L2s Unchained: Stacks’ Muneeb Ali On Why Bitcoin Is Exciting Once Again  Runes Decrypt: Bitcoin Runes Launch at the Halving: Here's Everything You Need to Know Ethena Hayes’ tweet on Ethena Unchained:  ENA Surges 20% to New All-Time High as Ethena Rolls Out Reward Boosts Ethena’s USDe Grew to $2 Billion in 7 Weeks. Is It Safe? What Is Ethena's USDe Synethic Dollar? Learn more about your ad choices. Visit megaphone.fm/adchoices

I think there's really two forcing functions that are going to drive money into this thing. It's the debt situation, just the fact that, you know, the U.S. isn't going to default on their debt. There's a low likelihood we're going to have some type of like utopian AI productivity boom or something like that. The most likely scenario as it pertains to the debt is that the United States is going to have to let inflation run hot. And then the other piece is demographics as, you know, younger people kind of take the homes of capital allocation, you know, they're more digitally native, etc. So, you know, I don't know if I necessarily even think that we're going to kind of have these traditional cycles that we've been used to over, you know, we've a pretty small sample. Oh, the super cycle, man? You go on the super second wheel?

Like, look. Like, look. Hi, everyone. Welcome to Unchained, your no hype resource for all things, crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago and as a senior editor of Forbes was the first matriamian, meter porter to cover cryptocurrency full-time. This is the April 16th, 2024 episode of Unchained.

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Corona Serro, the official non-alcoholic beer of Milano Cortina 2026. Today's topic is the Bitcoin halving and its overall impact on Bitcoin and the wider crypto markets. Here to discuss are Arthur Hayes, CIO of Milstrom and Will Clemente, co-founder of Reflexivity Research. Welcome, Arthur and Will. Yo, yo, yo. What's going on? Great to be here, Laura. Next week is the fourth Bitcoin halving when we will see the number of new bitcoins minted with each new block halved from 6.25 to 3.125.

five. What's unusual about this particular having is that the Bitcoin price has actually risen ahead of the having. And that actually typically happens about a year or a year and a half after the having. Although it might seem obvious that the reason for that was the approval of spot Bitcoin ETFs here in the U.S. I don't know if you, Arthur and Will, think that any other factors came in a place. So you can feel free to mention that if you think there were others. But my main question is, how do you think the fact that we've had this new all-time high already? before the having will affect the price trajectory post-having. And so people can differentiate voices.

Why don't we start with Arthur? And then we'll go to Will. Sure. So obviously the approval of the U.S. Bitcoin ETS has been amazing. It's the best-selling product, I think, in BlackRock Fidelity, like the whole asset manager space for ETS in their history. So they're loving the fees, all the AUM inflows.

And obviously we're seeing on a daily basis a few hundred million dollars of new fiat being pumped into the crypto ecosystem, which is obviously led for the prices to rise. So I think that's probably the big macro trend. Obviously, you have the halving. Everyone likes to look at the past cycles and divine how it's going to be exactly the same, but obviously every cycle is different. This is the main narrative of this cycle is sort of the addition of a Bitcoin derivative that institutional investors globally can invest in. And so we're really tied to those flows in terms of how the price action is going to, you know, I think having sort of takes a second step to that. Maybe it'll be a lot more pronounced in terms of its impact, three, six, nine months down the road. But I would say that we're primarily focused on what are those daily flows out of the U.S. Obviously, Hong Kong has approved its own spot Bitcoin ETFs and those should be launched sometime soon. So in Europe, UK, everyone's trying to get on on this fee game in terms of a Trotify Asset Manager. So I think that's the trend having a sort of a second fiddle this cycle. Yeah, I completely agree. I think, you know, even these

prior historical cycles, it's hard to say, this is because of the having, this is just because of just kind of the macro liquidity cycles. Is it a combination of both? Is it the behavioral dynamics in the market? I think one thing that's for sure is that, you know, the halving has a, you know, diminishing impact on the overall kind of the supply shock that we like to ascribe that it does to the market, you know, just in terms of the percentage of overall circulating supply relative to, you know, that kind of cutting in half of the issuance. So I don't necessarily think it has an immediate impact on the market. I think as Arthur said, you know, you go out months from now, and over time it will start to have an impact. I do think the story of, you know, kind of this cycle is basically,

you know, the fact that you've unlocked passive flows to come into the market for the first time. This is something that we haven't had historically and, you know, indices have been the beneficiary for, you know, two to three decades. So I think for the first time, as Arthur mentioned, you know, you're able to have all these pension funds, sovereign wealth funds, et cetera. They're able to kind of passively allocate to the stuff in a way that maybe they weren't able to before because of like regulatory or compliance reasons or whatever it may be. And so, you know, those are, I believe, a different type of investor than what we've typically seen. So how would you think that would affect Bitcoin's price or volatility, but even things like the decentralization of Bitcoin? Just curious

for both of your thoughts on, you know, this, I do believe, I agree with you that we're sort of in a new phase now that we have this new class of investors here. But how do you see them impacting all those different factors? I mean, I've come out pretty strongly saying that taking to the extreme, that passive investing, and we've seen this in traditional equity markets, is toxic to price discovery. And so we'll see how large these asset managers get in terms of the percentage holding of Bitcoin and maybe some other cryptoes and shit coins as well. And whether they're passivity and their non-engagement with the actual underlying protocols and what we're here to do, which is, you know, create a whole new financial system, does that detract from achieving that goal or not? So I think the jury is still

out. I don't know what percentage of the network. So the total supply that BlackRock can co-own as well, that 1% or something like that. We're well far away from any sort of like doomsday scenario, but it's definitely there. Yeah, I think for me in the, you know, like, foreseeable future, the decentralization stuff isn't like a huge concern. I do think the volatility will just naturally come down every time as Bitcoin becomes larger, becomes more liquid, more volume, et cetera. I think the other side of that, you know, obviously that's less, you know, less favorable for somebody looking to allocate just because of the return profile that Bitcoin

may generate. But on the flip side of that, you know, I do think it de-risks the asset in a way that, you know, maybe it wasn't de-risk five or ten years ago. Like, I think you can make an argument that Bitcoin at 70K is more de-risk than it was maybe at 10K just because of the infrastructure, you know, the kind of the, decline in career risk now that's brought on by Larry Fink going on and chilling our bags on live television and talking about how Bitcoin's digital gold, et cetera. So I would argue that in a lot of ways, you know, as Bitcoin gets larger, it actually becomes less risky to a lot of these super

large, you know, pension funds, sovereign wealth funds, et cetera. And then so earlier you both said that you felt that because of the approval of the spot Bitcoin ETFs, that is kind of the main driver for this particular cycle less so than the having itself. But I want to, wanted to float a theory by you, which is I kind of felt a little bit like just the sheer amount of money that we saw come into the spot Bitcoin ETF so quickly, you know, well beyond pretty much nearly every projection I had seen out there. I wondered if you felt that we reached this new all-time high almost like in a delayed way. I was sorry, I know that doesn't sound correct because obviously this came ahead of the having. But what I'm trying to say is,

that it's sort of like the price maybe had been artificially depressed before because the bought Bitcoin ETFs had been, the approval of them had been delayed for so long, you know, like it took this court case and all that. And so I wondered basically, like if you, if you think that maybe it had happened on time, which, you know, we could debate about when that was, but at some point in the last, you know, 10 years. 2013 when the wrinkle clowns first tried to get one listed. Right. Well, you know, at some point in the last. 10 years. Obviously, it's a very, very long time. I imagine it's probably historically, you know,

a very much longer than the average application. So assuming that, then do you still feel like this having will have less of an impact or like basically how do you see those two things coming together? Like, do you still think we will have a fresh new all time high? Do you think it'll not be quite as high as it's been in the past or do you think it will still be, you know, some, a big jump from from the most recent all-time high. Well, I mean, I think just look at why, why are institutional investors investing in Bitcoin? Because there's a whole narrative about the destruction of the sovereign bond market,

which started basically as the Fed started raising rates in March of 2020. So there's a reason why people are allocating the Bitcoin, and that's just that Bitcoin exists. And so therefore, I will allocate, however many billions have gone into these products. There's an actual underlying issue with the markets that's propelling this. So if you take away the Bitcoin initiative, And it was still pending. I think we, maybe we wouldn't be in an all-time time, maybe a $50,000 or $45,000, whatever it is.

But we've rallied off of $16,000 after the FTX collapse. And that's all predicated on a lot of money printing from the Fed, the BOJ, ECB, PBOC, all the major culprits in this fiat to basement orgy that's going on globally. And now institutional investors have a way to say, okay, I'm not just going to sell my bonds. now I have something else to invest in that's not GLD. And that's why you have all these inflows. It's not just that Bitcoin's here and therefore I will allocate. There's an underlying economic tension there. Yeah, I completely agree. And you can look at a gold chart and, you know, gold's been ripping the last couple months. And I think that's because of the fiscal situation. I think ultimately that's the big picture for Bitcoin. I think there's really two forcing

functions that are going to drive money into this thing. It's the debt situation, just the fact that, you know, U.S. isn't in default on their debt. There's a low likelihood. we're going to have some type of like utopian AI productivity boom or something like that. The most likely scenario as it pertains to the debt is that the United States is going to have to let inflation run hot. And then the other piece is demographics as, you know, younger people kind of take the homes of capital allocation, you know, they're more digitally native, et cetera. So, you know, I don't know if I necessarily even think that we're going to kind of have

these traditional cycles that we've been used to over, you know, we've a pretty small sample. Oh, you know, you're going to the super cycle, man? You go on the super cycle rules? I don't know. I don't know if super cycle means, you know, we have like great move, you know, up to the moon and in a couple candles. But it's kind of just this fact, you know, I think that you've got an underlying shift in the market participants and the type of flows that are now coming in. So I tend to think that Bitcoin will kind of just trade as, you know, like an upwards grind up into the right, maybe with less volatility, but more similar to kind of how indices have traded. And, you know, if you look at a lot of, you know, different risk assets, again, I think I think gold has also been a reflection of this. I think a lot of people have really started to focus or at least wake up to kind of the fiscal situation.

I suspect that Bitcoin will probably be the fastest horse over the coming years as a way to kind of hedge against that. This is so funny because this whole thing about the super cycle or whatever you want to call it, I actually had that as one of my last questions. But I want to just bring it out now because, I mean, first of all, you just did. But then the other thing is you're not the first person I've seen who's actually said this and not like in a mocking way about, you know, 3AC or Suju or anything like that. So there was a tweet by Naval Ravicon. He said, quote, the narrative for this cycle is, quote, this will be the last cycle.

So are there you were kind of laughing about that? But why don't we just discuss it seriously? Like, Will, you know, what made you say that? And I mean, I guess you kind of elaborated on what it might look like. But yeah, I'm curious just to hear your thoughts, both of you. Yeah, to be clear, I'm not saying that like we're going to go up only and never have any drawdowns, right? I just think the drawdowns will probably be more muted, like maybe, you know, 30, 40, 50%, but also I think the upside vol will be capped as well.

But I think the Quinn will, you know, trade more with this kind of, you know, just general upwards grind up into the right because of the monetary debasement over time. Arthur. Yeah. I mean, I think that maybe there's no such thing as like a permanent plateau, right? I'm not fucking Irving Fisher in 1929 thinking that stocks never going to go down, right? That's just dumb. Stuff goes up and down.

We're humans. We over promise the future and then it gets there and it's kind of like blah, blah, blah, right? So I think maybe the cycle is just longer and the upside is just higher. But there will be an 85, 90% drawdown in crypto. I am very confident in that. We might not adhere to this four-year cycle because I think we're in the moment where the global investor class and the proletariat loses faith in this thing called Keynesian economics and deficit financing.

And so if we have a revolt of the bond market saying, fuck, I don't want to own JGBs, treasuries, you know, buns, all these bonds of these bankrupt governments. And here's this digital alternative, we could see a very explosive upside cycle. And then maybe if we throw all the baby boomers out of power around the world, the younger generation is like, well, why am I paying for health care for a bunch of Muppets? Let's reorganize a system. And then we might see some more responsible governance in terms of spending. And then at that point, maybe a government bond is a better bet than owning a Bitcoin on a forward-looking basis. So I think things can change. We obviously think that the same crop of idiots who run the world, they're going to continue doing so.

And the same sort of deficit financing policies are going to prevail for the foreseeable future. But that's not going to be the case in five years' time. Things are different. So I think that would be my caveat to the super cycle. And I hope the more people who say super cycle, the more I be ready to start dumping back. But I don't think of it yet. Wait, and so, but you did say that you felt that we were going to see an 80 to 90% drawdown again? Absolutely.

Okay. And I'm just curious about that because I just would have imagined with the presence of this new kind of spot Bitcoin ETF investor, that they are, you know, just kind of like doing their little portfolio thing and maybe they rebalance now and then. But I don't, I would imagine a lot of them are sort of long term and that would kind of create a base that would prevent these massive. broad ends, but you think even with that, we'll still see these big problems. I mean, this is the piece that went down from what, I don't know, like, was down 30, 40, 50% in 2008, and you still have the same sort of mechanics of passive investing then, right? There is a very risk-off event, and the market's reacted. So whatever it is, the challenge to whatever the narrative is in two, three years time

of, okay, there's just going to keep printing money forever. maybe the demographics change in terms of who's in power and sort of those assumptions aren't validated and you see this massive swing to the other direction like okay well maybe we don't need to own this much of Bitcoin there's something else that makes more sense and the change of that narrative because that's so well entrenched could lead to a massive decline in the price okay okay but you don't necessarily see because typically that's been on this four-year cycle with the happening but now you're saying like it could happen, but maybe not because of this four-year cycle.

I think that we might be in a more elongated cycle because there's a whole we're cheshenowing into a collapse of the sovereign bond market, or I believe that there's something better to own than a treasury, a bund, a JGB, or whatever. Okay. All right. So I know we were super zoomed out. This was super interesting, by the way. But now let's zoom in.

So we're about a week away from the having as at the time of this recording. and by the time the episode comes out, we'll be just a couple of days away. So what would be your best guess for what would happen to the Bitcoin price in the short term? Yeah, I tend to think that it'll probably be someone of like a sell-the-news type of event. I think anybody that was going to buy Bitcoin in the short term because of the having probably has already done so. Actually, Arthur put out a piece over like two days ago or something. I agree with mostly what he wrote in there. Yeah, I just think that, you know,

whenever there's an event that everybody's kind of expecting, you know, the people that are going to buy have kind of already bought into it. So I tend to think we probably kind of at least chop around until then and then maybe start to grind up, at least as it pertains to the kind of direct impact of the having itself. Yeah, I tend to agree. It's selling news. But again, you could be wrong. Most people are already invested.

So it's not as if it's like, let's go short Bitcoin. It's, hey, I'm going to hold off and maybe I'll allocate more a week, two weeks, a few months after the having, I think that's probably just going to be very boring. And we're entering the summer, people going to be a vacation. So I think we're entering that low volatility, boring period. And sort of the having sort of just starts that period. So a couple of other things that I wanted to look at, Will, I know you, you know, have often looked at on-chain indicators for your analysis. And there's one in particular that I was curious about, which is the, uh, realized price, which basically is where you take every coin, you multiply it by the price of its last

movement, and then you divide the value of that by the circulating supply. And you have said that you feel this is one of the biggest drivers of Bitcoin's price dynamics. So what are you seeing now in terms of realized price and how that might affect Bitcoin in the short to medium term? Yeah, I used to track a lot of the on-chain analytics stuff pretty closely. And what I found is just not that actionable for trading, at least on short to medium term time frames. But I do you think it's decent for is kind of getting a, getting kind of a proxy of like the valuation of Bitcoin. There's not a lot of great ways to value Bitcoin. Some people like to look at the energy price. This MVRV thing is one of my favorite kind of valuation methodologies that people have come up with for Bitcoin.

So basically compares the realized value to the market value. As you just described, realized values basically looks at the price that every coin was last moved. It essentially gives you kind of an aggregated cost basis of the network. And so then the idea of comparing that to what the current market is, trading prices is basically, you know, where's the market trading relative to the cost basis of the network? So what we've seen historically is whenever this ratio gets up to ratio of about six to seven, the market's kind of topped out. Whenever it goes negative, it means that the market is underwater in aggregate. So that's kind of when you want to be buying. It's kind of more of an art than a science, but it's something that I kind of look at is,

okay, you know, on this kind of spectrum evaluation based on kind of where Bitcoin is historically topped out, you can get somewhat of a rough proxy as to, you know, kind of how it's trading and where maybe it sits in kind of its cyclical dynamics. So right now we're kind of just sitting kind of midway in between both of those bounds. I don't really think there's anything super actionable to derive from that. We're still not in that undervalue territory, but we're still not in that super overheated territory that was reached at the end of 2017 or at the end of 2021. And out of curiosity with the introduction of spot Bitcoin ETFs and now this kind of new class

of holders who are all represented by, you know, one big entity, on-chain or even if they have multiple wallets, still it's like, you know, all these people are grouped together now. Does that make it harder for you to do this type of analysis? Like, are you less able to detect certain trends that you could see before? Or how is this affecting your analysis? I mean, you know, I guess you could, you could make an argument that, you know, the coins maybe are transferring, but they're not moving on chain. But, you know, they're ultimately, you know, if people are redeeming the shares and the coins are moving. So, you know, you're still kind of seeing that impact in terms of like the profit and loss type of metrics. But I do think things like,

you know, selling of GBT recently, you know, that's like impacted. We've seen like a large influx of like older coins being spent that haven't moved in over a year. But, you know, I don't necessarily think that's like an inorganic thing that's showing up in some of the data. It's just a reflection of like the market participant behavior. Like the coins haven't moved. But overall, I don't think. think it's like something that I would say like I don't follow the NBR ratio thing because of that. Okay. So now let's talk about the macro environment. We're recording the day after the Bureau of Labor Statistics reported that the consumer price index, which is a measure of inflation, had risen to 3.5% in the last year.

It was higher than what analysts had expected. It seems like now the market is pricing in two rate cuts as opposed to three. So, you know, if you think, or if inflation can use to not fall as has been projected despite these high interest rates, what do you think could happen in terms of Bitcoin? Well, I mean, I think, and I've been banging on about this from for a while, the Fed and the Treasury, at least in the U.S. perspective, are net stimulative. And because the stock of U.S. debt is so high and all these other Fed programs that they have reverse repos, interest on excess reserves, taken together,

they've been stimulative for a while because as they raise rates, they pay more interest out to banks and wealthy individuals who spend that money into the economy, right? And so I think the focus on whether it's two or three rate cuts or maybe it's zero is kind of irrelevant because the Fed and the Treasury are already printing money. The more they raise rates, if they do that, they print money.

They cut rates, juice to markets. Essentially, it's stimulative as well. And so it doesn't really matter what they do unless the U.S. is going to declare some debt jubilee and just extinguish all the debt. The net effect is stimulative. There's more liquidity in the system. And so I think parsing, you know, Powell's statements and debt dependent and, you know, one tenth of CPI here and another tenth of CPA there is fucking just mind-bendingly boring and it's dumb because it. It doesn't matter. Bitcoin's going to go up whether the Fed cuts two or three times if they even cut it all.

There's some people who are saying that they're going to reduce the pace of quantitative tightening by, I know, $30 billion per month or something around that. They'll announce it at the May meeting. Again, at the end of the day, they have so many ways to print money that isn't the quantitative easing that everyone understands from 2008, that it doesn't really matter. So that's my my particular view on that particular situation. Yeah, I don't really think I have anything to add. I completely agree. I think interest rates are basically just Stemis for people that buy assets. Yeah, well, so I did want to ask you because you kind of use this similar language earlier,

but I'm just going to ask you directly about this. You tweeted, well, quote, people are still focused on rate cuts when they don't really matter. Interest payments or Stimmy checks for people that buy assets and debaicement its program without a utopian AI-fueled productivity boom that closes in debt to GDP. So can you talk about this, like, what do you view as this utopian AI-fueled productivity boom? And yeah. Yeah, I mean, it's basically the idea that, you know, you'd have this massive influx in productivity

and, you know, a massive increase in, you know, economic output that was brought on by some new technology. But I also think you can make an argument that you don't want that productivity boom to come on too quickly, because if it comes on too quickly, then it's going to displace too many jobs, and then people are going to be out of work. And then, you know, you have to, you have some issues there as well. So it's almost like, you know, not only would you need some type of, you know, miracle in terms of this productivity boom, but you also need it to take place not too fast, but also not too slow. So I just think that the, if you have like kind of a distribution curve of probabilities,

the probability curve of the probability of the U.S. basically just, you know, doing some type of debt you believe like Arthur just described is pretty low. because why would anybody want to hold the U.S. is dead after that. The probability of some type of crazy productivity boom that closed in the debt-to-GDP ratio is also pretty low. The real meat of that distribution curve is they just let inflation run hot. They're not going to come out and say that. But I think you've already kind of seen this in terms of, you know, Powell kind of hinting

at basically like changing the inflation target. And I think, you know, they want inflation to run at 3 to 4%. They don't want runaway inflation. That's going to cause like civil unrest. but they needed to be able to service the debt in nominal terms. Okay. Well, yeah, I mean, we also do have the election this year. I don't know if it probably seems like you guys think that also factors in.

Well, so, Arthur, when I ask that, go ahead. I mean, I think I listened to a very good presentation. I forgot the man's last name. First name is Matt. He's a strategist at BCA research and give a geopolitical breakfast a few days ago. And my biggest takeaway was, and he had a great chart, and it showed projected spending under a Trump presidency or a Biden presidency. Trump, he believes, will spend more money, but Biden is going to spend a fuck ton of money as well. So it ultimately doesn't matter who wins the election.

Like, they're going to print money to hand it out to whoever their constituents are. Trump wants to do tax cuts. Biden has green energy or whatever, right? So it doesn't really matter. It's a fun little circus that everyone gets to watch about two old. old dudes fighting it out in the media. But other than that, it's irrelevant. Wow. Okay. Well, something that I think you do think is important is the ending of the bank term funding program, because you wrote about that. So you talk about how you think that will affect the price of Bitcoin?

So I was out publicly before the BTFP expired and I said that that would be a net negative in terms of liquidity because the banking system would come under stress because all these banks who were basically soft bailed out by this program would no longer be able to access it. And in the weeks and months leading up to the cessation of the BTFP, the Fed and the Treasury came out and they said, hey, banks, we really would like you to use the discount window because we believe that that is a better way

for you to access financing. We would to remove the stigma from accessing the discount window. And if people know their baking history, typically banks only access a discount window when they're about to fail and other banks will refuse to deal with them if they know that they've access to discount window. And so the Fed and Treasurer are trying to say, hey, use this policy measure. And it's a great policy measure because it's been around since, I don't know, 1913 and whenever the Fed was created and therefore it has no negative stigma. Like the bank term funding program is seen as

a bailout of the banks, which is bad politically for most American voters. And so that's why they had to end that. And in the place they put the discount window. And there's a lot. And there's some very nuances about how they differ, but at the end of the day, the Fed has unilateral authority to change the way in which loans are given out by the discount window, and they continue the same bailout in the BTFP. So I got that wrong. They came up with another way to bail out the banks. They just use a discount window. They've told everybody, if you have trouble, use this over here, and they can change the terms however they want, and that's sort of politically benign versus the BTFP, which was a political hot potato.

Okay. Well, let's talk about one other thing that I feel has just been an overhang over the crypto industry for quite a while now, which is just the regulatory environment in the U.S. You know, hilariously, I asked Olaf Carlson, a question about this, and he said something like, it's been like this always, so it's no different. But, you know, when we have something like a coin base, which is the largest entity in the U.S., you know, for, you know, for the crypto space in this lawsuit with the regulator. And, you know, I mean, that's just, yeah, like, obviously not either a good look or even good for the industry, I think, just because it sort of perpetuates this notion that it's sort of lawless.

But I just wanted to hear your thoughts on, you know, what you thought the market was thinking of issues like that, yeah, for such a big entity like Coinbase. I don't really think it matters that much, to be honest. I think it's something you kind of maybe worry about in the States whenever that bridge gets crossed, but it's going to take time for a lot of that stuff to get worked out. We also saw Uniswopla just issued a well as noticed by the SEC as well. I do think it's good that a lot of the stuff from 2022 has kind of got worked through. I think you've had a lot of selling from Genesis and Gemini over the last couple of

month that's been a lot of the GBTC offlows that we've seen. And so that stuff in terms of like a direct market impact has been something that I've kind of been watching. But I think a lot of that's gotten worked through. We've seen at least over, I don't want to take a couple of days of data and extrapolate out, but we've seen over the last couple days, some of the GBTC flows have slowed. So, you know, that's a pretty good sign. But in terms of, you know, trying to, try to, you know, base kind of how you're going to

position yourself based on these cases, I think it's really difficult to do. I do think if Coinbase wins their case, it's a really positive catalyst for a lot of alts, So, you know, I think if Coinbase were to win their case and if Uniswap was as well, if they get sued, I think Alts probably would go crazy in that case. And, well, you did say before we started recording that you felt like Coinbase was mispriced. And I was curious for your thoughts on why. I do think it's mispriced, Laura. I do. Sure, come on, buddy. Here we go. Here we go.

Look, I think the story of Coinbase for me is basically the street. isn't really pricing in the crypto-native revenue that I think a lot of the crypto-natives understand. I think Coinbase is probably the biggest kind of venture-style bet in public markets since maybe Tesla about five years ago. I think the street still views Coinbase just purely as an exchange, where I would say they're kind of making, or at least throughout the bare market date, they made a lot of strategic pivots to kind of shift towards what I'm calling kind of a crypto super app, if you will. So, you know, for example, the staking revenue, I think the other big one is base. So over the last 30 days, base has done 30 mil of top line revenue for Coinbase just based

on the sequencer fees, which annualizes out to like 360 mil a year. I think that could get a lot higher as base gets more traction. You're starting to see a lot of projects kind of shift over to base. And if you've got Frontex launching here in the next month, I think that'll probably have a massive kind of wealth effect on the base chain. If you go back at the end of last year, look at the Gito AirDrop. I remember I went to this like happy hours like Monad and Wormhole hosted this happy hour and everybody there was just everyone was talking about how they had gotten the Gito AirDrop. And then, you know, in the months after, if you go back and look at basically the activity on Solana after the Gito AirDrop is that's basically like right when it

absolutely exploded. And I think kind of the wealth effect of that had a decent kind of part in kind of initiating that and kind of lighting off a catalyst of activity on Seoul. I think Frentex AirDrop, They're saying that they're giving all of the tokens to users and they're potentially going to float the entire supply out of the gate. I think that could be a pretty big catalyst in terms of just the wealth effect and people speculating on other things with some of that money. And then I just think, you know, base has a competitive advantage over all the other ethel twos because of Coinbase's distribution, right? You know, they have 100 million users, all KYC, et cetera. They're just going to plug in, you know, all of the DAPs on Coinbase right into the back end of, of the actual platform and it's going to completely abstract away the fact that you're on chain

and the users on Coinbase aren't even going to know that they're interacting on chain. So I personally feel really bullish on base. I think it's probably the biggest competitor to Solana just in terms of being kind of high throughput, high TBS chain. That's pretty low fees, especially after EIP 4044. And I think that's something that, you know, the street doesn't even know what base is. And they're definitely not kind of extrapolating out the potential of, you know, a ton of activity taking place there. And the sequencer fees that Coinbase may benefit from that.

Yeah. This is, this makes a lot of sense to me. But I agree that the people that these comments are meant for probably, yeah, they don't see any of that. I mean, I'll make it simpler for you. Like, it's Binance, smart chain for white people. That's what basis. Yeah, pretty much. I think that's a one-liner on it.

I love it. Arthur, keeping it simple. All right, so in a moment, we're going to talk about other innovation on Bitcoin, but first a quick word from the associates who make this show possible. Pocod is the original and largest layer zero blockchain with over 2,000 plus developers, and the anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem, upgrading the infrastructure with eight times higher transaction throughput, and twice as fast block times, perfectly tailored core time for the needs of every protocol, Trustless bridges internally and into Ethereum, Cosmos Near finance smart chain,

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Because local news is big news. Choose news, not noise. CBC News. Back to my conversation with Arthur will. So we were just talking about base, which is a layer two on Ethereum. But we are currently seeing a trend of this upspill of new Bitcoin layer two projects, which is super interesting in me. There's Satrea, which is ZK Stuff, Botanics, which, oh my God, I interviewed them now I'm forgetting, but I think it's more like a side chain. I remember that it's decentralized,

which is very interesting. There's build on Bitcoin. There's a bunch of these like bitVM style things. And then, of course, there's the ones that have been around for a while, like lightning, stacks, liquid, rootstock. So do you think that you could see a future in which layer two is on Bitcoin are as active as they are currently on Ethereum? For sure. I think it's going to come down to what's the incentive for Bitcoin holders to use one of these. So is there some native proof of stake revenue that comes to providing your Bitcoin on one of these chains, how you want to characterize them. What sort of apps are on there?

They're going to have to give some yield to the user to get them to move their Bitcoin. Because if you think the Bitcoin, I guess, Maxi is the most conservative in the crypto ecosystem for them to move Bitcoin out of their wallet to one of these new chains. They're going to have to have something very compelling. And so I'm not super in the weeds on any of these new L2s. I know I see all sorts of Muppets coming to me on Telegram. I'm starting the Bitcoin L2 fund. So there's something there.

whether or not it's it'll make money. I don't know yet. Yeah, it's not something that I've delved into a bunch. You know, I do think it's potentially a solution to the kind of long-term security budget problem that people like to talk about and ascribe that the Bitcoin has, you know, 100 years out whenever the issuance runs dry and there's no longer new coins coming into supply. The other thing is the Orinals as well.

So the kind of the combination of, you know, potentially having some type of defy activity on top of Bitcoin with Ordinals that's generating fees for the Bitcoin network. I think that kind of adds to the security of the network long term. I think it's a positive thing. That was actually my next question. So first of all, so Will, you definitely feel like the security budget is a concern. And Arthur, do you agree with that? Yes.

Well, so, you know, Will, you just said that you feel like ordnals are one way to resolve it, potentially these layer twos. Like, Arthur, what's your take on ordnals? I fucking love ordinals. And I have a bag to show. Obviously, an early investor in oil wallet, which is we're going to do some fun fucking shit. So keep your eye out on that. We got some good drops coming.

But I think at the end of the day, bringing culture to any of these chains is obviously net positive. We've seen what meme coins have done to Solana. I mean, the bullshit Solana TPS has been shown to be absolutely bullshit as people have started to trade these things. And 75% of transactions have started to fail on Solana. So good luck becoming the new ETH of this cycle. So I think that obviously when people want to have fun on chain, it drives activity, it drives fees. Why should that happen on Bitcoin? Anyone who says that this is trash or spam or whatever, the whole point, it's an open system. And so the block space is there.

People have found a way to use it. They're willing to pay for it. So let them do it. So I think ordinals are great. If we can continue to push this narrative of ordinals and culture and digital artifacts on chain, we're going to bring a whole new type of person into the Bitcoin ecosystem and energize people who have just have Bitcoin sitting around doing nothing to, express themselves on chain. So I love them. And out of curiosity, I'm sure you both heard Roger Verre just came out with a book, hijacking Bitcoin. And it has raised this Bitcoin block size debate yet again. This debate is actually filling my notifications on Twitter a lot, or it hasn't last week.

And obviously, you know, the Bitcoin block size, being at one megabyte, it does sort of cap a little bit, you know, the transaction fees on there. So do you, like, is this coming? up on your radar at all? Do you feel like that's just like said and done? Or do you feel like this is reviving any kind of debate? Or what's your take on that? It's just the first time I even heard of Roger's new book. So I don't know. Well? Yeah, same here. I mean, anybody can fork the code. It's open source code. Go for it. See how many people use it relative to the current Bitcoin. How much more money does Roger want to lose on another fucking, you know, mining some dog shit chain?

If someone wants to launch it, a fork, knock yourself out, go for it, but I won't be using it. Okay. So similar to ordinals, we are now seeing that Rooms will be launching soon, which is a protocol meant to be similar to BRC20s. But I guess what's different is that it'll utilize the unspent transaction output model or a UTXO model. It'll launch it around the time of the halving. And the creator, Casey Rotemore, who also created ordnals, said that these will be completely on-chain, pay fees on layer one. And he said on the Hell Money podcast, quote, if Roons are successful, they'll drain liquidity,

technology, and attention away from other cryptocurrencies and bring it back to Bitcoin. So do you guys have any opinions on Rooms? And do you also agree that they could take attention from other cryptos toward Bitcoin? I mean, sure, but I guess we'll see. Proof us in the pudding. It depends on what you actually launch at them. Is there going to be some new meme coin or some new way to express yourself that's different? And then we'll see.

I don't know. Yeah, I agree. Okay, so not much of an opinion on this. I mean, it's like it's like anyone coming out saying, yeah, I've got this new layer too and it does $1 million TPS. Good for you, buddy. Let's see some actual apps on this thing. Well, so let's just talk about that for a second.

I mean, we are seeing like, you know, meme coins on Salana really obviously have become a huge thing. In general, it does feel like over the last few cycles, you know, Bitcoin has found it's one little niche that it does well in, but then frequently like other trends take off on other chains. And Ordinals was the first time we saw a trend that had taken off on another chain actually come to Bitcoin. But I don't think it's like necessarily, yeah, as easy as, as just, you know, what happened. Like, I feel like there have been other attempts to do things that maybe haven't paned out in Bitcoin. So like, do you have theories on what makes something successful,

you know, when you try to transition it back to Bitcoin? Just think it kind of is just basically what Arthur just said, you know, are people excited about it? Is it fun? are your friends getting into it and that kind of gives you FOMO to get involved with it. I think with a lot of these chains, the issue is maybe less about, you know, some of the aspects that have gotten, you know, commoditized to some degree in terms of like, you know, having high TPS, for example, it's much more about, you know, BDE or how do you kind of create economic incentives that are going to get you people, you know, get you people that come on and use these things.

Yeah, we'll see. Who knows? It's got to be fun. It's going to be fun. It's got to be D. Like, it's not fuck professional. all that like bullshit. Like if it's not fun, if you're not doing it because you don't care if it was all your money,

but it's how you're having fun, it's not going to drive any sort of attention. Because Bitcoin has a very good value problem. Bitcoin is crypto money. It's the hardest money in crypto. And so I know people are like, oh, no, Bitcoin doesn't do anything. That's the fucking point. And so the conservative nature of Bitcoin is its biggest asset. So I'm not really that fuss at, okay, maybe, you know, mincoins can or can't come to Bitcoin.

or defy can or cannot come to Bitcoin or whatever, as long as we keep being the best money that's ever been created, then we're doing a job. Yeah, one thing that I kind of forgot to mention earlier when we're talking about the regulatory stuff, I think you could make an argument that if you have, you know, all these defy projects that get shut down, that actually is kind of bullish for meme coins.

I, you know, I actually think of any kind of, you know, crypto project to potentially get an ETF moving forward. I think the one that has the highest likelihood could actually be Dogecoin, because it's a commodity, right? I mean, I would argue that as a much pure commodity profile than like an Ethereum, for example. So I think kind of the barbell portfolio of having, you know, Bitcoin has hard money and then meme coins basically has these, you know, speculative assets, you know, speculative activity will continue to rise because of, you know, several things from the fact that we have a dopamine epidemic in the

world, but monetary debasement, you know, gambling trends are up and to the right ever since, you know, the U.S. basically changed regulation around gambling from the federal level to the state. level. All these things I think are aligning for kind of that barbell portfolio, if you will, of Bitcoin and meme coins to become increasingly favorable. Wow, that is a stupid. I mean, look at behind me. I got Omar with hat, right? He's rocking his little, his dog with hat beanie. So y'all know what to do. The hat stays on. So, Will, I want to hear a little bit more about why you think it is that Dogecoin is more

of a pure commodity than either. Can you elaborate on that? Yeah, I'm being out. How much do you own before? I don't know many doge. But I'm being a little cheeky in saying that. But I think you know, you have something like a doge where is a completely fair launch, nobody that controls it. I think that's like a much pure argument that the fact that it's a commodity. A lot of these meme coins, if they have a fair launch and no pre-sale, nobody controls it.

They're just kind of out there in existence. So I think those things have a much higher likelihood of being viewed as commodities by regulators than maybe some deep. project that's generating yield or like sharing fees with with some of the users. Well, I mean, it's also interesting because like Satoshi Nakamoto, the creator, Jackson Palmer, stepped away. So, yeah, he in fact has denounced Dogecoin. He raised quit. Pretty much. Yeah, and then obviously now we're seeing this, you know, SEC investigation into the Ethereum

Foundation. But actually, this goes back to my initial question then, or earlier question about layer two's on defy. So I know you guys are not regulatory people, but just obviously defy is taken off on Ethereum. And we have, you know, now uniswap potentially being sued by the SEC. So, you know, I don't know if that might be another way that defy takes off on Bitcoin. I think the challenge really with Bitcoin, though, is like the Bitcoin scripting language is not set up to handle smart contracts in the way that Ethereum was initially. So I think, you know, that's why in a way there's like these workarounds almost. But anyway, that was just a thought that I had. So now let's actually talk about Ethereum and defy-ish things. Arthur, you are an investor in Athena,

which is the new hot synthetic dollar. I will call it. Not a steeple coin. I know. I know there. I'll kill me if I don't say that. see, yeah, they're sensitive about the language. But I think it's good. I think it's good because it is true that the word stable coin is probably not the word that you want to be using for something, you know, like in Athena, which isn't like a judgment on Athena itself. But the point is that, you know, the interest rate that it pays out can be quite high. The day before recording, Bloomberg reported that it was currently at 37%. And I'm sure you're aware, there are some critics who say that Athena could be the next Tara Luna.

So I'd be curious to hear what your response is to people who say that. So the first thing is that anyone who says that and they probably lost money in Terraluna, they deserve to lose all their money because they didn't understand what they invested in. It was very clear from the start what Terra Luna was as an algorithmic stable coin. I remember when I told my analyst, like, what the fuck is this Luna thing? Why is it like so valuable? And he, you know, he did a little write-up. And then he set me a paper by some professor.

I forgot where the professor was from. And it was like how algorithmic stable coins die. called the death spiral. And I read this and like, okay, so this is how this is going to fail. And guess what? I still fucking bought some of it because number go up, right? And I guess knew that I was buying a piece of dog shit and hopefully I can get off the train before it goes to zero. But when the death spiral started in the summer of 2022, I was like, okay, well, here's exactly why this is going to fail. And it's not like, I know there's a whole like trial with Doquan and jump trading and that kind of shit about, you know, the alleged fraud or whatnot. But in my mind, the thing told you exactly how it was going to fail. It failed in exactly the way that it was forecasted to fail. You have no, I don't know, reason to be upset that you lost your money. You just got out of the wrong time. And it's a completely different thing than saying Athena, which is a synthetic dollar. It's crypto hedged with a short perpetual swap or short

futures contract. Completely different product. It doesn't have the anchor. I guess fund or whatever you want to call it, that guarantee this 20% interest rate and no one knew where it came from. It came from essentially them selling Luna and Bitcoin to pay out UST rewards to people, which is completely different than saying, hey, I've got a variable interest rate that can go from negative to infinity, right? And it is completely dependent on the demand for leverage in the crypto ecosystem and what are those synthetic dollars worth in terms of an interest rate. So, of course, Athena is not without risks. The funding rate could go negative.

It could be less desirable to hold it because you're getting a better yield on some sort of roble asset like a treasury bond on chain that yields, you know, five percent or whatever. The biggest risk is the capital that's held on the centralized crypto exchanges themselves. If they're not able to pay out profits correctly, if they get hacked or they steal the money, those are risks to Athena, right? It's just a different set of risk. Choose the risk you want and then invest accordingly. But it's a completely different risk profile than Terraluna.

That's not to say that Athena couldn't fail, but it would fail for different reasons. Arthur, I have a question for you, actually. So obviously, you know, being involved with Bitmax, being one of the founders of Bitmax and, you know, basically pioneering the perps, how do you think, let's say Athena becomes like 20, 25% of global AI on perps? do you think that kind of reduces the signal of funding rates because they're basically going to have, you know, they'll be pushing down funding so that funding won't be as much of a reflection of like the outright demand of people wanting to be long in the bull market. Well, hopefully what Athena does equalize what a dollar is worth in the euro dollar markets in Tradfai and what a synthetic dollar is worth in the crypto capital markets. right now with a disconnect because traditional allocators are not willing to essentially take counterparty risk with all the centralized exchanges.

So dollars synthetically are more expensive in crypto. Now obviously speculators are willing to pay that rate because what's Bitcoin up 50% this year? Okay, I'll pay an annualized 30% on a perp. Great. I'm still making money on a interest rate basis. That's why people are willing to pay these high rates. But if Athena is very successful, let's say they're 30% of OI and they're pushing down funding rates. And so we equalize at what is a dollar worth in Tradify, which is synthetic dollar worth in crypto,

then I think that's a good outcome because it makes leverage trading cheaper. And hopefully the derivatives markets grow in terms of the open interest for crypto. Yeah, that's interesting. So you're basically just saying it allows more people to be along crypto because they don't have to pay as much funding. Yeah. And so a dollar outside of crypto, a synthetic dollar inside of crypto should be equalized. Athena is just one of many entities arming that difference. Got it.

Huh. And so, Arthur, one question, well, actually, I had two questions for you. One is, first of all, you know, Athena just launched in late February. And the current total value locked is already $2.4 billion. Did you expect it to get that big that quickly? No. And I think that's a testament to the excellent execution by Guy and his team. I met them in August of last year.

They asked us to be a founding advisor and help them out with different things. And I've been speaking to them quite regularly and giving my thoughts on this or that. Obviously, I'm not involved in the day-to-day running of the thing. But I have to say, I'm very impressed with what they've been able to do in less than a year that I have known them. This is probably one of the best teams that have ever seen in crypto in terms of execution, whether it's the marketing side, it's getting the tech right, it's understanding the risks. guy's a great communicator. He's going on all sorts of different crypto podcasts explaining, taking the heat for people saying you're a scammer. This is just another Doquan piece of shit. You know, I can do this to myself. Great. Well, then fucking do it. He strapped up, built a team,

and built Athena. What do the fuck have you done? So I think it's a testament to the team about why they've been able to get Garner, what, 2.4 billion in TVL since February. And so now they're onboarding Bitcoin, you know, to do basically the same strategy instead of just Ethereum. And I was curious, and I don't know if this will have an effect, but could the Bitcoin having effect the USDA yields in any fashion? If it had, I mean, it would be a second order effect in terms of how are people trading the perps? What is the funding? Is it lower? Is it high?

I'm not really sure. Again, it's a variable rate. So whatever the market is willing to pay. then they'll be able to capture that. Okay. So now let's zoom out. Like we've been focused mostly on Bitcoin, but obviously we have often seen that,

you know, when it comes to these crypto markets, like as the price of Bitcoin rises, then interest goes to other alt coins. So what effect do you think we'll see this cycle on, you know, things like Ethereum, Salana, just like the rest of the crypto markets? Like, how are you seeing things play out the next?

Well, what bags do you got? I want to hear some, I need some, You know, what's going to have pop here? How degenerate do we want to get here? DJ to the max, man. I'm trying to make money. Left curve it. My biggest meme coin bag is this thing called Zin coin.

So Zinn is this very big thing. What your Pomp was pushing this thing too? Well, listen, I got pumped to buy my bags like 3X higher than when I originally got in. So I put Pomp on. But Zen is this very big thing in the U.S. It's like a nicotine pouch. basically. People use it as like an alternative to smoking or vaping. It's become very popular with guys my age, like 20 to 25 year old dudes. It's also very associated with like based culture.

So a lot of like, I don't know if you know what the milk, the milk boys are. They're like very popular kind of like streamers or like media personalities with people around my age. As well as like Tucker Carlson has been a big proponent of Zen. So it's kind of got associated with kind of the quote like base culture, if you will. They just launched on base and then they're about to launch a rewards program where you can scan the back of the tin, like there's QR codes on the back of the 10, and you get tokens. So I think it's an interesting. That's pretty interesting. So it's like if you think about it, right, if I'm going to be like the right side of the bell curve, it's the first ever kind of crypto rewards program that subsidizes both the usage of a product and on the, on the

company's end, on PMI's end, subsidizes their revenue in theory. I think the biggest risk is obviously like PMI comes after them and like says you need to shut this thing down. But in theory, you know, people are getting basically paid to, you know, use Zen in the tokens, then that allows them to purchase more Zen or, you know, the Zen tens that they're purchasing are becoming free while also contributing to PMI's, you know, Zen sales as well. So that's one thing I've been excited about. I just think in general, the meme coins that I've been interested in are like the culture coins. So basically like tokenizing different cultural movements. I don't have any bags of this, but I do like Andrew Kang's thesis around Trump. And just basically, you know, if these things are like tokenized

attention. How many times is Trump going to get mentioned in the media between now and the end of the year? Probably a lot more, you know, more than zero. So things like that are pretty interesting to me. Outside that, like I mentioned, you know, Coinbase is probably my largest holding outside of Bitcoin. Arthur, what about you? What are your theories? I mean, obviously Solana's the hot kid on the block this cycle. And we're seeing that their TPS servers are completely bullshit, which is fine. I mean, that's just a function of them being successful, attracting a meme coin degenerate trading crowd,

and they want to all trade on Solana. Does that mean that Solana is going to flip Ethan in terms of market cap? I don't think so. But again, as you said, as Bitcoin price rises, everybody feels wealthier, then they get into all these sort of, you know, different sorts of alt. Obviously, I've been pushing this narrative, like AI coins.

I've been a big file coin believer, but there's other ones out there as well. Like tau and bit tensor has done very, very well. You've got, I think, Iio.net as a big air dropper launch that people are like fomoing about. So there's all these different sort of narratives. And then you have all the different new L1, L2s that are launching this cycle.

So again, all the alts are going to rally. The question for an investor is picking the one that resonates with you the most, being concentrated in your bets so that you're making the most amount of money given this particular point in time that you can because obviously most of these things are completely dog shit and bullshit

and they're not going to live up to what they said they're going to do on their nice looking pitch deck. And so you want to be well clear of this shit when the market starts sort of rolling over when people start asking the question of, oh, well, let me see all those users. Let me actually measure the TPS versus what you told me about two years ago when I invested in this thing.

how many AIs have actually used in this of how much data have you actually put on the chain versus what I thought two years ago. So when you start asking those questions, you want to be well clear of most of this shit. Even the good stuff is going to get smoked. So we're in a great time. It's time to strap it on, go long, forget about it for a while. They'll get true intellectual about things. Yeah, I think just in general, like the natural flow that we kind of see is, you know,

as in like most assets, you know, at, at the beginning of the cycle, people hold Bitcoin. And then I think in this cycle, it's also been Ethan and Seoul as well. And then, you know, as the wealth effect grows because of the appreciation of those kind of core value assets, then money just flows down the risk curve. One other thing that I guess I forgot to mention that I'm pretty excited about is social fight. I don't know if either of you have used friend tech, but the beta version that the V1 was pretty clunky and not very smooth at all is super, super slow.

but the concept itself of basically kind of like, you know, not token gating, but they're calling them keys, but essentially token gating the access to somebody and kind of like a private group chat or being able to kind of, you know, ask somebody questions or get their market thoughts or whatever it may be or even if you had like kind of non-crypto people get involved, like, you know, big celebrities be able to just have conversations with them. I think that could be pretty big. And I think that probably has the highest likelihood of any crypto app to, bring in like non-crypto people. And wait, you would say that even over something like Farkaster, which already, I know it's essentially.

It's essentially, yeah, very similar applications, right? I just think these social FI applications probably have the highest probability of getting of any of these like, you know, mainstream artists, celebrities, influencers, whatever you want to call them involved in crypto. They're not going to come and like do some, you know, liquidity farming or something, right? Like what's much more likely is they come on one of these these apps like a friend. tech or a farcaster where, you know, the kind of on-chain experience is almost completely abstracted away. And then all they have to do is basically go on like a group chat and they're talking to their fans. And, you know, they're able to also filter out all the haters as well because nobody's going to want to buy your key. No one's going to want to pay $1,000 for your key

if they hate you. So you're basically kind of in this private group of people that, you know, they want to actually hear what you have to say, et cetera. And then just to circle back about the AI thing that you both were saying, there is so much hype in this kind of cryptocurrency. Doe plus AI sector, and there's so many different ways that you can bring these two technologies together. So out of kind of the different variations that we're seeing out there, are there any that you are particularly, like, more excited about that you think are like more investable or or interesting? I mean, I think you don't want to invest in anything that's like an application on top of some sort of like open source model. Like you want to invest in sort of a AI infrastructure,

whether that's compute power, storage, chips. And so, all the really successful narratives in crypto are like, oh, we're going to create a decentralized network of people providing compute power or we're going to create a decentralized network of people data storage for AI. That's the sort of stuff you want to get involved in because they don't have to pick a winner. It's like how many startups is open AI or Amphropic going to put out a business because they just decide to do that same service themselves in house. And we're already seeing that was, you know, a lot of VC Silicon Valley startups just being zeros. And immediately once Open AI decides, okay, we'd like to do that too. Cool. We have better distribution.

We have the model and we can completely distance to mediate you. So I think you want to, as I like to say, focus on the AI food groups, compute power and storage. Any sort of coins related around that, it's very easy to build a very convincing narrative around those. Yeah, I'm bullish on like the crypto AI overlap. I just think from like a narrative perspective, it makes a ton of sense. I'm not positioned in anything though. But I do like the file coin thesis. I think it makes a lot of sense. All right. So last couple of quick questions. We started by talking about the halving.

And, you know, as we mentioned, there's often a new all-time high after the halving. But we said this year, it's going to be a little different. So out of curiosity, what's your Bitcoin price projection for a year's end? This year-end or it's in general? Well, too. We can do a year-end for 2024, plus also what you think the next all-time high will be. Okay. My year-end price prediction is a 99,99, and my all-time high prediction is $900,000, well, basically $1 less than $1 million Bitcoin.

Wait, in this next cycle? In this next cycle? Yes. Oh, wow. Okay. Will? Cycle defined as in because we kind of had like a different, whatever, whatever we get like they different year. All right, look, I'll say 120k in a year. And I'll say 500. I'll be a little more conservative than Arthur by end of cycle. For this next cycle. Okay.

And how are you defining cycle? Just based on whenever this kind of liquidity cycle peaks out. And I don't know, you have like some G7 country that comes out and bans Bitcoin and people all of a sudden are scared to hold it or something. And I think that's probably like the most likely catalyst that tops out this, current cycle is you have some type of like coordinated basically like capital controls like money is leaving you know a country we've already started to kind of see like foreshadowing of this in countries like Nigeria which like obviously doesn't really matter but I think there there's

a decent likelihood you could see that on like a broader scale at some point and that's probably I think like the thing that maybe tops out this cycle huh Arthur what do you think of that I think that if they were going to ban it they would try to do it all right they would try to have done it already. My base case is look at China. In China, Bitcoin is not illegal. It's illegal to hold Bitcoin. It's illegal. I do a lot of things in China. It's very controlling sort of policies that they run over there, but they have not deemed Bitcoin illegal because I think they know it's very good advertising when you make something illegal that you can't actually enforce in a broad sense, right? Individually, yes, police can go over to your house and put a

hammer, put an M-16 to your head and say, give me the private keys to, you know, a few different individuals. But like on a broad scale, it's very hard to enforce a ban on private ownership of Bitcoin, which is different than so it's in gold, right? Because in 1933, you know, FDR on the U.S. ban private ownership of gold. Very easy to enforce that policy because gold's fucking heavy. And, you know, it's very easy to, you know, find somebody who's storing a lot of gold versus a private key that's held in your head. All right. All right. Well, this has been a hugely fascinating discussion. Thank you both so much.

I personally am also excited to see whether the having occurs on April 20th, 420, or on the 19th, which is, I think, because originally it's projected for 420, and now I think it's shifting a little bit. Although on GMT time or what time zone? It could be straddling. It's very subjective there. I know, I know, but the latest estimate I saw was the evening,

yeah, UTC time on the 19th. So obviously, at least on the East Coast, that would be still the afternoon of the 19th. I don't know. What would that be in Asia? That would be the 20th. Oh, what would? Okay. So maybe for some, maybe for one half of the globe, you'll get to experience it out on the 20th.

Anyway, all right. Well, thank you so much for joining. Where can people learn more about each of you? At Cryptohaze on Twitter. At Mailstrom Fund on Twitter as well. and I have a substack crypto haze. You can find me on Twitter at W. Clementi IAI and then the research firm at Reflexivity Research.com. Perfect. Well, thank you both so much for joining Unchained.

Awesome. Thanks so much for joining us today to learn more about Arthur, Will, and the Bitcoin having. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Matt Pilchard, Juan Aranovich, Megan Gavis, Shishonk, and Margaret Curia. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week with host Noel Atchison.

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