Unchained - Bits + Bips: Market Chaos, Fed Missteps & Harris' ‘Crypto Reset’ - Ep. 688

Episode Date: August 14, 2024

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger, and Joe McCann sit down with Chris Cecere of crypto investment firm Asymmetric to make sense of the latest market volatility and the factors driving it.  From the impact of the yen carry trade and the Fed’s controversial decisions on interest rates, to the potential signals coming out of Jackson Hole, the discussion cuts to the heart of what’s moving the markets. The group also dives into the SEC’s crackdown on Ripple, the ongoing drama surrounding wrapped bitcoin (WBTC) custody, and whether the Biden-Harris administration is genuinely considering a “crypto reset” or if it’s just political posturing. Show highlights: 00:00 Intro 02:05 Whether the yen carry trade is to blame for the recent market sell-off and the concept of Value at Risk (VAR) 09:25 How Asymmetric handled the volatility of the sell-off using a strategy called “delta replacement” 14:17 Why the Volatility Index (VIX) spiked and whether it could do so again 22:21 Why Alex thinks that unemployment numbers started a panic and what the Sahm rule is 27:24 What might have triggered Jump Trading's sudden liquidation during a massive market sell-off, and whether more funds will face similar pressures 31:15 Why the market and major banks like J.P. Morgan agreed that the Fed missed the mark by not cutting rates in July 41:36 What key signals the Fed might send at Jackson Hole about the future of interest rates and the winding down of quantitative easing 45:40 How significant the timing of the first rate cut is in determining whether it will be bullish or bearish for the markets 53:45 What Ripple's lawsuit settlement and the SEC’s subpoenas to VCs mean for the broader crypto industry 58:13 Whether Harris will actually do a “crypto reset” 1:03:04 The drama surrounding the custody of wrapped bitcoin (WBTC) Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Joe McCann, Founder, CEO, and CIO of Asymmetric Guest: Chris Cecere, GP and Head of global macro and trading at Asymmetric Learn more about your ad choices. Visit megaphone.fm/adchoices

The sentiment was like suicide watch. It was so bad on Sunday night, you know, my time, Monday morning, Asia time. I had multiple people that I don't even know, DM and me on Twitter and telegram saying like, do you think the bottom's in? I'm about to get liquidated this and that. Like people texting me and getting all concerned.

And I'm like, bottom's close. Like when people really start getting this scared, it's usually when you're very close to a bottom. Hi, everyone. Welcome to bits and bips. exploring how crypto and macro collide one basis point at a time. I'm your host, James Safer, Tradfai Archmaister, Lord of Bloomberg's End, here with Alex Kruger, Kruger, of House Asgard,

protector of the realm, and Joe McCann, Lord Commander of Asymmetric and Master of Bank. We're here to discuss the latest stories in the worlds of crypto and macro news. Just remember that nothing we say here is investment advice. Please check Unchained Crypto.com slash Bips and Bips for more disclosures. Also joining us today is Krits Chetcheray, Baron of Asymmetric Treasury, keeper and trader of the Golden Ledger. Chris, why don't you give us a little background about who you are and then we'll get into the episode.

Yeah, so I'm Chris Chetrae, general partner at Asymmetric, head of global macro and trading. I was just real briefly, employee one with Joe. And before that, I have a deep trad-five background. It was at hedge funds with Brevin Howard running, you know, large global macro books there. I was Citibank Asia, so the Japan. I was actually based in Japan for a couple of years, ran Asia-wide for sales trading research with the rates business. And before that, I was Lehman Brothers in London and New York,

and I was at Lehman when I went bankrupt. So I think some of my experiences are probably pretty relevant currently. Yeah, I mean, let's get into that. I mean, that's exactly what everyone wants to hear about right now. Let's get into macro. Let's talk about this supposed Yen-Carrie trade unwind. Like, from your point of view, was it a Yen-Carrie trade unwind? Was it a vol blow up?

I've heard both from very knowledgeable people on both sides. What is your view of what exactly happened last weekend into last Monday when everything was blowing up? So I think first, let's just define what yen carry trade means because there's literally words in there that are people just talking in circles. I'm like, okay, so interest rates in Japan have been very, very low. Interstrates in the U.S. have gotten relatively very high. So the difference between them implies arbitrage condition that the FX rate of dollar yen in forward space is much lower than spot. That's just math. So if you get long dollar yen, one year from now, two years from now, whatever, it carries very positively as it rolls up to the spot because you're picking up that interest rate differential.

That is literally what a yen carry trade is. Now, what else are we talking about? So how does that relate to AI stocks? to VIX, et cetera. Well, it doesn't. It doesn't so far as everybody had on these same positions. Everybody, like not everybody, quite a few were long dollar yen to pick up this carry. And they were using that to fund other positions. They were also long for momentum reasons, the AI stocks. A lot of people were short VIX. And the same trade as the yen carry trade, the yen continues to weaken. That's very good for yen exporters. There's your Niki. And the steeper yield curve with a

low rate at the base, and they raised the level of yield curve control, steeping out the curve, that was good for banks. So when all of those things reversed, all of those things reversed. So in my opinion, the yen carry trade, yeah, sure, it unwound, but all that did was one trigger in a cross-market bar shot that ancillarily those things were related, but in general they were not. Yeah, and just to clarify a couple things that Chris is saying here for our listeners. So first, when he talked about in forward space, he means effectively a futures market. And then secondly, when he says Varshok, this is something that was definitely occurring on Monday. Wait, wait, Joe, real quick, define VAR, value at risk.

Can you like define, there's probably people out there that have no concept of what that actually means. Well, that's what I was going to do, James. Oh, sorry, sorry. Sorry, I thought you're moving on. You got to lay off the caffeine in the late afternoon, brother. So, yeah, value at risk. I'll let Chris kind of dig into this a little bit more, but the concept of Varshock has a lot to do with the broader value at risk within institutions and their portfolios. And in most cases, when you have a shock like that, it's a correlation selling event of one.

So everything is down. Chris, you want to just maybe expand a little bit on VAR shocks, VAR and how it's like applied at like, say, the hedge fund level and how institutions utilize that? Yeah, as a concept of VAR is a risk management tool. So value of risk. Think of it as when a market is very, what they'll do is they'll run back testing and say over the last 90 days, 180 days, 365 days. If you plot a distribution of positive and negative returns, what is the one standard deviation negative outcome, the two standard deviation, et cetera, et cetera. So that'll and then within that framework, it allows you to take a certain amount of risk. Well, as volatility starts to spike and you get violent moves, that math starts to change and they force you to make your position.

smaller. So it's very, it's on the way up, volatility's coming down. You can put on much bigger positions, but very quickly it reverses because volatility tells you you're too risky. So it makes everyone de-risk at the same time. I say a fat guy in a small door. People have correlated positions. They're all simultaneously because of this model-based approach being told by risk management they need to de-risk, de-leverage. Who's going to take the other side of it when everybody is the same way around, and that's what happened. That's right. And I think one thing to note here is that, you know, there's been a, what a surprise, a lot of misinformed or misinformation on Twitter and the internet about the actual

yen carry trade unwind. I've seen estimates in the range of $15 to $20 trillion associated with this carry train unwind. That also completely throws out the concept of how derivatives are actually netted. I saw a really good article this weekend, Steno's Signal, I forget the guy's last name, but he's a great macro dude was talking about there might be close to at most a trillion dollars notional in this actual trade. However, you want to define the carry trade with Japanese yen involved. And according to Morgan Stanley, Goldman, you name it,

the majority of that's done. I think a lot of people saw that shock to the system. And I'd love to get Alex's take because I know he and I were actively trading this, as was Chris, when this was going on. we didn't really sleep at all. I'd love to get like the, the notion that this is going to happen again seems foolish. Because if you've been around trading, I would say, as long as myself, Chris and Alex, that was it.

That was the event. And the idea that there's going to be trillions and trillions of dollars still to be unwound from this carry trade unwind just seems a bit foolish. So Alex, you want to talk maybe about your view as it relates to the unwind and, you know, the potential ramifications going forward as well as like how you. To begin with, I think it's all one same thing, you know,

it's not, I mean, the, the end carry tray and wine did happen and mattered. There's a million things that matter. At the end, yeah, it is,

it is a bar shock. It is basically, you get the triggers, you get the, it's the spark. You have the Tinder there. You get a few sparks and then eventually, in three seconds,

we get a wildfire. That's the way to think about what we experienced. At the end, one thing, Joe, by the way, is like, I remember we disagreed on the need for the Fed to cut rates. And I want to say, congrats, man, you were spot on. Wish I had been as fast as you were. Yeah. I appreciate it. You know, we just keep getting over and over again.

I want to go through some of that Tinder, though, because we had some weakening economic data, which we can get into. on employment and some other things, right? So we had some weakening economic data. On Friday night, we got news that Genesis was unlocking all of their money and sending a bunch of money back in billions of dollars in Bitcoin and Ethereum and other things. We can get into the jump trading on wine because they just liquidated, I think, $400, $500 million worth of ETH on a Sunday in very thin markets, which made this so much worse for crypto. We had, which goes to the yen carry trade, which a lot of people already know, the Bank of Japan was bringing rates into positive territory. We saw the yen spike 12% in like literally a few days. If you look at like

the middle of July through the end of August. And that's what kind of like caused this. So I feel like a lot of this was like cascading dominoes to a point where every you were just like, all right, screw it. Correlations are going to one. It's time to get the hell out of these things. But like specifically, you said you were both like trading this. One, what did I miss? And two, like what was it like last week for you guys being traders? Like I cover the markets. I was paying attention. I was actually on a flight on Sunday, like looking at this stuff. And I was like, oh, my God, this is insane. The markets are blowing up while I'm midair right now.

I just want to know what it was like for you guys, like, what were you guys doing Sunday night? What did you do through Monday, Tuesday, Wednesday when Val was through the roof? Fall of Val was through the roof. Everything was kind of a little bit crazy. Yeah, I mean, I'll speak more for myself and I'll hand it off to Chris because he and I are trading partners at asymmetric. And we actually, you know, love this type of volatility. what we didn't like is that how thin the order books were.

So I remember over that weekend, I think it was like a top of order book liquidity for Bitcoin's spot went from like, you know, 150 million bucks to like 53. That's a pretty significant drop. And irrespective of whether, you know, jump was emptying their, their eath coffers or not, like, that's just, there's just nothing in those books.

And so it's challenging, to, well, first of all, you don't want to catch a falling knife. But secondly, it's challenging to actually how to try to identify levels where you actually want to get long. And so one of the things that we do that is not unique to asymmetric, but I think, you know, sophisticated traders can appreciate this is we just did this concept of like delta replacement. And so, you know, we had a bunch of spot assets that we were long. But because of the severe drop in the underlying spot price,

of certain options, we were able to actually kind of rotate out of some of those spot positions into other options positions. So Chris, do you want to just briefly touch on kind of that technique and what we did and then we could pass it to Alex to see how he handled it? Yeah, I think what Joe said is exactly right, which is the volatility is welcome, picking a level in a manic, right? Like a 66 VIX is like a generational type event. I've been doing this over 20 years, and I say that with confidence. Although we've seen it twice in this generation with COVID, but generation is a are getting shorter apparently. So basically what Joe's talking about is if you're long spot,

you can go to zero. But depending on how you optionalize things, you can replace that because, look, either things are going to be dead or history says they tend to rebound relatively sharply. So vols didn't, it vols spiked a little bit, but not all that much to be honest. In fact, the first move was lower. And so what we did, like Joe said, was we dumped a bunch of spot assets to clip what our max loss could be and replace those with calls, calls, spreads, things of this nature, where when we return to where we were, we'll actually be doing better than had we just put our head in the sand ignored and held. The last thing you want to do, again, having done this for, you know, almost 25 years, is we had a very good sense of what was going on. We weren't nervous.

We just didn't know where it stopped. So the worst thing you could possibly do is sell the bottom, get scared, and then you're buying back Bitcoin at 70,000. That is one thing we did not allow it happened. Now, we're not going to put the fund at risk, but with the Delta replacement strategy, there's clearly a timing component on it because options have expiries, but if we can get that moderately correct, we can survive, and I can beat up too badly and make it all back plus on the rebound to where we were previously if that follows. Yeah, that basically, that's happened four times in the last 20 years, right? It's 08, August 2015, Corona crash and right now.

One thing we know is that basically Bix about 30 is unsustainable. It means reperts to 20 or the teens, basically. It's a matter of time. But as you guys said, is picking the bottom here. It's impossible. People may think that on Bitcoin actually 48 and a half, 49 was the level. Actually, it was a level. We talked about it a lot in many circles.

But actually, like, a quick break of 50 would be a buying spot. It's like where you go all in, but it only works if price reverts very quickly about 50, which happened. From what we talk about to practice is a big gap and actually going only in at 48. When that thing can break, I had basically, let me put it this way, I had strong March 2020 vibes. It's like, careful this thing. I just keep on going. I have no clue where it's going to stop. So I did take my time to buy the dip.

I took a long time to buy the dip. One thing I did do is after ETH crashed, I rebalanced a lot into ETH. Even though despite all the hate, despite you may have seen me a talk sheet about ETH online, etc. One thing is what I write. A different thing is what I do. I did reshuffle a lot into ETH on that flash.

And I got out of my... I reshuffle on what was it yesterday. Yeah, I don't know what else to say. It's kind of like you're driving a car and you're driving very, very fast. And things blur on your size. You're like fully focused on the screens and nothing else matters. That may sound corny, but it is what it is. That's how it feels.

I was in a similar boat. I was watching what was happening. I was like, man, I've seen this in crypto cycles in the past. And like, you think, you know, Bitcoin at 49K, 50K is it, Ethereum whicked to 2100, Solana Wick down to 110. It was 194 a few days prior. You think that's it. And I've seen, you know, crypto go down another 30, 40 percent. And that's why I think it's important, you know, to Chris's point earlier of like selling the bottom and not doing anything is one of the dumbest things we do.

but you have to manage your risk accordingly. I also want to point out, like, the sentiment was like suicide watch. It was so bad on Sunday night, you know, my time, Monday morning, Asia time. I had multiple people that I don't even know, DM and me on Twitter and telegram saying, like, do you think the bottom's in? I'm about to get liquidated this and that. Like people texting me and getting all concerned and I'm like, bottom's close. Like when people really start getting this scared, it's usually when you're very close to a

bottom, at least temporarily. And like Alex nailed the ETH trade there, you know, in and out six days, probably getting close to the tick lows. Like that's pretty solid. And, you know, as this relates to broader risk markets, I mean, the S&P 500 finished flat last week, basically unchanged, which is insane because VIX was a 66 handle on Monday. Now, I've looked into why VIX was so high. Of course, somebody was massively short VIX calls. Like, it's very clear and they just got absolutely obliterated on the squeeze, but it's also a function of liquidity. So the pre-market VIX trading activity or liquidity is very thin. And so like effectively when it traded up that high was in these incredibly illiquid markets. Well, crypto was incredibly

liquid all weekend as well. And that's why you had most likely these massive draws in like the major L-1s or top 10 by market points. I don't think you're going to see. VIX remotely that close to that level again. There's obviously some geopolitical tension right now with what's happening in Least. That certainly could be, you know, having an impact. But I mean, the VIX, I think today, Monday, closed basically flat again or slightly up while oil was ripping. So, you know, I think one other thing that we want to kind of like underscore here is that Goldman Sachs, and I think Deutsche Bank and Goldman both put out, you know, reports basically show. showing the change in positioning by investment managers.

And I think it was Deutsche Banks, which is a highly regarded positioning metric, basically went from like 72, so this is out of like 100, zero to 100. So 72 to 31 positioning after that Monday crash. That is a huge, huge move in positioning. And it usually takes months for institutional investors to get back to that 17, two level of positioning. So, you know, at the risk of sounding like a permibull, this kind of rinse across all risk assets, you know, theoretically is providing us with, I would say, a clear path to, you know, higher prices barring some other exogenous shock like what we saw

last Monday. So, yes, we do have an election. We do have, you know, geopolitical tension in the Middle East, which can clearly affect the things like oil, which would clearly affect things like inflation. I think something to the effect of 12% of the world's GDP goes through the, what is it, the Hormuz, how do you pronounce it, the channel there, right? Like, you know, that's a non-trivial number. I think, you know, Chris and I and some friends were chatting earlier today about this. Like, Chris, I'd love to kind of have you opine a little bit about what you think's happening in the Middle East and how it could potentially affect risk assets as well as, you know, the political landscape here in the United States, given their Harris Trump presidential outcome, especially

given that like this is like a telegraphed attack. So I mean, I would love to get your, your take on what you think's happening there and how it may affect things. I said a lot of like the Tinder stuff before. I bought a school. The one thing I left off, I forgot the Middle East and what's going with Russia, Russia, Ukraine. There was a new stuff going off. So there's, And there's probably a bunch of shit we also forgot that happened in the last two weeks that contributed to a lot of people being very jittery. But yeah, sorry, I didn't mean interrupt you, Chris. Yeah, so the Middle East is interesting because, you know, we've made this joke over and over. Like, did you get the Google invite for the Iranian attack on Israel?

What are we talking about right now? I mean, so common sense to me would dictate that they're negotiating for something. Maybe there'll be some attack that's, you know, maybe ceremonious or something. but they're negotiating for something to not attack because nobody wins in that scenario. And, you know, they hold a little bit of power if they show a little bit of restraint or some foe type aggression. But you can see the anxiety in the market. Joe pointed out to me today is like, look at oil. Oil at the time was up three and a half percent.

There's no reason for that from a fundamentalist perspective. So what's causing that? Well, very basic, right? That's your fear of premium. People are getting anxious about a real attack over there. and you know you're seeing vicks struggling to hold below 20 you're seeing oil spiking you know so there's some there's some like the market's giving you some signals about anxiety so what do you do with that information i think what number one you have to respect it because if something does happen

yeah this stuff could wick violently now history has proven that none of these things actually matter over time but in a mark to market world they will probably matter instantaneously so you set some low bids to buy some wicks down, et cetera, et cetera. So my gut inclination is, and I hope to got it, right, is that nothing major happens, no major escalation. And then slowly over time, it deflates out this risk premium, this fear premium that you see in the price of oil, that you see, you know, in VIX, which is then impacting, obviously depressing to some extent, some equity prices, which probably by proxy involves crypto as well. And then as far as a relative trade goes, you know, I mean, I was a little bit taken aback by the bad data that you alluded to

with the unemployment rate of 4.3, and I'm going to make this full circle in a second. Because last March, when we had the bank blow up, we had rates spike lower, we had gold spike higher, we had the dollar get nuked, we had equities destroyed, and Bitcoin went to the moon, 50% in a week. This time, we had all of those things happen, except Bitcoin got pounded. So I have a sneaky suspicion. I mean, there's maybe some arguably fundamental reasons for that, but a lot of that may well have been positioning. You know, you know, so now that we've rinsed it, I think,

and this is more of the academic side of me, obviously our goal is to make money. But I'll find it very interesting if we get a similar scenario where rates had lower, dollar has lower, et cetera. Does Bitcoin have the same direction or the opposite direction as broad risk? My inclination would be, you know, Bitcoin either direction outperforms, but to be determined. You know, one thing there actually is on March last year, we did, I think, I mean, I'm not opening the chart right now, but I think we did drop, Bitcoin did drop 10% very quickly and reversed.

I think it reversed within like three hours or something like that. But if you look at it, okay, it's like 10% versus, yeah, okay, 20. Yeah, big difference. It is a big difference, right? Well, and it went up 50 in a week. Yeah, yeah, yeah. Well, what's interesting here is, and it's good you point that out. If you look, I was staring at the screens with Joe's face right next to me.

During when that unemployment data came out, Bitcoin went green at first. It tried. Then the overwhelming nature of, you know, everything being a correlation one, it just overwhelmed it. And that was the end of it. Yeah. One thing on unemployment, I mean, actually, we can talk a lot about it. It's, I do stand with the view that it's mostly panic. So you could call it a VAR shock.

You can also call it panic. I think that kind of the same thing. One is systematic. One is discretionary, right? Meaning people panic. Algos don't panic. Algos just follow their rules. And if ball goes up, they have to the risk.

But at the end, mechanically, it's kind of like the same thing. And that unemployment number, it was put out and pushed by absolutely everybody. As like we are going into recession. And it only only like Monday, at the end of Monday, it started to come out, basically, the more, the other side of the story, basically the other point of view. There's always two points of views to everything, right? And neither is fully right or wrong, but one, one usually has the upper hand.

In this case, if you look at unemployment, yeah, an employment did go up to 4.3%. But the thing is great part of that increase is due to temporary layoffs, which is not the same as permanent layoffs. So that it may come back. There was the impact of a hurricane that at the beginning wasn't really reported. Like, everybody focused on the bad things. Another thing that happened there is this triggered a so-called Sam Rule that basically nobody had ever heard about it before.

It was invented in 2019. I had never heard about it before. And then suddenly I have every single bank out there talking about the Sam Rule. The Sam Rule just has to do with the rolling out. average of unemployment crossing a certain threshold and historically. So we just triggered it. And historically, that implies you are instant or currently in a recession, whereas most recession indicators are backward looking.

Now, I mean, everything is right until it's wrong. But yes, tripping that basically set fear like you're saying, rippling through the market of, oh no, now the fed's got their head up their ass. They're, you know, now they're talking about maybe cutting 25 and they should be doing clips of 50 or 75. And I'm not saying that's not wrong, to be honest, for a myriad different reasons. But that is exactly what started that snowball. Yeah.

And one thing I think also is important to acknowledge here is that I think last Monday was the kind of combination of a number of things that happened last week. So last week you had, or skies to say a week and a half ago, Wednesday the Fed did not cut. Chris and I were fingers crossed. They would do 25 bits, but they didn't cut, which we see as a policy error. And that's one of the reasons why you now see futures markets pricing 50 bips in September, which is exactly what I've been saying. If they don't cut in July, they have to do 50 in September. But the same day as the Fed, the Bank of Japan did their surprise rate hike.

And that kicked off the strong yen trade and weakening the dollar against the yen. And ironically, on July 31st, the day of the Fed, it's also the last day of the month. You had enormous flows coming in to the equities markets, and the markets finished up pretty significantly. And then it was just straight down. Thursday, Friday, Vick spiked over 20 on Friday. You had the dollar yen weakening even further. And then over the weekend, you had huge amounts of selling, whether it was jump or somebody else. Who knows?

It doesn't matter. It happened. excuse me, in very thin order books. And then Sunday night, my time, 9 a.m. Tokyo time, you wake up and the largest bank in Japan is down 21% with no news. And so retroactively, people look at it and go, oh, it was a carry trade on wine. It's like, imagine literally today on Monday, you wake up, James. You're on your way to the office. You're in your rolls, Roy's telling your driver to pull over because you can't believe what

you're seeing, and that's J.P. Morgan Chase stock down 21% with no news. That's insane, right? And so this is like one of these things that it was only this snowball of events were happening. And the sentiment to Alex's point around the unemployment rate, the headline was terrible. Devils in the details of the numbers. Yes, the hurricane and these temporary loss, et cetera, etc. Maybe we'll see revisions to the upside. Who knows? However, revisions have been worse for months now. But it all collided at one point, which ultimately, I think, led to the bar shock. So I think one thing that we should probably consider talking about is what does last week's activity or action have to do with the Fed's policy? I think you guys know my position on that. But, you know,

Alex, have you, have you... Wait, wait, wait, before we get to rates, I actually have a, I want to ask a question for, I want to ask a roundtable question. So you mentioned jump trading when you were just talking about that there. Like one of the unique things with like blockchain is we can see everyone and these, their wallets were tagged and you could literally see them unstaking and just liquidating into thin order books. And it was, it was kind of unreal watching ETH price just absolutely utterly collapse. So I guess my question is like they had to have been in some sort of, whether it was their crypto book or some other book, they had to be involved in their like, whether they were borrowing yen or they were short vol.

one, it's unique because there was probably other hedge funds out there that were doing similar stuff, like selling futures, doing whatever they can in the weekend to get money, but we could see jump trading doing this. So one is, are we going to see like what other funds got hit hard here? And two, like, what do you think was the cause of jump trading liquiding that? There's been some speculation that was CFTC, tapping them on the shoulder to get out of some of this stuff. I think that's insane. I don't think that's happening. There's no, they would force them to do it on a Sunday in thin order books.

So they had, my, they were just doing a fire sale. So I'm curious. Let's start with you, Joe. What do you think was the reason for Jump actually selling before we get to rates where you can take your victory last. Well, look, I mean, clearly Jump is now leaving crypto again, right? Like, this is the irony here is the last time we did this episode. Towards the end, we were talking about this. And I said, you know, Jump has left crypto, I think 11 times now, according to Crypto Twitter. And here we are once again, Jump is leaving crypto.

And it is absolutely not true again. That being said, were there tagged Ethereum wallets selling Eath? Yeah. Do we know why? Of course not. Like, assuming that you know, like, I even get this with a lot of traders that follow me on Telegram and Twitter. Some of my wallets are tagged and they're like, oh, why are you doing this or that?

I'm like, because this is a fraction of my portfolio. You have no idea what's happening with the rest of my book and how I'm actually, what I'm actually doing and why. And I think this is the same thing with jump. and frankly, anybody for that matter. Somebody's selling something because they're selling it. Like, that's it. You know, could we speculate as to the CFTC

tapping them on the shoulder? Sure, unlikely. Why would Jump such a great market maker do this in thin order books over the weekend? Hmm, well, Jump does have a Tradfai book and business as well. Tradfai's clothes on the weekends. So I would think if you're going to speculate, it probably has something to do more with Trafai

by markets and less with crypto than just these guys hate Ethereum and wanted a wicket at 2100, right? Like that to me just seems ridiculous. What do you think, Alex? To me, it seems a matter of freeing a capital in the midst of need. You just need to, like, shit is happening. You need to free up capital. I don't know and I wouldn't know, as you were saying, if it's just one leg or if it's hedge. But even either way, it's capital that is locked up in the system and if things are happening, it makes sense to free up capital other because you think thing is going to go to shit or because things are already going to shit. But the point there is that they're like this narrative that they cost the thing.

It's just they're like, as Chris was saying, they're like, jumps behavior is just part of the Varshock. They're, they're part of the Tinder. They're risking for whatever reason because things are happening and they just have to. That's the way I say it. I wouldn't read too much more into it than that. Chris, do you have anything to add or you're going to leave that one alone? I think what they both said is right.

Maybe it has something to do with raising capital for some other purpose, but we will never know the answer to that. I mean, the only thing that's interesting is they were doing it into thin liquidity. otherwise I don't think anybody would have questioned it. Yeah. I mean, the one thing I'll say is which is common wisdom, which most people are you listening, when you get shocks like this, it's correlations to go to one because everything just starts going down. If you need to sell to make cash, you'll sell whatever you can sell.

And crypto is liquid over the weekends. And I think that's what we saw. And the other thing I would say is goes hand in hand with what Joe was saying, I constantly get arguments with people who try to look at 13Fs to like understand what hedge funds are doing. And I'm like, one, this data is 45 days old. Like, it's like these are their positioning, these are the equities they hold them. Like it doesn't show the derivative book. It doesn't show their short book.

Like, we're seeing possibly one side of like a really complex trade and everyone's like trying to read into like what these really huge institutions and hedge funds and smart managers are doing. And there's just no way to know exactly what's happening. But the jump stuff was obviously eye popping. All right. Let's get to rates now. I'll let Joe take his victory lap. I'll just shout out what the numbers look like right now. Right now the market is pricing for either one or two big, one or two high.

cuts in September, the September 18th meeting, which we're literally right in the middle at one and a half. Then they're pricing for 2.75 in November, four by December. So right now we're priced for four cuts before the end of the year. I mean, a few weeks ago, we were priced for two, two to three potentially. But not long ago, we were pricing near five in in 2024. So things have come back a little bit after the volatility has settled down. But I'll let Joe jump in and take a bit of a victory lap here. I mean, look, you know, I got to tip my hat to Chris. He and I talk nonstop pretty much every day of the week about this kind of stuff. And Chris wrote an actually a brilliant piece in our latest asymmetric market update that you can go get for free. It's subscribed at asymmetric. Financial about understanding the importance of distributions of outcomes and how the Fed has missed the mark, so to speak, on understanding that their higher

rate environment is actually consistent with a bimodal distribution. If you don't know what that is, you can go to my Twitter. I have a post pinned to read about it. It's in plain language. And of course, you can read it in our market update. We do think that the Fed fucked up. We think that they should have cut in July. And I think the market agrees.

If you look at, you know, I'll hand it off to Chris here in a second. But if you look at what happened to the yield curve, you look at what happened to risk, you've looked at what happened to the U.S. dollar. All of these things are suggesting that, you know, the fixed income market is not dumb. They understand what's happening. And then the futures markets as well. And finally, you know, I think Chris actually pointed this out to me about a week or so ago. J.P. Morgan came out and basically said the Fed needs to cut 50 bips.

They don't speak out of turn, right? That's J.P. Morgan. And for them to actually, you know, kind of affirm our view, it was validating, but also, I think it clearly carries more weight than, you know, two guys in a crypto fund opining on macro. But ultimately, you know, I think pretty much every bank is on board at this point with at least 25 bibs. The futures markets are pricing 50. And, you know, Chris, do you want to kind of dive in a little bit about the, your concept

around that bimodal distribution and how the Fed is basically upped up? Yeah. So obviously, we go into more depth in the asymmetric newsletter. But the brief, the TLDR is basically. like you have poor people and you have rich people. You have small companies and you have big companies. You have strong banks and you have weak banks. All of those things have one thing in common. The weaker borrowing and they're paying exorbitant rates. The stronger lending, they're receiving those exorbitant rates. So it is robbing the poor to pay the rich. Now, economic data is

broadly speaking on the average of all these things. So some are doing just fine. So for example, you look at McDonald's, right, going off a cliff, the number of people eating. there. But then you look at European travel, that's the other mode of the distribution, right? And so people are doing great. So there's something for everyone. If you want to be like a dark nayser, you can find your data. If you think the world is amazing, you can find your data. The answer is both are correct at the same time. So how far do you want to press this? Because the higher you take rates, the rich are the rich that have long, you know, like banks with excess reserves, take rates up, leave them high. They just make more and more and more money. And they have more

disposable income. Same with, you know, the large cap companies, right? long cash. Same with rich people. All of these are the same. But the longer you do that, you're hurting small business. If you look at the prime rate, the real effective prime rate is the highest it's been since 2008. That is the real effective rate that small businesses and, you know, individuals to some extent borrow at. We know how 08 ended, right? Like you hit, and again, the nominal rate is not important. It's the real effective rate. And I think this is what people miss is, yes, we're slightly above target, but we're at three percent, arguing. arguably plus dependency index data of real rate. So yield above inflation with data coming obviously

on a lag. That's how monetary policy works. So trying to squeeze that blood from a stone to wait until we're at spot 2%. You're going to have so much pipeline stuff. Even if you cut aggressively from that moment forward, you're going to end up at 1% inflation. Right. And so this is why it's been confusing for us is why the Fed has been so sticky. It's I think they just fucked up so bad saying that they were never going to hike again, then now they're being too conservative on the other side. And on one hand, I understand it because the Fed has a rich history of absolutely wrong economic predictions. But on the other hand, you know, if they screw this one up, it's very hard to fix an unemployment problem in reverse and to base an turn an economy the other way.

So I feel like, okay, they've made their point. But if they don't cut 50 in September, I think, I mean, I'll say right now, I think risk is in big trouble. And I think it's a unequivocally you could debate of policy error thus far. There is no debate after that point. One thing is like the Fed is notoriously late, both in cutting rates and hiking rates like the last since, I mean, I've only been tracking rates for like less than 15 years at this point. And I feel like every time the Fed is doing something, the consensus is they waited too long. And then they just feel they can be aggressive enough. They'd rather be late than early and they're worried about like inflation heating back up. And then you talked about like when you were talking about the people who are doing really well and the people who are getting crushed right now,

like the first people that came to mind was tether because they've earned $5.2 billion in profit and they're the perfect example of like the luxury travelers over there that are going across the world right now. Those numbers are actually like mind boggling. They have less than 100 employees and they're 5.2 billion in profit so far this year. I just wanted to throw that out there before I let Alex chime in with his thoughts on macro and rates. So actually, the first I want to say I agree with Chris, right? And I think now, and then I'm going to take the other side, right?

I think right now is the way I saw it before is if a 50-bip cut would be bearish and a 25-bit cut would be bullish because 50-bib is basically the Fed recognizing we fucked up. We're trading a hard landing. We're in a hard-landing market and we have to cut 50 is basically the market forcing our hand. with the recent wash and everything that just happened, I think it's exactly the opposite right now. I think they need to cut 50 bibs. 50 bibs will be bullish. 25 is either a wash or bearish.

No cut would be absolutely a disaster. And that's, I think, September 16th. So plenty of time till then. And before then, we get on the sixth. We get payrolls, which is basically going to determine I think if they do 50 or 25. But TLDR, I do think that the Fed right now has to cut 50. And if they don't, we may be in a world of trouble.

I'm just so glad that I've got you across the line for 50 bips because the last time we did this podcast, I was like, you guys got to be more aggressive in your forecast. So conservative, but now you're there. And that change your mind. Yeah. On the other side, let's look at the other side. Like we have the PMIs are coming in well.

The nowcast of the New York, the New York now it cast, Atlanta now itcasts are actually also coming in well. The Dallas Weekly Economic Index is coming in well. Like leverage, corporate leverage, I could pull up some numbers, but corporate leverage and household leverage are both very low relative to historical levels and relative to 2008. The leverage now is on the public sector, not on the corporate side.

So things are not really, the economy is growing. The fear is that, yeah, real rates are too high, and things can accelerate and just basically collapse pretty quickly. It's a matter. In six months, we could be looking at an entirely different world if the Fed doesn't speed up, I think. think. Yeah, and I think one thing we should probably also point out, and maybe Chris can talk a little about the importance of this, but every August there's a central bank rave in Jackson Hole.

Every August, it's not actually a rave. They just don't wear suits. They wear a Patagonia vests, big fashion statement there. They'll be doing that again this year. And I think, you know, I may have mentioned it on the last pod that we'll likely see Jerome Powell give a speech and telegraph more or less what the Fed's view is on rate cuts for September. I'll be there. I know a bunch of other folks will be there. There's the Wyoming blockchain symposium. I'll be speaking at it.

There's a bunch of other folks attending like Nick Carter's going to be there who was on last time, et cetera. But this is the exact same time as when all the central bankers are there. So it should be hopefully a positive outcome with respect to the speech that Powell gives. But maybe Chris, you want to talk historically about Jackson, hole and its importance as it relates to, you know, the feds tightening or loosening policies. Yeah. So anytime there's been large policy changes that involve QE or Twist or QT, any of these things, they like to use this as a platform to do it. So I'm not given this giant sort of cycle we've

had within cycles, you know, with COVID post. It's not completely surprising to me that they would want to drag their feet to, you know, start to reverse all of this, this tightening that they've done at Jackson Hole. And there's a couple things they could do. So like Joe said, they could telegraph rates. And now one thing I think people are missing is I think they're staring at a tree, missed the forest. The feds been telling you over and over again, if you listen carefully. They want to be careful for when they start. But once they start, they're not stopping until they normalize real rates. And what that means is a steady state long run. That's about plus 1%. So today, that takes you straight to 4%.

Sorry, 3.5%. Now, put another 50 bips in there. You're at 4%. But the point is, they're still way too restrictive by any historical standard. And every month, the year on year is dropping. So one thing is they could signal, okay, we're about ready to go,

but just to be clear, it's not one and done. And if you listen to Powell's words, he's literally said this over and over. The other lever they have to play with is, you know, QT is sort of running a little bit long in the tooth. Yet we just dropped from, you know, We were stuck at 400 billion up in RAP for a while. Now we're pressing down toward 300.

We have some stress in the G.C. repo markets that seems to be coming out. But also, we're getting into the time period where they should start to announce the wind down of QT as well, because they will have drained a sufficient amount of excess reserves from the system. I don't know what they're going to say. No one has called us. But this is the type of a symposium or format, you know, like global format, that they would start to announce things like this. Yeah, just to put some numbers to what Chris was talking about. I talked about the fact that we're basically pricing for cuts for the rest of the year.

We actually have pricing going out much further than that based in the futures market, which tends to not be usually as accurate, but it's a good indication of what he's talking about. They're basically pricing nine cuts by January of 2026, would put the rate around 3%. And right now we're at like 5.5 to like give you concepts of like what type of rate cutting we're talking about here. And James, the one thing that we've discussed over and over that we have reasonably strong feeling on is because we think once they start, they don't stop. We don't think the terminal rate is wildly off. We don't know what that is. We just think it happens a lot sooner than people think.

Once they get going, they get on it, they normalize it, and then they see how it goes. So you're saying that 3% rate I'm talking about that's priced in for January 26th. You think that's going to happen earlier? Call it three and a half by mid-20205. Wow. Oh, that's real aggressive. All right. It's not a base inflation is 2% by the end of this year, though, right?

Yeah. I mean, everyone was wrong about the hiking cycle, too. I mean, they went 75, 75, like, sent markets roiling. You know, something I want to say here on the, on the FOMC, so on the beginning of the hiking cycle, it's, there's this view to put it in a way that basically when the Fed cuts the first time in a recessionary environment, that is a cell signal. It's a bearish. And on the contrary, if it happens in a non-recession environment, that is a bullish cut.

And assuming that is true, and I would like to pick your brain, guys, if you agree on this, but before that, the point is that we actually going to know this quite likely based on the payrolls, on the coming payrolls that come in September 6th, right, under the first Friday of the month. So that number, you could argue that is going to basically determine what happens afterwards. And it's literally the number that would determine what happens in the next two, three months. And it's more important than the elections, for example. And it could even be more important precisely what the Fed does on the FOMC. What do you guys think?

Yeah. I mean, look, it's a great question. I think one way I look at it is, you know, the yield curves have been inverted for how long? You know, like two years now or something, a long time. And historically, every time the yield curve inverts, there's a recession. Technically, well, I guess technically we did have a couple of quarters of negative GDP, but, you know, the administration can redefine it and move the goalposts for what the recession actually means. But for the most part, economic data suggests that we haven't been in a recession the entire time the yield curve has been inverted.

inverted. That being said, you know, if you apply that to something like historically when we're in a recession and you do cuts, it's bearish in your winter in a non-recessionary environment, it's bullish. That is true. I do think that this environment is somewhat different. And also, I don't recall, and maybe Chris, he's got a more encyclopedic knowledge of the history of rates than I do, I don't recall real rates being this high, this long for such an extended period of time. And as we look at headline inflation numbers rapidly approaching the Fed's target 2%. I mean, I think the St. Louis Fed came out last week and said PCE was a 1.89 print or 8.7 something, below 2%. Right.

I think in a vacuum, yes, you're right, Alex. If it's a recessionary environment and you cut rates, bearish. If it's a non-recessionary environment, cuts are bullish. I just get back to one of the things that I've been kind of harping on, which is global liquidity as it relates to central banks, particularly the Fed, has a big influence on this. This is all starting to tick up. All the July data that came out, liquidity is ticking up.

Same with August. We actually saw, I got the report from cross-border capital over the week or last week. Same concept. So, are our rate cuts currently bullish or bearish? as it relates to my view on global liquidity, it's bullish. And the global liquidity cycle is nowhere near complete. In fact, it's got a long way to go. And so if the Fed starts to follow Bank of Canada, ECB, et cetera,

these other banks that are cutting and they all sort of do it in a coordinated fashion, you're going to be bringing liquidity back to the market, which on balance is bullish. Chris, what are your thoughts? So I think that's actually a very important question because this is a very strange cycle. because normally you get overheated, then you got to cool it down, etc. But if you sort of think through this one, you've got, you know, you've got COVID, right? So a big source of this is not just overheating economy.

It started with underheating, right? Supply chain blew up. That's the problem. Then the government pumped all this money into individuals, put it straight in their pocket, right? And so, you know, you start to put those pieces together and it's like, well, did rates have anything to do with any of this? And my answer is way less than in the past period, right? you just had all these exogenous factors. So what we're doing now is we're burning off these things.

We're burning off the supply chain, right? We're burning off this excess cash that people had. And then you see it in the debt levels are spiking, right? And so right now, it looks like finally we're getting to a point of more equilibrium where these things are coming, they're mean reverting effectively. And in the middle of that, by the way, we're reonshoring from China, right? So we've got the chips hacks and all these things. So all of these things have been pushing one direction for years now that were inflationary.

But as they mean to revert, it comes off. So I don't think we necessarily have to go into a. recession here to slow everything down. I think it's just happening by itself. I think if rates were 4% or rates for 6%, I don't, my gut is it wouldn't have mattered much at all. But now that we're mean reverting and normalizing, rates actually matter again. And so if they keep real rates this high, they're going to break things very badly, in my opinion. So anyway, Alex, the answer to your question is I do think it matters a lot. I think they can get away with a real nice sort of smooth landing here or they can crash and burn. And it's going to come down to like one, two, a three month

difference. You know, another thought there is, is on, like, say we get 100K on payrolls on the next number. I can definitely see deafening recession calls. And basically we're going into another, like, panic run, not in the same, like, nothing alike, what we just experienced, something longer and not as fast, basically. But it would be pretty bad. Not what I'm expecting, but, yeah.

Yeah, I think the market abuse algorithms, the momentum ignition algos will take over on that type of a headline for sure and crushed risk. But I was chatting with some folks over the weekend. And folks in equities markets are like, I mean, I want to say all of them. But some folks are worried to put cash to work, right? You've got week seasonals, August and September. September is actually the worst month historically for the S&P. but what actually could be the reason that positioning ticks back up, and it isn't until Q4 is Q3 earnings.

And so I think that's actually going to be one of the more important metrics that we need to wait for, unfortunately. And it may be, to Chris's point, it could be too late from the Fed's perspective that they wait that long. They don't track earnings for SP 500 company or just companies in general. But I think given what's the sentiment over the past week and a half or so, There was effectively eight weeks of net selling for equities and indices heading into the Varshok. And last week, you had retail capitulating and hitting the bid, basically selling everything they could, and institutions for buying.

You know, hedge funds actually got net long last week. And so what is the thing that could potentially tip off like a next big leg up? Yes, we also have the election, which is a potentially volatile event, certainly a volatile event. What are I talking about? It's Harris versus Trump. But I think earnings surprises, if earnings are still good and companies are still growing, you're not going to have, I mean, would companies necessarily have high earnings in a, you know, a hard landing recessionary environment?

The answer is no. And so if companies are earning money and growing earnings, we'll know, Q4 when those earnings reports come out. But that's really going to be the true tell, in my opinion, based on what Chris is saying of how unique this current cycle actually is, is whether or not companies are still growing and earning money. Yeah, it'll be interesting. I feel like, at least in the last, like, 20 years, it's been, like, wonky things have happened from like August to October. We're right in the heart of that range. There's probably some actual reasoning for it if you guys have anything, but, like, there's been plenty of examples of me, Mark,

2008 it happened. I don't know when the taper tantrum happened in 2013, but we had this. We had the flash crash, I think in 2015. There's been a lot of really wonky stuff. It all tends to happen in like that three-month period. I guess this has been the most macro-heavy episode we've done yet. So I think we can move on from macro a little bit and talk about some of the other topics. And we'll keep those relatively short unless you guys have anything macro-related you wanted to touch on. Yeah, just just when a quick one here is is something I wanted to mention is basically it's a pattern right in inequities that you see in in these extreme cases of high volatility. It's you go max peak max fear max volatility into the Monday open into the cash open.

That's it's something that happens over and over again. We just saw it again. So I think there's value in remembering this. Like, don't bid Sunday night. Just wait for Monday. Wait for the open. A little bit after the open, I guess it would be the recommendation, at least in the ETF world, unless you really know what you're doing. We see so many examples in the ETF world of people putting bids out there.

Market orders at the open and just getting obliterated by not having people have their books fully open yet. All right. Moving on, I guess let's talk about some lawsuits and subpoenas. The Ripple lawsuit completed this week, I mean, absent the SEC going back and appealing, they asked for $2 billion in damages. They got $125 million. I mean, that's a huge win for Ripple. I would say argue for the crypto asset industry more broadly.

I don't know if you guys have it a different thought. I think it's a loss. It's an L for Gary Genser and the SEC and their regulation via enforcement strategy they've used. I'll hand it over to you guys if you have any different thoughts or want to chime in and add anything. Yeah, I mean, look, like most often how these cases end up working is, you know, they put some huge number in front of you and they end up settling. I mean, this settlement is 6.25% of what they were asking for or something like that. It's a fraction of what they were actually after. It's a tiny number relative to, you know, Ripples balance sheet and money that they have available to them.

But I think more importantly, the odd thing to me is how, you know, Ripple is losing cases and they're settling with tiny, you know, fines that have taken years to litigate. And yet we're in this position where the Harris election or the Harris election team is setting a reset button with crypto. And it just, it's bizarre to me because, you know, I think the ripple case is, you know, that is, I don't want to say it's old news. I think it's welcomed by the industry because we can have this thing behind us finally, irrespective of how you feel about ripple and XRP in general. Like, regulation by enforcement is just, it's not good for any industry, right? We are obviously biased working in crypto full time, but in any industry, regulation by enforcement is stifling to innovation. and clarity from, you know, investors, participants, entrepreneurs, et cetera. Yet here we are still getting enforcement actions.

And in fact, I think the other topic that stems from the ripple case is the subpoenas that have gone out to venture capitalists recently. Now, one thing to note, you know, don't let crypto Twitter let a good headline go to waste, right? Like subpoenas, oh my God, it's the end of the world. It's not. SEC has been a subpoenaed people in crypto for years. And in most cases, it doesn't really go anywhere. That does not mean that won't be the case this time.

But I think it's actually part of a bigger sort of coordinated effort by the current administration in the White House to try to dismantle the crypto industry in the United States. So whether it's regulation by enforcement, it's the utter irony of suing Coinbase, while also simultaneously using them as a resource for offloading. Debanking them, choke point 2.0. So you've got choke point 2.0, which Nick was on the on the pod a couple weeks ago talking about that. And then now we've got subpoenas. So not only do they go after the companies

with enforcement actions, not only do they indirectly debank anyone that's trying to do anything in crypto. Now they're going after investors investing in entrepreneurs. And these are not like your kind of run-of-the-mill sketchy VC firms. This is A16Z and Union Square Ventures. These are the elitest of the elite tier one VCs in space with billions of dollars under management, tens of billions of dollars under management. So if you dig in the details a little bit of those subpoenas, what's interesting to me, or what stands out, I guess, is that it has to do with Uniswap. Uniswap is a U.S.-based company. And so it was almost like,

this is just me putting on my tinfoil hat or speculating a bit. I know Chris Dixon has been public about really wanting to back entrepreneurs that want to do stuff in crypto in the U.S. Well, this is what is potentially an outcome is the SEC wants to inquire about their involvement in uniswap and supporting them and there's a token.

And it's not a registered security broker and all this kind of stuff that the SEC has potentially going to claim. I don't know where this will net out. But if you look at the series of events, it's very difficult for someone to look at the current administration, which Biden is still technically president. He's still technically president with Harris's VP and now the Democrat candidate for president for the next four years.

It's pretty clear that they're pretty anti. crypto. And if they were actually going to reset, don't you think they probably would have said, hey, let's pump the brakes here a little bit or just like put the car and park, right? And they're simply not doing that. And I think that recently what we had this call, this phone call with, you know, industry leaders. So this is folks from, you know, I think he's a chief legal officer from Coinbase. It was Anthony Scaramucci from Skybridge. Folks that are, you know, Democrat leaning, if not Democrat donors on the phone with the Deputy Treasury Secretary, Rokana from California, folks that are involved in the Financial Services Committee

wanting to have a conversation about what can be done. And, man, you want to talk about not reading the room. The Deputy Secretary of the Treasury basically said, we've done nothing to restrict banking access. And I think the chief legal officer over at Coinbase asked everybody on the call if they had had issues getting a bank account. Pretty much everybody raised their hand. So the long story here is it's hard for me to see the case being made that with the ripple lawsuit loss for the SEC, the tiny settlement, coupled with these subpoenas and this phone call in the past week, it's hard for me to see any real wood behind the arrow with respect to. to Kamala Harris' team wanted to do a reset with the crypto industry.

Yeah. I mean, some of the reporting that came out of that, Eleanor Turner, a Fox business was the first place I saw it and just reading that documentation about, like, everyone raising their hands saying pretty much that I've been debanked was rather laughable. Alex, Chris, do you have anything to add on the lawsuits slash Harris campaign reset on crypto companies? My quick take is like, I can't, I just, I kind of have to.

assume that if Harris wins, it probably can't be any worse than it's been. So at worst, it's probably neutral to slightly positive if you get a Democratic victory in November, but we'll see. We talked about Polly Market last time, really showing the odds for Trump winning, and then Biden dropped out. Polymarket was slow to catch up to what other polling was showing, was that Harris was a way stronger candidate than Joe Biden, which is like borderline common sense, as far as I'm concerned. But Polly Market was way wrong on the VP nom. They, they thought it was going to be Josh Shapiro in Pennsylvania and it ended up being Tim Walz. So I guess like, one, we've been talking very positively about polymarket and these betting odds.

We've also seen this. This isn't even in the note that we plan on talking about this, but Elizabeth Warren wrote a letter with a bunch of other Democratic lawmakers, basically saying the CFDC needs to go after anyone trying to make election odds and betting markets on election campaigns, which is kind of laughable to me. But I guess does anyone have any comments there real quick on like polymarket and the fact that things were so wrong? Do we still think the betting markets are good? And Elizabeth Warren trying to just go after another area where crypto feels like it can

actually have some sort of staying power. I mean, it's a small market, polymarket. I mean, at least it's bigger than predicted, but it's very liquid. So placing too much emphasis on where it lies, I think it's. is mostly noise. Unless it's in my favor, then it's sick, though. Good, good answer, good answer. So you bought the odds for Tim Walz to be selected VP, right?

I didn't even see, I didn't say them. No, I didn't see them. I'm not, yeah, I've been kind of outspoken that I don't particularly like. like, yeah, Harris and Waltz. But that being said, I think what matters here is prices rather not talking politics. And I think the Trump premium with the washout we just had is gone. So I don't think Kamala Harris winning is veryish. I do think Trump winning would be very bullish. And that's what matters, I think.

That's a much more soundbite way to say, kind of similar to what I was saying. Or it's way nicer to say it that way, I guess. Yeah. And then the last thing, MakerDAo is considering offboarding WBTC with some custodian issues. I mean, Joe, you want to dive into that real quick and then wrap up? Yeah, this is relatively recent. So for folks that may not know, WBTC is a wrapped version of Bitcoin that BitGo, which is a custody provider, multi-sig custody provider provides as a service. They recently are

announced that they're partnering with Justin's son and are looking to move the custody operations of WBTC, I believe, to Singapore, other southeastern Asian location. The folks at MakerDAO, the folks, meaning people involved in governance, which is anybody that holds the Maker token, they put a proposal out there that more or less said, hey, let's go ahead and drain WBTVVVTC vaults to zero because they don't feel comfortable with Justin's son. Mike Belchie came out, the CEO, BitGo saying like, this is, you know, if you dig into the facts, this is a nothing burger. I don't really have a view on it except that this could be a potential headwind for Bitcoin. WPTC is not a trivial amount of Bitcoin.

It's pretty significant. And it's a big moat for BitGo for their business. and if Maker was to, if the, you know, the governance participants for Maker were able to actually get this thing across the line, I do think that there's a potential negative impact price. It's just worth noting that right when you think, you know, hey, the Mount Gawks selling is done, the Genesis thing has done, the FTX stuff is done, there's always something in crypto next. And I think that this WPTC thing is likely a nothing burger, but it is something. that I think was worth mentioning to keep on people's radar.

To be honest, I barely followed crypto at all in the last week. So you were just trading traditional markets the last week or so. Yeah. Aside from rebalancing into Ethereum. All right. That's it for this week. We went a little over an hour. We talked about a lot.

It was very macro-heavy. Thank you for joining us, Chris. That was awesome. Thanks for joining us for this episode of Bits and Bips. We'll be back in two weeks to discuss more about how the worlds of crypto and macro are colliding. Until then. Thank you, guys.