Unchained - Bits + Bips: The Real ‘Trump Trade’ & Why Trump's World Liberty Financial Was a Flop - Ep. 723

Episode Date: October 23, 2024

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger, and Joe McCann are joined by Jeff Park of Bitwise to discuss some of the latest developments in the crypto world. They share their thoughts on a controversial ECB paper about Bitcoin, breaking down why they believe the authors missed the mark. They also dive into the rising institutional interest in spot Bitcoin ETFs and how Trump’s momentum in the polls could impact the market, especially for altcoins. Plus, the conversation explores the significance of Bitcoin ETF options and why they could have a larger impact than many expect. Show highlights: Why the guys believe that the ECB paper on Bitcoin is a joke How the Minneapolis Fed report said that prohibiting Bitcoin would allow the government to operate at permanent deficits  The institutional demand for spot bitcoin ETFs How Trump has been rising in the polls and what the Trump trade looks like at the moment Whether polls and Poylmarket bets on the U.S. elections are manipulated How the Fed is putting more focus on jobs than inflation When the bitcoin ETF options might launch and which issuers will get it first How memecoins succeed and the rise of AI memecoins like GOAT, fueled by the AI bot truth_terminal What the $1.1 billion acquisition by Stripe of stablecoin company Bridge means  Why Donald Trump’s World Liberty Financial token sale was a flop Sponsors: Gemini Stellar  Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Joe McCann, Founder, CEO, and CIO of Asymmetric Guest: Jeff Park, Head of Alpha Strategies at Bitwise Links ECB paper on bitcoin: Bitcoin Appreciation Could Be ‘Fuelling The Division Of Society’ Omid Malekan’s rebuttal to the paper by Bindseil & Schaaf (of the ECB) Minneapolis Fed report: Unique Implementation of Permanent Primary Deficits? | Federal Reserve Bank of Minneapolis Alex Kruger’s tweet on memecoins  Alex Thorn’s tweet on bitcoin adjusted by inflation Timestamps: 00:00 Intro 03:08 Why the ECB’s Bitcoin paper missed the mark 10:17 Political motivations behind the Minneapolis Fed report on Bitcoin 14:18 Rising institutional demand for spot Bitcoin ETFs 21:38 How Trump’s poll momentum could impact crypto 32:14 Are election polls and Polymarket bets manipulated? 43:36 Why the Fed is prioritizing jobs over inflation 52:37 When will Bitcoin ETF options launch? 1:01:08 What makes memecoins, including AI memecoins like GOAT, succeed? 1:13:00 The significance of Stripe’s $1.1 billion crypto deal 1:18:02 Why the WLFI token sale was a “flop” Learn more about your ad choices. Visit megaphone.fm/adchoices

The main trade is Bitcoin and is Alcoins. I think that's the main Trump trade. And we've been talking in the pot here for quite a few months. I prefer Eith and Seoul over Bitcoin on a Trump win than Bitcoin itself. Sorry, Maxis. It's just common sense to me. 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, Tradfi Archmister, Lord of Blue Briggs End. It with Joe McCann, Lord Commander of Asymmetric and Master of Bunk, alongside Alex Kruger, Kruger Macro of Asgard, Protector of the Realm. We're here to discuss the latest stories in the world's crypto and macro nudes. Just remember that nothing we say here is investment advice. Please check Unchained Crypto.com slash bits and bips for our disclosures. Today we're also joined by Jeff Park, Master of Alpha, Warden of House Bitwise.

Today's episode is brought to you by Gemini, a U.S.-based crypto exchange built for new and advanced traders. Gemini is offering new customers $15 in BTC when they trade. Sign up today to earn your Bitcoin. Where can you find $700 million in real world assets, 11 million daily operations with industry low fees, powered by 450,000 plus on and off ramps across 180 countries, the Stellar Network. Jeff, why don't you give a little background on who you are and then we'll get into some of the topics to the day. Sounds great, James. And what a lovely title to kick off my day. Appreciate it. My name is Jeff Park.

I joined Bitwise about three years ago to augment their capabilities on having alpha strategies in house. And so the main function that I run is our multi-strategy solutions. But also I come from the lens of TratFi, like many of you, and the ways to appreciate crypto into the dialogue. So super happy to be here. Big fan of all three of you guys, of course, in the space that I follow for a long time. And Joe, I thought this might be the perfect occasion for me to wear my Anagram hoodie that

and not trade it away from the suits. So you're running alpha strategies. Are those private LP type vehicles that Bitwise has on the side, not alongside their ETFs, which I think most people probably know them for. Yeah, it's a good question, James. Our flagship vehicle is a multi-strategia solution in a private fund format. But that being said, I do think the strategy for Bitwise is to offer active strategies in every investment wrapper possible.

So you may have actually seen in the news recently that we are repurposing our futures-based ETF, BITC, as well as AE, into a trend-based strategy. So we're implementing a trend-following strategy, even within the ETF wrapper that I think will bring nuanced sophistication and investor expression towards ways to invest in crypto. And of course, we manage also other custom mandates as to some investors coming and saying, hey, I'm saying a ton of Bitcoin. I'd like to earn some yield on it. Can you help me find some yield?

and we'll run different kinds of mandates of that nature, also to help investors explore all the orthogonal alpha vectors in the space. Awesome. Yeah, we'll definitely get into some of that more because we're going to talk about Bitcoin ETF options and the stuff we could do with that. But let's talk about what I think is the biggest news of the last few days. There's two papers out. The ECB, the European Central Bank put out a paper that basically said Bitcoin was fueling the

division of society. I mean, from my point of view, like I didn't read the whole thing. I'm not going to lie. I'm not going to pretend like I through the entire paper. But like I skimmed enough of it. And what I got from it was Bitcoin has no intrinsic value. It's worthless. But those who don't own it will be like impoverished.

Like it's messing up sight. I don't know. It was it was really bizarre to read. Did you guys skim it? How much did you read it? What do you guys thought? Yeah, same thing. Five minutes.

It's, I thought it was a joke, to be honest. It's like if you think about it, it's the gist of it. was that if you, if you, that if Bitcoin keeps going up, it's basically generic division in society. That's it. And if you think about it, the same thing applies to any asset that goes up.

So you could say the exact same thing about stock indices. So yeah, of course. If you don't own stocks, you're going to left behind, quite likely. If you don't know Bitcoin or anything that appreciates, you're going to be left behind. And there is a, yeah,

the division of society between the haves to have thoughts. It's just quite bizarre for the ECB to put such a paper on such an obvious thing. This reminds me of Joe's comment about everything being the bimodal distribution here. It's like you either own assets or you don't. And there's like two different worlds that people have been living in depending on whether you've owned assets or not over the last decade plus. But yeah, I don't know. It's just, I can't believe. I mean, it's kind of getting to the stage where like, you know, everyone's like first they fight you and then they join you and all the stuff. There's definitely like this instance of them trying to fight us.

Joe, I don't know. What was your thoughts? I mean, full disclosure, I didn't read it because it looked like utter nonsense from the like commentary that I was just seeing. I was like, ah, that's pretty on brand for the European Union to do something this stupid. I mean, maybe I'm, you know, stretching a bit here. But there has been a, I would say, a pretty concerted effort in Europe and the UK moving towards a more. I don't know, top-down centralized authority towards any sort of anything that could be not controlled by the state. You know, we saw what happened in the UK with people posting stuff on Facebook that were, that was, you know, uncouth and ending up in jail.

I mean, that's pretty crazy. And it goes to show that I think if, if this is actually the belief of the ECB or a member of the ECB and this is being. paraded through the rest of the members of the ECB and ultimately the European Union, is this just consistent with the broader view that like, hey, we need to actually clamp down on these decentralized approaches of, you know, questioning our authority. Maybe it's a stretch. I don't know. I will say that the person that wrote it, I believe, is an academic. And even though I think Nicholas Nassim Talib is kind of an asshole on the internet, he's

got a pretty powerful phrase for what he uses for people like this. He calls them intellectuals yet yet idiots, IYIs. And these are folks that have no skin in the game. And this isn't the case of all academics, but there's a number of folks in academia that will pontificate in the abstract and take these rather controversial positions, but have absolutely no real skin in the game. I think Paul Krugman is like the epitome of this. And there's myriad examples of this historically. There's another guy on Twitter I saw yesterday. It was so good.

He said something like meme coins are a signal of like lower intelligence or something or low IQ. He's like a PhD Bitcoin nerd. I mean, it was just awesome. Like you can't help but see this kind of stuff and go, yeah, these guys just don't get it because they don't have any real skin in the game. And so to me, I just discount this stuff to zero. could it potentially have been part of the reason we sold off on Monday? Maybe. But it just seems like complete nonsense. Joe, I'm going to augment your case there and actually argue that they do have skin in the game,

but in the complete opposite direction, which is actually the issue with academia at times. One of the co-authors has actually architected the ECB since 1998. And that's his only career since. And so actually he does have skin in the game. it's kind of skinning the game in the direction. Maybe you should not be publishing on an credible and neutral platform that academia is meant to proliferate upon. And so this is, I think, at the crux, why this is becoming problematic. If you read the paper, and I also glanced it for only about five minutes,

there's generally a well-known structure to how academic papers are written. You kind of have to argue for both sides and then zone in on your thesis and do make up some claims at the end for how you could be wrong. That's the accepted way of how academics argue. This paper makes zero effort. And so one of my very good friends, Professor Omid Malikon, who actually teaches at Columbia Business School, he ended up writing a rebuttal today and posted it on Twitter to explain why his friend Uruk might be wrong. And he actually spends a lot of time trying to explain why Bitcoin is not worthless

and has this incredible utility in the ways people want it. But I almost want to tell Omid, Omit, Omit, you missed the point. Because that's not what this paper is arguing. This paper is arguing about what Alex had exactly mentioned, which is ultimately the redistribution of wealth is the problem. It doesn't actually talk about Bitcoin. It just talks about the fundamental asymmetry of market profits and losses and how that's bad for society. So you can't engage in a thoughtful debate when you're that far apart. And I think that's what we saw in the dangerous energy that is coming from which people pay attention to academia, right? There's ramifications that come out of this. People

then compound and snowball into these things. And that's where it becomes really dangerous, in my opinion. Actually, it's a very good point. A lot of these guys actually come from academia. We forget about it, but Fed bankers and ECB officials, many do come from academia. They never had a job in the private sector ever, like ever. Powell does. Powell did.

And also, before we even move on to the other report, I want to talk about, another thing to note, I think this happens since we last recorded. It definitely did. Italy, which I just went to Italy. I've been to Europe for the first time, like a couple weeks ago. Italy is raising the cap gains tax on Bitcoin from 26% to 42%. So I mean, that's like just an example of something going on in Europe where that like that, I don't know, that would be insane to have happened in the U.S. But this Minneapolis Fed report is kind of like basically pitching that. So I'm just going to read like from the abstract, this one line that I think just summarizes everything. And in my head, it's like you're saying quiet part out loud, but it based the Minneapolis Fed put out a report, I think it was today or

yesterday, a legal prohibition against Bitcoin can restore unique implementation of permanent primary deficits and so can a tax on Bitcoin at like a certain rate, a very high rate essentially. So kind of like the cap gains we were talking about. He's basically saying like Bitcoin is making it obvious, I guess, that like we're running at like permanent deficits of the economy, saying the quiet part out lot. I don't know why that's different than gold in some. regards, like in my mind, like they're signaling out Bitcoin. But also, I, same thing. I skim this report for five minutes. There's a lot of analogous language used here. A lot of it is,

again, they call Bitcoin worthless. They say it's just pieces of paper. They say they're, they're substituting Bitcoin for something else. I'll get the quote in a minute. But like, pieces of paper. Bitcoin's pieces of paper. I got, I got to get the actual quote. But yeah. That's a new one. I mean, I don't know. What, what? were you guys thoughts on this one? Same thing. Nonsense. I mean, it may be potentially politically motivated, arguably is politically motivated. This gets back to, I think, one of my hypotheses a month or two ago when I was talking about how it doesn't favor the Democrats to actually have a crypto stance, because then they can use the fact that Trump is pro-crypto to continue to divide the nation or

the electorate. And I saw this thing the other day, which I kind of agree with. that Kamala Harris' strategy right now is not Trump, right? Like they don't have to list literally any policies. All they have to do is say, like, we're not that guy, which is like a pretty effective strategy if you can convince, you know, 51% of people or 52% of people that you shouldn't have that guy as your president. So does that imply that the folks that wrote this paper are, you know, pro Kamala Harris? It almost feels like it is, I'm not going to say anti-trans.

Trump, but just the language used in this paper feels like it's creating that further division and trying to justify it through academic means, which just seems ridiculous again. Yeah. I'm also. Maybe was it last week that one of the Fed governors, I believe it was Waller, who came out in support of Defi, potentially as a substitute for ways that it could replace some of our centralized finance services. And I wonder, actually, if that was maybe a little bit of a little bit of a lot.

of the bottle energy that came out to kind of oppose one other Fed governor in the context of the political fabric we're living amidst. Yeah, I found the quote that I was looking for. We use Bitcoin as a metaphor for private sector security that is in fixed supply and that is not a claim to any real resources. And then there's like a whole section about like what to do when Bitcoin is illegal. And it all really comes back to the fact that they want to make sure that government debt remains the only risk-free security so people won't realize that they're being like

inflated away, I guess, and redistributed. It's literally saying the quiet part out loud, which was a little bizarre to me. Let me take it a little bit further there because I thought it was very interesting this one. I mean, ridiculous, but interesting. It's the, the TLDR was Bitcoin is a useless asset. And even though its price converges to zero, second statement, its very presence makes it harder for the government to control its deficit and debt, basically making it harder for the government to run permanent primary deficits, potentially forcing the government to balance its budget. Solution, prohibit or tax Bitcoin.

I don't understand. How is that any different from like gold or like other precious metals, silver? It's like not that different of, I don't know. whatever. That's why I put my tinfoil hat on and go, man, this has got to be some political motivations. I mean, let's talk about the election right now. Trump is leading in pretty much all the major polls that I've been able to see. Do we think, like, I mean, my theory is that's probably some of the reason why we've seen a run up in prices, primarily with Bitcoin. I think there's a, there's a bit of pricing correlation there between Trump's polling odds and the price of crypto. I mean, what are your guys' thoughts there?

I mean, last Monday when Bitcoin kind of ripped out of the gate at the New York Open, I was skeptical at first because my trading partner was like, feels like, you know, the Trump bump or Trump's odds improving or bleeding over to the price of Bitcoin. But we just had massive ETF inflows last week. And it's been the same story like all year when there's big flows that come in. And I mean, I'm sure Jeff, given his, his connection. to the folks a bitwise are probably aware of this. Like, when there's big flows that come in, price goes up.

When the flows come out, price goes down. And yes, there's basis trades that end up impacting this to some extent. But last week we had, you know, I think that the highest weekly inflows since like March or something. Is that because of Trump? I don't know. I think people love to find correlations to create the causal connection. I think there's probably some of it.

But, you know, I don't know, Jeff, maybe you can illuminate. us a little bit on like the maybe the retail versus institutional demand for these products because I've heard both sides. I've heard that there's a lot of institutions that are actually buying these ETFs. And then I hear like, oh, it's all these, you know, folks on Robin Hood. Yeah. It's a great question. I would agree, first of all, that flows determine everything up, especially for Bitcoin. And it's not an accident that perhaps the highest flows you've seen in a long time with these ETFs coincided with, I think, the new historic high for CME open interests as well. There are joy, as you mentioned, there can be some trading that's relative value oriented going

on there. But it shows you that still there's money coming into the system. And generally when money comes in, it stays around in some fashion. One example of this is I recently heard from a friend who was in the hedge fund industry, a fairly senior guy, ex-Borgan Stanley, he told me that one of the ways that pensions are thinking about allocating crypto is they actually have consultants pitch with BlackRock a model portfolio where it comes out of the fixed income bucket that you make a small allocation to Bitcoin. So you make it into a multi-asset custom portfolio pitch. And within the fixed

income segment, you just put in a little bit of Bitcoin. And this makes everything look better. Of course, you all know that. But it also, I think, opens the eyes for people to talk about exactly the kind of hedging that we're all all alluding to here, which is how to think about our fiscal deficit. So these kinds of conversations are happening. This is like a Taft Harley plan, right? They're the most conservative kinds of American investors you'll ever find. And so I think not just retail, but there's a channel of institutional capital that is finding a way to harness this energy, even though you don't see it wide open in the press. And I can tell you from all the dialogues I'm having on behalf of Bitwise with these kinds of institutional investors, they are all

paying attention. Whether, again, as Joe, you noted to it, whether it's correlation or causation, whether the election is driving in, there's no mistake that people are paying attention. And I think that's generally a good thing that drives flows. See, look, that's why he's the head of alpha strategies, guys. Yeah, I mean, just to put some numbers on there, the U.S. spot Bitcoin ETS, Joe talked about the big week. It was over $2.1 billion that came in last week.

So, like, it's funny. I remember when, like, they had like a billion dollars that came out in a week. And there were people jumping on the grave of the U.S. ETFs like this is going to be like this is the downfall for them and I'm like I say this I've said this in many episodes here you're going to see outflow weeks as the trend is going up we're about $21 billion in inflow since these things launched in January 11th which is just I mean if you told anyone in January that these things are going to take in $21 billion on a net basis in aggregate back in January within the first seven months or whatever nine months it is everyone would have

said that's unbelievable. We're going to be at all-time highs. We're going to hit $100,000 Bitcoin, I think. At least that's what I would have guessed, essentially. James, do you have, can you pull up or do you recall, like, you know, I think obviously Bloomberg, you guys had an estimate for inflows for 2024. I think Bitwise and like the other issuers had them. I'm just curious, like, how accurate we're tracking towards those, given that we're at 21 billion and there's still like two months to go. I mean, our number was, I think our number was, 15 billion by the end of 2024. So we're done already. But I will say we also, we were, I said that they, we thought that Ethereum UTFs would do like 15 to maybe 25%. I settle around

that 50 to 20% range mostly. We're still negative on those. So we over we undershot on Bitcoin. We overshot in Ethereum, but we're not done. We're not through the end of the year yet. Question for you guys, James, Jeff. What, what percentage you reckon of, of, of, inflows that are directional, basically, net inflows. No arving bases, no arving futures, just pure inflows. It's a good question. We don't have a look-through attribution to that level, but based on the filings of the prior 13Fs, I would imagine that a good chunk still is driven by relative value traders.

And especially with the futures basis spread annualizing over 10%, I do think that is inevitably a big component. right to me that 10% is kind of important because it clears what hedge fund return hurdles can be for people to then take interest and it's actually quite low the hurdle's probably like 7%. So if it's above seven people are interested if it's below 7 it's not. So it's not about whether it's 10 and 25. It's if it's over 7 it gets interesting. So I do think there's a lot of that demand that has been pushed in there. But nonetheless, the the conversations that we're seeing with all our advisors makes me think that I, I would like to be pleasantly surprised in the other direction come next 13Fs, that there are people accumulating slowly here, even at the institutional. Yeah, I mean, let's be clear here. I mean, like I said, $2.1 billion came in last week. There's no way that's all retail.

I mean, that's an insane amount of money. And also, I actually debated Jim Bianco on stage about the success of the ETFs. And one of the things we talked about is like, yes, investment advisors have somewhere, I would think the numbers around $2.5 billion based in the last 13F filing. two, around two, over two. All right, that's a small fraction of the 60-ish billion dollars that are in these things now overall. But that's still like, for an ETF that just launched this year to get that much RAA money,

investor advisor assets is a smashing success. And I'm expecting that number is going to go way up when we see the data from September 30th, which we'll get in around November 15th. So right after the election, we'll get a better understanding of like where, who else bought some of these things. But as Jeff said, a lot of it is hedge funds right now. There's multiple hedge funds with hundreds of millions of dollars. And it's that basis trade that he was talking about.

Yeah, I mean, if we think about the Trump trade, though, I'd love to get Alex's perspective on this. Like, what do you think the Trump trade is right now, Alex? Like me and some folks at asymmetric have debated this internally. And our view really is, you know, if Trump wins the election, Bitcoin going to 100K could happen. very quickly, like shockingly quickly. And a lot of that has to do with the fact that there's some of the current market structure and dynamics that exists, particularly around the end of December open interest for options is 100K.

There's a lot of gamma right now at 70K. It's been that way all year long. But another point that I found out over the weekend is that exchange balance. centralized exchange balances of Bitcoin are at five-year lows. So, you know, on the one hand, if the folks that were overriding calls to, you know, clip some carry by selling premium, get called away, they're not going to have any Bitcoin left and they're going to have to buy it back. Well, there's not a lot of Bitcoin on exchanges, at least according to, you know, on-chain metrics and the exchange metrics. So what do you think, Alex? What happens in a Trump?

Wait, real quick, Joe. Can you define gamma for us idiots who don't understand Greek alphabets when it comes to options? Yeah, it's like the acceleration of the delta of the option, right? So it's like the second derivative, if you will. And it gets wild around a certain strike where there's a heavy amount of short gamma. This is the GameStop trade. So if you guys remember what happened with GameStop, the options market was basically driving the price of the stock. and then the stock was ultimately then driving the price of options.

But ultimately, these folks that kept selling calls to take in premium because, you know, the thing had risen so much, well, the stock kept going higher and then it created, forced them to actually buy the stock back to cover them being short those calls. Because if you're selling a call at a certain strike price, if the price goes through it, you have to deliver the stock, right? Well, if the stock price is ripping, then you got to chase it higher. So gamma squeezes can be extremely violent like we saw with GameStop. Thus far this year with crypto, specifically Bitcoin, around the 70K strike, there's been a ton of gamma.

And folks have been selling calls to collect premium to clip some additional carry. At some point, if we do in fact break out, which I'm confident we will, that thing's going to get run over. And those folks are going to have to buy back Bitcoin. Yeah, that's why it's a way to think about this principle of the longer the consolidation, the stronger to break out because people are basically, they being either shorting or hedging or selling calls for, say, six months. Yep. And those guys, they basically have to, the other get ran over and they have to unwind their

positions. So, yeah, I mean, it looks pretty good. But going back to the Trump trade, I think the way to think about it is you have, like, each candidate, there's like four verticals. One is spending. The other one is regulations. The other one is immigration. The other one is tariffs. When it comes to spending, the market, and I think it's the same way, by the way, it's not this consensus.

the market sees Trump as more aggressive on the spending side is going to spend more and it's going to lower taxes. So that would drive Republicans would drive higher budget deficits, which basically would lead to lower interest rates and a steepening of the yield curve based on the expectation of basically much, much higher rates than the line. So again, it's higher rates, lower bond prices, not lower yields, and a steepening of the curve. Steepening of the curve is good for financials, which is banks, basically, mainly. And lower regulation is also good for financials. That being said, the main trade is Bitcoin and is Alcoins. I think that's the main Trump trade. And we've been talking in the pot here for quite a few months.

I prefer EVE and Seoul over Bitcoin on a Trump win than Bitcoin itself. Sorry, Maxis, it's just common sense to me. I think obviously if Trump does half the things that he seems to think he's going to do with the SEC and this other stuff, his win for him is way more impactful for all coins than it is for Bitcoin. I feel like Bitcoin is like kind of like set as far as I'm concerned. even the SEC is calling it a commodity. There's a lot of things that are still up in the air for every other all coin, essentially, even somewhat related to Ethereum.

So I fully agree with you on that, Alex. But Jeff, Jeff is the head of alpha strategy. So give us some alpha here. What are you thinking? What is your thinking here on the election? You guys, I'm putting me on the spot. Well, I've been crunching with it. I'd be super curious for all of you guys take on it.

So I'm a little bit of a student of merger arbitrage and how to kind of think about this probability based on price movement. And I've been looking at the polymarket data to see if there's a delta we could assign to the highs and lows of what Bitcoin might be based on that event. And so what I've done specifically is I looked at the summer in August and September, Van Kamala's odds were higher than Trump's and how much the spread worked in her favor with Bitcoin's price reflecting that. And then vice versa, more recently with Trump gaining an edge, try to compile it and draw a regression out of it to see. what the market might be saying a Trump win would lead to X, Y, Z, Bitcoin price or vice versa. And the number that I have found to be best retrofitted is that if Trump wins, the probability assignment would imply that Bitcoin could go to $92,000.

And if Trump loses, Bitcoin might go to $37,000. So again, these are pretty unscientific range-bound numbers that I'm trying to just retrofit based on the most amount of data that I can find. But I think that alone tells you, like, regardless of the setup that Joe just described on the gamma squeeze and all the other things that's going to work in the favor of where we're going to go, it feels to me that already, like the probabilities are pretty fair in how Bitcoin will inevitably find that price of Trump wins. I want to say, I think it's very important.

It's on a on a on a on a on a on a harris win I mean 37k is is pretty extreme right that's quite a drop we that's not cool that's uh we we need to that's like very very scientific there yeah it's not just like yeah so but i i don't think i mean this is very subjective and this is where actually what what makes a market a market right i think on a harris win we go down a little bit and then we continue going up driven up by macro because I think actually is macro and the adoption story is more important than actually

Trump versus Harris. It matters a lot, but it's secondary for Bitcoin, not for altcoins. Yeah. So I kind of agree with Alex on this. Like from a trader's perspective, what we would love to see is new all-time highs in Bitcoin because sentiment is that Trump is going to win. So we plow through that belly of the gamma and maybe get to 80K or something to that effect. And then in this scenario, if Harris actually wins, you better believe the momentum ignition

algorithms that are market abuse algorithms will push Bitcoin lower just on the headline alone. But then to Alex's point, the macro just points to Bitcoin going higher because both candidates are going to increase the deficit. The odds that Trump does that in a more material way than Harris are pretty stacked in his favor, which is why I think you see things like the long bond selling off with this. belief that Trump is actually going to win. You also see, I think last week, Goldman Sachs' prime book was showcasing that they're like the Democratic-Democrat winner stocks and these Republican winner stocks, whatever they qualify that as in their basket. People were dumping, meaning likely hedge funds,

were dumping Democratic winners and buying Republican winners. You saw the long bond sell-off, which implies higher deficits, et cetera. So best case scenario, I think, is we actually get the new all-time highs ahead of the election. That would be amazing because then we've already kind of chewed through a lot of the market structure that's potentially kind of holding Bitcoin back and the market more broadly, such that if there is a Harris win, expect some type of a pullback or reaction just based on the algorithms that are going to be trading it.

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And the top, it's showing like the RCP polling average. So like what the polls are saying. Think like Nate Silver type stuff. Right now, the polls are still saying that Kamala Harris is ahead, 49.2 to Trump's 48.3. but then you look at Polly Market. I mean, I've been saying this pretty much every time we record an episode. I felt like Polly Market was definitely tilted in favor of Trump and we need to like knock off some of that spread.

And I think there was a bunch of, there's been a bunch of reporting done over the last week or two basically saying there's a bunch of huge whales like meaningfully moving those markets. So it's not as, it's not as efficient at a market as we thought. But also Kalshi is up there. And that's not, I wouldn't consider that to be as, you know, right leaning due to it not being specifically crypto, but that has Trump at 58 and Harris at 43. So I mean, what are your guys thoughts on like the differences between these betting markets and what the polling markets are? And I also have this is another one that's new, Kalsi just got approved like legally in the court.

So you can see on a court on a on a map basis where things are going right now. And yeah, it doesn't look good for the Democrats if you're just trusting betting markets. Joe, I know you have thoughts on this. So I guess let's go with you first. Yeah, I mean, so I've been saying this for months now on our pod, which is like, I think it's a coin flip. If we look into things like polymarket, there's been a lot of opining on whether or not there's an individual whale pushing these markets up or if there's an arbitrage opportunity between. predicted and polymarket. I even saw some nonsense about somebody saying there's market manipulation on polymarket.

And I'm like, the only people in crypto that complain about market manipulation are just shitty traders because you can't have market manipulation on a permissionless network. It's literally what the market is doing. So if somebody or some wallet or some entity or some AI agent is actually bidding up Trump on polymarket, that's not market manipulation. That's called the trade. Yeah, exactly. And so, like, there are folks that are professional, you know, call them like prediction market gamblers, if you will, or quasi, you know, poker players, et cetera, that do this stuff for a living.

And I don't think that the arm opportunity is big enough to justify trying to arm between something like predict it, where you can't really. bet reasonable size and what you can do on polymarket. So I don't think, I just look at what the market says. And if the market says, hey, you know, Polymarket has Trump way ahead, but the polls are polling this way. Well, which one has getting back to the skin of the game concept? Which one has skin in the game? Somebody who is being polled on a phone caller in person or someone that's putting their money

to risk. and in my opinion, it's people that are putting their money to risk. Now, again, if it's just some whale that's pushing the market up, well, that's what the market's doing. Right. So they're either going to be really wrong or they're going to make a lot of money and be really right. The other thing I would say in my mind is like theoretically, if you're like all in on crypto and you're worried that Harris is going to ruin things, like you'd probably want to make some money

in the event that like you want to hedge your risks, I guess. So theoretically, I would think that Harris would be going up. But this is just people out and out betting on Trump. Yeah, actually, in fact, when, when I think it was, man, I could be wrong, maybe it was like 61.39 or something Trump to Harris. I was like, honestly, buying Harris at this price is like really good. Like that would have been a great hedge, you know, in the case that she actually wins, right? Like, and then you are subsequently sad because crypto will continue to be kind of dribbling along

through U.S. policy and regulations. I mean, the other alternative, of course, is just to buy a Kamala Harris scheme point. Jeff, you have any thoughts here? You know, I don't think I have anything super nuanced to add beyond the fact that I think I'm a big student of just recognizing that markets are fairly efficient at what they do.

I don't know if you guys read On the Edge by Neat Silver recently. I did. I mean the middle of reading it on my list. Yeah, I think it's such a wonderful book because it talks about risk-taking in a way that normalizes it so that it's not this weird, like, gambling poker, like, phenomenon. And in that sense, I think what people are getting mixed up here is, like, they do see, like, weird things happening in polymarket where, like, the ticks look a little strange, like, relative to other things. And they find that to be, like, unwholesome, right? this idea that you're financializing something as important as an election feels like it's an unwholesome endeavor. I think there's a little bit of this mental incongruance that is occurring

at the larger societal debate as to whether these things are good or bad. And then, you know, you just have to remember like many, many, many things in life are just financialized, whether you see it or not up front or not. Even like Garger-Arp, for example, someone might be trading that spread and hedging it with the sector ETF and things happen. And so, you know, I hate to break it to people, but like, if people are making bets on outcomes and it's with money, it's probably a better signal than those making decisions without money. Like, I think it's maybe just even that fundamental at some level. And people should want more skin in the game, if not just to get better information.

And that's at a high level what I think of this particular debate that I see on both sides. I so agree with what you're saying, Jeff. And actually, when we were in Jackson Hole, you recommended that book. and it's on my list. This is, you know, one of the things that young traders or new traders will always ask me about, like, how to trade or, you know, how are you figuring out all this information or whatever? And I'm like, well, I just, I put money to work. Like, I test the order books.

I see how it reacts to a small bid or a big bid or a market order or a limit order. And, like, that's how you actually get a lot of this intelligence. So I completely agree that by putting your money at risk, you actually learn more because you've got actual skin in the game. You could suffer from loss aversion from doing something like that. So I wholeheartedly agree that this is why I don't believe that there's this nonsense around market manipulation with polymarket. There's just people actually betting one direction that is not consistent with polls, which pick the poll that you want to fit your narrative and you'll probably find your answer, right? You know, something else there I want to add is almost every single Trump trade is moving in the same direction. If you pick the

So we have polls, we can argue about who's ahead, who is behind, bias on the polls, but the trend in the polls is very uniform. It's in favor of Trump. That is in line with

polymarket going up for Trump. I agree that actually Trump right now is a little bit too much. The other thing is you can look at the DJT stock to going up, it's up like 100% in a few weeks. And more importantly, as we were talking about before, one of the Trump trades is higher yields,

especially long bonds. So long bonds down, long rates up. And that is the most liquid market in the world, the 10-year bond. And it's actually, it's, you can see it, in the last few weeks just in line with crypto and all the Trump trades. The direction is extremely clear and the trend has been very pronounced. And that being said, I want to share actually, I've been saying here for a month that I thought the election is coined us.

And I changed my view, actually. I think it's going for Trump. And I'm saying this because I've been digging a lot into bias in the polls in the last elections, 16, 20. and the midterms, 18 and 22. And the bias when Trump is running is very significant. It's like 5 to 7% in favor of against Trump. So the question there is, have pollsters managed to get rid of this anti-Trump bias or not? And I don't think so.

You were talking about what you guys think? I actually, I'm now, I think it's, I think the polls are inaccurate based on everything else that I'm seeing. And like if you look at some of the more local polls, it kind of implies that it should be leaning a little bit more Trump. But who know, I was actually in Philly this weekend and I was driving on 95 for anyone who knows the area. And the whole road shut down. I'm like 90% sure that the Trump's, uh, uh, I don't even know, parade of cars was was blocking and stopped the whole highways and created so much traffic for me. So I'm not happy with him right now. But you were talking about long bonds. Stanley Druck and Miller today, big news came out. He is

So he's an absolutely legendary investor. And he has a massive short position against these betting against the Fed. He's short the Fed with 20% of his portfolio right now. Well, at least the portfolio that we can see. So we don't know what else is involved here. So I will take a step back and say we can only see certain things here. But he's betting against the Fed here. Yeah.

Balzy move, but also Drach is known for just completely changing his view overnight. So for all you know, he could have covered that by now. He's on the opposite side now. Before we move on, I actually wanted to share this, which I thought was an awesome chart from Alex Thorne over at Galaxy Digital talking about the fact that, like, yeah, we could go to all-time highs, but if you like adjust this for inflation, like we are kind of nowhere near the, well, not nowhere near, but we're, we're, it's at least 12, you got to subtract somewhere around $12,000 likely in the Bitcoin price to get a more accurate price compared to what the,

the prior all-time highs were. I don't know if you guys have any thoughts or interest in that, but I thought that was worth sharing because I found it's something we've kind of talked about but never really blatantly showed it. Yeah, it's a great charred by Alex. He does great, great work over at Galaxy. I don't think anybody pays attention to inflation adjusted anything, to be totally honest, but it makes for really good Twitter engagement. So also ethics adjusts, right? It's like we're so much American, just living a dollar denies. But the reality is Bitcoin has to pass all-time highs and many other local currencies.

That's right. People pay attention to that in the ways that we don't have to worry about. So it just shows you, yeah, inflation is a part that many of us should actually adjust to it. I'm a big fan of Alex also. I'm glad he's bringing that more to the public domain. Yeah, he does very good research. Let's move on real quick to rates. I mean, we talk about rates every week, but there has been a change since we last recorded.

This is showing the interest rate probability of like what's going to happen for the rest of the year. If you listen last week, you know that we were basically pricing for a 25 basis point cut in November and then another 25 basis point cut in December. And now the market's basically pricing for the fact that we might only get one more cut this year. I don't know, Joe, you have a, you're the interest rate guy that talks about the most. You've had your strongest views. What are your thoughts here? It's going to take another week or two for the cuts to come back into the market and get priced. I mean, there's some other actual market.

things that are happening behind the scenes that are affectedness. Yes, there's been strong retail sales and a couple of other data points that have come out. But there's just the idea that the Fed is it going to cut, is only going to cut one more time this year. It just seems like utter fantasy to me. And, you know, last week we had Waller coming out and basically saying the same type of stuff that like we can, we can, you know, adjust or move our, or pull hikes forward, or pull cuts forward, excuse me, kind of beating the same drum before they did 50 bips. And like, I don't think, you know, as we see here today,

based on the data that I have, I think it would be a stretch for them to actually do 50. It's still a possibility, of course. But to me, it just still feels like they're loaded up for 25 bases cut points until they get from my perspective down to like 3% to 3 and a quarter, somewhere in that range. Yeah, I'll go on record say. I think we get 25 and 25.

That would be my guess, but what do I know? Alex's thoughts? Yeah, same thing. We have very good data, especially payrolls on the first Friday of the month. Like they came at, I think it was 250K. So literally changing the downtrend on payrolls that we've been seeing. So basically throughout the hard landing narrative at the wind at least temporarily. Nowcasts are saying 3% GDP for Q3. I think things are looking good.

I think 25-25 makes sense that the Fed is going to try to stay on course. They've been very repetitive in the last month or last few weeks on the fact that rates right now are tight, basically. They're restrictive. They're basically talking about three to three and a half percent. nobody knows and they say repeatedly they don't know where the neutral rate is but they seem to think more of most of them that is between three and three and a half percent so we are very tight right now and they're more concerned now about the jobs market than inflation inflation unless we have an insane print inflation doesn't matter if you're a trader stop stop waking up you know if you're living in Hawaii stop waking up at 830 or 815 in the morning

you know, Eastern time to trade CPI because you're... Yeah, right here. It's pricing 3.4% roughly by the January 2025 meeting. So a year and change out from now is basically what Alex is talking about. Jeff, you have any thoughts here in rates before we move on? No, you know, I agree with everyone here. The one maybe view that I would share is that sometimes I think that the way the Fed and the mainstream media talks about at large about this particular decision being driven

by factors that sometimes I genuinely wonder if there's a broader conspiracy theory behind the scenes where none of this is truly relevant. I think about that often. Like there's so many pundits looking at like non-farm payroll data and unemployment and try to, you know, assume the Fed is acting upon a certain mission. But then like I think we all know. We live in a world where it's not clear if the market's driving the economy or if the economy is driving the market. And when you think about that, there are certain conditions that I think we all, observing that looks highly unnatural. I mean, we were just talking about Joe, like the move index is at 125. That's a pretty high level. And if you've been following the reverse repo, explain what the

move index is. There's definitely a whole bunch of people here that have no idea what that is. Sure. The most commonly cited VAL index, of course, is the VIX, which is on the equities market and the volatility that's demonstrated. But the move index actually represents the same feature, but for bonds, treasuries. And the reason it's really important is because while it's not a headline number that communicates like a fear gauge, it's the most important metric that determines the capital ratio that banks would likely lend against based on the fact that they're the largest assets that are sitting on their balance sheet. So in other words, if the move index is high and fixed income fall is high, well, the haircut's going to be a lot more onerous for those people to then create leverage on top of it.

So it actually is a part of the financial plumbing. And that actually sometimes matters a little bit more than the actual price section of the stock market. And you combine that with also the reverse repo operations, which has now, I think, almost gotten back to the lows we saw in September before the rate cut. It's like 240, 50 billion or so. You see like liquidity draining in a way where like it's a, it's kind of a problem, like outside of unemployment stuff and inflation stuff and all those things. And so I agree with you guys that I think there's going to be more aggressive cuts still, if not just because this is a problem.

Like, even people are talking about this is actually going to destroy things. And so that's also something that I want to share with you guys in the same side. Yeah. I mean, Jeff brings up a great point. Like, I've had these debates with some folks that are saying, the economy's doing so well.

They don't need to cut rates. It's not restrictive. I'm like, if you're a card dealership. Have you seen the volatility in the repo markets? That stuff's not supposed to happen. And if you drain RRP down zero, there's a liquidity issue. If the Fed is going to keep rolling assets off its balance sheet, that's even more liquidity issues.

This is a function of liquidity at some point. And that's why I'm still very confident that the Fed is going to continue to cut these rates because they've got to apply or provide the kind of lubrication for the financial markets. There's just no other way around it. And do you want to have a shock in the money markets? No, you absolutely don't want to have that happen, irrespective of what's happening with CPI, PCE, non-farm payrolls, etc. So Jeff brings up a great point.

This liquidity picture has to improve or the Fed is going to have. a serious issue. Yeah. And there's obviously plenty of sectors that are struggling really hard with these high rates, cars, mortgage lenders, you name anybody, anybody in the mortgage industry is having a real hard time. So they're praying that these cuts actually come in the way that they're supposed to. Or even businesses that rely on credit to run their business like the Russell 2000s, right? Like we talked about this before. One of the biggest beneficiaries to rate cuts are businesses that are you know, called small caps, if you will, that are having to borrow at very high rates. Well, that starts to come down.

It can take some pressure off of the companies to service their debt. That's net positive for the broader economy. So I just don't buy this. And it was clearly proven to be true that this notion that somehow rate cuts are going to crash the economy. We only cut 50 bips whenever there's a problem. Like, you know, what happened after that? It's like, look what happened since that. right we've gone basically straight up to new all-time highs i think for s mp 500 and dow nasdaq close

russell close right bitcoin close so it's just i don't know i i i get like kind of hung up on this idea that people are so backwards looking and saying look at these cherry-picked data points of when they did this and the economy crashed after that it's like this time is different yeah it's funny you brought up the russell 2000 i'm actually do i believe it or not i do research on things other than crypto. And I'm writing a lot of research about the active small cap space. So there's 500 billion-ish dollars in assets and actively managed small-cap funds. Overwhelmingly so, small-cap managers. They have like a massive overweight to large cap and a massive overweight to mid-cap. So the Russell 2000 actually is, there's a lot of mid-cap stocks in

there. But even still, active managers in general, like across the board, whether you're looking at value, growth, the matter how you slice it, every active manager is like tilt and heavy towards large which usually like when you're a large cap manager you think like their juice and their returns with small cap stocks and things like that it's the exact opposite happening in this environment it makes sense when you think about the tech environment and everything that's going on but yeah i thought that was that was interesting uh to point out let's move on to bitcoin etf options i've been we've talked about every week my stance really hasn't changed um i think it i won't say this year's off the table my my view is i think q1 that's what i said that on stage

in Salt Lake. I think Q1 is likely when it's going to happen. The problem is we just don't have a deadline. I think based on the, there was a whole, we talked with this last time, a whole bunch of language change in these defilings, basically talking about position limits. I think the SEC was essentially worried about what Joe was talking about before. They don't want somebody able to use like a gamma squeeze and Bitcoin ETF options to like affect the underlying market price. That's what the CFTC is concerned about. They don't want the underlying spot market to be manipulated. It makes sense. There's a bunch of position limits now and the approval orders from the SEC. I'm assuming like that's mostly cut and dry, so I don't know what else is waiting on.

So basically the CFTC basically needs to give the green light for the options clearing corporation to let these things start trading. My guess at this point, I've talked to a few people, particularly in Spring Lake in Salt Lake. I think there's like just like they're worried about like second order effects. So I talked last time, there's like platinum and palladium ETFs that have been trying to get options on their ETFs under the same process for a decade. there's a whole bunch of gold ETFs that have launched that like just don't have options. They haven't been able to get approved under the same process. So like also, so one, the SECC and CFTC have gone on this path of like selectively choosing funds in these process to get options. So one, are they going to approve all 11 Bitcoin ETFs to get options?

And two, if I'm one of those issuers that holds one of those platinum and palladium ETFs that I had this sitting on the CFT's desk for over a decade trying to get approved or any other ETF. Like what are they going to do? go back and just green light all of these. I'd be annoyed. So I think there's, I'm guessing, this is just a hunch. I think there's something along those lines that is going to possibly kick the scan down the road. But I think BlackRock, Nisi, Fidelity, all these huge behemoths out there, CBOA, they'll figure out a way to get it through the finish line. So my guess is Q1. Now, Jeff, obviously, his firm has BitB, one of the largest Bitcoin ETFs in the U.S. They're trying to get options. What's, what's your view on this?

Yeah, that's great coverage, James. I largely agree with you. I think it will likely be sometime early next year. And part of that is because to the way you've mentioned, we're seeing real movement on actually productive dialogues happening. Right. So actually, you might have noticed, not every issue got approved, by the way, on this. So I don't want to be who didn't, but there were some that did not find its way through with Nicety. And that shows you already there's enough deliberation happening behind the scenes. Otherwise, they would have just done blanket things if the whole point is to not make any of these things happen. Same thing you said about position limits. The fact that these things are like being firmed up means there's real intention. And so I think that the CFTC will likely find its way post to give the OCC approval. There's always been a little part of me in the back of my head wondering for reasons they too want to exert dominance in the futures and options market that they might actually play a role in holding. back. And I think what I'm just really thankful about the CFTC as an organization that just is fundamentally different than the SEC is that they know that as a regulator that they are the hub of

these innovative products. And I think maybe at some point there is a little bit of that cultural difference in which they're willing to compete for merit. So what I mean by this is you might have also seen the Bitcoin Friday futures launch a few weeks back. I mean, if you think about that, that is highly unlike the CME, right? The CME does not cater to retail investors calling their products BFFs. At a shrimp size that you would trade, less than a shrimp size, actually, by Bitcoiners. And so, you know, I think the CME also is saying, you know what? We'll compete for retail and we're going to do it in actually a pretty fair way.

And I think that's part of the energy we're seeing here, which I just love. Like I just think an open fair market with these things kind of being not in the way is the way to go. So I'm pretty bullish that. Yeah. As you said, James, we'll see something move early next year. Yeah, I would say once these things get approved, look out for a ton of different ETF products. I'll talk about it on here as they get filed. But we've already seen a bunch of these defined outcome products.

Basically, once you have options, you can do things where you're like, I want to get up to a certain amount of the upside. So maybe you can capture if Bitcoin moves 20% a year, you'll get all of that. But if it goes to 50%, you're only going to get 20%, you get downside cap protection. So you're not going to get exposed to the full loss. And all of a sudden, you're going to get people that, you know, in my view, the volatility of Bitcoin is like a positive thing, particularly for a portfolio, especially if you're rebalancing potentially. But there's plenty of people that like the volatility of Bitcoin is why they aren't investing. And if they want to get exposure, they might do it through some of these, you know, covered call type strategies to generate income on top of them. So once these options on the ETS get approved, look for more money to be poured into the Tradfai, defy overlap space with Bitcoin ETS and other similar products, structured products, if you will. Yeah.

Which is you talk about last episode, Joe. Yep. Yeah, I still think that that's actually the end goal for these banks and issuers is the structured product play. I mean, Jeff, maybe you can provide a little insight from your perspective as to whether or not I'm crazy thinking that. But I know the banks make so much money off this stuff. It just feels like a no-brainer. Yeah, I mean, I come from that.

that world. I used to trade exotic option derivatives at Morgan Stanley, which sits at the center of issuing these structure products for Morgan Stanley's wealth management business. And so I literally saw how these things got made. And as you all alluded to, yield is a very special word that gravities people towards a product, no matter, actually, what the underlying risk may be. Now, I think there are reasons that maybe we should approach crypto yield a little differently, but it won't matter. There are people who are drawn to big numbers. Take, for instance, one of the products that Yield Max has out there called MSTY,

it's the micro-strategy cover call strategy. And it's a phenomenal success. When you look at the distribution rate that is north of 90%, wait, let's take a little bit back. What is saying is this thing is basically yielding 100%, which is crazy. But go ahead, Jeff. Well, no, actually, I would, but you got to do your homework, James, right? Because if you look at the way they define distribution and how much of his income versus return of capital, for example, it's not very obvious to the most unsophisticated investor.

But nonetheless, that number is so amazing that it has a product market fit in certain portfolios. And to your point, when the VAL is that high, you can come up with all kinds of path-dependent structure payouts. And it'll create an open a door for a lot of financial product innovation. The banks love this business. Yeah, I mean, that's been, that is exactly why it's been my view for so long. It's like, what is a bank's most number one top thing that they focus on? Profit. And if there's an opportunity for them to make money, a lot of it, they're going to pursue it at any means necessary to get there.

And this is why I just always thought, like, once the ETF got approved, I was like, options are a done deal. It's just a matter of time. And yes, there's been a lot of process and ceremony around this, but here we are. And guess who's going to benefit the most? To Jeff's point, these banks that are creating these products. That's right. That's right. Yeah, this is why I think also people misunderstand when they say these Bitcoin

ETF options are not a big deal. And they'll say things like, oh, we've had derivatives all the time. We've had ledger and we've had Deribit and we had CME. And I just tell them like, guys, those things are not what is on the backbone of this complex, this industrial complex of wealth management products. the way that it allows the biggest group of participants. And so I do think Bitcoin ETF options are separate. The same way, Bitcoin ETFs, so many people doubted that this is a product market fit

because, hey, why would you buy that if you just buy it on Coinbase? It turns out, well, people do need it for all kinds of reasons, whether it's cross-asset collateralization, whether it's margining, whether it's to participate in stock lending. And you can actually lend out your ETFs and not have to worry about counterparty risk. there are useful things that come out of this financial wrapper. And so I put Bitcoin ETF options in the exact same category. It's a zero to one kind of moment. All right.

Let's move on to meme coins. Alex, you had a, this is Joe's favorite topic. But Alex had a pretty long, interesting tweet this weekend on his thoughts on meme coins. Why don't you run it through your tweet and what you were saying and drive into it? Yeah, it was just a quick run. you know, written in like 90 seconds. I didn't see it until the next day. I don't know what time it was.

It was midnight for you then, right? It was late. Were you at the bar? No, no, no. I was just, just wasting time, unfortunately, on the phone. And it's the thought there is, like, yeah, it's basically, it was trying to describe how the ones that succeed, what they have to do to basically succeed, right?

And one of the things they need is to, they need very strong hands at the beginning. Like on Mimcoins, if whoever are the early buyers and the early holders, they have no strong hands, you are dead in the water. They also need no snipers. If you have a lot of snipers that kicked in at the beginning, they're going to basically dump on the first waves of guys and literally send a coin to kind of zero, killed momentum. and you lose your community. So it was, yeah, it was just like, I don't think it's worth going too much, putting much more thought into that,

into it and that, but it's like, I thought it was, I thought it was actually a really, a really good tweet and articulation by pattern recognition that you've likely seen Alex through meme coins that have been successful in those that have not, which is the majority of them. I mean, right now I think it's in the range of 20 to 30,000 new tokens

are being created on just Salana every day. I mean, it's insane, right? Like 99.9% of those are going to be utterly worthless, which is a whole other topic of discussion. I caught up with Meow, the founder of Jupiter, when I was in Salt Lake, and we had some pretty awesome conversations about how we think that there's eventually going to be

one trillion tokens, and it's likely going to be because of the kind of tokenization of pop culture and entertainment and engagement. The fascinating, thing that's happened over the past few days as it relates to meme coins, which is very, you know, I would say consistent with Alex's tweet is the, this AI meta that's surfaced around meme coins. So I'm not going to try to like rehash the true terminal thing, but just go read on the internet what true terminal is. I think actually Matt Levine at Bloomberg ended up covering it or something, right?

Like this is basically what they call a sovereign AI. So somebody is evidently unleashed this. AI model to just tweet stuff. And it created a meme coin on Solana called Goat. And I don't own any of it. I missed it. I've watched it from the sidelines and looked at it. It was like, oh, my God, this is insane. This thing went up to like a four or five hundred million dollar market cap within a few days. And it had completely captured the attention of basically every peer-to-peer or excuse me, PVP-based trainer in crypto today. It was unbelievable. And then immediately after that, you just started to see more and more of these AI-based agents creating tokens, or at least that's what we think, right? This is like the watching this stuff happen is crazy because every single

principle you were taught in business school or risk management is completely useless in this type of environment. And it's creating actually a new breed of traders, young adults, likely men that are just like, it's like a video game. I remember gave a talk at some conference in Vegas in 2019 basically comparing trading crypto to like this awesome nonstop video game. And now it's really come to fruition because people see trading meme coins as player versus player. Because if I make money, you're probably not. Right. And there's so many meme coins. that are always trying to capture attention that whatever the hive mind of the internet of these meme coin traders follows is where money ends up following.

Like, do we really think that a cute photo of an info is going to maintain a billion dollar market cap for a long time? No, we don't think that. But, like, there's enough holders of the token to Alex's tweet. Like, if there's a big enough community and there's market makers, they want to make money on it, like the exchange lists it. They want to make money on it. Like all this stuff becomes almost like a self-fulfilling prophecy.

And it's why I tend to, you know, I bucket meme coins into three categories. One is a blue chip, billion-dollar market cap sustained for a reasonable amount of time. Free blue chips, 100 million to 99 million that are like on the way there, but not quite. And then the best, the fan favorite, the technical term is shitters. These are like your single-digit market cap, 10, 20, 30 million dollar market cap coins that who knows what's going to happen with them. but these are effectively the lottery tickets that in some cases will capture the attention and absolutely explode in price. And you see this with a new meme coin every week. But also, you know, you see a lot of people feeling like they missed it. And I would always encourage people to

understand that there's going to be an infinite number of opportunities to trade meme coins because attention, content, and culture are constantly changing. And so the faster and more effective people get at tokenizing it just means that there's going to be even more of these lottery ticket-type opportunities for traders out there. Here is a thought on this gold coin on the AI meta, which is actually fascinating. I also miss it, by the way. So it's, but it's like I'm going to talk against it. Not good at trade.

We're really not that good, all right. I missed goat. Yeah, it's like that thing went up to like a 500 million market cap from like almost nothing in a week. But what I think about goat is that this thing actually had a typo the other day, two days ago. And there was a whole discussion about, okay, the typo actually indicates that it was human made. And there is the other side of the story saying, well, no, it's not human made because these, this LLM is trained on, say, Twitter. And because of the kind of what you're feeding into the algal,

it's more likely to generate typos. That's right. Personally, I don't buy that argument. I think you just basically couple that up with a dictionary. I've never seen an LLM do a typo ever, and I've used it a lot. So I think it has a very big human component. But that being said, it doesn't really matter. There's two things here.

The first one is this coin, beautiful, amazing story, benefit of the doubt, already very high liquidity, very high number of holders, very good distribution. So even if I don't like it, and I think it's human-made, the market doesn't care. And it's likely, I think it's going to do well. I'm not advocating for it. Again, I'm not long. And there's another thought there is that the creator of this Truth Terminal, he sort of turned himself into a Murat type of persona right now. It's like the cult.

Somebody else was talking about this by the way, and I agree. It's kind of like it turned this thing into a cult already. And the final thought is if you agree that this is not, even if you don't agree, but that this AI meme coin meta, so basically an LLM plug to Twitter, plugged into a blockchain with wallet, cash in the wallet, and the ability to create a coin. That's basically the gist of it. So this goat and all these coins coming up is not verifiably, it's not verifiable, that is fully AI. So I think we can actually expect a new meta at some point, say, in the next year, where this is going to be the first AI Mimcoin that is fully verifiable that this is actually an AI, no doubt about it.

I just want to say this is all like so far over. This is so dystopian in my mind. I'm just like this is MEPP is a perfect description. That's the way I think about this market. It's just completely player versus player. But Jeff, you're the head of Alpha Strategies. Do you guys in your strategies, do you dabble into meme coins at all? Is there like, what are your limits on where you can go in your investing process?

I mean, I'm just, I'm too mid-cur, relative to Joe. I'm with you 100%. But what I will say is, actually, I wish Jim Simons was still alive today because I would be so curious what he thinks about this particular phenomenon because he would be one of the spokesperson since the 90s to tell people like, stock trading doesn't matter. like at the end of the day, what the stock represents. It's just a thing that trades and has certain behavioral pattern. And so I make money.

And if you think about that like purest approach and the application of that to the evergreen life cycle of meme coins that Joe alluded to, culture will never die. I mean, I think that's a great phrase, by the way, that Joe, that actually kind of unlock something for me to thinking about why this is a strategy that maybe everyone should learn when they're young. Because if life isn't about trading some aspects of that. these behavioral psychology, this might be a really good lesson for kids to learn early on.

And I would bet Rentech would launch a MnpointCon at some point. They would never tell you. They put a medallion and whatever, just print and mint money. But, you know, I couldn't agree with you more. I mean, the thing that I, like, when I've run quant strategies and algorithmic strategies in the past is that it's like, it doesn't matter what you're trading at all. And that's meme coins. I mean, the reality is that the majority of meme coin trading, it's retail, you know, PVP traders.

But the people that are making money are the ones that are running bots, whether they're snipers or whether they just have the fastest RPC infrastructure or they're like, you know, finding ways of ensuring that they get included in the next slot for the block for Solano. Like, whatever. That's where actually a lot of this money is. And so, you know, I don't have the, unfortunately, the bandwidth to spin up at any. Algos to trading into this stuff. But oh my God, if I was, you know, whatever in my early 20s or a teenager and knew how to code and saw this, it's a completely new world if you can programmatically trade culture. It's just never been done before. And, you know, Rentech, arguably the greatest hedge fund in the history of the world in terms of performance. Like, they even said it doesn't

matter what it is. And I think that that's lost in the discussion around meme coins because people are like, oh, it's value extractive from the user. It's like no one put a gun to anybody's head and told them to buy Moodang at the highs, right? Like, no one forced them to do that. But more importantly, like, it's a market. And people have traded, you know, OTC pink chic stocks, like penny stocks, all kinds of shit forever.

And it's not going to stop. We just now have technology where there's no way to control it. And I think that that's actually fascinating. A lot of people get scared by that. I actually get excited because I have no. idea what it's going to mean for markets going forward. All right. Let's wrap this up. We got two more topics. We'll touch it on them real quick. Stripe, one of the largest backend FinTech infrastructure plays out there. I think they're worth like $70 billion. They processed a trillion dollars in

transactions last year alone. They just spent $1.1 billion on basically a stable coin company bridge. one, I would love to know what the multiple is on that because it seems crazy to me. I don't know. What are your guys' thoughts? I mean, obviously, all of us have on here have been saying for a long time, stable coins is like one area where there's definitive product market fit. It's one of the areas that we are most positive on as a group, I would say. There's like no disagreement there.

Do you guys have any thoughts on this? I do. I mean, I think, you know, full disclosure, investor in circle and think that they're a great company and doing great things with stablecoins. I think that this is a huge signal to the broader market and even like Web 2 companies, Silicon Valley in general, that crypto is okay, right? Stablecoins are a form of crypto, whether it's, you know, it's still, that's a $1 is $1, $1, right? But let's be clear, Stripe was pro-crypto and then totally anti-crypto. And then they now they're like, oh, they're pro-crypto again. And they just acquired a stable.

Cablecoin company. And Stripe is Silicon Valley's canonical, like, perfect fintech company, perfect startup. Two brothers, you know, from Ireland, build this amazing developer-focused company worth tens of billions of dollars, not going public, right? And just keep growing the business in an amazing way. And these guys have been, they're incredible founders. Like, I mean, you can't take anything away from these guys. But it's also like they've been almost groomed to be like the canonical, you know, startup out of Silicon Valley. Silicon Valley back startup. And that image is very, very, very important from a signaling perspective. Not only to like the broader world that Stripe is doing this, but to the investors in Silicon Valley, the kind of elite Silicon Valley

tier one firms that a lot of them don't touch crypto. And now they're starting to get a a sense that actually this is okay, right? I think that that's actually the most important piece here. Like, Bridge is an amazing product. I was talking with Nick Carter about this. When I saw the announcement, he had mentioned some of the effect that like seemingly every startup that he speaks with that, that, you know, uses stable coins in their product, uses Bridge. So hats off to that team. They're awesome. Like, I think it's an amazing exit for them. And being integrated into something like Stripe is huge. But like this has to be a huge win for the industry in general. Because when Stripe goes.

and acquires a company that's doing stablecoin infrastructure for other companies and startups. And Patrick tweets something today. Stablecoins are a big deal, et cetera, et cetera. I'm paraphrasing. It's hard to be bearish on the kind of progress and momentum that we're making it as an industry when the bellwether of Silicon Valley is now acquiring crypto-based companies. Well said. Anyone have a different view?

Alex. Jeff, you have any thoughts? No. Yeah, I think it's a phenomenal thing. I often talk about like VC investing in crypto needing like a very barbells approach. And part of it is my own learnings of what's worked and what's not. On one hand, I tell people like investing in crypto means you have to invest in like the most cutting edge like things that are so DGEN that like literally just services a particular group of people. But it's good.

Like, it's a good product for that, like, enthusiast. And it has to be kind of, like, outside the system. So things that are, like, Tether and Tron, like, they find product market fit because it's kind of outside the system. And you have to kind of lean that energy, lean into that energy a little bit. Or the other energy is you must go strictly for the very institutional, very regulated, very much like a bitwise or an anchorage or a bridge. And there's money there too. But maybe don't do anything in the middle. And you should ask every founder, which market are you going for at the left or the right?

And if they can't tell your straight answer, don't invest in it. And so to that point, Joe, I think I've for a long time have been a little skeptical about the right. Like, we just haven't seen enough exits, right? But we've seen enormous success in Pump.com, and Banana Gun and all these great tooling. And so to me, this is a day of victory, really, for that institutional VC community to also raise a flag and say, hey, we're going to make money here for you guys too. And so I'm moved by it. And I think, as you said, like the cultural tastemaker that Stripe is for that community is profound.

And there could almost have been no better acquire for us to have a reset in that energy, too. All right. Last thing, I'll just say what are the World Liberty Financial did their raise, their token raise. They were targeting $300 million for those that don't know. This is like Donald Trump's son, Baron Trump and some other people that are. of re-skinned some code and supposed to be a defy application. They only raised 11 million out of 300 million that they were trying to get. So I won't say it was a failure, but it's a little bit of a flop.

I mean, I've been on here. I've said it multiple times. I just don't get the idea of what they're doing here. Personally, it just doesn't make sense to me, particularly for Trump to put his knee behind something. I mean, everyone already knows he's the crypto candidate. But yeah, just not surprised it didn't do too well, I guess, is my own thought. I got I got asked by a journalist last week to comment on it as to why it was so bad.

And I was like, well, you don't want me to shit on Ethereum again, do you? I'm just kidding. I know I'm going to get so flamed for that. But no, I mean, honestly, it's like, it's not innovative. Like, it's AVE again. Like, we did this five years ago. Like, AVE is the winner. Like, next, you know.

And then also, though, you know, this does point out a little. bit of the Ux challenges of getting complete utter normies to onboard. And like, if you went to the site, you had to have a web three wallet. And if you've never done crypto, but you love Trump, you're like, what the, what is a web three wallet? There are solutions to this now. Magic, I think Magic Link is one and there's Privy and these like a bunch of others dynamic. There's all these other providers tip link where you can just sign in with Gmail or whatever, right? Like, there's ways of doing it. And then the other issue was, the site. was down, like, for a long time. And they're running it on Versal, which is probably the best

auto-scaling, like, hosting solution on the planet. If you don't know what you're doing, right? Like, Guillermo is a friend of mine, the CEO there, like, he's really smart with this stuff. And, like, if you didn't set that configuration to just auto-scale and handle all the load, like, I don't know. I would have lost confidence if I was crypto-native and came to the site. It was just giving me a 500 error every time I went there for hours. Anyone else have thoughts? I mean, not much to say there. I don't think it's very important.

In a way, we could see it as a negative for the space because it makes Trump look like a lot of people talking about like a low-level grift. But that being said, if you want to look at the other side of the coin and what is positive about it is basically if he becomes president, that would basically mean a precedent of the US having actually interest in a defy application and also would bring up more light the spotlight into basically how truly complicated from a regulatory standpoint operating on defi is it truly is so it's that that is actually quite possible yeah i'm with you i think it like it the undoubtedly

is going to have people around him that know just how difficult this regulatory environment is. I mean, bitwise, you could probably tell stories about getting bank accounts and different things over the years. It's been awful. I just think like the downside risk to him are just so much higher than the upside benefits to anything else. But that's just my view. Jeff, you have any thoughts? Yeah, and I agree with what Alex said. I think it's even, I mean, take away bank accounts, even just having somebody touched non-custodial solutions in a way, to then imagine what the fabric of that system could look like and really usher in a dialogue. You can only know if you touch it.

Now, we have sincere hope that Trump is actually touching it. He's not, of course. And like, nonetheless, you would hope that the advisors around him are actually experiencing the friction and therefore solves one of the biggest issues outstanding, which is custody. Like custody to me at Bitwise, we just severely feel that to be the most restricting factor. One of the reasons we went abroad to acquire ETC group, the largest Bitcoin ETP issuer in Europe, is because a regulatory framework there is much more flexible into the interest of the investors. We can stake in Europe, right?

We can't stake here. So I look at these little things that people will solve if they touch it. And so good for Trump's team for touching it. And I hope that sincerely, their hope is enthused there, then they'll pay attention to it. And as a result, as Alex said. Guys, before we wrap it up, something that wanted to add, I think is interesting very briefly. There's been a lot of talk last week about banks, unrealized losses, being bigger than 2008 by a very large margin and a lot of people actually panicking about this. And it's the way I see it's just a perfect example of Twitter incited paranoia that actually leads a lot of people to lose money and get out of the trade and not hold and sell their stuff.

talks or whatever because they panic for the wrong reasons. And the gist of it is very simple, is basically, yeah, they're sitting on losses, unrealized losses on basically bonds that are meant to be held to maturity. And because they're meant to be held to maturity, those losses, they don't feed into the balance sheet. And they don't affect the banks whatsoever. This would only be important if there is a systemic something really bad happens, exactly, and they need cash. And if that were to be the case, we get the Fed quite likely, probabilistically, quite quickly, quickly to come in and plug whatever problem there is. So these unrealized losses on health maturity bonds, it's not really very meaningful. And if rates go, the way we were, that chart I

had up before, where rates are predicted to go. it's going to be a non-issue in a year theoretically. Yeah. Yeah. All right. Yeah, we went long this time. Sorry, everyone, if it's a long episode. But 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. Thanks for joining us.