Unchained - Bits + Bips: Trump Has Spread Uncertainty Across All Markets. What’s Next? - Ep. 798

Episode Date: March 12, 2025

The markets are a bloodbath. If you’re feeling lost in the markets right now, you’re not alone. Stocks are getting crushed, bonds are sliding, and crypto isn’t escaping the carnage. The question is: why is everything selling off—and where does it go from here? One thing is clear: the next market move is extremely hard to predict. Between Trump’s economic policies, inflation worries, and DOGE’s cuts, there’s a storm of conflicting signals. So, is this pain temporary? Or are we looking at a long trend downward? Sponsors: Bitwise Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Ram Ahluwalia, CFA, CEO and Founder of Lumida Guest: Travis Kling, CIO of Ikigai Asset Management Links Recession?  Bloomberg: Trump Says US Economy Faces ‘Transition,’ Avoids Recession Call Inflation Bloomberg: Inflation-Linked Bonds Rebound on Trump Tariffs: Credit Weekly DXY FX Empire: US Dollar Forecast: DXY Sinks as Weak Jobs Data Fuels Rate Cut Bets, EUR/USD Surges Powell’s comments: CNN: Fed Chair Powell says he’s not worried about the economy amid Trump’s tariff chaos  FT: Federal Reserve chief Jay Powell plays down growth worries after jobs report disappoints Bonds: Bloomberg: The Bond Market’s Trump Trade Is Looking Like a Recession Trade CNBC: 10-year Treasury yield rises after weaker-than-expected jobs growth Bond yields in Europe and elsewhere are rising  Tariffs: Bloomberg: Lutnick Says Trump Sticking to US Aluminum-Steel Tariff Timeline  Japan and the carry trade: Japan's 20-Year Government Bond Yield rises to its highest level since 2008.  Jeff Park tweeted “Bitcoin is Japan’s game now whether you like it or not” - thoughts? FT: Japan seeks tariff reprieve after Donald Trump questions long-standing defence pact China’s deflation:  Bloomberg: China’s Inflation Declines Below Zero for First Time in Year Ukraine War talks:  FT: Ukraine seeks to persuade US to resume aid in high-stakes talks Timestamps: 👋 0:00 Intro 📉 3:05 What’s behind this brutal market selloff 🤔 7:26 Why making a market prediction right now is nearly impossible 🇺🇸 13:41 How Trump’s economic moves drive uncertainty ⚠️ 19:37 Is the Trump administration intentionally triggering a recession? 💰 20:30 The real impact of “austerity” on the economy 📉 22:59 What must happen before the market bottoms out 🔥 26:52 Where inflation might head next 📊 36:21 What the VIX is saying about the market 📉 39:00 How markets will react to today’s CPI numbers 🚀 43:40 When might Trump push for tax cuts? 🏦 49:19 Will ETF buyers create a bitcoin floor? 💴 55:12 What a declining Japanese yen reveals about demand for risky assets ₿ 1:00:35 Why BTC is the furthest that it has ever been from altcoins 🛍️ 1:11:00 What new groups might step in and buy bitcoin?📉 🤦‍♂️ 1:20:25 Whether the Trump administration “fucked up” the economy Learn more about your ad choices. Visit megaphone.fm/adchoices

It's impossible to guess where we're going because we are pretty much being driven by Trump. And Trump, at least for me, he's proving to be kind of not predictable. The one thing I know is that he will flip stance quite a few times. That's how it. Unfortunately, I wouldn't be surprised that this is the beginning of a very strong, very strength. Hi, everyone. Welcome to Bits and Bips. Exploring how crypto and macro collie, one base point at a time. I'm your host, James Safert, Tradfai Archmaister, Lord of Bloomberg's End.

I'm here with Alex Kruger, Kruger Macro of House Asgard, Protector of the Realm. Also with Ram Al-Alawalia, maister of wealth, leader of Lumida. How's it going? And today we're joined by Travis Kling, Grand Strategist of the Ikegaid Treasury. Here we go. Thanks for having me. Hi, guys. Thanks for being here, Travis. We're here to discuss the latest stories in the world of Cryptoferiqa. and macro. Just remember that nothing we say here is investment advice. Please check Unchaincrypto.com

slash bips and bips for more disclosures. Crypto moves fast. It's why Bitwise launched the weekly CIO memo, a jargon-free summary of what's moving crypto markets, written by one of the best in the business, CIO Matt Hogan. Get up to speed in five minutes or less. Check it out at bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. All right, before we get into this bloodbath of a market, Travis, why don't you give us a little background about what you do, who you are, why you're relevant to the crypto and macro space. I'm very familiar with you, with you personally, but we'll see if everyone else is or not. Yeah, I'm not relevant. I'm actually applying for jobs at McDonald's, so I'm not really sure how I got here.

You're a long-term investor now, right? Community member. I'm a community member. Yeah, founder, CIO of Eikiye asset management, crypto hedge fund, launched it in 2018. Most of what we do is quant trade, BTC, Ethan Seoul, although we'd kind of do bits of a lot of other stuff as well, too. Before I jumped into crypto, I was in traditional hedge fund investing for a decade. I was a portfolio manager of 0.72 before I jumped into crypto, energy, mostly oil and gas. So that was my prior life.

Yeah. Fascinating. Well, it's extremely relevant today because as I kind of hinted, it's a, we're recording this on March 10th. It has been a bloodbath of a day, a bloodbath of a weekend for the most part in markets. Maybe I'm being a little hyperbolic, but I mean, everything I look at on my monitors and my Bloomberg terminal is red.

It's not just crypto. Everything in crypto, all equity, indices, everything just does not look great, to be honest. Bitcoin below, it's 200-day moving average. But before, like, I'm not even going to keep rattling these things off. I'll hand it over to Rom. What is your reading and summarization of what's going on here right now in the markets? Yeah, look, if you want to frame it up, going back to the Trump's inauguration, you had peak Goldilocks, or as Trump likes to say, peak golden age. And he was at the UN saying, we need a lower rates. And it was an America first speech. And fast forward, the United States is lagging all international indices.

Europe is leading, although I think Europe and Germany may have rolled over today. And we've gone from a Goldilocks narrative to a growth scare and recession concerns. Those were exacerbated over the weekend when Trump had an interview with Maria Bartaroma who said, do you think we're going to have a recession? And he did not respond with confidence, which is what you're supposed to do as a president. You know, there's a, I think the exact quote was, there is a period of transition because what we are doing is very big. He did say, I hate to predict things like that. Now, it reminded me of in September 2008 when George Bush gave a primetime TV address.

This is in the middle of the financial crisis, but we had not seen October, which is the real depths of the financial crisis. and he introduced the public. He said, hey, be calm. And of course, the public did the exact opposite. And I think you have some of that here, right? A lot of small business leaders look to leadership to inform their point of view. And you're starting to see weakness in different confidence surveys. Of course, the sentiment surveys are all washed out.

They are at significantly, you know, negative two standard deviation levels. The VIX was around 29 today as kind of begrudgingly stepping higher at a slow pace. And you had markets gap down open and closed lower, which was a reversal of the kind of patterns that you've seen in the prior weeks where essentially investors were trained to buy the dip. You've seen call ratio spike, but it hasn't mattered. And partially, I believe that's because people are chasing every dip. So overall, you've also had this commentary from Besson and Trump saying, we're not focused on Wall Street, focused on Main Street. Wall Street's done well. Main Street's about lowering mortgage rates and lowering the tenure. And the tenure is not responding fast enough. The tenure is like 4.2 percent, barely budged in a brutal day for the market, which is what you don't want to see. You want to see the VIX blow out to 35. You want to see the tenure go to like 3.8.

So that's where we are. I think the market needs to see earnings next month. But it's a, you know, all the technical trends are broken. Every weekend, my team and I, we go through everything we can look at, Bitcoin's below the 20-day moving average. Aside from pockets in healthcare, every trend is down. And it's easy to spot short opportunities and not easy to find logs. Yeah, I mean, the two years is down lower than even the 10-year went down off of all this stuff. The two years down at 3.8, which I guess isn't a huge gap from the 10.

4.2, I see 21, 2, 2, which again, I agree with you. Actually, that's the only thing being bought today. I said everything is red. I mean, yields are red, but that means the treasuries are being bought. Travis, you're a trader here. Do you disagree with anything Rom said, or do you have any further thoughts that you can tag on to what's going on in the markets? No, yeah.

I mean, I think you can broadly characterize it as Trump uncertainty, and there's just a lot of moving pieces and like a lot of cross currents that go along with the moving pieces. And I don't know if there are people out there on Twitter or wherever that are like espousing a high degree of confidence about how they think the macro landscape is going to play out. I don't see how that could be possible right now to have a high degree of confidence and understanding kind of there's just too many factors that are moving around. I don't know how much you guys have been talking about that recently, but you just think of all of the different kind of mandates that this administration is running with. And then you try and sort of roll those

through and think about the impact that they, each of them have on inflation, GDP growth, labor markets, and debt level type of stuff. And you look at, you know, okay, what does it mean for Doge? What does it mean for tariffs? What does it mean for, you know, peace in the Middle East or lack thereof. What does it mean for illegal immigration coming out? Like, and you just try and take all of these different mandates that he's obviously run incredibly hard on. I don't know how many executive orders he signed at this point, but, you know, it's like a fits 50 or something. It's, yeah, I mean, smash the prior record. And then you try and go, well, how do all these things shake out net, net into those four buckets that I just described, which is kind of like what financial prices

care about. And I just, I don't know if one of you guys have like a clear picture on what that looks like. I don't have a clear picture on what that looks like. So the market's just getting kind of freaked out about it. James, before we started, I'd ask you about this, Alex or Rom, I don't know if you have any insights or commentary on this, but it is my understanding that in like traditional like multi-manager hedge fund land that there is like a big kind of factor getting is what people are calling these sorts of things right now. We've had a few of these previously, and just, you know, particularly, I think, in momentum and crowded, those two factors have had just some massive, massive wipeouts, which we've had things like that before because these

kind of factor bar of beta, you know, multi-factor var risk models. These are now how trillions of dollars of capital gets deployed on Wall Street. And it's It's just kind of this weird thing where, you know, capital gets like in leverage, just get ratcheted up and ratchet it up and ratchet up and you have something like this and you'll do like these periods of unlines. I will say that, and then this will be the last thing I'll say about that, factor getting stuff, generally you can have more insight. You can have some amount of insight into when those things are getting close to the end.

And like prime brokers, you know, JP Morgan and these guys will put out research because they see a lot of the stuff from the back end about what's happening. happening with these unwinds. And, you know, and I think we're probably getting pretty close to that. And the market may get some relief as some of this like factor getting stuff chills out. That's a lot easier, I think, to get your head around and see sort of like a light at the end of the tunnel relative to what is this Trump administration going to do, basically. I'll try them in briefly. I want to get Alex as you here. So if you share the screen, James, so you're right on. So we use factor models all the time to analyze what's working and not working. I did a back test over the weekend of the momentum factor.

So what you're seeing here is what happens if you own securities that have high momentum and rebalance every month. And two takeaways. One is it's dramatically crushed the SMP 500 since the rally began. Observation two, it's got hammered. And, well, what are the stocks in this? These are thematic stocks. So Data Center, Navidia, a Palantir, Robin Hood.

So themes in general have been getting crushed because themes are stories. People like a good story and they've been buying stocks based on these stories. And, you know, Palantir has only got a 300 PE ratio now. So this is different than other corrections. It's a momentum correction that's right. But the valuations here are coming at a much higher level than they did in the past. So, you know, JPMorgan, to your point, Travis, said that we're 90% through this momentum correction. I do think we're due for a balance with a VIX at 29, but I do think the bounce will be sold.

And you want to really orient around quality value. Like cost more selling off too. Those are bubbles. The one thing I think of when I look at this stuff is like this stuff is supposed to be market neutral. Right. So like all the stuff Travis was talking about and kind of what you were talking about, most people think of momentum. They usually go in the long, the names, as you said, but also shorting names that have like bad momentum.

But like it looks like even market neutral stuff is doing bad. which kind of seems weird to me because in my head, it really would do bad when you have, like, you know, a junk momentum rally, things that have been doing bad start doing really well. The things we're doing well start doing bad. That's when you see that massive dip down. But it doesn't really matter. Everything just kind of seems to be like all those cross currents are causing a lot of issues. Guess what the best sector today is?

Energy. Energy. It's what the worst performing sector was or the last few years after 22 and 2. Energy, exactly. So if you're a quant and your long momentum, means you're going long, high momentum stocks and shorting negative momentum stocks so that you're dollar neutral. You know, the crazy thing is that AQR has rolled out products recently to enable more

of this factor investing about a year ago. And so it's significant. I think the damage that's been done out there. And the other thing I would say is there are good businesses that are trading cheap, but it doesn't matter. If it's caught up in the wrong factor mix, like your house is in the wrong neighborhood. It doesn't matter how much free cash flow you have. It's getting taken out. Like, it is, you know, there are business out there with like 12 times PE and 20% earnings

growth that are not doing too well. So you're saying those are pies today, right? Right. theoretically, sure. Or at some point in your future. Yeah, sometime this month, correct, but you have to navigate this carefully because the momentum factor is under a lot of pressure. You know, we got the fixed bounce. But even when we had these Friday bounces, those momentum names haven't participated as they should have. They've been laggards. So it's working on things like healthcare, defenses, consumer staples. We saw Staples actually have a downdated name.

In general, defense was utilities, which are essentially bond proxies, right? Yep. That's overall what's been working. Alex, you're as active a trader as I know. What are your thoughts on everything we just talked about? Anything you disagree with? Are you kind of in everything's going down? How short are you right now?

No, no, the first one is this is not a long. I'm sculpting. I'm sculpting and I'm blowing. I see a very, very significant rally. Green by Tech tomorrow, Tuesday. What I'm thinking, the first thing is this is entirely Trump-driven. It's important to recognize it, especially, I think it's important to actually do some sort of mea-culpah about basically misreading the devil of aggressiveness Trump would push through at the beginning of his administration.

It's being dramatic. Is Trump-driven? It feels like he's an 800-pound gorilla that got into a... a house, just toss everything around. Took a big damp and he's still there. When it comes to basically what's going on right now,

his equity is driven. I really think we're going to see a very strong relief rally tomorrow, which is not relevant for the audience because we release this two days late on Wednesdays. But this today was on like

driven by the Trump and Best and Commons. And it was pretty much you could see like a very strong hand wine and they went all the way back down to a very important level, options-wise, on the S&P, which is basically around 55. It is 55-65, 65, that was a number. We went right straight into it and then we got a very big bounce at the close. I think, I really think it like a bounce when something,

when you have such a big move of small headlines, and something that's been going on for actually for already two weeks, it kind of makes sense. Then you go into Bitcoin. And what you see on BTC is you see a book that is like really stacked with basically limit orders, buy orders, basically from 78, now 77 all the way down, like really thick, both on spot and perps. and on the upside, it's pretty empty,

which is something you usually see when you have such a big book, right? So what we want to see right now is some sort of, ideally a catalyst tomorrow, some sort of comment. But I think it's going to happen regardless. That being said, very important, is I'm with Travis. This is, it's really, it's impossible to guess where we're going because we are pretty much being driven by Trump. And Trump, at least for me,

he's proving to be kind of not predictable. The one thing I know is that he will flip stance quite a few times. That's how it. Unfortunately, I wouldn't be surprised that this is the beginning of a very strong, very strength. And again, it depends on Trump. I agree with the Trump comments.

And that's where all this started. from. And I would add to it, though, there is some data showing softening, right? If you look at the Citigroup Economic Surprise Index, you're getting more misses. We're also seeing, you know, more recent inflation prints remain elevated, which puts, you know, the Fed in a bind. And now, Powell said a few days ago that, you know, they'll likely, you know, relax and respond if conditions warrant, but they want to do it this coming month. We want to see how CPI reports later this week. But all to add is that there is softening underneath the surface.

And there were softening going even into the Trump election. We're just seeing that start to express a bit more here. One thought on that is a little bit of softening, actually, could be considered good because you get sustained growth, just to. slower and you get basically less pressure on inflationary side. So a little slowing down, some slowing down was not an issue. The issue is basically Trump and the uncertainty he breaks it. It's more than just the tariffs.

It's the level of uncertainty. The back and forth, they're getting into pissing matches with foreign dignitaries, same with bands. It's like we don't really know where we're standing. comments about recession, comments about Main Street before Wall Street. This is the kind of thing you don't want to hear. It's like you can think about it. Just don't say it.

Yeah, it goes back to what Travis was saying. It's really like you have like 50 different streams that are coming out of their mouths or like coming from people in the administration. And like one thing's inflationary, but this thing could be deflationary. This could be good for job. Like it's like it's who the hell knows what's actually going to happen aside from somebody possibly in the administration? Well, everything right now is front-loaded on the bearish side.

In fact, the word that was used was detox. That's not used the word detox. CNBC. So what the front-loading is, tightened labor supply, tariffs, and austerity. So the tax cuts come later, the deregulation we haven't seen yet. You know, I want to say something there. I think it's a problem. the one on the regulation

it's on the first term we got the regulation from the beginning we got the tax cuts before the targets this time around I don't know why he's doing exactly the opposite so he didn't really prepare us for the market I think you want to lower the tenure

is not the operative theory lower mortgage on by the theory I don't think they're, I really do not buy the theory. The theory is that they're trying to engineer a recession to lower the 10 year. I don't know if they're trying to engineer it, but like, so Besson has said several times, including this Friday, we're not folks on Law Street, folks on Main Street, and look at, he's saying, look at the 10 years come down, look at the spread of the mortgage rate above the 10 years come down,

and he also said in a month, we will have unlocked the mortgage mark. Now, the only way you unlock the mortgage market in a month, if the tenure really comes down, which doesn't help asset prices. Then someone asked Trump, do like the stock. He's like, no, I'm not looking at that. And then the spokesman had come out and say, or Besson came out and said, Trump looks at many pieces of data, one of which is the stock market. Did you guys, did you guys see the clip from Steve Cohen, like last week or the week before? You don't see. He's not in front of the camera that often.

And I did just notice that where he just was describing it as austerity, which was like the first time I had heard somebody. I mean, that is what it is. Doge is that. But it was like the first time I had heard, you know, like just that particular word. You know, I feel like that word is so loaded for financial markets people. You know, you go back to post-financial crisis European Union and the pigs, right? That's what you think of when you think of austerity. But I mean, Doge is that.

And there is this big question. Like I remember right when he got elected, it was like the simple math was government spending is 25% of GDP. And if you cut out 10% of government spending all else equal, you know, simplistically, that's a two and a half percent reduction in GDP, also known as a significant recession. Now, TBD on what exactly the pace of the outcomes of Doge is going to be. I did see like a one-off tweet from Elon saying he thought he could get a trillion dollars out of the deficit for 2026. It's a $2 trillion deficit. He said he thought he could get a trillion dollars out of the deficit.

I don't know. Maybe he was taken. I don't know. I don't know what he meant by that. And then also when you're looking at a lot of the stuff that they've been announcing so foreign doge there is a question of like how does that stuff actually roll through GDP i mean a lot you know it's like you know you're putting on a play for you know whatever like trans puppets in iraq or whatever like it's like that's that's not something that hits GDP and so and but you know so it's it's hard to

say if they're really pulling a lot out with those it's hard to say how does that roll through inflation, labor, and GDP. I mean, I don't know. I'm not sure. Some of it seems so wasteful that, you know, if you're just taking a pile of money and setting it on fire and then you stop setting the money on fire, does that ding GDP? I don't think so, but I'll take the other side of that. But, Rahm, you go first and then.

I'll be brief. Look, I think I'm all for the doge cuts. If you take an unproductive government worker and they get a job that adds value to the economy, it's net positive for GDP. That's one. Two, to your point, Travis, they've got to pair it with a tax cut, so there's no net impact on demand because the key is Trump can drive small business confidence, which is where most jobs are created.

That confidence peaked shortly after he's elected, now starting to come down because of the anxiety around living room presidential politics and geopolitics, which people cannot handle. I mean, I've had conversations with people that just volunteer this to me, where they otherwise wouldn't as a form of therapy. I'm like, huh, I haven't seen that before. So here's another comp I've been looking at. One is 2018. So in 2018, you have three things. You had China Trade Wars check. You had growth scare concerns check. And you also had a Fed that had just recently concluded these adjustment hikes. Now, we don't have that here, but there's a lot around what's the Fed going to do is policy, restrictive, easy. So what happened in 2018 is you had a 19% correction

And my team and I were the week and are like, all right, at the 10% level, given what we knew at 2018, would you have bet that prices drop further or that you get a recovery? And so this chart here shows how 2018 unfolded. You see a steep, sharp, sudden drop. You had a rally when the VIX hit around 28. That rally lasted about one week, and then I rolled over again. That rollover was about the week and a half, two weeks, bounced again, about a week. And then you had this capitulation down, which was two weeks of pain and then a V-shaped recovery.

That recovery started when the VIX broke the 30s, which is kind of what I'm waiting for from a sustained recovery. I think the market kind of wants to puke. I do think you get a bounce soon, but the bounce will be faded just like this. And I see that, you know, when you look through hundreds of these different charts, they are going to rally into short-term resistance. people will sell them and then they will

they will then continue downward until evaluations are compelling. The key difference between 2018 and this is that the stock market is about 20, 30% more expensive than 2018. I think there's another difference there which is 2018.

That was driven the way I see it. It was driven all by Powell. Powell basically on that there in I think it was September, September 30s, maybe, when the move down starts. Powell says, we are far from neutral and just basically hell breaks loose. We go basically driven on the back of the perception of a very hopish friend.

We basically crashed all the way into Christmas, and we go into the FOMC in December. We keep on cooking and ironically, by the... probably was the year, so exactly what it. Maybe it was Christmas on the 25th, Trump comes out and says, stocks are cheap. This is the time you go and fucking pay the pit, right? So now it's Trump, not how well. I guess you're trading off a hawkage fed on the one hand

with high valuations and, you know, growth concerns, right? The GDP is clocking in now at a one. plus annualized right now. By the way, I don't think we're going to get a recession. I don't think that's going to happen. But the backdrop that we've all discussed here, it does not help at all. It just doesn't help. And there's reflexive qualities to markets.

Do any of you guys have a strong view on the directional path of like just CPI inflation from here, like over the course of this year? It's coming down, huh? Oh, yeah. You saw that hot print we saw last month. But well, okay, let me tell you the other side of this story. I got a chart that I can show you here with the inflation levels. And it does, it has been elevated recently.

But, you know, if people are pulling back and oil prices are coming down and oils are at 60, right, then, you know, you've got defense cuts. You've got less labor pressure. I think in the near term, actually, it's coming down. We know, we know the house. We know the shelter component is coming down because you can look at that Zillow, the Zillow lead, right? So that's basically set in stone, I think, for at least the next like nine months, the housing component is coming down. But it's like, you know, I don't know, eggs like quadruble in price or whatever just happened to eggs. So there's, there's offsetting stuff.

And then when you try to think about the labor market and tariffs, the labor market as it relates to, I mean, I mean, that's what I mean. There's just so hard. It's like, what is rounding up however many illegal immigrants we're going to round up and send him home? Like, what does that do to the labor market? They're moving too slow on that. So if you look at this chart, James, this is the contra argument. This shows the CPI headline. And you can see it's going up.

It's going up. But I will maintain that inflation will come down because a lot of these are one-time annual price creases you get at the end of the year. Think like your Netflix subscription goes up. or progressive auto insurance raises their insurance costs. That's behind us. Those are the January menu price increases. Now we should start to see this go in the other direction, which is good. That gives more flexibility to the Fed.

Yeah, going back to kind of, I'm not as staunchly in belief that it's going to necessarily go down. I don't think we're going to see like us. There are people that think we're going to go back into an extremely inflationary environment. I'm not quite there either. But going back to what you were talking before, Travis, like for everyone who's listening, if you took economics, you know, like the GDP, like, textbook formula is like C plus G plus X or net exports, right? So consumption, government spending and investment.

And if we're really going to decrease that G, like you said, Travis, you said, yeah, we're decreasing stuff we're spending overseas on like puppet shows in Iraq. But, like, also, if we're really going to get rid of some of this fraud, like, believe or not, like, that money is going to people and people are probably spending it. Like, it's part of the economy, right? So, like, what we're talking about here, like the tariffs, I know Besson will say it's not inflationary, but no matter how you slice it, it's an increase in price. Maybe it's a one-time increase in price, but who knows what the second, third order

effects will be. You're talking about immigration. That's almost certainly inflationary. But as Rom said, it's not going as fast as like Trump was talking. He obviously wants it to go faster. And then, but then you take into account they're trying to cut government spending left and right anywhere they can, which also not going as. fast as they wanted to, I don't think.

Like, if you look at some of the doge numbers, some of them are really sketchy about whether or not they actually count. And, like, it's just not really, it's moving the needle. I'm not going to be the person that sits here and says, like, saving $100 billion is nothing. Like, there are people out there saying, like, it's pointless to do this because, you know, it's not actually moving the needle in a major way as though, like, saving a couple hundred billion dollars is not a meaningful use of anyone's time. But we needed to go there.

Those people are losers. Yeah. But, yeah, like, you cut that G. big enough. The second third order effects are definitely going to be deflationary towards what Ron was talking about, I would say, because of the second third order effects of where that money is going. Hard to cut G, don't forget as well. I hope they can cut a lot, but you need acts of Congress. You're already getting pushback from agencies. I think there's a puzzle out there, which is why is the 10-year stubbornly at 4.2?

It dropped from 4.7 to 4.2. If you have lower growth expectations, you should have a lower 10-year, right? The 10-year approximately, a good rule, of thumb is the sum of the inflation rate and expected growth. And you're not seeing that come down, which I don't like. I don't like to see that. Same thing. I want to see the VIX jump higher. And that bothers me because the 10 years still attractive as an opportunity cost to holding risk assets. Two more things I just want to throw in in terms of complicating any kind of inflation predictions. one is on the inflationary side if they end up not taxing tips in overtime, which you have heard that sound bite multiple times.

You want to talk about like tip of the spear inflationary. It's like two of the most tip of the spear things I could imagine doing. Again, don't know the likelihood of whether or not that happens, but it's been repeated by Trump. It's been repeated by that's it, I think multiple times from both of them. So they seem pretty serious about it. And then I would say one more thing I'll throw in just not that I have a view on it because it's so confusing. But supposedly Doge is going to get pointed at Medicare and Medicaid here pretty soon, which is like the ultimo. It's like if USAID we're talking about bees, you move to Medicare and Medicaid, it starts with the T.

Insane amounts of just like, that's like the ultimo grift, right? And I don't know. I have no idea what's going to come of it. What do you think that means for when they say they're going to point to Medicare and Medicaid, which are obviously the two biggest entitlement programs after Social Security, where Trump has already said he's finding people that are 300 years old getting checks and many, many of them? What do you think that means? Like those policy, which is in the one hand that has to come through a Congress and the agency has some control. But the other would be like waste fraud and abuse. Do you think that they're going to find a lot of waste fraud and abuse?

I wouldn't be surprised, by the way. whether it's people, if the government's running a check for meeting out some criteria, remember like the CARES Act or the PPP Plunch Protection Program, not the plunge protection program, not the, it was a, it was a paycheck protection program. Thank you. Plush protection program is called Black Rock. That's the fun. I got the mixed up here.

But you had a lot of fraud and abuse there. So I'm curious how you think about the Medicare, Medicaid. I think it's right on, by the way. I'm looking at that too. Yeah, yeah. I don't know the scale about. I guess the little like, well, I know nothing about health care. I've got buddies that are in it.

Every time I talk to them, it's just this enormously complex. It's like, seems like such a mess, right? But the little, like, simplistic thing that I hold in my mind is like the whole thing where, you know, you have insurance and then you, you know, take an ambulance to the hospital. And then you like, they fix your broken arm or whatever. And it was like six grand for the ambulance. And it was like 20 grand for your broken arm. and then it's like you don't have insurance and then you hagg with them and they're like

all right 500 bucks for the for the EMS ride and you know a thousand bucks for the arm or whatever like just immediately they can just make like 90% of the cost cost of this just like disappear and it seems again

a layman on this stuff but it just seems like it's indicative of this like insane amount of just fluff I don't know how to describe you know that in not an expert at all but i had i had my appendix taken out two summers ago and i had insurance but they gave me a quote unquote bill so i could see and it was like 20 000 and what the hell and i was out within 24 hours i went in saturday night i was back home sunday at 11 a m so yeah right i mean they're they're gonna try i'm sure they'll find stuff i mean you the uh odd lots

specifically of bloomberg podcast i don't i'm not sure if you guys listened to it but like did an episode strictly on like Medicare fraud. There's like all these companies that spun up because they they set up this program that was like for good reason to help people that need like an ambulance ride to the hospital. Like Medicare will reimburse that for certain situations. And like they set up this whole process to do that. And then all these people spun up companies to give like pseudo ambulance rise to bill for it even though they're really not full ambulance rides. And like yes, it's needed. But there's a lot of fraud. So I think I think that when they say they're pointing there, I think they're looking for things like.

Like, people are billing this much money saying they're doing X, Y, and they're going to try to use data science, AI, you know, whatever, what have you to look for like pockets of this being misused. I don't think they're going to point there and like, you know, cut like the spending by like any meaningful percentage. That's my just personal view. Hi, everyone. Matt Hogan again, CIO of Bitwise Asset Management. Are you wondering if this current market pullback marks the end of a cycle or just a pause before another bull run? In my latest CIO memo, I examine what the market has missed in the executive order establishing a strategic Bitcoin reserve and why it's really set us up for new all-time highs over the long term.

Download my latest memo at bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. And going back to rates, I mean, you were talking about like you don't know why the 10 years, down, isn't down any lower. I mean, it's, like you said, 4.2-ish, but the Fed effective rate is still 4.3, 4.5, right? So, like, technically speaking, the Fed funds rate is, is pretty high. The long end should be responding to risk-off conditions and lower growth expectations. It's odd. It's odd. I would say that and the VIX are not behaving, they're not responding

to kind of the recent risk-off environment in a way it normally would have. Like, I don't know, Alex, you probably start at the VIX. Like, I do. To be honest, to meet VIX 27 and the way, how the curve is backwardated right now, meeting short VIX is, I mean, no, no, it's not that it's bullish. It's, I mean, eventually it means your hurts, but on the curve and inverse. My point is, to me, actually, I'm not surprised. I mean, they are in line with why I would expect VIX 27 right now. what is it? Yeah, 28.

So I'll tell you this. I was essentially staring at the VIX pretty much the whole day, which is what you do if you're trying to, you know, target positioning. And I see Travis smiling there, you know, you guys know what I'm talking about. But, you know, in the August correction, you know, the VIX was just very responsive, like a spring. You know, you go down day, VIX shoots up. And here, like, it's like 26.2, just steady, steady, steady, steady, steady and it's bleeding now, then finally, it was just very, it wasn't as a response. I think part of it was because so many people have hedged. The put-call ratios are off the charts.

So it's a different dynamic than we saw in the April correction and in the August correction. So markets find in a way to shake as many people out of their positions, whether they're hedged or not hedged. So. One thing on the bigs, like just quickly, I mean, 30, we traded 30 today, right? I think to unite something. 29. It is very high. Historically, it very rarely goes about 20.30.

Like it happened. Let's look at it like for going about for more than like one day. It happened on in August. That was one day. And yeah, 2020. We got, we got, we busted through 30s. We got like 38, I think a close on one day. But it got as high as like in the 50, 60, 70, which is extraordinary.

You know, and I think zero DT options might have a role to play with this. I'm not sure. But I, you know, I think there's a puzzle. There's an odd lot of podcasts to be done there. So sticking with macro before we get into a little more crypto-specific stuff, because we do, we probably should at least talk a little bit about the, you know, the Bitcoin Reserve and the crypto stockpile. But first, like, we have a CPI print for February coming out on Wednesday.

Travis, you kind of talked about you're saying, the one thing you were saying before, which I agree with is like the real estate is kind of going to be part of that is going to be going down no matter how you slice it just because of the way it's lagged. And the Fed often talks about that. And when I hear them talking about, I'm like, why don't you change the way that you're doing it then? Like if you're looking at the forward looking stuff, the way that all of us are looking at it? Why are you still allowing whatever? I don't need. That's a different side of chat. But like, what do you guys think? Do you think the print the print on Wednesday is going to matter? Are you like even at all thinking about it? Or are you just kind of looking past it. Like, usually CPI print the last few months, like the last few years, that was like the biggest, like, macro data point we could get every. That was moving markets. And I feel like now I feel like nobody's really paying that close attention to it. What do you think, Ron? I'm processing that question real time. I'm trying to sort out is good news, good news, or is bad news, bad news? And I think good news is good news and bad news is bad news in this environment because there's a question around where are we on growth? But the reactions have been unusual. Remember, Friday, last Friday, we had the non-form payrolls report come out,

broadly was in line, missed by a little bit. But, you know, the noise around these estimates are significant. And the priority initial claims came in just fine. And yet markets had a small gap down red. And markets are not responding, you know, an unusual name says news data. I think I think the technicals and positioning have more to do with how markets are behaving than any given data point. You know, we had two good data points and here we were lower than last week. And everyone's buying the dip. That's, you know, you see a gap up.

But the worst thing for the market is you see a gap up open. People sell into it and then it closes lower. So I think that's the more important variable. Obviously, look, if the CPI comes in hot, it's risk off. I think that's, I don't think, I don't think that's good. If it comes in lower, you know, I don't, I don't know if it has as much impact on the markets. And we'll see. I'm still processing.

That's a really good question. Travis? Yeah, it's been, I mean, how many cuts are left in the curve for 2025 right now? Anybody have that in front of them? Yeah, I do have it in front of me, actually. Right now we're pricing for 3.3 cuts by the December meeting. So at least three right now is what we're pricing. We got down to like less than one at one point.

I was going to say. So we put like two, I was just about to say. So we put like two more cuts in in the last couple of the last like two weeks. Yeah. Okay. Yeah. So it seems to me like that would simplistically risk assets are going to be pretty much circled up around that if inflation starts to trend higher for all the potential reasons

that we just talked about. Again, I do not have a strong view on whether or not. the likelihood if that's the case. And then you've got to go from three cuts back down to one cut or back down to zero cuts for the rest of this year because the Fed's stuck. It can't cut if inflation is just not doing what they want it to. And then it's like, does it keep going? And at some point, I don't know, this summer or something like that, you know, the Fed Fund Futures curve maybe starts to price in a hike for the next move and not a cut. And then at some point do we just get pal comes steps up to the to the podium and just gives us you know some kind of

brutal you know like the day after Thanksgiving in 2022 and he was like now or 2021 he's like now's the time to retire transitory do we just get some kind of moment there where he's got to communicate to the market that it's like no it's looking like the next move is actually may have to be a hike and again I don't know the likelihood because there's so many of these moving pieces that we've just talked about that go into it, but you can understand how just kind of risk broadly would just be skittish about that because there's just so much uncertainty, so many moving pieces. Yeah, the inflation fears have me like thinking for the first time in a long time that like I can't remember the last time I thought like it wouldn't absolutely shock me if like somehow

the next move ends up being a hike or like, you know, I don't because of all the concerns about like the different things they're doing. But I'm still in the camp. I think we're going to get cuts later this year. I've been in that camp for a while. Alex, any thoughts on inflation CPI? Well, I don't think it matters. Yeah. Okay. It's short-term noise now.

Now, we're trading Trump. It's an owl doesn't react to one day at points. He's been very, very steady on highlighting that. So, yeah, definitely like a point to me sort of beat on max and max inflation. We move the market a lot, but it doesn't change the trend. which is being driven by Trump. I think on the Trump thing, the most important I think

what we have to be paying attention on is if he starts talking about tax cuts, if because of this dump, this strong move down, if he, without being very specific, if he changes narrative and he starts talking about tax cuts, which are not something that he is, we're not expecting it. right now. It's just something for later on. So it's kind of like bringing forward something that

he's reserving so far for later in his administration. So fingers crossed. It's a great point. It's always important when markets are down like this to find what the bull case is and what the headlines will be in the future. You know, Druck Miller says like, show me the world two years from now, right? And then work backwards. And yeah, I mean, tax cuts are a bullish story. I'd say the other bullish story is peace deal, you know, that Trump wants to get a deal done. Will we get one soon? I don't know. That's so hard.

That feels so hard. Those conversations. It does feel hard. It does feel hard. In the exercise of envisioning what that bull story looks like, it's peace deal, it's tax cuts, its inflation is low, and no tariffs on Mexico and Canada. And the world lowers their tariff barriers, too. That's the home run.

That's all very hard, by the, by the, that's, that's, that's the outline of what recovery to all-time highs, you know, would look like in the next six months or so. I would say, you know, on the, on the peace deal, like, I don't, I don't think that's, I agree, it's hard. Like, the U.S. is withholding intelligence to Ukraine, which I find, uh, this tastesful and horrible, you know, there are people that are allies that are surrounded and flanked on both sides. by Russians who are probably going to get slaughtered. But you know, you don't do that action if you think you're close to getting a deal done

because that's an action that hurts the relationship. Yeah, I mean, with regards, I agree with what Alex was saying. Like, everything is, you know, it's being traded around Trump. And we've said this on this podcast many times before. Like, my view is just like, we went from Biden, like, never being around and like just being silent and kind of like being like a grandpa. And now, like, I just want Trump to not be in the news for, like, a day or two. Like, I feel like every single day, it's something new.

And going back to what Travis said, it's like there's a lot of, like, flip-flopping on basis here. And, like, we saw last weekend him tweet out, which we talked around this podcast, you know, he was going to do a Bitcoin, he was going to do a crypto strategic reserve and said he was going to do Cardano, Solana, and XRP. And then, like, later followed up with Bitcoin and I think, you know, I still would love to know what the background is that. And then all of a sudden, we get the eye.

actual language of the document later last week. And it's like, it's just a Bitcoin strategic reserves. Everything else is going to stockpile. The only thing we're going to try to acquire really is going to be Bitcoin. And it's like, did Trump actually believe what he said on Sunday? Or was he just doing without talking to David Sachs and whoever else might have been in charge? That was such a joke of a crypto conference. I mean, first of all, David Sachs did a fantastic job.

That's how Zelensky should have communicated to Trump. Yeah. Like, his opening speech was just, he really hemmed it up there. Like, great leader. Like, this is a thank you for it. It was a really inspiring speed. He did a great job. I mean, that was like a compliment, right?

But it was so over the top. And it's what? But then Trump near the end, he's like, what did he say about Bitcoin? He's like, some people say you should never sell. He said, I'm not sure if I have that view. Yeah, he basically was like, well, find out or something. It's been true so far. You're supposed to inspire confidence.

Project confidence. It's all markets are all psychology. So, yeah, we were, we were short MSTI. I saw that. I was watching it live. And I told my team, I said short MSTR and GDLC. It's a bunch of all coins in the public markets that rally to the moving average. So, look, I think trend is down, you know, bubbles have burst.

I don't know. The main trend is that many bubbles have burst, whether it's Bitcoin, whether it's Costco, Walmart, Palantir, Robin Hood, Tesla's down 45 or 50%. And I don't think it's done bursting. It's a difficult position because there are bargains and opportunities that we talked about. So part of it's a question about positioning. But the other question is, can those opportunities deliver while you have these large market cap stocks that are deflating?

Mag 7 is down, and it's in a correction worse than 10% too, for example, right? It's a, and I don't know. I'm not so sure about that. I go back to the 2018 example, because when people have an increase in risk aversion, they move into shoe first, ask questions later. Now, notwithstanding the near term technical balance. So it's a very complicated picture. So on Bitcoin, so when the ETFs launched, I think it's totally accurate.

to say that price discovery for Bitcoin changed very meaningfully as a result of the ETFs. You just brought in, you now had access to this financial instrument to a totally different magnitude of capital. We all know what the inflows look like. We also know though there's a lot of noise to inflows with carry trades and things like that. But there was also a lot of just directional buying of Bitcoin through the ETFs. and price action has changed a lot since we launched ETFs.

Since the ETS launched, we've had, I think, a 30% drawdown is X, which is basically exactly what we have right now. Like, as of this morning, I think we did right at 30%. And we had a couple more that had been in like the 20s, 25s, high 20s. You know, I think the Yen-Carry unwind was, you know, 27 or 29 or something like that. So all in this kind of range, right? and we're right at the bottom of that. But what I will say, so the way that I would characterize that is that you have this new type of buyer for Bitcoin that is a buyer on dips in significant size.

And I think that, again, some of the noise and the ETF inflow data notwithstanding, when you go back and look at some of the pullbacks last year, you can see that there was some response in inflows in the ETFs that kind of formed the bottom in that, whether it was Germany, selling 50,000 VTC in July of last year, again, carried trade unwind. Obviously, big bounce in all markets off of that, huge bounce in all markets off of that. Bitcoin included. ETFs had solid inflows off of that. But all of that, so this new kind of buy the dip buyer in size that now exists through these ETFs, they have had generally a constructive macro backdrop for that entire period of time. Since January of 2024, we've been in. in a generally constructive macro backdrop, little hiccup, but you know, Yen-Kerry trade on wind, real short hiccup despite it being violent at the time. Now it's like, is that buyer still

there in size down 20, 25, 30 percent? Is the buyer still there for Bitcoin? The last thing I'll say is I think what I think it probably hinges on is whether or not we're still in a broadly directionally constructive backdrop. You know, if panel had said it's time to retire the word transitory and we were going on an aggressive rate hiking cycle in 2024 instead of, you know, getting ready to start to cut interest rates and then cutting interest rates in 2024 like we got, you know, would we have gotten the inflows that we got? What would the price action have been around Bitcoin?

You know, my guess is it would have been a totally different story. So I'll tell you why I don't think that's going to happen. You'll get a bounce. I think the bounce is playing out right now. But this buyer base, they're long Bitcoin, but they're also long Tesla. They're long micro strategy. They also want to be along Palantir and Navidia. That's the buyer base.

So their wallet has been pulverized. Let's look up Tesla. You know, Tesla topped out. and it was the leading at best or coincident at worst indicator for Bitcoin. Now, you get a bunch of volume here. Maybe that's an arrow low. It's a question worth asking here. This is back to Alex's point, you know, maybe QQQRIFs here.

I can see that. But what I would expect is that this rallies and then it fails to fail to get over the hump. I mean, it's still, you know, these are still expensive, right? I mean, the crypto rally started when ETH and GBTC were training at 35% discounts to NAV, and it ended when MSTR had a 300% premium to NAV. And markets are trying to find the equilibrium. Do you think there's real idiosyncrasies in Tesla Stott because of Elon and because of what Elon represents in this Trump administration?

No, it's all animal care. It's all correlated. People are, the psychology of the buyer that buys Bitcoin, they're banning in the future, they own, I could tell you their portfolio. You can see them on Twitter. Like this one guy, Shea Bowler, like his portfolio sucks is getting destroyed. They can't help it. They're buying, they think they're buying innovation and price doesn't matter. They're buying lunar stocks.

They're buying variations of SpaceX in the public markets. and they don't know how to rotate and to other approaches. Yeah, and going back to what you were saying, Travis, this is like kind of a noisy chart, but this is the flows and all the spot Bitcoin ETFs. And you can see down here in the bottom right, like it's just been nothing but outflows. We're at $4.6 billion in outflows for these ETFs since they launched. So, yeah, no one's buying the dip really in these things. I mean, this is net flows.

So on a net basis, people are selling. I'm sure there are people buying. I've talked to a bunch of advisors that have been looking at this space that kind of think they miss the boat kind of thing. So I think there are a decent amount of people out there that are like, well, maybe I didn't miss the boat and they might be considering to add an allocation here at some point. That's what I'd be watching for, but I have a feeling they're going to wait to see some of the shakeout.

The people that do that, the advisors, they're waiting to make a one to two percent allocation. And it's not something. They're not like watching the VIX like Ron was talking about. for the most part. Obviously, Rom is an advisor in a way, but like I'm talking like these more model-type-based people. We're not very advisors. That's for sure. I'll give you one other chart to look at as USDJ.J.P.Y. So, you know, this was at the center of the Yen-Meggaden correction in August. It was one of the three stories that led to the Yen-Megden correction, right? So I'll

pull that up on screen here. But this represents, among other things, the foreign demand for U.S. equities and call it like risk-taking. There are a lot of people in South Korea and Japan that love Elon Musk and Tesla. They love it. They love it. Can't get enough. And this also obviously funds a bunch of carry trades. So this is heading down. So the demand for U.S. access to clients consistent with the idea that Europe and international markets have been rallying, although I think, as I said earlier, I think those are probably topping out now. They've had a nice little spurt. Like this needs to behave better, right?

And this is a margin call on U.S. asset managers and hedge funds that are long U.S. equities and borrowing in the yen. You know, when the U.S.D. JPI drops, then your funding costs, you've got to pay back in a currency that's appreciating. So, again, I don't think we're going to get the same kind of dynamic in August, but it doesn't help is what I'm getting. Like, on the margin, it just doesn't help. I'd like to see that improve.

You know, I get asked a lot about the JN carry trade, like a lot by people that before 24, I'd never heard of the term carry trade. My understanding is it's been mostly unwound, and therefore it's kind of like it's even less important than inflation. Like inflation, it matters. The yen, we can forget about the yen for now. It's like, this is a time to focus on Trump's headlines. nothing else.

That's the way I think Trump's headlines are number one, right? So two angles. Like maybe the, I think the carry trade doesn't matter that much because people adjust. However, foreign capital has a big driver of U.S. risk asset returns, right?

People have, just in the same way everyone wants to immigrate to the U.S. and cross borders do whatever it takes. In the same way, like European stock markets are nowhere. There's like, there's like, how do I,

and they've been, I mean, there were ETFs that, I don't know if they still are the case. And maybe, James, your terminal has it or not, but they were training at premiums to NAV to access the U.S. market. The foreign demand for U.S.S. has changed.

And since the Trump inauguration, it's been anything but that. It's been the opposite. It's a U.S. down. So in foreign markets up, so, you know, there is a change in these trends and behaviors that we did not have before. Yeah, make, make Europe and China, right now. Yeah, make Europe and China great again is what was what we're doing here, right? Yeah.

I mean, part of it seems to be, we talked with this last time was like Europe, the Europe has to, if they're going to step up and like join in Ukraine, there's going to have to be a lot of fiscal spending from the, you know, European governments. And, Rob, what you were talking about was the Chinese ETF. So there's, there's ETFs listed in China. And unlike the U.S., they have like capital controls. So there's only a certain amount of like dollars that can go. those ETFs can use to buy foreign shares.

So there's a limit, it's basically like the closed end fund. And as you said, like they were trading a 10, 15% premiums. They're still trading at premiums as far as I were. I've been looked in a couple of days to be frank. But like they were trading at meaningful premiums because people in China were like, we need to get access to U.S. markets. Like seriously, serious premium. It's just bad investments, honestly, to be quite frank.

But yeah, it's crazy. And it's been a complete change. I mean, I think we saw deflation in China in some of the most recent reports. So, yeah, it's kind of crazy. Does anyone else have any further macro thoughts about what might be impacting things here? I think we talked about mostly everything. I mean, global money supply seems to be ticking back up a little bit. We still finish the year up, I would say, for risk assets.

I think the economic growth story is there. But, you know, I don't like the volatility, this is not like the August correction. it's not like the August correction because everyone's been trained to buy the dip and Mr. Markets rug pulling all that trained behavior, I would say. It's a complex, complex picture.

Yeah, it's hard to, it's hard to have conviction around by the dip when there's this level of uncertainty about everything that's going on with Trump, full stop. Yeah. Yeah, August was a pullback in a bull market trend, right? For the most part, there was a little bit of concern around what was going on with rates

and what the Fed was going to do. And it was like concern about one thing. This, like we've talked about it's like 50 times in this episode where there's concerns about what the hell is going to happen across like 50 different avenues. I mean, Travis, you have, you have, you've had a lot of tweets the last few days about like, you know, what Trump is doing. You had one tweet basically saying, still trying to wrap my head around how Trump has managed

to piss off nearly everyone in crypto with this sport for crypto. I mean, we didn't really get into like, what are your thoughts around like the, what's going on with this administration? I mean, Rom praised David Sachs and what happened. there in the meeting on Friday. But what are you thinking as you're looking at the space right now? I mean, you know, Bitcoin and Alts are just so separate to me. They've been separate for a long time.

They feel like it's more separate than they ever have been before. Bitcoin's really, I think, of really often its own thing and has a set of risks around it, but also I think just has a set of potential buyers around it that is a total. totally different setup than when you look down market cap to anything else, including Heath, even though they've got ETFs. And we're going to have some other spot ETFs here pretty soon, I think. But ALTS broadly have a core utility problem. And Bitcoin has found product market fit and stable coins have found product market fit.

And everything else is somewhere between solutions looking at. for a problem and just vaporware grift. And there's a whole lot of stuff that's in between that. And until we can get, my view, which this is pretty new, just as of last February, we had the Trump win. Alt-Broadly did about a double in a month after Trump won. But they topped out for second week of December. And then they went kind of sideways-ish for about six weeks, generally.

And then you had a real breakdown in February that is obviously continued now through March. And I think what we, there was a question at right after Trump won when everything was ripping. There was a question about whether or not all of this positivity around the Trump administration as it relates to crypto broadly, not just Bitcoin, crypto broadly. there was a question about whether or not that was going to be sufficient to bring significant inflows into alt broadly. And what we now know, when you fast forward to February and saw the price action there, is that that was not sufficient. And that we did not have any kind of meaningful inflows into alts to a degree to kind of lift

really much of anything, honestly, because, and certainly not any kind of broad-based. inflows into alts. And I think the issue is that there's a lot of eyeballs looking at alts broadly, a lot of eyeballs with a lot of capital, billions and billions of dollars of capital. And they're looking at this and they're going, what is it that is going on in alts that is compelling enough to get me to put some money in, to get some exposure into this? And there's just not a good answer to that question right now. There's not. And people try and say some stuff. this, that, and the other, you know, for a long time, it was like Solana was like the headline for that. It was like Salana. This is what you need to own in the Alde. So you want to own

the casino. That's what everybody wanted to say. You want to own the casino. Well, the casino that people were referring to for Solana was Pump Fun. And now what we've seen is that Pump Fun has magnified the worst parts of crypto and then metastasized the most degenerate, the most nihilistic, the most pointless, the most worthless.

All Pomp Fun has done is just... And then taken money from, you've seen the on-chain wallet statistics for a pump fund. It's like 99% of people that ever touched Pomp Fun lost money on it. Same for fees in the last cycle. What we've done is you could not have treated new entrants and retail into this market. You couldn't have treated them worse if you tried.

Trump coin, Melania coin, Malay, Dave Portnoy, Central African Republic, Izzy fucking Exalia. You could not have treated retail worse than what, what, we have done. And now we're sitting here and do you really want to own that casino anymore? Oh, never know. Oh, by the way, North Korea stole all the money from ByBit. They started laundering it through, they're laundering it through Pump Fun. Zach XPT found he did the wallet tracking and now they're trying to move some of that through Punk. Not Fun, which brings the question, begs the question, haven't seen firm evidence of this yet. Don't know if we're going to be able to find firm on-chain evidence of this or not.

But there is a question about how much of the whole pomp fun mania that we had over the last 12, 18 months, how much that was just bad actors moving money around? If you told me that it turns out that some very significant portion of this casino that Tradfai needs to own so badly as it turns out, that was actually just like North Korean shit, wouldn't be surprised off. That would be quintessentially criminal. crypto for that to be the case. Look, but a few quick reactions.

One is same as it ever was, 2021, same thing. People bought NFTs, 2017, people bought ICOs. Yep. You know, we, it's funny, if you think about the progression of, of these podcasts the last few months, we talked about how, yeah, I remember Thanksgiving. My grandmother was like, should I buy Bitcoin? We never even talk numbers ever. We usually play card games or something, right?

Then you have like sovereign wealth funds that are starting to leg in. the sovereign wealth funds aren't the brightest people, and they're not. And then you've got, we talked about the proliferation of new product ETS. James, you mentioned that. There are dozens and dozens of crypto ETF. We talked about how when you have a proliferation new product ETFs, that means you got to start looking for the exit. We saw it in the video too, by the way, like NVDU and VDL, the lever long, lever short. You know, that, and that isn't that not plain out here?

I just popped up like ETH here. This is something we invested in 23, sold it in May. I haven't looked at in a long time. I just want to see how it's doing. What I see here, putting on my technical analysis here, I'll see. What I see this is massive rally from 23. You can see this when we're selling it. We're out here.

Here's our lack of trade. We're out there around May. But now this thing is selling back. And what's going to happen is this. All these people here that were buying, some of them are waiting for long-term capital gains. And there's counting the days. this population is going to grow more risk averse. And if this rallies, they will sell.

They want to get out now. That pattern is true for many digital assets now. That story I just shared with you, big 2023, 2024, high momentum return. And now with just this technical breakdown below key levels, people have this regret feeling. they're going to want to sell on rallies. And by the way, I think that statement is true for other momentum assets. It brings it back full circle. We start out.

This is a momentum correction. And some of these assets, like you got Pallant here at a 300 P.E ratio, that's not coming back, guys. It's a wonderful business. CEO's amazing, great American. It doesn't matter. It's just the psychology of that buyer base is now broken. I mean, what's really happening is, you know, know, support is becoming now resistance in many ways, which is basically what you were saying.

So, like, we're all talking about this. Obviously, everyone's, like, broadly this episode has been very bearish. But I guess, like, everyone's pretty bearish, except for maybe on Bitcoin as an asset because Alex is bullish. Alex is bullish on like a short term tomorrow. But I'm curious, like, you guys are worried about, you said, you said we'll be positive by the end of this year. I'm curious, like, what is your, I'll go to you first, Travis. On equities. Okay, you'll be positive. On equities.

Bitcoin is one year return. Get ready for the audience listening. Imagine your head, what's that number? 50, 80, 30. The one year return on Bitcoin, year over year, is 10%. So think about those holders. What, they want to get back to even? And they bought late.

They're late to the party. you know, if you want to own Bitcoin, you've got to be non-consensus. You've got to buy when no one wants to buy. And the question is, well, isn't there blood in the streets now? I think if you proxy against other asset classes, other asset classes are still expensive. That's the issue I have with it. The bullside is I look at uranium, it's totally destroyed. And I think uranium and Tesla and Bitcoin, they do move together. So there might be something there, maybe. I think you've got to wait for this market to kind of prove itself. and heal, get above these, as you pointed out, these resistance levels.

I'm not particularly worried about Bitcoin unless we get that macro path that I described where you've got inflation coming up. You've got to pull all the cuts out of the curve and then people start thinking about hikes. And that would be the kind of path that would take Bitcoin 50% off the top. There was this question of whether or not the ETF, would change price discovery so much on Bitcoin that we would not do the full cycle drawdowns that we had seen in every cycle prior.

Don't have a firm answer on that. Gun to my head, I don't think we would do. I would say we probably are done with the 85s, peak to trough, probably. But I think we can do it down 50. Sure. I think we can go, you know. What are you thought it's a hedge fund? Redemptions. What's that? Hedge fund redemptions. The hedge funds that are down 40, 50%,

yeah, in crypto, in crypto. Oh, the AUM of Liquid Focus crypto hedge funds is a rounding era. Nobody's, nobody ever raising money. Nobody ever raise any money. What's the profile of the marginal buyer? Is it a RIA? Is it a sovereign wealth fund? It's not retail. I don't think it's retail. Retail. The best marketing for Bitcoin, it, right. The Friday was, you know, put the kibasha. The best marketing for Bitcoin is momentum. That's the best marketing for Bitcoin. So when momentum's not there, who's the marginal buyer?

I'll answer that real quick. I think the marginal buyer is these wirehouses and brokers and advisors that you're talking about. I mean, for the most part, vast majorities of them, if you're in one of these places, if you're at a wirehouse at a big bank or some platform, most of them still don't allow you to buy it for your client unless your client is asking to buy it for it. them, right? Like, so if you're, if I'm somebody there and I've been asking them to like, you know, green light me the ability to buy, you know, a Bitcoin ETF, whatever it may be, whatever ticker you want to throw out there. Now, like, I'm looking at this and I'm like, we're down 30-ish percent, maybe more, we're under 80. Like, just give me the green light already. So I think that's

the marginal buyer potentially, people who have been wanting to get a small allocation to it in this space and they thought that it wasn't there. The problem is how big is that and how long does it take before they can get to that. Okay, here's the home run hopium scenario. It's not a, I'm just outlining. Trump is saying we're going to go to Fort Knox and see if there's gold there. I expect there'll be gold there. It's hard to move a lot of bricks without someone in security tapping you on the shoulder.

By the way, that doesn't help public anxiety either. That just does not help saying we're going to see if the U.S. government actually has that does not help. None of that help. So it kind of goes back to is Trump trying to talk down the market. But if Trump does say, hey, look, we're not have taxes on Bitcoin and we want, we want, to have a settlement of value through Bitcoin. And he says, like, he's already said bricks. If anyone's in bricks, we're going to tear a few at 100%. He's already said that. Bricks is dead.

And Russia's support, you know, can get on board with crypto. I have no doubt about that. But if he makes a sovereign push with China and Russia around Bitcoin, maybe, I'm, I haven't seen any readings or evidence of that. But if we're trying to get, if we're trying to get what an exciting story might look like that is within the Overton window of Trump. To be honest, I put the probabilities that happening at 0% in 25. When you say that, you mean the U.S. government actually buying Bitcoin on balance sheet. Is that what you mean by that? Getting like anything out of the government, the government is done.

That's the message we got out of the summit. It's like, you guys are on your own. We delivered. We got the SSI out of your bucks. You got your little SDR. Now you're really wrong. That's like that's the message I got. What about on the payment side, Alex?

Can, can, you know, maybe the U.S. government can do something around. Yeah, but that's not a good job. And I think I'm still trying to figure out exactly how to make mine out that, by the way. I don't know. I don't know. Let me know. It's going to be. That's where the money is going to be flawed.

But it's not really crypto. It's payments, right? And now, yeah. So, Alex, if you're, if you're, if you're one of the more bullish ones here, well, you think there's going to be at least a, like, at least a short-term correction. No, no, I'm thinking of 24-hour correction. Yeah, okay. That's what I thought.

Yeah. So you're not, you're not bullish. You're just like, just like maybe like March, like 2020, you know, it's like we got a very big down, March 9th, 2020. And then the day after, we rally really hard and then good luck. Again, I really think it depends on Trump. So I'm just trading short term following headlines. And I don't think, I can predict exactly if we got to go down 8% in a week or up 8%. Where is the Trump put?

right like we are now back to smp 5600 and that is now below the election levels yeah i don't i don't think it's that close because i think that one of the i'm guessing that one of the main factors that trump is thinking about this through is that we need to get this pain done early quickly because you got midterms. You got midterms coming up in 18 months. And you've got a narrow red wave right now, TBD on exactly how much you can get done with a red wave that's that narrow.

And there's people that, you know, kind of flip-flop sides. But if he, if right now, you know, a lot of this stuff, there's an inevitability to the tough medicine, right? There's no such thing as easy, tough medicine. By definition, it's tough medicine. And that is definitely an accurate way to characterize components of what Trump is trying to do right now.

But you would think that he needs to get that in a meaningfully better spot by the time we get to midterms. Or Republicans could get smoked in the midterms. And then you're back into two years of gridlock in the back end of his administration. And then he's out. I mean, the fact that he does not have another term to run for is a ace in his pocket. It allows him to act in ways and do things that I think he never would have done if he could run again because he's so obsessed with winning. It's like, you don't have to worry about that anymore. But the midterms, I think, component, and I think that could be a real reason why maybe it's like, you know, we got all this shit that we got to get done.

So it's going to be painful. It's going to be painful. And let's front load all this. So by the time we're in summer of 2026, a lot of this stuff is looking a lot better. I agree. Look, the faster markets go down now, the better the market is next year too. And if you're Trump, wouldn't you lean into this? Wouldn't you say, hey, look, I'm not happy with the fact that the market's down.

But while we're here, let me go fix up the mortgage market. Let me get the 10-year lower. Just to lean into it. We'll blame it on the globalists and best and sorority on message. And there's actually a logic to that. Like the mortgage market is stuck, right? The 10-year is too high. And we've got to control the debt.

There's not a problem with that, though, in my view. There's a problem. People are locked into home. They can't move. They're locked into a relationship. No, it's a real issue. Housing affordability, one of the, you know, one of the, kitchen dinner items that people are addressing, you know, unless you're an all-catch

buyer, you can't have the American dream of having a home. It's a real issue. I mean, nothing talking about it two weeks in a row. As somebody who's in his early 30s and a lot of his friends are looking to possibly buy at some point, like it's something that comes up every time I hang out with my friends who don't have a house. If you lower mortgage rates, it is stimulative for the economy, too. I mean, you're going to get house, home builders up, building supply materials, construction contractors, small business. And it is Main Street. Those are Main Street millionaire next door kind of jobs.

And that crowd voted for Trump. So I think that's like maybe he leans into it. Maybe I could see him doing that too. Then you get that with 25% down Christmas, whatever it is, right? Like a month from now, let's say. I don't know. It's something I do think it's a great point to consider though. I just want to lean into it.

Yeah. To me, that narrative makes no sense whatsoever. It's like it's akin to a man trying to become less desirable to women by getting fat as fuck. To spend less money on days and that's the yield to sleep more money. It makes no sense. You don't crush the stock market. Are you saying? To get the yield a little bit lower for like two months because as soon as the stock goes back up, yields go the other way.

this risk of relationship is quite teach for tat, you know, so it's, the other hop on issue is inflation. Like the number one issue, people still talk about is inflation. When people ask about polling, they say, why is he not focused on egg prices? The DNC response after the state of the union said, he's not talking about inflation. So if you want to solve that, you break things. Mortgage refi apps are up, by the way. They haven't recovered, but they are going up. Yeah, but you need to keep it back for a long time, not just for a couple months.

Yeah, fair enough. I think the detox is a new thing that they came up with after the fact, you know, to try to make them look like their pains with just when they just fucked up, you know. They fucked up. Here's the narrative, but then do they own it? And then, like, say, hey, maybe this is a path we take. I disagree with that. Okay.

The characterization that the Trump administration is fucked up over the last, we're not even two months into this over the last six weeks. I disagree with that. You're saying it's a deliberate walking down of risk assets, or is it just a consequence of- aggressive policy? Yeah, yeah. You can really sum it down into like Wall Street's done whatever best it said.

Wall Street's done fine. Wall Street's going to be fine. We're focused on helping out Main Street. and they're making a lot of these moves right now and there's a tough medicine component to it and the fact that like all of us rich guys are sitting around like whining about our PAs our portfolios like get over it

like just we should just get over it more we've been winning we've been winning for 15 years we've been winning I think they front-loaded the medicine they've talked about rates consistently you know when Trump walked away from the Zelensky meeting he said that will make great tell television, so the visibility of Trump's not going to end. He is disrupting the legacy media by putting himself in front of social media all the time.

That's their strategy. That's not going to stop. I think he's delivering all the tough medicine, not all of it's even medicine. The geopoliticals isn't actually medicine. He's front-loading bad stuff. One thing, targets are not really medicine. They're just bad policy, you know. We kind of go over that, but that's the thing that worries.

Well, yeah, but Alex, Alex, you agree that there's – Yeah. You agree that there's really broad disagreement over the statement you just made. I mean, that's your opinion. There's like real smart guys around the other side of that. So it's like – Like, who goes on Maria Barter Romo show and says – I mean, look, I mean, he's –

interviewed by Maria Bada Roma. He's prepped by staff. He knows he's going to get these questions. And he made a deliberate choice not to – to inspire confidence around a recession, right? I think this is a, okay, none of us know the mental states of Trump. And I'm just talking out loud here, but I would assign maybe a 30 to 40 percent probability that they're walking down rates.

And like, Besson's got to sell a lot of treasuries. That's, yeah. So the one thing I would say is, one, they got, we got nine trillion dollars of treasuries coming due in 2025, right? That's the number we're at right now. And it's all been front-loaded by Yellen. under Besson was a chief critic of that. And he's been saying she shouldn't have done that, should have been more on the long end.

But like if Besson normalizes that, that's going to do the opposite to the treasury rates theoretically because you're going to be selling way more 10 years and long bonds than you otherwise would. So that's going to be negative on what they've been saying they do on a lower. The other thing I would say is along with what Travis and Alex were talking about, like this idea that tariffs are bad is, I don't think it's even up for debate much in many regards. it's going to be bad for risk assets. It's bad for like a lot of companies and probably going to cause price inflation. But this is something like J.D. Vance, like if he was the president, he would be talking

the way that Travis was saying and what Besson has kind of said. So this is a Trump 2.0 that's very different from a Trump 1.0 in the sense that J.D. Vance wants to, you know, stop some of this globalization. He wants to bring something manufacturing onshore. I'm not really sure that's all that completely possible from my personal point of view, but that definitely seems to be a talking point. They they want to do this via terrorists. I personally think, okay, maybe tariff certain things. They came out recently saying they were still going to do the aluminum and steel tariffs, as they said they were.

But these blanket tariffs on everything potentially coming in from everywhere just seems insane to me, maybe do targeted if you want to do it, but they don't seem to care. Lutnik is trying to walk that back. Lutnik is saying that we want a world where others will reduce their tariffs. And I would expect that India lowers our tariffs. That seems to be the first deal they're working on, which is good. So they have the right priority. The priority is lower barriers to open up markets to let American firms compete and grow.

But I think, you know, just coming back, like this 10 year, if you have tariffs, then China doesn't have capital to buy balance because when we import, we give them the U.S. dollars to turn around and buy balance because we're not exporting to them. We're not going to sell them F-35 jets. You got the U.S.D. JPI, JPI trending down. And I have yields in Europe that are going higher. So they're in a difficult spot that they've created, right? How does your tenure come down, given that confluence of factors, which are created by their policy actions? Well, Tarves is basically, like, quite literally bringing lower growth, which directly brings you slower. The question is, the best they realized they f-ed up and they tell everyone.

Like, you guys, have you guys talked about the Mar-a-Lago Accord? path on here before? A little bit, yeah. Jim Bianco was on, but we didn't get into too much. So this guy, Steve Moran, that just got named Chief of the Council of Economic Advisors. That's Trump's nominee appointment for that role. And he wrote a paper that was like his years ago. No, no, no.

No, he wrote a paper right before the election, right after the election, right after the election, right after the election, he wrote a paper. There was like his job interviews, like his job application writes the paper talking about using tariffs to bring our trade partners to the table, mostly China, because I think almost everybody else that matters falls in line if you get China. Most of them, or a lot of them are, we'll do whatever we say. You know, it's like Japan is going to do whatever the United States says regardless, so with a lot of people.

But he did this paper. He also went on Felix's is on the margin, the Blockworks podcast. Yeah, he went on that right after he wrote the paper. And if you guys haven't listened to that, I read the paper,

highly recommend that. He goes into great detail about the paper on the podcast, super interesting. And the whole thing is that all of the tariffs, all of this is just negotiating leverage to bring people, namely China,

but other major training partners, to do a multilateral currency agreement a la plaza accord, nickname the Marlago Accord, because Trump would like do it at Marlago or whatever, hypothetically. And that this would be a structural devaluation of the dollar. And it would also include this like treasury stabilization aspect of it as well too, where you get China and the other people that are in the treasury market, the other foreigners that are in the treasury market,

everybody kind of comes to agreement, make sure the Treasury market doesn't have any big hiccups in it. And it seems like they're putting that, you know, there's a question of like if this was this guy's paper that he wrote, like Trump could have hired anybody to be the chief, you know, of the Council of Economic Advisors, pretty senior position. It's like a, you know, it's pretty senior. And he could have hired anybody and he hired this guy that just wrote this paper. And then you start to see the moves that he's doing.

And he's doing some of these moves around the tariffs and the tariffs and the, And he, like, says you can do the tariffs. And he, oh, we're going to push it back a month. You know, a lot of deal making, a lot of classic art of the deal type of stuff that he's doing. And it's like, is the end game for this just to get to this multilateral currency agreement that finally gets our trade balance and deficit into a more sustainable position over, you know, a multi-decade period of time potentially. So, yeah, I listened to that. And so Steve Moran was at the Manhattan Institute, a conservative New York City-based think tank. Trump hired him because he supports his policy of tariffs. That's it. It flows from that.

And Steve Moran, and I listen to that pod and a lot of contradictions, you actually made the best case for the pod and things that actually made sense. But he also says, we want to stop China from devaluing their currency. Guess what? If you've got tariffs on China of 40% and they devalue their currency, they eat the tariff. Let them devalue their currency. That makes the product will import cheaper, which offsets the costs of Americans paying for the tariff. So his paper isn't even a – it doesn't even make any sense, like logically. I just pointed out of an example. You want to stop China from devaluing the currency?

Let them devaluing it 50%. We'll go by China. We'll go buy some other – Yeah, but you're trying to secure the supply chain and you're trying to onshore jobs, right? No, no. But dependency on China doesn't matter. So I'm actually not worried about China tariffs. Like raised tariffs on China.

They're a bad actor. They're hacking American. business stealing IP, their espionage encroachment is off the charts. They're bad actor. They've got to be dealt with appropriately. Now, the real terrorists are Mexico and Canada. Now, you can do some, I did some research over the weekend on the cost of a Mexican car workers, $10,000.

65% of the cost of a car is labor. Now, you bring that job to the United States after you add an OSHA prevailing wages, and union and supervision costs and coffee break costs and no one's doing 12-hour work weeks, that cost of a car is going up. And, you know, you can create a $60,000 jobs that hurts the consumer. You're not creating a high-paying job. That's the fundamental thing. To the extent it's high pain, it's because of non-market forces, which hurt consumers well-being.

We're not trying to import $10,000 jobs from Mexico. It makes no sense. Taiwan semiconductor I get. That makes sense. That deal made a lot of sense. Prescription drugs? Europe is free-riding in American-free-scription drugs, but with generics. That's got to be fixed.

Europe is riding on America's defense umbrella. Yes, that's got to be fixed too. But part of that equation is right under the U.S. dollar, but that's part of the trade, right? Use our currency and we're going to take care of things and get to run full position on on the direction of the travel, you know, for world. Travis, one, thank you for joining us. This was fun. And your rant is, your rant there before was, was, was very enlightening.

It was enjoyable to listen to. Very passionate about all coins here. All right, guys. Just call it like I see it. But thanks for having you, guys. Yeah, thank you for joining us. Thank you. We'll have you back.

All right. Thank you for joining us for this episode of Bits and Bips. We'll be back in one week to discuss more about how the world of crypto and macro reclining. Until then, everyone.