Unchained - Bits + Bips: Will Rate Cuts and Trump's Policies Spark a Bitcoin Supercycle? - Ep. 737

Episode Date: November 20, 2024

Bitcoin and SOL are flirting with all time highs, Ethereum is lagging behind, and the next six months could define the trajectory of crypto markets.  In this episode of Bits + Bips, James Seyffart, Alex Kruger, and guest David Grider unravel the key stories driving the space: What could a meeting between Trump and Coinbase’s Brian Armstrong mean for crypto policy? Could a new Treasury Secretary pick become the industry’s biggest ally? And is Ethereum’s underperformance hiding a major comeback? Plus, what crypto categories might be winners in the near future. Show highlights: What the potential meeting of Trump with Brian Armstrong shows Which pick for the Treasury Secretary position would be most positive for crypto Whether Michael Saylor has been driving the bitcoin market Whether rate cuts are coming in December and what impact it’s having on the markets How tariffs are not as bad as people think, but massive deportation is, according to Alex Why a potential Treasury General Account (TGA) rundown would be bullish for the markets Whether traders will be taking profits at the $90,000 bitcoin level How ETH has been underperforming and why David sees a silver lining How the lack of institutional interest in ETH has changed dramatically since the election Why David is so optimistic about restaking across different ecosystems What the outlook for crypto regulation looks like in the near future and what will benefit the industry Why James believes that we’ll have in-kind creations and redemptions for bitcoin ETFs under new SEC leadership What the future trajectory of bitcoin’s price is and the role of a strategic bitcoin reserve How different categories within crypto will perform in the markets Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Guest: David Grider, Partner at Finality Capital Links Trump and politics: Unchained:  Donald Trump to Meet Coinbase CEO Brian Armstrong: Report Truth Social in Talks to Acquire Crypto Platform Bakkt Who Might Trump Pick for S.E.C. Chair? This Is Who Jay Clayton Hopes to See The Trump-Connected Brad Bondi Is a New SEC Chair Contender and Pro-Crypto A Degen Administration? Why the Crypto Czar May Be Allowed to Own Tokens Markets: Unchained:  Spot Ether ETFs See Record $515 Million Weekly Inflows Solana dApps See Massive Fees Amid Memecoin Frenzy Bitcoin ETF options: Unchained:  Bitcoin Hits New All Time High as IBIT’s First-Day Volume Nears $1.9 Billion  Why Bitcoin ETF Options Could Unlock Massive Amounts of Capital for Crypto Timestamps: 00:00 Intro 02:31 What a Trump-Brian Armstrong meeting means for crypto 07:36 Who could be crypto’s biggest ally as Treasury Secretary 12:43 Is Michael Saylor driving bitcoin’s rally? 14:46 Whether December rate cuts will shake the markets 19:33 Tariffs vs. deportation: What’s worse for crypto? 26:03 Whether a Treasury General Account rundown would be bullish for markets 30:19 Whether traders will take profits at $90K Bitcoin 35:50 Why ether’s underperformance might hide a comeback 47:15 Whether institutional interest in ETH has turned around 51:49 Why David is bullish on restaking across ecosystems 54:09 What’s next for crypto regulation and industry growth 1:06:55 Whether new SEC leadership would greenlight better bitcoin ETF structures 1:09:10 Whether strategic Bitcoin reserves could drive its price higher 1:17:25 Which crypto categories could lead the next rally Learn more about your ad choices. Visit megaphone.fm/adchoices

So I think we continue going up and this is the time where if you're running a spot, you just let it ride. Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide one basis point at a time. I'm your host, James Saferred by Archmaster, Lord of Bloomberg's End. Here with Alex Kruger, Kruger Macro of House Asgard, Protector of the Realm. We're here to discuss the latest stories in the worlds of crypto and macro news. Just remember that nothing we say here is investment advice. please check unchain crypto.com slash bips and bips for more disclosures. Today we're joined by David Greider, Lord of Finality from the restaking realm.

How's it going, David? Hey, everyone. Glad to be here. Yeah, before we get into it, why don't you give a little background about who you are, what you do, how you started in crypto, and then we'll get into the current topics of the day. Yeah, happy to. Let's see. So I run the liquid fund at Finality Capital. Finality is originally a venture fund

I've done very well in crypto we made some early investments in known for things like Egan layer Babylon, Monad, Athena, Celestia, Ando Dewey being early in many of those I launched a liquid fund back in July I've been in crypto a while

I've been at crypto personally since 2015 professionally since 2017 launched a one of the early waves of crypto funds I launched a small crypto fund in the 2017 18 cycle. So I've been at this a while. It did really well, but it was just our money didn't get it big enough. So I went to something, most people probably know Tom Lee and FundStrat. I was head of crypto research there. So I was head of a digital asset strategy. Ran that business for a number of years. Eventually went to Greyscale. And I was head of research there for a bit, launched some

innovative products, you know, someone being like Salon Trust and others. I got back to investing at another fund, $50 million fund called Teffra, and then before coming back over the start of the year, here to watch the liquid fund finality. Jeez. Good timing, eh? Brilliant. We definitely did pretty good.

But, you know, Alex, that's the job, right? Got a time of the mark? All right. So let's jump into it. I mean, so just so everyone knows we're recording on November 18th, it's a little after 5 p.m. on the East Coast. And, I mean, in the last couple hours, it's been a flurry of news.

I mean, I feel like we recorded two weeks ago, and not quite two weeks ago, but like things have changed so much since then. But even just today, there's been a bunch of news. So let's start with some of the political stuff. News just came out being reported that Brian Armstrong is to meet privately with Trump and they're going to discuss appointments. I guess one of those top options likely to be Treasury. Who knows exactly what they're going to discuss? I mean, this is a complete 180 from the Biden admin. I mean, no one could talk to to anyone in the inner circle the Biden admin, let alone the person at the head of the administration. So, I mean, first of all, this is just a huge turnaround for the entire crypto space. Let's get into it.

Like, what are your guys' thoughts on this news and potential appointments? So with you, Alex. Oh, I just saw it. Like, I learned about it by chance, because it just happened. So I have nothing nothing to say outside of the fact that, yeah, it's absolutely incredible. Like, it's literally bananas that this is happening. Also, they're talking, from what I saw, they're talking about acquiring backed. Like, basically, it was like Trump acquiring backed or something like that, which is quite a bizarre turn of events because backed is sort of like a dead exchange, like a truly dead exchange from, it was, it came out live on 2019 with a lot of fanfare or however you say, fanfare. and literally marked the kind of like a very major local top in 2019. It's like Backed went live.

It was a massive disappointment within like three days. We collapsed. What was it? We collapsed from 10,200 to 72 in like one day. Yeah. Yeah, I mean, Backblast. The last I heard of Backed was. it was going bank.

I thought it was going to cease to exist. I knew they were trying to say. I thought it was just going to go to the wayside. To be clear, backed is owned by ICE International Continental Exchange, which also owns NICSI. So like this is part of the NICC family, which again, it's just kind of crazy that truth social, a social media company might be buying a cryptocurrency trading platform. David, what, I mean, what are your thoughts on Trump meeting with? Brian Armstrong of Coinbase, and what is your thoughts on, what's going on with what, or what's being reported with that, at least.

I think it just shows why crypto is repricing so much higher over the last several weeks. It's just there's a complete regulatory turnaround and de-risk that you can't price with macro. You can't price with a lot of the adoption fundamentals that exist. And I think that the market is just stepping in and saying, this is incredible. you have a president who's launched a crypto coin, he's made all these statements on the campaign trail, we'll see what happens with them. You have this Republican sweep of, you know, many crypto-sponsored PAC-sponsored candidates. And I just think it shows why we've repriced so much higher over the last couple of weeks, but I think there's still probably more to go from it, just given some many regulatory implications.

And I'm sure we can talk through those over the call. But, I mean, it's definitely good that he has people, like Brian in his year and people listening to industry and seeing what we have to say to be proactive and working with business. Yeah, I mean, I guess donating to PACs and actually donating to your election to the tunes of tens of millions of dollars from your company and the fact of fair shake and stamp of crypto, Coinbase is largely behind actually does get you some years with the higher level. So that's definitely to play here. But yeah, I agree completely. Like, this is a complete and utter shift. And it's funny, a lot of the people, it was a very common talking point of in the last like month or so. It's like he's just saying this to get elected. He does not

actually going to do anything about it. And meanwhile, it's like, okay, the two social companies are going to buy back. He's meeting in person with the CEO of the largest crypto company in the US. And it's like, okay, at some point, some of the people who have been discounting how true and serious Trump is about this space are going to have to like, you know, take it on the, chin because it's, I mean, all the, all the indication is that it's being taken seriously. You know, that's what one thing there I want to say, James, is it's the beauty of bias, a very large chunk of the market who is basically anti-Trump because of, well, many, many reasons, right?

In many cases, very valid reasons, I would add, but that's- Yeah, absolutely. But there is still, it's still bias. A bias so strong that basically, like, like drove a lot of people to literally override and say this is not happening regardless, even if he wins. He's a liar. All of these things that you're talking about are not going to happen. And they all happening, and that actually also helps the move because positioning was not there and it still is not there, I believe, besides short-term exuberance, which is part of the game.

Let's say a little bit on politics. I mean, he's made a lot of, shall we say, out of, shall we say, out of. a box picks for his cabinet. We don't need to get into all of them because for the most part, they're not too relevant to the crypto space. But let's talk about the fact that he hasn't picked Treasury Secretary. The leading candidates on Polly Market right now are Kevin Warsh, Howard Ludnik, Gottberg, and Mark Rowan right now. There's a few others on there, but those are the only ones that are in the double-ditch percentage points. Do you guys have any thoughts on who he's going to pick, what it means if he picks them? I think, David, who do you think would be the best for the space,

I guess. And after that, who do you think is most likely to be picked? And do you think it'll be somebody that's on the polymarket page right now? Well, you know, I'll start with this. I don't actually have a view who he's going to pick. I think Letnik was the original pick. There's some news articles out about him, how valid those are. You know, I don't know. I do think Lettick would be perceived by the market as the most positive for crypto and specific. As a reminder for folks, he's obviously his bank is the bank that banks tether. So, you know, that's very, you know, deep into the industry. So they hold all the treasuries there.

I think from that standpoint, he's made, he also has a $2 billion. His bank is a $2 billion credit facility for lending against Bitcoin collateralized loans that they've announced. I don't know if it's implemented yet, but they've announced that. And I think he's made some statements that he has quite a bit of Bitcoin himself. So I think the market would view him is the most positive. but I don't know who's going to ultimately pick. I think the point, though, is either way, you know, we just have an administration that either way it's going to be much better than previously had.

So net positive just to what degree? Yeah, I think Howard's, it's funny because, like, he'll be on TV and, like, they'll ask him questions about, like, I don't know, interest rates or, like, what's going out with Bitcoin. And he goes out of his way to tell me, let me tell you about this company, Tether, whose money I hold. And it's like, he loves Tether. It's funny to watch him talk about this stuff. And obviously he's part of the transition team.

Yeah. I mean, he's part of the transition team. So even if he's not Treasury Secretary, he's like, he's heavily involved in what's going on this administration, at least it seems like he is for now. And I'll throw all the numbers now. Kevin Warsh is the leader at 44 percent. Mark Rowan at 8 percent. Scott Besson is in second at 21 and then Ludniks at 13 percent, according to Polymarket. Alex, you have any thoughts?

Do you have anybody, any picks from outside those top four right now? No, no picks. I'm going basically by Polymarket, in this case. Whoever is trading Polymarket is more informed than me. The one thing I think, like I've seen chatter about how Kevin Warsh is not as good for, or is actually not great pick. He's not in team crypto. but that being said, it's quite likely, I don't think the market would care that much if someone who is not pro crypto is chosen, but would care greatly if someone pro-crypto is chosen. So let's see. Warsh is coming at first, as you said, 44%, which means there is some room for surprise, positive surprise for the market.

And one last comment is, well, two, one is, it was interesting that Elon Musk was supporting publicly Latnik. So it looks like he would not be getting his way. And secondly, there was a, there was a breaking news this morning, early Easter time, that basically the administration would be favoring in Warsh. That's when polymarket spikes up. I'll throw one out there that's not on the list real quick before we change topics. I'll say Larry Fink seems like a very outside pick because he's typically thought of his Democrat, he does donate typically to Democrats, but there's some rumors spreading around that he could be in consideration, which would be very interesting to say the least.

Well, I just think James, Trump's taking a lot of Democratic former Democrats, right? RFK, Tulsi, Trump, I mean, Musk. Issue on himself, right? So not completely crazy. Yeah. Let's get into something we don't typically talk about too much just because this is so eye-popping. I mean, we talked about micro strategies, you know, $21 billion in debt, $21 billion in equity offering, and they're going to own $42 billion worth of Bitcoin essentially.

Today, just within the last hour or so they announced that they did an offering of $1.75 billion of convertible notes with a 0%. So they're earning zero interest and just convertible notes at $1.75 billion to buy Bitcoin. And it's being gobbled up by the market, which I mean, it's, I don't really have anything intelligent to say on the topic other than that like it just kind of blows my mind. I don't know if you guys have any thoughts on what's going on there, David. Well, I think, you know, we should also mention that in tandem with that. He's, this morning it was announced that he bought another $4 billion, I think, roughly at Bitcoin as well. this morning, which I guess you could say that's that's bullish or bearish because, you know,

he announced 40 billion of, you know, planned buys over the next three years and that's 10% of it. So I guess one question I have is how much of this market move that we just had was, you know, organic outside traditional money coming in on the derisking versus how much is sailor kind of front running that move and amplifying it. But, you know, I think this offering and the others, I think it just shows like how much demand there is. is for different ways he's securitized in different products. I'm not sure that this offering is fully closed, but it seems like he's, you know, he's raising an extra, you know, two sides of the cap structure, right?

He's raising, you know, these ATM offerings on the equity side, doing that by, you know, diluting by selling shares in the market periodically on the shelf and then, you know, doing these underwritten or, you know, these debt offerings. And I think just the way that he can structure them, that's, you know, at those rates, it does show that there's a lot of demand for these type of structures and eventually, flows into crypto and Bitcoin. So that's positive for the underlying. Howard's thoughts? Well, just, I was a little bit concerned this morning that he would be marking a local top when basically when it came out, which is nothing to be concerned about, I think, bigger picture

or even mid-picture. But if you're running leverage and a lot of leverage, you know, a little local top and a little Bitcoin, 5% drawdown can generate quite a bit of a move. It didn't happen. It didn't happen. Also, equities turn around pretty quickly. I thought it was meant to happen, given that we go in a little bit of topic here, but last week on Thursday, we had Powell come in, basically saying, in my opinion, nothing new, but at the same time spelling out that there may be no cut in December.

So rates on the short end went up a little bit. Market didn't like it was quite a bit of a sell-off quite large, actually. I was surprised on tech, mainly on, well, the NASDAQ. It's pretty remarkable. It dropped 70%. it pulled back, retraced 70% of the Trump move between Thursday and Friday, mostly Friday. And my view was on Friday and still is that that move is uncold off. That is noise.

Interestingly, Tesla, which is basically proven with Bitcoin and Dodge to be the main runners of the Trump move, Tesla dropped the three days before. and since Thursday morning, like on Thursday, the NASDA was down 2%. Tesla was up. I think it was 3%. And now it's up like 20, 28 points.

It's a lot. It's like 7%. So what's your view? What's your view on the cut in December? You think it's happening? You don't think it's happening? I don't know, to be honest. I think both the cut and no cut

makes sense. We have a bit of a little bit of time and we also have the payrolls that take place before. So I think cat or no cut is actually noise, even though it matters in the market. But what we really care about the most is if they get hawkish on the dots and more like the path going forward. David, what's your view on interest rates? After you're done, I'll give mine, I'll give the Bloomberg House view as well. All right. Well, that's the real view we need to know. But, you know, I think everyone did expect, you know, somewhat higher for longer,

higher growth, higher inflation as the Trump trade. But the deregulation being the overriding factor that's just taking risk assets higher. But, you know, along with that trade, it has been higher dollar. I think a lot of that's in the short to medium term at that price, just given like you see you know you see uh rates kind of at the top end of the range you see the dollar kind of at the top end of the range starting to roll over here um we have seen quite a bit of hawkishness on you know some interpretation of what future fed speak may be um i think right now now it's about it's about almost 60 percent pricing a cut so not very definitive you're pretty

split in between me and there's going to be quite a bit of data between now and then you know my My view is probably that, you know, the Fed is going to tinker with their models and say, you know, these policies around potential for tariffs. I think there was a paper that was released by the Fed outlining that recently. Potential for deportation risk, what that could do is going to be, you know, need them to potentially stay higher for longer so you could reflect that in the dots. I don't ultimately think, you know, it's going to, I think we'll probably come down a bit farther than people think. You know, in next year. We'll see. Maybe that's a Fed policy mistake if not. but I think that's that's that is just part of the Trump trade but I think the deregulation right now is the most important factor for general markets and especially for crypto. You know on that two two things on Trump's policies and also the I want to say that there's a lot of people in the market on the macro side that are actually concerned about basically Trump tanking the economy.

I actually think that that speaks more about political bias than it's an absence or lack of full objectivity there taking place, which is unavoidable when a persona generates such massive emotions in different directions. And by the way, Republicans also thought, many Republicans, the hardcore ones, thought that the Harrier ones thought that Haris victory, we'd crush the market, which also made no sense. We even talked about it in the pot here quite a bit, actually, for many months, how the big high into election night would unwind afterwards and how risk would come back into the market and pop up regardless who would win, but Trump would be much better for crypto. But on the policies, two things.

One is the tariffs are, quite likely not going to be as bad as people thinks. I see a lot of fear around tariffs from people in Europe, and I think it's misplaced. So I don't find reason to be concerned there, at least not yet. And then immigration, immigration, if he were to implement a very aggressive deportation, mass deportation of illegal immigrants, would be quite negative for for the economy because like them or not, immigrants drive and illegal or legal, they drive growth and they also help keep labor markets more in balance and therefore our immigrants help keep inflation down and drive growth. So reversing that would basically lower growth, increase

inflation and you get basically what people like to part about on Twitter, which is is tax inflation. I don't think this will happen. Yeah, yeah. I was going to add one more and maybe you were going to get there, but, you know, to the extent that Doge, and I'm not talking about the mean point, but the actual Department of Efficiency is implemented.

I don't think we know how much they're going to cut, but you know, the government right now is 44% of the whole economy. So, those outlays, depending on what extent you cut, there could be some GDP hit there too in the short term. I think that's probably the other

factor than those people worried. But I think it's too early to really say without knowing how the policy is going to be implemented. It's just a lot of, like you said, Alex, potentially pressing your bias, maybe. Yeah, I get a feeling that they're going to focus mainly on criminals. It's going to be mass, but for people with, how do you say this, criminal history, not just everyone. Yeah. I would say, I agree largely with what you guys are saying. And then to you, To your point, David, I think part of the reason there's been that divergent, you talked about gold a little bit. I mean, I think the divergence is solely based on dollar strength.

So we've seen the divergence between gold and Bitcoin, and I think it's solely a dollar story, whereas Bitcoin has way more, you know, tailwinds coming from this potential administration, which we should get into in a minute. But I also, on rates, what we were just talking about, yeah, like the market is basically a coin toss on whether or not we're going to get a cut in December. I think they're going to pause personally. The market is basically saying they're either going to pause in December or they're going to pause in January. They're not going to do both.

And they think the market is pricing for three cuts by the end of next year. So basically getting to just below 4% somewhere in that range by the end of 2025 is what the markets are expecting. I personally think they're going to cut in December. I guess we'll see what happens with different economic indicators. And we can go from there. And the other thing I would say, what you guys were talking about with tariffs, potentially impacting the economy with, you know, potential rounding up of illegal immigrants impacting the economy.

The thing with Trump is like, and I said this in the last one, it's not my saying. Take him seriously, but not literally. So I kind of agree with like it'll be less literal than what he was saying on the campaign trail. The other thing I'd say is like, this man loves the stock market. Like when he was the president, he kept pointing to the stock market and how well it was doing. And if he's implementing policies and the stock market is tanked, thinking, like, I have a, he's going to take that, he's going to take that into consideration when he's like putting things out there. So that's the one thing that I say could be like limit exactly

what he's going to do. And honestly, I would say it's something that Biden should have done more of. Like, everyone thought the economy was horrible and the stock market was ripping, pretty much everything was ripping. And like, they, the Democrats didn't do a good enough job of like pointing out the positive things they did. They just kind of like, people are going to realize we brought jobs back to these areas with the Inflation Reduction Act and the Chips Act and all these things. And they just didn't, I don't think they did a good enough job, you know, saying exactly how well they did or at least trying to make that story come true. So maybe they'll learn from that mistake. Any other topics on macro rates, potential regulatory implications from here?

I'll just add that on the on the on the on the rate side on the fed cut side I subscribe with the David Zervos to you at Jeffries which is essentially that the short end has to come way down because normal which fed the Fed doesn't really know is you know he thinks normal is about 20 25 percent balance sheet as a percentage of GDP and you get there by middle of next year and he thinks that you know he's been really selling this you got to look at the balance sheet plus the rate story. And if that's true, you know, you should be, his view is you should be somewhere in the mid, mid to high twos. So, you know, I think the Fed's going to want to keep it a little higher for longer until they get a little more certainty around the policy outlook. But I think if

inflation can continue to come down, if energy can, you know, Trump can do what he does with energy and deregulating that sector and bring energy prices down inflation with it, you know, I think you could, you know, maybe the Fed's a little slower in their reduction. but I think you could go ultimately lower than, you know, depending on how the policies play out, lower than what's currently price. Yeah, I realize I also didn't say that the House view from our rate strategists is they're going to pause in December. And it looks like the Blueberg economics team is also expecting the pause in December. So it seems like that's generally the consensus view from most people here. The other thing I would say that to watch out for is we're probably going to bump up near the LCLOR, the lower.

the lower comfortable level of reserves. Basically, there needs to be a certain level of liquidity in the market. And the Fed is still doing QT, but they're getting to a point where they're going to have to stop QT and do some minor level of QE to keep their reserve levels, you know, around that $3 trillion mark. So they're not going to go below probably $2.9, 2.7. That should happen sometime in the spring. So that's another potential tailwind for global liquidity if the Fed stops the QT process sometime in, you know, the end of Q1, beginning of Q2 of next year. So that's something else to watch for on the macro front. On the liquidity front, too, just to add, you know, we haven't seen that TGA rundown.

That's a Treasury General account, which is the spending of the government budget, which is like $800-some odd billion, that, you know, I think you're probably not going to have a debt ceiling fight, you know, with the, you know, the Republican House and Senate and presidency. So maybe there can be an spending bill, which is why it hasn't run down as much. But, you know, it's going to have to run down some into year end. So that should add liquidity to the U.S. market at least. David, could you be great, I think if we could explain to the audience what the TGA, why would that be bullish, like the mechanics?

Yeah, so the mechanics are, you know, when money is held with the government in what's called the Treasury General account, that money is parked at the pet. And that money is not in the economy and it's not in the banking system to go out and be used within the economy. So when the government spends that money that's parked at the Fed and the balance sheet in the real economy, that money goes with the economy. It can go to financial markets, can make its way back into the banking system. So the TGA, when it goes higher, when the balance the Treasury has goes higher, it sucks money out of the economy. And then when it goes down, it adds money back into the economy. Yeah, and we had Sam Callahan on with a paper that you did with Flynn Alden, and I'm sure

everyone here kind of knows this already, but Bitcoin specifically is one of the top assets when liquidity goes up, both in the U.S. and globally. Go ahead, Alex. I wanted to add on two things, one on gold. I agree with you, James. Gold is a dollar story, and the dollar is going up because it's part of the Trump trade. Eventually, I think, is going to mean revert, not just yet. Why, there's a lot of confusion I perceive in the market by a lot of people out there that think that actually Trump is bad for the dollar because it drives him. He's seen by many as drives inflation. The daughter goes down either or like whatever cost and effect are both happening.

And that's not the case at all. That's exactly the opposite on the dollar. It's fiscal policies, his fiscal policy and his pro-growth policies. And the tariffs, all three are good for the dollar. That's why the dollar has been basically ramping up since he won. And that is why gold is down the way it is. It's a dollar story. And interestingly, this has put a lot of traders out there that fail to understand this in a difficult position where something is happening that basically, like the correlation changed.

Like normally they would think they would see dollar go down, Bitcoin go up, risk gases go up. now it flipped. Now, like, everything is going up at the same time. So, for example, misunderstanding that has kept a few people from amping up the risk exposure because they think, okay, something is wrong here, something may be breaking when things are trading just the way they should be trading. And on long rates, I think I'm not sure about the short end if it's going to go lower or is going to be higher next year than what's priced in.

It's going down regardless, but I'm not sure about relative to the market, which is something very important. But I'm very confident about the long end coming down, the long end, 10 year, 20 years, 30 year, and basically expressing that view with a small long position on long bonds. And I think it has a little bit room to run. And this is something important because at some point, if this continues running, is going to generate a lot of a mini panic, like maybe panic for a week.

When once like the 10-year note, the yield goes across as 475%, and even more once it hits, if it hits 5%, which we were just discussing with David. David, you were the view that we're heading there, right? 5%. I can see that over the medium term. Maybe short term would top out for a bit. Yeah. Great.

All right. I'll give a shout out to Alex here because one of the quotes from our podcast that we did the day of the election was the question is, are you long enough? And I was going to read off some of the prices from just 12 days ago. Bitcoin was at $76,000. Ethereum was at $2,700. Solana was at 188. And right now, Bitcoin is 913.

Ethereum is just shy of 3200. and Solana is way up at $2.40, just shy of its $259 all-time high, though its market cap is way higher due to, like, you know, new Solana tokens out there. So I guess that call was correct, Alex. Do you guys have any thoughts about the run? I asked this question last week. Do you think this is kind of makes sense? Do you think it's a little bit overdone? We're due for a pullback before we potentially go higher. Where do you think we're going right now in the current environment for, I guess we'll start with those top three, but the crypto overall, but Bitcoin Ethereum and Salon, specifically. Alex, you have any thoughts? Maybe want to start?

Yeah, maybe I'll start with this. You know, there's a survey I saw of different crypto funds and what they thought the expectations would be under different win scenarios. The consensus was a month after a Trump win, the total crypto market cap would be 27% higher. If we just apply that to Bitcoin, that's about what we've seen now, about 90,000 from 70, whatever it was the day before, a couple days before that. So, you know, that would say we've kind of priced that consensus move. I think there's still more room into year end, potentially. I mean, look, one thing I've seen over the years with crypto is that as the industry has become more institutionalized, as there's more professional fund managers, you do see, you know, year-end profit-taking.

people want to lock in their performance, their bonuses for the year or their carry. So, you know, I could see some profit taking into year end. I think some people might try to run the election trade until we have more certainty on what policies are going to be, who's going to be elected, or even just into inauguration. But, you know, it's, it doesn't seem like a bad level to kind of consolidate, but I think it's, you know, Mark, I think it's, I think you're hard pressed to find sellers here. is the other part of the market story that's very important as well. So we are at 97,000, right?

Actually, 90K was my target year-end for Bitcoin and a Trump win. So we run faster than I thought we would. That being said, actually, in hindsight, it's clearly makes sense. I mean, and also this is something also we talked about in quite a few podcasts here, is how the length of the range meant that once it breaks, we would run higher and higher. And there is something with Bitcoin, once it starts running, it just really goes. And people left scrambling to how to get on board, get a pullback, and the pullback doesn't happen, or is too shallow.

I was like a few nights ago, I was writing a little analogy with 2020, the 2020 breakout. The 2020 breakout, basically, we moved up for, what was it, 19 days straight, in a straight line up. On the 20th day, Bitcoin had its first real retracement.

which was what I call a leverage flashout because it was minus 20% from the high of the day before pretty much in 24 hours. And it was bought up very quickly. That's basically people running way too much leverage and getting flashed out. And then we continued higher for like four days later, Bitcoin was a full 2X from 20K,

from the break of something like 41K. only then we go into two or three weeks. I forgot exactly how long, two, three week pullback and a lot of noise. And then we continue breaking out when Elon starts talking about Tesla buying Bitcoin, which was beautiful. If you guys remember how he basically hinted at it by changing his bio, which was fascinating because it happened actually right before, like an hour before options expiry.

a Friday at AM UTC.C. So I think we continue going up. And this is the time where if you're running spot, you just let it ride. And eventually people may be concerned about their coins not going up while everything else goes up. I think that's fortunately for whoever is running, has that issue, they're going to be fine because we're in a market where I think you were talking about it, David, because the regulatory change. Everything is meant to go up. And everything is meant to reprise, even Ethereum, although I do expect Ethereum to continue underperforming. Shall we talk about Solana and Ethereum?

You have a Solana t-shirt, David. Oh, well, yes, I do. Let's get into the sole-Eth ratio. Do you guys, actually, before we even get into that, the, you know, the ETH-BTC ratio, sole-Eth ratio, I see it all over. You guys are both liquid traders. Do you actually trade that? Do you actually go long-eathe in short-soul or long-BTC and short-Eath?

Do you think about those as paratrades when you're trading, or is it just kind of like something you're watching? I mean, for our strategy, we're a long-bias fund. So, you know, we're not pair-trading. You know, there are crypto funds that will do that strategy, market neutral or pair-trade strategies or something like that long-short. I'm mostly watching it from the perspective of, you know, if you own too much ETH, relative to Bitcoin, you're underperforming. And if your benchmarks Bitcoin and most people probably want to think about it as that, you know, you really need to focus on outperforming Bitcoin. So I think from that standpoint, it's probably been painful for a lot of funds this year who've owned too much ETH. We've owned very conservative, conservative amount of ETH this year.

we just started inching it up here around these levels recently because, you know, I look, it's kind of a, it's kind of a widow maker's trade this year. I think it's tough to pick the bottom. But, you know, the way I'm thinking about it, at least EPPC, is that I wouldn't be surprised if there was a calendar year rotation. You see this in a lot of asset classes. You see it in macro, I see it in crypto many times where the worst performing is the best performing. Lana was a good example of that in 2022 or 2020. Yeah, 2020. 2022 after the FTX crash.

And going to 2023 is the best performing. I'm not saying that each is going to be the best performing, but I could see positioning being, you know, you know, off sides there. And I think the thing that I'm actually watching to think about when more money is going to come in to EF is I'm watching BlobSpace, which is the per the call data that upgrade they just had, which is what the roll-ups post. their transaction metadata to.

That's the reason. that upgrade is the reason ETH is not really printing any fees or at least relative to what they used to print. But you're not at the marginal ban now for ETH. You're right at that marginal band of, you have a certain amount. You know, you get 50% full on that. And you think once you get above that,

you know, like any commodity, that marginal demand could exponentially make price spike. And I think if you get above that meaningfully, for a consistent period of time. You can see E. start to print fees again. Why do I think that's even important, right? TradFi, Boomer, PE ratio.

If you think about the new money that's going to look at ETH right now, especially through the ETF lens, I think a lot of the traditional fundamental buy side guys are going to say, I want to see revenue on this asset, you know, accelerate. I want to see profit accelerate.

That's when I'll start to be more excited about it. As one real cohort of potential buyers that I think EAT needs right. now. David, how do you track blob space demand on any website, any tool do you use, public proprietary or, you know, paid, whatever? Yeah, I think, you know, I think Blockworks has a good dashboard. That's behind a paywall. Doon Analytics, there's some public ones. You can, you can go on Dune and you can Google, you know, search ETH blob space. I think there's some blob explorers that

exists. I think Grow the Pie might have some interesting data on that as a website for Bloss Base. But yeah, I'm tracking, I'm tracking Blab Space and how much is going to be, you know, really it's like a commodity, right? It's like the ETH block gas limit.

You know, when you're below the block gas limit, it's, you know, if your consent, you'll blow it, it's like free. But once you're consecutively above it, you know, it just starts to spike. I'm not saying we're there yet. We have a lot of DA coming online. But that's kind of one thing I'm watching to see. Like, when could that money get excited?

You know, I think this is very important, what you're talking about. And I would want to stress from the public to actually remember what Dave is talking about. Because this is something that is on my radar. I approach the market more from almost entirely from a macro perspective, not on chain, but on-chain guys are looking and paying attention exactly at this. So definitely I think is very likely if that changes, that could drive a very rapid change in ETH's price action. Yeah. On ETH I wanted to add, sorry, James, go ahead.

No, I was just going to say that EFTC ratio chart is just constantly down into the right. And part of me, like, I'm not a trader at all, but I'm just like at some point, I would think this either has to, this has to rebound in some regard. And maybe I guess David just talked about a potential catalyst for it, but I just, I'm not exactly good at market timing. So I won't be doing it. But that chart is really painful for anybody who's an eth maxi looking at what's going on in the market. I mean, even still, they're only at like 30, like I said, 3200. And it's got to be painful for somebody who's holding a lot of eth and watching Solana and Bitcoin. A lot of these other coins truly run when they're theoretically should.

should be the sitting in the pole position for, you know, a defy ecosystem. And maybe they still are. So time will tell. You were talking about if we trade the pair. I do not trade the ETH VTC. I do not trade Seoul ETH. Some traders do trade them. I pay attention to them as basically potential places where sentiment may pivot.

Everybody's looking at them. So I look at them. It's just a matter of like being on. the same page. And I know smart money that actually tracks Seoul ETH and actually trades risk based on the Seoul ETH chart. If you're trading or very focused on ETH and you look at the ETH VTC chart, it has an issue which is, it has no exhaustion as someone who pays a lot of attention to technicals. And I place a lot of emphasis on volume. It has. no real exhaustion there that you can see on the chart, which is basically a major flush

where like price plummets by an outlier amount and you have, you see volume spike up a lot. And looking at the chart, I'm looking sideways because I just opened it. If you're going to be trading that or if you're paying a lot of attention to ETH, if I were trading this, the time I would long ETH against PTCs, either once it flashes down or once it goes up to somewhere around 0.04. Right now is 0.034, based on technicals, based on how I interpret charts and bear traps and bull traps. So I get the gist that you, like Joe McCann, our guest, who is not here today,

are more bullish Salonah right now than you are Ethereum. Or is that, am I putting words in your mouth? Extremely so. Let's put it this way. The Ethereum experience is the same as it was in 2021. It's dismal. It's low. Bridging is a pain in the ass.

It's just not a good experience. Solana is a fantastic experience. It's not perfect. It has a lot of problems. It has some infra problems that if you bring the right guys in, they're going to start fighting Solana because things are breaking behind the scenes. But that being said is the experience on Solana is great. The experience on ETH is just bad.

It's low. You don't want to trade on it. And all of this move towards L2s so far has not been a trigger by what David was saying before. It is not accruing value to ETH. So you have a bad experience and growth in the asset class in the chain that is not really accruing value to ETH. And on top of that, it completely lost mine share. And most users literally left to Solana. It's just a Solana story right now.

I would say 95% of everything that is being traded right now is on Solana. Anything to add there, David, on the Solana versus Ethereum? Look, I think Salon is still quite a bit smaller than, I mean, it is quite a bit smaller than ETH. I think there's still more room to go there. It definitely has the winds behind it right now.

I think a lot of people are looking now at that fee story and saying Salon is printing a lot more fee revenue than Ethereum is these days and Salamma just keeps printing new all-time highs. The market is very reflexive in that sense where higher activity, for higher

prices will create higher activity, which will create better fundamentals, which will create higher prices, which are pretty higher activity, which will create better fundamentals. And I think that there's probably still more room to go on the salonofront. You know, I, for this cycle, I think ETH is somewhat challenged

this cycle. I don't think ETH is dead. I think that our view on ETH is very much ETH is still going to exist. I think it's just a transition period for ETH. You know, if you look down the road, but it's for, there's a tech roadmap, and there's things that I'm not getting into the one that they just announce devcon.

But, you know, but there is there are no comments on that stuff yet. But what I can say is stuff like base roll-ups, stuff like eigenlayer. You know, I think that it's like based roll-ups should, which is what lets the L-1 validator sequence the L-2 roll-ups so you can get

faster execution and pre-confirmations. So that's to help with fragmentation of liquidity. Things like Igen-Layer should give you new middleware that can create a whole bunch of new apps. So like one that we're excited about is opacity And we think that's going to change the game for actual apps In Web 3 And there's stuff like this is going to be on Solana as well too

And I'm happy to talk about that But like opacity for example Let you put any Web 2 data from any Web 2 server On chain in a trust minimized way And this is different than like an Oracle like chain link This is like the JP Morgan Bank JPMorgan server said my bank account balance is this. Spotify service that I like

these songs, and you can't tamper with the data from the time it's produced to the time it's on chain. We think it's just going to open up a whole realm of web three apps that are actually useful. And that's, of course, we have a lot of that's being built on ETH, but it's not mature yet. So maybe it's a next cycle story that it comes back.

But I still think for now, you know, Solana as a liquid trade, is probably still the better one. But, you know, stuff to watch on the ETH side. Yeah, this is a good transition to the next topic that I wanted to bring up. I wrote this week about the Ethereum ETFs. As a group, they have been utterly demolished. I've talked about it on here pretty much every episode, maybe not every episode, but most episodes, there just has been

no interest from investors. And that all changed on Election Day. So, I mean, at the peak, as a group, these US ETFs, including Grayscale's ETH, they had net outflows of $690 million, almost. But as of November, like early November, around November 5th, they had five. They had five 554 million in net outflow. So it was getting a little bit better. But then the day after the election, like money just started pouring in. It was an $800 million swing. And when we look at Bitcoin ETF flows, we're talking billions of dollars. So obviously this isn't necessarily the same level. But to your point, David, you talked about potential fees coming in here, people looking at price to earnings types ratios, how much how much revenue is being generated by staking and things

like that, I think that could impact, you know, how trad-fi type investors that are more likely to use an ETF wrapper are going to be looking at these ETFs. And obviously, that Trump election, while it did fire up the Bitcoin ETFs and Bitcoin in general, it basically caused Ethereum ETFs to rise from the ashes. We see a little bit of flow out, but we're still solidly into positive territory for essentially the first time since these things launched. I don't know if you guys have any thoughts on tradifies overlap with Ethereum and the Ethereum ETFs, but I'll stop there. I think Ethereum needs urgently and should get it. I like your thoughts on this, James, the ability to stake their AUN. And I think that would drive a massively increased demand for

ETF. Any thoughts? Yeah, I mean, undoubtedly, I think that's one of the biggest hindrances. One, we talk about all the reasons why I don't think there's a ton of interest. One, it's Ethereum's just more complicated. Like, David can sit here and talk about restaking and, like, all this, the layer two's and the blobs. And, like, you're talking to these advisor networks and they're just trying to understand what a cryptocurrency is. It's just a whole other level of detail.

So I think that's problem number one. Number two, it's, I think Bitcoin is Bitcoin. And Ethereum isn't really competing with it in, like, the way that I think about it, but it is competing with Solana. So there's issues there. obviously we told the layer two. But the number one reason, aside from that, is staking. Like, you're just giving up yield because you can't stake in these ETFs. So BitWi has just actually acquired a staking firm, a staking company that specializes in Ethereum staking. So I think they're getting ready

for the ability to stake Ethereum in ETFs in the U.S. They also acquired a European company. So I think it's coming. Obviously, the Trump admin is much more likely to be amenable to allowing staking these things. I mean, also, we don't even have in-kind creation redemption, which means, like, a market maker or an authorized participant, the people actually create and redeem shares. They have to hand over cash and goes to this arbitrary process because the SEC didn't want people touching the underlying crypto. So I think at some point in the next year, maybe two, we will get to the point where you have in-kind. We'll also start to see staking. I mean, staking is allowed in Canada. It's allowed in ETFs in Europe. Bitwise just launch an aptost.

staking ETF in Europe. There's Ethereum staking ETS. There's a whole bunch of ETS in other jurisdictions. It's just the U.S. that doesn't allow it. After this, we can get into talking about what we think the regulatory outlook looks like with, you know, Republican control of the Senate, the House, and now the executive branch. But yeah, I think all of those things are going to be positive, ultimately for the Ethereum ETS. I just don't know what exactly how long it's going to take to get there. And yeah, time will tell. David. Yeah, I think all that's true. I think the thing I would add is that, from a regulatory standpoint,

the election also changes the dynamics of everything built on top of each. And Solana as well, right, but all of Defi is derrised to a degree on the election. So you can have these economies that were somewhat languishing, these digital economies somewhat languishing from a regulatory chokehold that can, you know, the market should receive more activity, more gaps, more usage, you know, picking up on these networks. And I think that's probably partially what's getting priced in there. Thoughts on eigenlayer. You specialize in staking and restaking. So I'm curious. I bet quite a few people in the audience would love to hear your thoughts on Aga Layer, which, by the way, is up right

now. Finally, woke from the dead. It's up 11% today. Yeah, look, I mean, I think, you know, first thing, you know, I think shared security, we think shared security is going to exist on most of the main chains. Right now you have it on first eigenlayer on Ethereum. But you also have Babylon on Bitcoin. It's going to enable staking at the base layer, non-custodial and trustless. And then you have Gito on Trouana, which looks like eigenlayer. And then you have another one sole layer, which we invested in as well on Solana. So, you know, you have it across these ecosystems. And we What it does is, you know, those four things. Let you bootstrap a network easily. You don't have to have a bunch of capital of stake. You can get this node network of validators that will participate. I think the most important thing, if I just summarize it, let you create me middleware. Middleware being, you know, services that adapt, decentralized application can use to have more utility.

And, you know, eigenlayers is, you know, it's really like a decentralized cloud. It's like an AWS for decentralized middleware for cloud services. And I think that's what you're going to get from a lot of these shared security platforms across the different ecosystems. And we like Gito too. We own that. We're going to restake on Babylon. We're going to do that as well.

We're restaking on Sol layer. So these are all things we're doing. We're pretty excited about that development. But I think the market doesn't understand it fully yet. They look it as just kind of like a yield play. It's really not like a yield play. It's not a defy play as much as it is. These are going to be app economies.

I think eventually people will look at eigenlayers competing like an L2 with Ethereum. They'll value it like an L1 or an L2 in the sense that you have 100 ABSs, 200 ABSs being built on this network. And, you know, I think that's how the market's going to look at it. Interesting. So yeah, let's get a little bit more broadly into regulation, what we think is going to happen as our, I guess, our last topic. You kind of hinted at it there and the fact that these stuff built on top of Ethereum and these other defy type protocols. And we talked about the last episode. And this episode before that, basically, like, honestly, they are probably better off, like, with the changes that we've had in this administration and this election than, like, by Bitcoin.

specifically, right? Like the defy true protocols that had all this regulatory ambiguity out there, theoretically, if all things go the way that most people are thinking, they should have at least a little more clarity on, you know, what they are allowed to do, what they can do, what they can't do, what have you? I guess, David, what are your thoughts on, like, do you have a timeline and when we're going to get some of this clarity? Do you think this is going to be happening that happens in the lame duck session, the next? few months. We'll see some clarity on different things. Stable Coins. Fit 21. Do you have a view here on like when we're really going to know the rules of the road, if you will? Yeah. You know, I was at the

Salt Conference. Cynthia Lewis talks. She's talking there about, you know, potentially getting some stuff through with, you know, whether stable coin or construction. Bill in the lame duck. I think that's not going to happen now that you have a Republican sweep. You're going to have Trump administration, they're going to want to put their policies in place. And I think that, you know, Congress is going to, you know, wait for the turnover of the session to do that. I think stuff with Congress is going to be much slower. You know, as much talk as there is about crypto, I'm not sure that we're going to be a first priority in terms of passing legislation. I think it's probably, you know, a high probability that the stable coin bill passes.

I think there's a good chance you get, you know, there's a chance you get fit. I think there's still a lot to learn and there's going to be a lot debated around the mortgage structure bill, which is probably the most important, at least for the all coin sector, the most important legislation that's out there. But you might not need it. And there might be a lot more immediate things that can actually give you 80, 90% of what you want with fit. Now, I don't want to say exactly immediate, but I think the agency stuff is what's key.

So if you look at, I think the one that most people care about is obviously the SEC chair. We did a survey with, I'm an advisor to a conference called Medici. It's one of the, you know, a well-known institutional conference in crypto. We did a survey of allocators, fund managers, projects, and that's what the most impactful regulatory change would be. It would be a new SEC chair. There's some debate, you know, we don't really know if Gensler's going to step down or not. I think there's some legal questions as to whether he can be forced out or whether he can just be demoted to a regular chair and then replaced.

Then I don't think we really have a conversation yet about who's going to be. I haven't seen any, you know, there's been people floated. I don't see a polymarket now. I think Dan Gallagher from Robin Hood's maybe, you know, who's been, you know, floated as top of the list, he'd be very good. But there are other good people that have been floated that would be positive for crypto. But to be specific, what are some of the things that could happen that could have a really immediate impact?

I think if I looked at it in time horizons, I think there's like short, medium and longer term. I think short term is, and I'll go to some specifics, but short term is just stop harmful regulation. Medium term has cut the red tape. And then longer term would be issue positive regulation. So like if I had to walk through those three buckets, I think in the short term bucket, it's, you know, Saab 1-2-1's gone. That's pretty easy, which was the, you know, banks have to hold an equal amount of assets for the customer assets to custody. I think that could be easily gone. That'll open up, you know, banks and flows for more institutional money to custody and hold digital assets. Then the other one is if you stop prosecuting companies, crypto companies,

I think you'll see, you know, more products of the market. And I think you'll see, you know, for example, staking was quote from cracking on the retail site. You'll see more exchange listings of tokens. Then in the medium term bucket, I think there's things like you'll see more crypto IPOs. So more capital formation. you'll see Circle go public. You'll see more Myers go public. I think you'll see more activity there. I think that'll open up venture capital funding

because now people who are stuck at later rounds who can't fundraise because the companies can't get acquired, there's dead money. I think that's good for that supply chain. I think there's going to be more crypto-ETP products. You've already seen some stuff like Bach launch ETPs. I think you'll see more ETS.

This is your specialty, James. I'm curious what you would think would be the most immediate, but I think GDLC, bit-wise, they've already converted. maybe Rickle, Soul, then maybe things like whatever has Coinbase futures. I don't know. I'd be curious what your perspective is on that, James.

And then I'll talk about longer term in a second. Well, actually, I'll just go on a longer term. I'll pick it back to you, James. I think the longer term stuff, and this isn't stuff where you can accomplish the Fit 21 stuff, that's actually most important, is if you can get, you know, there's no regulated way to issue a token to them.

Because the tokens, you can't issue with S1 with a token and meet all the standards that you require. It's like the oil and gas industry. You need specific standards on these forms to allow you to be in compliance to actually do it. Like you can have, you know, different industries can have different disclosure requirements. I think you can get some stuff like that for the token issuance. You can get more special purpose broker-doer licenses like the prometheum stuff that have limited the ability for crypto asset securities to be traded. at a broker because you can't clear and settle them based on the current rules with holding private keys. And then if you get more cooperation with SEC and the CFTC, like you have with

Henman defining what's the security and what's a commodity, I think that's what really brings stratify over. That's when you can see the banks become involved. That's when you get the real machine behind crypto, and that's where all's really do well. But I think that's a longer-term story. Yeah. I mean, my first thoughts are, one, all the reporting seems to be that Gensler's likely to step down. I mean, I expect him to be, you can make his life hell if you're Trump, if you really want him out. So I would expect him to step down personally. I mean, what you were hinting at is, it's kind of something we've been saying on the show, or at least I have been. I viewed, even if Harris wins, like, even if she won, it was likely to be slightly positive or at least neutral.

It wasn't going to get any worse than it was under Biden, but I thought slightly positive, just because, I mean, the one thing you didn't mention, which I can get into. But the first one is, like, the Wells notices, like, just stop some of those. Like, there's plenty of, of good actors in this space that receive Wells notices. I mean, just look at the biggest exchanges, Brian Armstrong's Coinbase. You can crack in, like, immediate you come in, you can basically stop some of those actions, right? That's one of the first things you can do is stop going after good actors in space and focus on people that are doing really scammy stuff out there. It's like blatantly obvious of people that you can go after. And meanwhile, it's just

better to go after bigger names because it looks better in press releases rather than saying you, you know, busted is something that was worth like $30 million. It's better to say I'm suing this multi-billion dollar company. So I think one, that would, I think some of that would have stopped or slowed, at least under Harris, even if she had one. The other thing, which there was a really good podcast from Mark Andreessen and Ben Horowitz where they talked about a lot of startups in this space, like they just couldn't get banked from Operation Joke Point.

So the fact that that's going to stop under a new Trump administration, it's probably stopping now, I would have to assume, like that should open things up greatly for the space. It's just the fact that you're not under the thumb and constantly just trying to find banking to move money around in the space is going to be huge in the U.S. And then, I mean, there's a whole host of other things, right, that they can do. Just engaging in conversation between the SEC and the industry about rulemaking is something they haven't done. It's something that Hester Perce and Mark U.A. have been calling for for years, and it just hasn't been done. It's been against the Biden admin's policy and Gary Gensler, you know, the Elizabeth Warrens of the world. to like even engage in this process. So even some semblance of conversation will be positive for the

space. And then you, you ask. So yeah, Gray Scales GDLC, which is their large cap crypto fund, is one of those trust products. They filed to convert it. Bitwise is BitW. They filed to convert it. Hashtex has an application out there to have a fund of both Bitcoin and Ethereum. I think those things, it would make sense to approve them. That said, Bitwise is BitW owns 10 assets where GLC owns is basically almost all Bitcoin, Ethereum. And then I think there's a tiny bit. What's in there else, David? Is it ripple and light coin or something like that?

I'm not really. Solana, ripple, something else. Yeah, we can look it out. But I think those could possibly get approved. Those have the 19B4s out there. The problem is, like you can make the argument that something like Solana or Ripple or any of these other tokens, there's a, There's a filing for the H-Dera network, H-PAR to get an ETF from Canary funds, which is run by Steve

McClurg. I don't know if those are going to get done anytime soon. We don't have 19 befores for those, which are the ones that actually start the clock. We just have the prospectuses that are just like, you know, you file those at the start and you go through the SEC that goes through a different division of the SEC than the one that would ultimately make the call. The problem is the precedent that's been set under this admin and honestly, even under Clayton's admin is like you need a regulated futures market. You need a regulated market of

significant size before they'll consider approving these ETFs. And to be honest, there's no rule that says that needs to be there. So all of a sudden you get a new SEC that's run by, you know, a Republican that leans the way that has their person, Markuated does, and you change the rules, or at least you make it more clear about like what is exactly needed rather than like constantly denying enforcing issuers. I mean, you were at gray scale. It was just. just constant, oh, we have issue with this, this, and this, and they list 10 different things. You knock off seven or eight of them, and then all of a sudden you file again, and they add other issues that they wanted you to be concerned with.

And all of a sudden, if you had just had a conversation about, like, this is really what we need to approve these ETFs, things would go a lot smoother. But I do think this new SCI admin were like to see a bunch of these spot products list. Maybe not until the end of 2025 at the absolute earliest is my view. But at some point during this new admin, that said, another precedent that's been set for years under the SEC is they, those 19B4s, they go through that process. It's that long 240, 260-day process where anyone who's paying attention is paid attention to the ETFs, it's like delay, delay, and then deny or approve. Theoretically, there's nothing saying that the SEC has to keep delaying and then deny or delay and then improve at the final date. So honestly, it could happen earlier, but my understanding is that it's unlikely to happen.

And you got to remember when Gensler came in, he didn't get into his seat until like May or June. So it could be a long time before, you know, we get somebody running the SEC. I don't know if that's going to be the first thing on Trump's list to get a new SEC commissioner in place. And again, it also depends on whether or not Gensler's actually going to step down. I mean, I can't imagine him going from chairman to being demoted to a commissioner under Trump and then just sitting there and writing out his term. I just don't see him doing that. It would be the ultimate fuck you if he would do that.

So in a way, it would be kind of funny. You know, in a bad way. Yeah, I mean, he also issued a statement saying, like, he's proud of what he was able to do. They approved the ETFs. Like, it was all this kind of stuff about these things. And I was like, it was kind of like so disingenuous because it was like, you did everything to stop this from happening.

Aside from maybe the Bitcoin ETFs. And you issued Wells notice that you sued the hell out of everyone in this industry, refuse to admit that this 21st technology, 21st century technology might need newer rules and regulation than, you know, the 1940 Act, something that's almost 100 years old, can regulate this stuff. I don't know. Common sense, in my view, just doesn't make, that doesn't make sense to me. But, you know, here we are and hopefully things are looking up. The other thing I would say, and I said this last episode, you're going to get new rules and regulations coming out of Congress. the SEC is going to come with new rules.

The CFTC sounds like it's likely to get some control over regulating this market. The industry is not going to like some of the rules that come out of this. But there will be clarity. That's one take, I will say. James, can I pick one to you on the ETF side? Yeah. Do you think there will be a spot or incong creations for Bitcoin ETFs? Or do you think of the cash creation rule is going to stay?

You think that's meaningful? I think there will be in-kind creations and redemptions under this new SEC admin. I would almost, I'm pretty confident. I think that would happen. The reasoning behind not happening was basically Crenshaw was very against approving the ETS at all. Crenshaw is a Democratic commissioner. This is kind of what I've been able to gather. If you read, she dissented on the approval of the ETS.

And basically, from what I could gather, was the main reason that we don't have in-kind creation. I mean, back in December and late November, pretty much everyone, including grayscale, BlackRock, was pushing really hard to allow for in-kind creation and redemption. And that was just a line that the SEC wouldn't cross to allow. And from what I understand, that was mostly coming from the Democratic Commissioner Krenshaw. And she's mostly going to be out of power in a lot of these things. She'll probably be writing a lot of dissents on the things that come about in crypto over the coming years. Look for issuers to throw a bunch of stuff at the wall.

We didn't even talk about options, actually. So Bitcoin ETF options, the CFTC approved them last week. The OCC issued a letter today that basically saying they were going to be approved. They could start, we could see options on iShares as Ibit, the Bitcoin ETF in the next day or two. And there's going to be a bunch of other ETS that are going to have options. I don't know if it'll be on the same day. But that's coming down the pike. So not only you're going to see a bunch of potentially other altcoins get put into an ETF wrapper,

in the U.S. Look for a whole bunch of covered calls, structured outcome, structured product type ETFs, and structured products in general from the banks. Once these ETFs list, there's going to be time where they're going to have to, you know, build up liquidity and open interest. But there's going to be, this is going to be a boon for liquidity of the Bitcoin ETF market as well. But, yeah, to answer your question, I think we'll see in kind in the near future.

And options are coming likely this week. They might even be trading by the time this episode. drops. Guys, two topics before we go. I think it would be good to cover. One is, and we're over time, but these are important. One is, and we can be brief. One is direction of price in the next, say, six months. The other one is what's happening in crypto in different categories. On price, I think the most likely scenario is we keep on running higher, as we were discussing before, into year-end and running higher immediately. And eventually, within the next amount of time, days or a couple weeks, we get a retracement below the current level. That's quite normal.

It's like people ramp a piles in. There's a lot of formal, and you get in, and you get in, and you get a, you. get in the position and you start making money and you're happy and then this is crypto, right? It's illegal and it flashes and then you're in pain for a little time. So what level do you think it goes down to you? What do you think the support is? Like 75, 73? No, no, no.

It's 80s. 80s. Like 84, 84. At most, 80, at really most, that's your all in level. But again, it's first, it's up and down and up, right? And then I do believe in the super cycle. What does the super cycle mean? Supercycle means continued positive correlation with equities,

which continue going higher through time. It's a structural bull market there. And at the same time, the dips on Bitcoin are more, shallow. Now, as it already happened in this year, the shallow Bitcoin dip cost insane amount of pain in Al-coins and Al-coin holders, because basically we, even though Bitcoin remain in a bull market, Alts had drawdowns in the 80 to 95% range, or 70 to 85% range. That was quite extreme and also extensive, right, that lasted eight months. So I can see, for example, we run a little bit up, then down below the current level,

then continue higher into year end. We cool off, like, say, around Santa, like right after the Santa rally that usually happens in equities. We cool off early January. We keep on running. We repeat the playbook of last year. we run into the end of February, euphoria everywhere, positioning absolutely out of the books. That basically sets up the perfect scenario for another flash that this time continues for a while, also paired with tax payments that in the U.S. are April 14th.

So that's basically March and April. People are taking profits. So I think that we could see that. That that being said, it's pretty certain we're going higher. What's your, what's your higher price target? What number, what number? How high do we go at that? I don't have one.

No, I could make one up. I can spin up a model that is going to give you a different number. But that's not how we make money, I think. It's usually the number, the number usually falls short. Yeah. Or is obscene, right? It's like, yeah, million dollars. Yeah, the one thing I would say is like, I'll believe

the super cycle stuff, maybe if we actually do so, see some sort of strategic Bitcoin reserve out of the U.S. if Lammis is successful in our bill and actually gets Trump on her side to do something like that, I think that would said things absolutely insane. I don't think that's that part of that actually happening. I don't know what the odds are of it happening, but yeah, that would just be mind-blowing. David, what are your thoughts on short, medium in the long-term as far as Bitcoin goes and crypto goes? Yeah. I mean, One point on the strategic reserve. The only market has a 30% probability.

I think that's too high. I think it's much less likely. I think you can define strategic preserve in three ways. Are there states in Pennsylvania that have a strategic preserve? I don't know. We'll see. Does the treasury hold existing Bitcoin? Once you back out Bitfinex, which they don't really own.

You got about $10 billion there. They could maybe transfer that and hold that. with the executive order, see? Does Congress pass usually reserved vote to buy Bitcoin? I think that's really, really unlike. But, you know, I think that narrative permeate through the market optimism

to the inauguration and somewhat past, potentially. I, you know, on the price dynamics, I do not have as precise a forecast as Alex says. You know, we don't trade a lot, but we do, we kind of have the right position. You get 90% long ahead of the election.

We're 95% now. So we're very much long right now into year end. See how we think about that. Ending weeks of the year and as we be closer to the inauguration. Do I believe in crypto and digital assets are in a long-term secular outperformance uptrend? Yes. What I call it a super cycle where we don't have, let's say,

50% plus drawdown in Bitcoin. I think that's absolutely going to happen again. So I don't think a super cycle that definition exists. Nick, if I said, you asked me over six months, if I'm bullish over six months, I start to really, I started to think six months is tough for me that far out. I think some things that concern me that far out are, does inflation pick back up? Does the Fed make a policy mistake and stay too high, too tight or too long? Does China not ease where they need to because the dollar's too strong

and they're trying to defend it. Does their economy completely deteriorate because they need the IQT and they're doing fiscal and that drags down global recession? Do some of these policy outcomes to break the U.S. into a recession? Or does this debt financing wall, the maturity wall, in late 25 and 26?

Does that suck capital out of the financial market and out of risk assets? And those are things that I think could probably derail the cycle or give us a reset, which would be natural. And that's kind of the way I'm thinking about the market environment right now as I look out over the next six months.

You know, as I like to say, we can worry about that later. Exactly. For now, for now, these work good. Yeah, so it's like we have at least till year end, you know, the Trump honeymoon. Trump honeymoon will end at some point. We don't know exactly when, but it's safe to assume that at least it lasts until inauguration, right? I would agree. I would agree. That is the thing about liquid markets, right? You don't have to care about it until you get a lot closer to it.

I listen to a lot of tradfai pundits and podcasts and stuff. And one of the sayings going around is obviously what I said, take Trump seriously, but not literally. The other one is, buy the election, sell the inauguration, which kind of seems like what you guys are a little bit hinting at here in the crypto space. And the other thing, it's in the beginning of some podcast. I don't know if it's Nick and Nick Carter and Matt Walsh's podcast on the the brink or it might be Alex Thorne's Galaxy, but it's just the opening is like if you're not long, you're short. And that just feels like kind of what, I get that gist from both of you talking about what's going on in the crypto markets right now. But yeah, overall, I think, I mean, honestly, if you'd come to me a couple of years ago or even like six months ago and told me what was happening right now, I would just be like, what timeline do you think we're living

in? It's been almost too good to be true for anyone in the space. So, We'll see how long that lasts. Anybody have any final thoughts before we wrap up? Yeah, categories. So I like to call it. Okay, yeah, that's right. Yeah. So we have basically, in one hand, we have a, we have a Solana, a category on its own, going up.

The drivers there, it's, on one hand, this insane activity, trading activity happening in Solana, very large mind share. and then on top of that you can add the possibility of an ETF becoming a reality in 25. We have Ethereum. Ethereum is not yet, hasn't really participated in much, but as we discussed, even if it continues underperforming, it should do well in absolute terms. Right now is ramping up, it's having the first good day, in relative terms in a while, it's up 4%.

The thing, the story for Ethereum is, So, okay, one hand, you have the extreme negative sentiment, sentiment. You have the, as we discussed, the possibility of improving the ETFs to enable them to stake their AUM. And then the narrative of basically different DFI protocols activating and turning their RepShare switches on revenue share. Same narrative that the latter applies to all of DFI. So once Ethereum goes, DFI should go. We have all the cheap layer ones, which are like most of them are like debt. Like there's no activity whatsoever.

But there are still L1s, L2s are their beta to the market. When the market goes, they turn to run a lot. And quite a few of them haven't broken out. So I see a lot of upside in all of those, like from say near, to say there's quite a few of those aptos. The one writing the most that takes all the mind share right now on that category is Sui. And the reason Sui takes number one is because Sui has more money than anybody else. Let's put it that way.

That's why they're doing it so well is because they have an extraordinary treasury that allows them to buy a lot of support from everybody. So that's definitely a competitive advantage because to build a community, it's costly, right? You need to pay developers, founders, in some cases even influencers. So that's on the L1 part. We have the narrative of Bitcoin as reserve. I think you're right, David,

it's likely going to disappoint, but at least it can keep us going for a while. It's not going to be, we won't have anybody come out and say it's not going to happen. Together with that, we have the BTC5 category that right now is kind of very lackluster, but I think it's going to catch up at a later stage, maybe in a month, in a few weeks, but BTC-Fi is going to catch up, I think, on that.

That's basically core stacks and the new guys coming, as David was saying, like Babylon, and there's quite a few others, right? What else? We have meme coins going crazy. We have the large-cap meme-cons going crazy. That started basically with Dodge. as you know we have the dodge department so it's dodge caught up quite a bit and that that spelled over spilled over all these other large meme coins from a bunk with pepe and so on i think by the way i think

large cap mincoins are quite overextended so if like if there is a flash like which word right if this flash meme coins would likely pull back much harder than L1s, right? And then we have the small cap meme coins, and that's where everybody's going crazy gambling on chain. And that is, yeah, Alden Solana is totally dominated by Solana, and it's mainly dominated right now by the AI meme coins, which are not really AI, but they're tied to AI. we discussed the last podcast or two weeks ago when we talk about goat goate and um there's a lot of there's so much going on there um most of the names out in the market they are absolutely at

stratospheric levels so i think uh investors out there looking i think it's not a fat i think is a I think it's a narrative that is going to dominate and improve and get bigger and bigger and bigger. So good idea to pick some names and get position or try to specialize in this and research and find names to get in early. I'm personally, I'm an advisor to a team that is basically building a platform for AI agents, have pretty much quite a few AI developers on staff. And that's how I'm positioning myself. More on this side is more as a builder than as a speculator. You know, it's funny.

On the mean front, the night before the election, we put on a bunch of risk. And one way I did that was I surveyed 45 different funds and investors that I know. And I said, what's the best election trade? Behind Bitcoin, the overwhelming with all was Doge. We put on a big position in Doge before the election. And, you know, we actually still have it.

It's gotten to be a large part of our book. I think it's consolidating here. We'll see, I think these moot points probably have still a little more room if you think the market's higher into your end. But again, it's, you know, it's a game you've got to be smart about if you're going to be in. Bonk as well, and I know Joe's big into that. I think of the fundamental side, you know, we own and we really like Gito. We like stuff like that in our fourth thesis.

I think that that thesis is just getting going. They had their restaking caps open today. Some of those other different platforms, that's the Solana. That's Solana's ecosystem's eigenlayer plus FlashBots, plus Lido. That's what Gito is. And we're in that as well. Their caps got are getting filled up pretty quick.

What else? In terms of narratives and stuff. I think Solico's still humming along. Sol DFI is still humming along. We do own some stacks. I think Alex, I mean, to your point on Bitcoin Defi, you know, the thing that I actually

track for Bitcoin Defi, or Bitcoin Phi, if you want to just call it, is really like the 90-day Bitcoin return chart over, you know, whatever that pair is in Bitcoin. If 90-game returns are going up, then that correlation tends to be pretty strong, and there tends to be a catch-up trade. We'll see if it happens.

But, you know, no future predictions here. You know, I don't know. I think there's just a – I do think the current meta right now, within least the more hot ball of money space, as you mentioned, Alex, is those AI mean points. We don't have any exposure there, but, you know, it's not really core to our thesis. You know, we could do something small, but it's – You know, I think, I think you know, you need prices to keep going up in that space, but I think there's probably more attention added there.

Awesome. I think that about wraps it up. Do you have any last second thoughts or rebuttals to David, Alex? No, no. I think we're good. And it's also a very long podcast. Yeah, we're long, so we're good. It's late.

It's late here. All right, guys. Thanks for joining us for this episode of Bits and Bips. We'll be back in two weeks to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone. and thanks David for joining us. Thank you, David. Cheers.