Unchained - The Bond Market Is the Boss Now: Bits + Bips

Episode Date: May 23, 2026

Kevin Warsh wants a smaller Fed balance sheet and fewer dot plots. Noelle Acheson says the bond market won't let him have either. Here's what she expects instead. --- Heads up! If you haven’t yet, be sure to subscribe to Bits + Bips, since the show will migrate there in a few weeks. Follow us on ⁠⁠⁠⁠⁠⁠Apple Podcasts⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠YouTube⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠Spotify⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠X⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠ and wherever you get your podcasts. ---- Bond yields are climbing globally while stock markets push higher on AI optimism — and Noelle Acheson, author of the Crypto Is Macro Now newsletter, argues the divergence is not a contradiction but a warning. In her read, inflation was building before the Hormuz crisis, the BLISS trade has permanently replaced the TACO trade as the structural put under markets, and Kevin Warsh is walking into a Fed that the bond market controls more than he does. She also flags a contrarian indicator nobody is talking about: the gap between the cap-weighted S&P 500 and the equal-weight index is widening at a pace last seen in 1999. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Steve Ehrlich, Head of Research at SharpLink and Host of Bits + Bips: The Interview - https://x.com/Steven_Ehrlich Guest: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Noelle Acheson | Author, Crypto Is Macro Now newsletter Learn more about your ad choices. Visit megaphone.fm/adchoices

Everyone, welcome to another episode of Bits and Bips the interview, the show where we explore crypto and macro collating one basis point at a time. Once again, my name is Steve Erlich. I'm the head of research at Sharplink, and I'm also your host, and we've got a terrific show for you today. Lots going on in the macro world. Stocks and bonds are going in entirely different directions. Crypto is getting caught in the wake.

We're going to have a new Fed share tomorrow and much, much more. But as always, before we begin, just a little bit of housekeeping, one, nothing that you here on this show should be considered investment or financial advice. For full disclosures, please see unchained crypto.com backslash bits and bips. And then second, let's take a brief pause so we can hear from some of the sponsors who make this show possible. If you've been loving bits and bibs, don't forget that the show is transitioning to its own feeds on X, YouTube, and your favorite podcast player. If you're not already subscribed to bits and bips on its own channels, go there now and hit that subscribe button so you can keep up

with our twice weekly live streams and macro means crypto breakdown. bits and bits will only be on the unchain feed for a few more weeks so subscribe today to be ready for launch you can get all the links at unchange crypto.com slash bits and tips all right welcome back so let me bring in my guest she's someone that will be very familiar to a lot of long-time listeners noelle at achison formerly genesis i think we've had a research at coin desk and currently is the author of a very widely read and influential newsletter crypto is macro now so welcome noel Hi, Steve. So good to be with here today. How are you doing today? I am good. I'm recovering from being about 95 degrees Fahrenheit in Philadelphia, a little summer weather in May. Yeah, I gather you're going to have to get used to that. Yeah. But I think like a lot of people watching and listening, I'm also curious to try to figure out what's going on in the markets today. And that's why you're actually the perfect guest to have on. because, as I said, in my opening, stocks continue to do well. I know, but there are some warning signs.

I mean, Nvidia announced another very big quarter, but the response was muted. But there's a lot of fear permeating, especially through the bond market. I know that's something you followed on, followed very closely. And then on top of all that, we got our first inflation print post the Iran War really beginning. No one quite knows exactly what's going to happen there. and Jerome Powell is enjoying, I guess, tipping this on Thursday, his last day as FedShare, although he's going to be staying on the board

to continue voting, I guess, for the foreseeable future. And again, crypto is getting caught up in all of this. Bitcoin had been up to about $82,000, $83,000. In recent weeks, ETH was, I believe, in the 2400s. That's all since retreated. So I want to kind of get into all of it. So let's really kind of just start right now, Newell, with my first question.

Like, how are you reading, especially some of the fear that is pushing through bond markets, pushing up yields to 10, the 30 year? To me, these would seem to be worrying signs, but for the most part, the market is kind of taking it in stride. You're right. They are definitely worrying signs. What's more, they're worrying signs at a global level. You look at global bond yields. They are climbing.

That's global tightening. That is not good for markets. But stock markets move to a different drummer. This isn't new. They always have moved to a different drummer. What is new is the divergence, the scale of the divergence. You probably remember back in the day everyone was excited about the 60-40 portfolio, big less than theory. You'd have bonds and stocks moving in separate directions. Well, you know, we're seeing that, but not quite at this. At this scale, it's astonishing. The stock market is being driven. We can talk more about this later by intrinsic and temporary factors, excitement about AI mainly. Look at the chip sector performance. Whereas the bond market looks at the macro outlook, what's ahead. The bond market traditionally has been known as the, and I'm going to big air quotes here, the smart money because they do focus on nothing but macro data and narratives and trends, whereas the stock market can get swept up, as we know, in some of the hype cycles

that we seem to be diving into greater frequency. So we've got stock market following the hype cycle, which may have some foundations, may not. We can get into that as well. We got the bond market following the macro indicators. which are not great right now. So that's why two very different drummers, not painting the same story, but they don't need to.

Yeah. Well, let's talk about some of those macro indicators. I mean, the inflation print is something that I know people are paying attention to. I think that the purchaser's price index is another one that is starting to creep up. But what else are you seeing? And how are you interpreting a couple of those sort of inflationary signs, given the fact that I don't want to use the word. transitory, but theoretically, if the straight reopens, if there is some sort of deal for Iran,

energy markets are going to go back to, at least immediately back to where they were before February 28th when the attack happened. But things should calm down a little bit, no? Things should come down certainly in terms of the oil price, but that's not necessarily going to bring inflation down right away for two reasons. One, inflation moves slowly. I mean, we've seen an uptick in the core index, which is what the Fed focuses on. But it's been small because oil prices do affect everything, but it takes time to filter through. And we are also going to see increased volatility in the expectations.

And this is interesting, especially in the American, the U.S. economy, the impact of gas prices on inflation expectations. You fill up your car at the pump. You see the tick, tick of the number going up. And that event, that feels like it's draining out of your bank. count almost. So with gas prices climbing, even though they don't impact the core inflation investors or savers, consumers feel that inflation is going higher. That's going to influence their expectations, which influences their behavior, which influences actual inflation. So we could have an end to the

Hormuz crisis tomorrow. And one, it will take quite a while for energy prices to resettle. And two, it'll take even longer for that resettling to filter through to the inflation indices and the So in other words, this trend of inflation is not going to be over anytime soon, no matter what happens in Hormuz, because it actually also isn't new. Inflation was building well before the Hormuz crisis started. Can you double click on that a little bit? Because I know that, again, you're based in Spain. You're European. Obviously, I'm American.

Inflation, the Fed has not, inflation had been going down, especially since. like the COVID inflationary boom occurred and the Fed was raising rates to kind of ratchet it down a little bit. But it never, it didn't get close to the 2% target. But it had been coming down. So what do you mean when you say it had been creeping out even before this happened? I'm going to push back on the assumption that it had been coming down. Actually hadn't. If you look at the graph since 24, it's been flat.

The core CPI has been hovering between 26 and three. It really hasn't been coming down. And even just a year ago, you're a number. a half ago, many of us were saying, okay, this is it. Inflation is done. The disinflation is done. And we're going to be steady for a while and then start to take up again. Why are expectations of a continued uptake in inflation, which we have seen, but since even

before the homo-strike, through the PPI, through import prices, through export prices as well. Why? Because of the de-globalization trend that even predates Trump's administration, this started during the Biden administration. So that's a longer-term trend. inflation will be heading up because of that. And Trump is just accelerating and turbocharging that. We had the tariffs flip-flopping.

We don't really know what's going on with the refunds there, but prices were going up at the result of tariffs. And then the whole risk crisis just lit a match underneath all of that. But seriously, if you look back, if you look at the charts, you see that non-inflation hadn't been coming down for a while. Yeah, no, I actually, I think you're right. I mean, I remember even some discussions about whether or not the 2% number actually had to be adjusted for like the kind of like,

and reset a neutral, sort of like a neutral Fed target rate, et cetera. So I think you're. Three is the new two, right? Three is the new. And this is something that many have been arguing, even many Fed officials have suggested. But they can't change the expectations because of the underlying and perennial problem

of credibility, of trust in the institution. A large part of what the Fed does is manage trust. And if suddenly, hey, we can't reach two, so we're going to change our target, well, that's going to impact the trust in the Fed's ability to reach the target that they sent. Gotcha. Okay.

Thank you for that. We're going to get a lot more into the idea of Fed and trust in probably about 10 minutes or so. But I do want to kind of press you a little bit on sort of the whole like immovable force versus unstoppable or immovable onstop. You know what I mean.

The whole idea of stocks versus bonds. Because in your newsletter this week, you pointed out a really interesting op-ed that was written by, I think it was a former deputy managing director of the IMF. I keep up open enough about sort of the bliss trade and kind of how it's perhaps a corollary or even like a more sustainable version of sort of the taco trade. And it sort of fits into the same family as the Fed put. And a really interesting book that I read a couple months ago about sort of like the rise of carry, the idea that like there's always going to be a backstop.

And how that got turbocharged, especially during COVID, when understandably central banks all around the world went into. excessive accommodation in order to support economies that were grinding to a halt. Can you please kind of explain, like, what do you think is going to give first? And I'd love for you to just also explain sort of this bliss trade and whether or not that's going to be a determining factor. Well, the bliss trade for those who aren't familiar with it, stems from a really interesting opinion piece published in the Financial Times a couple of weeks ago, by, as you said, Steve, by four.

former IMF chief economist and deputy managing director, Jita Govina, who's now a Harvard professor. And it was, again, part of it has to be read through the lens of someone that comes from the IMF. But she makes the excellent point that the market assumption that there will be a put, if you will, or a safety net, is not to do with the taco trade anymore. That's part of it, for sure. And Trump certainly has given the market many things to bank the, to hang, the taco expectation on many things we want him to walk back. But her point is that this goes beyond that. The taco trade is temporary. It's limited to Trump's term. But the bliss trade, which is the

acronym for big, large and lasting stimulus or support, is structural. Her point is that there is no administration now that will not spend to get people out of difficulties, whatever those difficulties be at a market crash, be at a banking crisis, be at high energy prices. We saw this in 2020. We saw this in 2020 with the energy prices. We're seeing this again, especially here in Europe anyway, with the Homoos crisis. Governments are not going to be voted out of office because they are not spending to save people from whatever difficulty they may be.

And this is irrelevant. It's irrelevant which political party you're talking about is actually also irrelevant, whether you're talking about a democracy or not because we've seen good. coups across the, especially across the middle of the equator economies. Now, this is relevant for the outlook for currency debasement, obviously, where is the funding for the stimulus going to come from? Well, it's going to come from somewhere. They're going to simply make it happen through one of the many tools in their bogs.

And longer term, this does add moral hazard, if that's the right term. It does add froth to the speculative side of the market is one of the reasons, I think, why we're just seeing so much risk on appetite in this very uncertain environment, as you pointed out earlier. But it's structural. The put is now part of the system. That, of course, will add a whole different layer of fragility. Yeah. And I'm really curious to see, like, when or if something might come to a head, because every time anyone who's been trying to kind of predict the doom loop ends up missing out because the market always recovers often with like a K or a V or some type of letter that shows divergent returns.

And one area I'm really focused on, I'd like to ask you about before we kind of move on to the next segment, is like, what do you think all this means in particular for the AI stocks? I mean, Open AI, I think is expected to file for a confidential IPO, perhaps as soon as tomorrow. Anthropic is on the hook likely later this year. These companies need to raise hundreds of billions of dollars in funding to build out all this infrastructure by chips from like some video.

actually, I think Anthropic, it was reported, they made an operating profit this quarter, which is pretty impressive, but Open AI loses a ton of money. And they're relying on all this debt to build out for the future. But they're also the ones like this whole segment. This is the segment that's driving stock markets higher. How do you think about that particular segment and its broader implications for the market? I follow the reports that insist that the earnings must. multiples, the PE, forward P, are actually very reasonable right now.

And what tries me bad is that everyone's assuming that the earnings are going to be met or exceeded. And while that has historically been the case, we can't assume that we'll always continue because, again, what is the basis of these earnings expectations? In many cases, it's the company guidance. In many cases, it's just simply extrapolating demand. We're assuming a ton of demand for chips and for AI infrastructure that may or may not appear, again, it may. I'm not going to be claim to be an AI expert here, but we've seen before, Steve, many times that technological innovations have their hype period in which the

expectations are out of proportion to the reality and they do eventually suffer a correction. Maybe this is going to be the very first exception in history, possibly, but it's rash to bet everything you have on that. And right now, everything the market has is betting on that. and that's an underlying fragility, which I think is being very overlooked. You mentioned earlier, Nvidia's earnings were good and the stock sold off. This has actually happened every single time Nvidia reports for the past, I think, eight quarters. And every single time everyone's like, okay, this is over. The whole AI plays over.

But no, what it is is the sell-the-news event. This has become fairly normal. It's related to expectations. Expectations before the report run up. after the report, okay, they were good, we're done, we're out, and people sell. So I wouldn't read anything into it yet, but you're so right, eventually you think something has to tip. And I will just throw out there that historically market tops have been tipped by very large

IPOs. Yeah, that is a good point to pay attention to. And in video, as you mentioned, is a really kind of funny case because I think I read that there had been an analyst's expectations, I think, were either 14 or 15 quarters in a row. But analyst expectations are, I guess, theoretically should be rooted in reality, whereas the Twitter hype machine can just speculate wildly. And those are the ones that are the momentum traders. So it is kind of funny. I found it interesting that Jensen Twang, Nvidia, CEO and the company, they pointed out how there's so much concern about a degree of incestuousness between all these different AI companies, the chip manufacturers, the consumers, et cetera,

that I think like half of, I think they tried to point out that like half of their clients are not like the big hyperscalers to maybe a suage concerns about too much concentration in a few big companies. But it is really interesting to see how that's going to play out. Okay. The concentration of clients in these companies and these clients are no doubt also themselves dealing with higher input costs and increasing cost of debt. Are we certain the health of these clients is going to continue to be strong enough to maintain the earnings forecast that these hypers and the chip manufacturers are selling. too. Okay. Great. But I've been wrong before. I've been expecting a market correction for a while now, and I've been wrong on the timing. So to be taken with a big grain of salt. Well, I've never been wrong ever in anything I've written. So I don't know if that feels like. Just kidding. Okay.

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Payouts event-based. Not investment advice. Not available in Nevada. Coinbase 1 card is offered through Coinbase Inc. and Cardless Inc. Cards issued by First Electronic Bank. Bitcoin back rates are based on cardholder's assets on Coinbase. All right, welcome back. So again, I said, Nuel is the perfect guest to have on this week. And the big reason why is because tomorrow we're going to have a new Fed share. So, Noel, I want to give you the chance to either eulogize or sort of provide a bit of a

valedictory speech to to jerome pow or maybe a little bit of a vote he's been fed chair for pretty much the for most of of crypto's uh era of maturation for lack of better term and uh and given how bitcoin and crypto were really designed to sort of be a counterweight to to everything that happens at the fed would really love to hear your thoughts on kind of what his tenure meant for this industry It's easy to get caught up in the personality cult around Jerome Powell. He certainly seems like the kind of grandfather, everyone which they had, the kind of guy you happily go out for a marshmallow latte with.

But we really can't forget that he was also behind the debanking of many crypto firms. He was behind the closure of Silvergate and what happened in March 23. He was behind a lot of really bad things that happened to the reputation of the United States banking regulators over the years. And he also really got the inflation story wrong. So while I do confess to feeling a certain fondness for the man because I have watched the FOMC press briefings, and I think he's done very well in the communication of the Fed's objectives and its inner workings, we have to remember that there were many things he either knew about and supported that ended up hurting, not just crypto, but also the reputation of banking in the United States generally,

or he was unaware, and that's also something to hold against him. And this is even before we give the credibility of the case against him by the Department of Justice a second thought. And the main objection was he's just not responsive, not even answering any of the subpoenas, which does also hint at a certain arrogance and an unwillingness to cooperate, even if you disagree with the premise behind these White House moves, sort of have to pretend to go along with them for the sake of precedent and protocol. So again, mixed. He had a lot to deal with. I mean, there's also there's the repo crisis. There was the pandemic. There was the inflation thing. I forgot he was there during the 2019 repo crisis. Exactly. He certainly had a lot to deal with.

But in my book, again, affection, but does not get a free pass. Yeah, I think that's probably how I would I would put it to. I'm an institutional list. I mean, people who have listened to me on the show before, I mean, know that I used to work for the U.S. government, the U.S. military. So I have a, I have a strong belief in sort of the objectivity, like nonpartisanship of of key institutions in the government. And sort of his insistence on maintaining Fed independence to me is admirable. because he's clearly facing a lot of pressure, and it's not even just, in my opinion, directly coming from the White House. But I think it also comes from the fact that I think a lot of Congress, especially in recent

years, they've abdicated their responsibility to sort of enact monetary and, oh, sorry, not monetary, to enact fiscal policy. And that's led to the Fed having to sort of pick up the baton there. And I know that's something that Kevin Warsh is actually going to try and push back on because he doesn't think, he wants to. reduce the Fed balance sheet. He wants it to kind of refocus strictly on monetary policy. So I understand that. But again, to me, like if the first line in his obituary from one that is his obituary as Fed chair, I guess, is that he's sort of stood for independence. His second has to be

he missed inflation, as he mentioned. I mean, we all got sick of hearing the word transitory in 2021, in 2022. And I have to admit at that time, I mean, there was a certain logic to it. I mean, COVID seemed to be a one-off event. And it was definitely a long-tail event that people hadn't expected. And if markets reopened, theoretically, it should go back down. But that's clearly not what happened. I mean, there were the de-globalization factors you mentioned and just ways that supply chains had changed after that.

And he missed it. And that led to record inflation heist in decades. It had to come back down. And that led to the banking crises that you mentioned because a few of those banks got caught on the wrong end of it with their treasuries. And that led to another unprecedented bailout. So it's hard to reconcile those two things. But that'll go ahead. And it wasn't even necessarily, I mean, he has a reputation for having defended independence, but perhaps that's worth picking at a bit.

He certainly came out swinging after the subpoena was served. And that was startling and good for him and everything necessary, in my opinion. especially when his job, as he himself has said, often is messaging and cultivating trust in the institution. He didn't think he did a good job there, but we do have to remember that there wasn't a lot of independent thinking when it came to shutting down crypto-related banking. That was influenced by politics. That was not showing much independence there. And we also have to ask ourselves, to what extent does independence mean you are not accountable for any decision? So what extent does independence mean you can simply ignore subpoenas?

And so, again, there's some pushback to be had on what independence even means and whether this Fed actually did exhibit that level of independence. And then that opens up the door to a fascinating conversation of what do we mean by bank independence. When is it a disadvantage rather than advantage? Yeah, I guess for me, it means he's much more like Paul Volcker and a lot less like Arthur Burns. But as you mentioned, there's different definitions of independence.

So that makes a lot of sense. Let's turn to his successor. I mean, Kevin Warsh, as I mentioned, he's gone through a bit of an evolution in his own thought on whether or not to be doveish or hawkish. One thing he made clear during his confirmation hearings is that he wants the Fed to move away from fiscal policy, which I believe he sort of characterized as not as being more picking winners and losers, whereas monetary policy is a bit more democratic in terms of affecting the whole economy.

And that's where he thinks the Fed should sit. He also has plans to try to create new ways of measuring inflation so the Fed can, I think, be a bit more accurate and more predictive and how it exercises monetary policy. And as you said, Newell, Jerome Powell was front and center and gave a lot of forward guidance. Kevin Warsh doesn't want to do that. What are your expectations? I think that, you know, he can say he wants a lower balance sheet. The markets aren't going to let him have one. It's as simple as that.

They're not going to let him have one. and independence, sure, but the bond market is the boss here and it's relevant for price stability. The Federal Reserve cannot let a disorder take hold in the Treasury market. It just can't do that because that would affect the dollar, which would affect price stability, et cetera, et cetera, et cetera, et cetera. So that is something that we can all, you know, wish for. I wish I were a professional piano player, not going to happen. In terms of forward guidance, I would not be at all surprised to see fewer FOMC press conferences,

there's fewer dot plots. And there's a big debate to be had about whether this is going to be good or bad. It sort of ties in with what the SEC is doing, talking about also in reducing the number of reporting periods of the year. Do, does the market, will the market be okay with less information or will this add volatility, does that mean analysts actually have to start doing their job, rather than being fed the information quite so frequently?

I don't know. This is a very, very big change. We get so used to a certain cadence or used to being spoon-fed certain pieces of data, that when that's taken away, is that going to disrupt markets enough that he's going to have to put them back on the table? Or will it be a refreshing change, reduce costs as well as reintroduce some original thinking that will in the end be healthy? I'm going to be surprised to see him try that, whether the markets will let him succeed or not, I don't know. But I think that's pretty much all he's going to be able to do. He's certainly not going to be able to change the inflation measure because it's not really up to him.

He can influence what people might look at, but we're going to make your own decisions over what we think is important. And he's certainly not going to be able to lower rates. Yeah. And speaking on that last part, not being able to lower rates, I'm sure you saw yesterday. I guess it was yesterday. Minutes were released, I believe, from the Fed's April meeting last month. And although one thing that I guess was revealed was that there was a lot more acceptance of hawkish views. than what came out in the final vote, which was really just to kind of hold rate steady.

And that speaks directly to what he's going to be walking into, which is a higher inflationary environment, but a president that wants lower rates believes that productivity coming from AI might put a bit of a lid on inflation. And then to add to all this, Kevin Warch is going to have to approve his quote-to-quote independence from the president. So what are your expectations for the next couple of Fed meetings? I think the number one thing to look at here is what Trump says. Right now he has publicly said that Kevin Warsh is going to do what he's going to do.

He has full faith in him, good man, et cetera, et cetera, which again is quite astonishing given the environment that you've said Kevin Warsh is walking into. We know Kevin Warsh isn't going to be able to lower rates, one, because he's just one vote and pretty much nobody else is going to be voting with him on this. And two, Trump can't bash the person he chose so soon after choosing him. So there's a bit of a respite there. I think one thing the market is getting wrong is expectations of a rate hike. I've been saying no cuts for a long time now, and it's reassuring to see that consensus

take hold. Now there's a consensus for a hike this year. I think that's going too far in the other direction. He's not going to be able to lower rates, but nobody's going to be able to lower rates. but nobody's going to think have the courage, or not enough are going to have the courage to vote for a rate hike when there is still so much uncertainty. We don't know if this is transitory or not.

We don't know what the other inflationary factors at work are going to do. So there's going to be no hike, so that'll keep Trump happy. There aren't going to be any cuts either. That may not keep Trump happy, but I think he'll be quiet, and that'll just simply give the Fed some breathing room. It'll give wash some breathing room to start to work on his relationships because in the end it does come down to how much the FOMC committee trusts the chair, whether they'll go along with what he suggests or not.

that will influence monetary policy going forward. Yeah, I'm actually a little reassured in a way. I know, like, until dissents started happening last year, it had been, what, decades before we had dissents. I'm actually more reassured that there are dissents at this point because it's sort of, like, you have so many different people in that room with different vantage points and they monitor different parts of the country economically.

Like, there should be differences of opinion. And I'm actually, yeah, I mean, move away from a group link. I'm actually looking forward perhaps season 52, of SNL will have an FOMC meeting. There's enough characters there that people recognize. I think there really could be one. Yeah, that's absolutely brilliant. And here's another twist.

What if the next dissent comes from the chair himself? Yeah, that would be, that would certainly be something. I don't think that's ever happened before. I'm not sure of my history is weak, but that would be, again, kind of mind-blowing. I doubt, again, I doubt he'd do that because his job, his number one job now is to get the people to trust, get the FMC members to trust him. Yeah, I would say at least for his very first meeting, it would be very unlikely, but who knows after that. All right.

So we talked a lot about macro. Let's talk about crypto. I mean, Bitcoin and Ether and the market, they kind of got caught up, especially over last weekend when news came out on on Sunday about potentially reduced strikes in Iran. They were put on hold, I guess, on Tuesday when President Trump mentioned that a few Gulf countries asked for a little more time to negotiate. But crypto hasn't really recovered yet. I know there was, I guess, some encouraging news that a few Chinese tankers made it out of the straight. Reporting seems to suggest that they paid some sort of fee or toll to Iran to do that. I don't know if that's going to be a model moving forward.

but crypto seems stuck once again. And it seems to be caught between, is it going to again be like a high beta risk asset or in a world of higher inflation, et cetera, is that the basement trade can come around and will Bitcoin and other crypto, will it be able to take advantage or is it going to lose to gold again? How do you see, especially the blue chip crypto assets behaving right?

know. Possibly all of the above, to be honest. I mean, right now, I don't see any catalyst to push it out of its current range, at least not any positive catalyst. There's always the danger of a stock market route, which will take the major crypto assets down with it, even though correlations have become somewhat unrelated right now, uncorrelated. Law of nature. Gravity will do its thing. However, will there be a stock market route? Again, this is up in the air. We just don't know. And the debasement trade continues. I mean, Bitcoin is a debasement hedge. And when people are worried about currency debasement,

that tends to be often when Bitcoin does better. Back in the banking crisis, in 23, the Bitcoin jumped, and everyone was like, oh, it's because people realize the banking system is corrupt and fragile. And I'm like, no, actually, this is because people expect the central bank to step in with stimulus. And that's what Bitcoin tends to react to. If things go really, really badly in markets, and there are signs of the stimulus, the bliss

tray that we were talking about before, then yes, that could well boost crypto out of its slumber. But when it comes to just risk on appetite, which we are swimming in at the moment, Bitcoin's not doing very much in respect. It's because there's so much else at the moment for the risk-forward investors. You've got an endless number of AI-related plays. You've got prediction markets if you really want some fun. stuff. There's just so much else to choose from. And this is one of the disadvantages of Bitcoin becoming a macro asset. And this is something I've been focusing on for quite a while. It's a good

thing because Bitcoin does have increasingly a position, a role, a place in macro portfolios, but the downside is it's now one among many assets. And other investors are going to choose the higher volatility ones, which right now is not Bitcoin. So in some, no catalyst to push it out of its range at the moment until it does emerge. from its range and the momentum will kick in. Yeah. I mean, I guess the one catalyst that could be on, that could be somewhere in the future is Clarity Act. We haven't had a chance to talk about it, but I'm curious if it's been discussed at nauseam

everywhere, but I'm curious if you have any just quick thoughts on it, either the nature of the bill itself or likelihood of anything being signed into law. I think we will get Clarity Act this year, she says, hopefully. I mean, I wouldn't put it at a high level of. confidence, but I just really think we will. That might be wishful thinking. I don't think it's going to affect Bitcoin that much. I mean, let's face it, Bitcoin does not lack regulatory clarity. What does is ETH. We could see ETH benefit. And if ETH goes up, Bitcoin will go up also because they often tend to trade in tandem. But overall investors, perhaps be more comfortable with Bitcoin

because of clarity, maybe. But Bitcoin doesn't lack regulatory clarity today. Yeah. I mean, one thing that we're paying attention to, I put out a couple of threads on this is, I mean, you're right, Bitcoin already has the clarity. ETH, for all intents and purposes, also has that clarity. There's even been guidance from the SEC pointing out how a lot of staking is not a security. Our staking activities is not sort of the offering of securities, which is at odds with what Gary Gensler's SEC had thought. It could be an unlock for DFI just because it kind of sort of gives a little more certainty, especially for some of the traffic firms to participate in, whereas like Dowels aren't treated as a

general partnership, which could be a big liability in certain cases. And hopefully there's going to be better test to sort of determine when someone like kind of falls under FinCEN versus not and has to comply with like AML regulations and things like that. That could be an unlocked from clarity. But you're right. I mean, Bitcoin, Eath, even like XRP and Solana, et cetera, I mean, even there has been formal guidance speaking to like those being commodities, there's enough judicial rulings. And if nothing else, there's the SEC blessing, what is it, 33-act ETFs, which are by the very definition commodities, like wrapping commodities into an ETF wrapper.

And I think that gives it that clarity. I hope I got that right. Sometimes I mix up the 33-40 Act funds. Who can blame me on that one? It's seriously very complex. I have a question for you, actually, if I may. Do you think that clarity passage is priced in at all? Another way to ask this is, do you think that if it falls through,

they would be a sharp drop in crypto prices? or do we just not care anymore? It's hard to tell. And maybe it depends on the asset itself. I tend to think that it's not just because crypto has been in such a big malaise for the last several, several months. It's really been coming down ever since President Trump was inaugurated again in January, 2021. If there is some real momentum suggesting that we're going to see passage in the next few weeks, it really has to happen by like early summer or I don't think it's going to happen at all.

We could see like another kickstart, but I don't think that necessarily means Bitcoin's going to go to 140,000. ETH is going to go automatically to 5,000 and so on and so forth. There's going to be a longer tail. But I don't think it's completely priced in and probably just because people still understand how many hurdles still have to be overcome in a short period of time for it to happen. I mean, the Senate bills have to be reconciled, and it has to be reconciled with the House bill. At some point, there's going to need to be ethics language that is palatable to the White House. And all that has to get done and signed into law, I think they're targeting July 4th,

which is really six weeks away, maybe. So I guess that's, I guess I was thinking a little bit real time as he asked me that question, but I think that's kind of where my head's at right now. Yeah, and the devil's in the details. I mean, one thing is the law and next is the rulemaking that then gets layered on top of that. But one thing I've been wondering about is if it doesn't, if it falls through, it's not the end of the world for crypto because the SEC is on board. Most of the financial regulators are on board and they can just rule make away until the end of President Trump's term. And if indeed a party opposed to crypto gets into the White House in 28, well, perhaps by then crypto is just too big to unwind.

Yeah, you would hope, or at least, I mean, Cryptos has proven itself to be such a powerful lobby, a powerful interest group that I would imagine that Democrat, yeah, like you said, even if it is a Democrat or anyone would not be as antagonistic as perhaps Gary Gensler's SEC was, just because there really was not much benefit that came from from taking that particular posture. I wanted to ask you about one more quick thing, and then we have to start to wrap up here. But I wanted to get your sense of sort of this innovation exemption when it comes to tokenization and kind of how that's going to interplay between these two markets. The innovation exemption devil in the details. One thing that I'm concerned about is the rumor that it's going to allow third-party issuance. In other words, anyone who wants to can issue a token wrapped around an equity that they actually have nothing to do with, even possibly I've heard some rumors that this would be without the

stock, the company behind the stock's permission, which I think is absolutely nuts. I mean, markets for me should be about capital formation, derivatives enable capital formation by creating more liquid markets and giving some assurance to investors putting their money into certain stocks. But when you're creating a market, that's just for derivative speculation, tokenized stocks, for instance, then that sort of subverts the, ideals of markets, the inherent ideals of markets, and it's not necessarily favorable to crypto, given the reputation that crypto, to be fair, has, of just pure speculation. The only thing it's good for is speculation. We've heard that many, many times. It's obviously not you and I think,

but we've heard it many, many times. So that was a concern, however, devil in the details. It may hopefully not happen, in which case the tokenization, innovation, exemption is great news. great news and that just it encourages some experimentation. It's going to be careful. They're not going to be crazy. They're not going to let anyone come in. They're not going to let unlimited amounts be spent. But to encourage both, you know, entrepreneurs and market participants and innovators,

start to experiment with this new type of marketplace that we know is going to be a big feature of markets five, ten years from now. I think that's a big step forward, the confidence that they're not going to get in trouble for trying new asset formats. Yeah, absolutely. Just last question. I'd love to have you answer one of two things. One, like what's one chart, one indicator that you're really paying attention to over the next few weeks or months?

Or what is one contrarian opinion that you'd like to share? Hmm. I think I love about your, the questions you ask is that you do, you don't hold punches. You do go for the overlooked stories. So we can actually use on that. Indicator, I'm going to go with inflation. inflation kills societies. And if we don't keep an eye on it, then there could be some very bad scenarios going ahead.

Inflation will move the bond market. Inflation will dictate monetary policy. Inflation could also have a very big impact on fiscal policy at a global level. So inflation, and inflation is something you can't hide from. You can massage the indices, as the incoming chair has said he wants to do. It's not going to help. You can't hide from inflation. So that.

And the contrarian indicator, I'm going to go with something that. I think people are ignoring and that is we're so excited about the S&P 500 reaching all-time highs. We're overlooking the widening gap between the S&P 500 and the equal weight index. There's the market cap weight index that we all follow. That's reaching all-time highs after all-time highs. And there's the equal weight, which isn't. And the gap is widening. The last time the gap was widening at this rate was in 1999.

For the dot-com bust, I guess. Yeah. Anything that gets top-heavy? we know this law of physics anything that gets top heavy ends up tipping over yeah absolutely all right well nobel we'll have to have you back on again thank you so much for for joining us uh that thank you everybody for watching and listening that concludes this week's episode of bits and bibsy interview but don't go anywhere laura's going to be right back on unchain she's going to speak with deo cassaris um on how pre-iPO pricing is moving on chain a spacex perps just launched

from hyperliquid, anthropic, and open, I'm sorry, and then anthropic and open AI shares are there too, and NASDAQ private market is teaming up with Pauly Market, so stick around.