Unchained - The Chopping Block: Crypto in US Politics & Roaring Kitty is back! - Ep. 646

Episode Date: May 16, 2024

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Robert Leshner, and special guest Laura Shin explore the latest trends in the crypto world. In this episode, we touch on how Donald Trump's pro-crypto statements influence voter behavior in the upcoming U.S. elections. We ask ourselves, is voting based solely on crypto policy a legitimate strategy? What are the implications of the Biden administration's stance on crypto regulations for future electoral outcomes? Following the political discussion, we unpack the recent GameStop and AMC pump and dissect the viability of their business models. We bring to light the broader implications for memestocks and whether the increased capital really saves these companies. Tune in for a detailed exploration of these critical questions affecting the interplay of politics, finance, and cryptocurrency. Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Pandora, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show highlights 🔹 Crypto's Role in U.S. Politics: Trump's pro-crypto stance at a recent gala and its potential implications for voter behavior are examined. 🔹 Single Issue Voting on Crypto: The legitimacy of voting based solely on crypto policy is debated, with insights into how this could impact the political landscape. 🔹 Opinions on Financial Regulations: The various aspects of financial regulation, including the Biden's administration's stance on crypto, and predictions on how this might influence future electoral outcomes. 🔹 Roaring Kitty’s resurgence and its impact on GameStop's stock prices are discussed, analyzing the ongoing influence of meme stocks in the market. 🔹 Retail's Impact on Financial Markets and the broader implications of retail investment behaviors. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly  ⭐️Tom Schmidt, General Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Laura Shin, journalist, author of ‘The Cryptopians,’ founder and CEO of Unchained Disclosures Links Blockworks article: https://blockworks.co/news/only-a-fool-would-vote-on-crypto-alone  Trump’s 2019 Tweet: https://x.com/realDonaldTrump/status/1149472282584072192  SAB121: https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409250  Roaring Kitty Tweet: https://x.com/TheRoaringKitty/status/1789807772542067105  Learn more about your ad choices. Visit megaphone.fm/adchoices

I mean, this was like a loose narrative around GameStop that like, oh, they were going to start an NFT marketplace and they were going to do all these things. And it's like, the core issue is not, yeah, they don't have the cash or, you know, there's, oh, if only we had more capital, then our business would be saved. And it's like, no, like, fundamentally these businesses are fucked and they don't have the DNA to like unfuck themselves. And so, yeah, maybe you can have some more cash on the balance sheet by, you know, selling shares onto retail. But like, that is not AMC. That is not GameStop's core issue. Wow. Tom, you might get more hate for this than for your politics comments. Yeah, right.

Not a dividend. It's a tale of two pawn. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Unnamed to trading firms who are very involved. D5 protocols are the ultimate policy. D5 protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective

on the crypto topics of the day. So quick intro, first you got Tom, the D5. Defy Maven and Master of Memes. Hello, everyone. Next we've got Robert, the Cryptoconnasur and Tsar of Superstain. Good evening. Joining us once again, we have Laura, the CEO of the show. Hey, everyone.

And I'm the Seve, the Head Hype Man at Dragonfly. So we are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopping Bloch at XYZ for more disclosures. So right off the bat, before we get into this, I want to give everybody a trigger warning we are going to be talking about U.S. politics on this show. If you're not down for that, you know, maybe skip forward roughly 30 minutes or so. I don't know.

We'll maybe edit this later when we actually figure out what the timestamp is. But there's been a lot of stories this week and a lot of discussion about what's coming up in the U.S. election. So naturally, crypto takes us into the realm of U.S. politics because there's a lot going on with respect to the White House and the executive branch being very aggressive against crypto. Well, there was a big story that Trump, of course, the U.S. Republican presidential candidate is apparently very pro-crypto.

So he held a gala on May 8th at his Mar-a-Lago resort, where he invited a bunch of NFT holders of his, you might remember, Polygon NFT collection. He had a couple of them. Robert, I believe, is a proud owner of a Trump NFT. Is it correct, Rob? I think I ironically own one, yes. Okay, okay. That's the same thing as owning one, by the way.

I'll just point that out. There's no way to ironically own something. You just own it. You can ironically move of financial asset in this age of financial nihilism. Okay, I guess. All right, fine. So anyway, he was asked at some point about all the companies that are leaving the U.S. because of the White House and Biden's crypto regulations.

And he claimed crypto is moving out of the U.S. because of hostility towards crypto. If we are going to embrace it, if we are going to embrace it, we'll have to let them be here. And so he went on to say, Biden has no idea. Gensler is very much against it. The Democrats are very much against it. And I say this, a lot of people are very much for it. I'm fine with it.

I want to make sure it's good and solid and everything else. And if you like crypto in any form, and it comes in a lot of different forms, if you're in favor of crypto, you better vote for Trump. So this footage went viral. I think it was Ryan Selkis and then Mihailo from Polygon, who were both at this fundraiser and apparently personally spoke to Trump about crypto and NFTs. And this has triggered a lot of conversation about what we're looking at in. the 2024 election with respect to crypto policy in the U.S.

So a couple days later, there was a Blockworks article that was entitled, Only a Fool Would Vote on Crypto Alone by a journalist at an op-ed contributor to Blockworks, who basically argued that Americans should not prioritize their own selfish financial interests over broader societal and ethical concerns. And so her claim in this article was that, you know, yes, okay, maybe in this presidential race, there's some left-right thing going on, but you should not. predicate your vote purely on a single issue that is a relatively minor issue in everything facing the 2024 election. This got a lot of people very, very angry, as U.S. politics tends to do,

arguing both the pro and con of whether or not it's true that this is one, a minor issue within the U.S. or that it's legitimate to be a single issue voter on the question of crypto. So I'm going to start here because, Laura, you came out basically in support of the claim made in this Blockworks article about whether or not is legitimate to be a single issue voter on this issue in this election. Actually, no. I'll give you before. Yeah.

So my personal opinion is if you want to be a single issue voter, fine. Go ahead. Do it. It's a free country. You know, however anyone votes is up to them and it's their personal choice. I guess I'm pro choice when it comes to voting is how you could put it. But what I was reacting to was I was seeing a lot of tweets where they were people were like kind of blanket criticizing all the Democrats and saying like, oh, like, you know, the Democrats are evil and like, you know, whatever.

Just and, and I thought, oh, if you guys go that route, that's a very bad route. So my tweets were more about, hey, we don't know who's going to win the election. And if you come out as like only hating one of the sides and then they end up winning, you're screwed. And so you might as well just like be a little bit more diplomatic and recognize that there are Democrats who, you know, they voted to repeal that SAP 121 and that there are, I mean, there have been multiple instances of this where the Democrats do side with the pro-crypto platform. So I think my point is more like, it was more like political strategy advice,

you guys. It was a little bit like if you, yeah, just throw your lot in with only one side, then not only are you only going to be, you know, in the favor of one set of politicians, but then on top of that, literally, like, nearly have the country will automatically hate you. Whereas, like, if you kind of just do what people I think have been, like the lobbyists have been doing so far, which is saying, like, oh, this is a technology, like any other technology, it's neutral, you can do good things with it, bad things with it, like it's not inherently political or partisan, like the internet. then that's a smarter strategy and in my opinion it's the truth um so that's you know but but i actually i'm not one of those people who says like you shouldn't be a single issue voter um i mean i'm not

uh but i've like i remember there was a friend of mine in high school school who was like super pro life and i i don't know if she was a single issue voter but i do remember like that was something she was super passionate about so um yeah i guess like yeah i guess like yeah It doesn't bother me if that's how you decide to vote. But I just more was like, wait, I think crypto people are going a little bit too far and they're going to screw themselves. So that's what my tweets were about. Before I go into the op-bed itself, which I think is actually a small detail that culminates,

I think really like two weeks of changing perceptions around the role of crypto in the upcoming elections. So it's kind of like a result of a lot of other things that occurred. So what I see is more important that leads up to this op-edad are, series of polls and research that were done, which demonstrated the impact of the crypto voter. I don't have the exact stats on hand, but something like 40 million Americans own crypto, and that there's a very small number of Americans who are significantly opposed to crypto. And this is an issue that can and might, and if things go unchanged, will decide some of the upcoming elections in the U.S.

We already saw some candidates like Katie Porter get blown out by taking an anti-crypto stance and losing a primary decisively because of it. And I think the series of polls over the last two weeks were starting to become a wake-up call for the campaigns that are, you know, beginning for this upcoming election cycle, coupled with Trump coming out in favor of it. And I think this is shocked a lot of people because. crypto has been slept on as an issue for a long time. And I think a lot of politicians in the Democratic Party, the president's party, have taken voters for granted, essentially, not thinking that this would be a negative issue for them as the administration has exerted somewhat of an outright hostility towards crypto.

And they've been sleeping on it. and the last two weeks have been a wake-up call. And crypto has a very important role in the elections. There's 40 million people who are for this issue. This is one of the newest wedge issues to emerge in American politics, probably in the last 20 years. And this is likely the first cycle where it's going to make a material difference. There's a number of very large packs forming around the issue. There's a huge number of supporters that are starting to mobilize. And this is the first time where it's going to shape outcomes. And this op-ed was one of the many reactions to this.

And the op-ed was basically trying to say, you know, hey, don't make this an issue. Like, don't vote based on crypto. Like, that's ridiculous. Vote based on what I find to be like moral, you know, arguments for why you should vote, you know, they have nothing to do with crypto. And I call BS on this. And the reason why I call BS on bad op-ed in particular is most races are decided by people's personal economic stakes. You know, the economy has been pretty much the number one issue for most

voters for every election going back 200 years. You know, right now in this election, you know, most voters that on the top of their mind are inflation are the cost of health care or the cost of, you know, basic goods and services, you know, student loans and medical debt is a constant policy plank of the current administration. Economic issues are number one for almost every voter for good reason. You know, it's ridiculous to ask voters, hey, vote something that's against your own financial interest. A small number of people will, a small number of people do. They say, oh, well, you know, I'm willing to suffer economically if I have this social issue or this non-economic issue, like work out in my favor because I care more about that. That's fine. But to ask people not to

care about the economic issues that they find important is preposterous. And a lot of people, 40 million Americans or so find crypto an important issue. And so I think it's ridiculous to ask them to not make that a part of how they think about voting. And I think they're going to vote it. Now, it doesn't mean that, you know, one party or another party is, you know, in trouble, in my opinion. I think it's a long way to November. And there's a lot of opportunities for, you know, candidates up and down the ballot to start to make their views know. The only thing that's really known at this point is there's been a stillity from the executive branch over the last four years. And a lot of people want the current administration to pay a price for that. You know, I'm a

lifelong Democrat. Like it makes me, you know, uncomfortable voting for the current administration because they've been so outright hostile towards the industry. You know, I'm not alone. There's a lot of people, you know, going through similar trials and tribulations about their support. And so I think we're going to start to see some fragmentation, especially of down-ballot races. We're already seeing it. We're seeing lots of candidates start to come out for or against crypto, a lot less than against it, knowing that the demographics of being against it do not make that much sense. And so I'm just really excited to see what the next six months look like, because we have six months of serious political, you know, gamesmanship ahead.

We, and I'm sorry, Robert. So you actually think that crypto will potentially help this the election because I don't know if I, really. And has Steve and Tom, what do you guys think? I mean, I very much agree with Robert that I think a lot of stuff does come down to just pure economics and financial interest. There's like very famously this like chart of people graphing like Biden's approval rating versus the price of oil. And there's sort of like very tightly inversely correlated.

And it's like, yeah, people care about their own financial. And it's often, you know, the most important thing for most people. I do find, as always in American politics, everything becomes very. black and white, red and blue, highly polarized for like really no apparent reason. I think people who view this again as like Democrats are anti-crypto and Republicans are very poor crypto, kind of forget the Trump administration. Trump was not exactly extremely pro-crypto. I mean, Mnuchin was trying to like ban self-custied wallets towards the end of the administration. It's not like we got a Bitcoin ETF under the Trump administration. So it's not, I think again, it's, it feels very panderingy, where

Trump sees, hey, you know, some free change on the ground, some crypto people, you know, why not vote for me? Sure, why not? Like, it's really no cost, which I think is the other weird question in my mind, which is like, why are the Democrats, why is the Biden administration specifically so anti-crypto? It's like you said, there's a very, very, very small number of American voters who are very anti-crypto. There's a decently sized portion that are pro-crypto, but it's like, what points are you winning? I think certainly there's a, like, aesthetic opposition to the crypto industry that is maybe partially our own fault and therefore it's, you know, hey, I'm just going to lean into my own gut instincts here. But it's just weird that's

painted as a thing that is that is polarized when reality it's not that polarized. And it's not really, I think, as black and white as sort of, you know, we imagine it to be as, you know, some other issues are. Yeah, that's very well said, Tom. I think it is always arbitrary how these things play out, and you're absolutely right. In the first term, Trump was famously anti-crypto, right? So he, there's a, there's a quote by him that I think I actually have it. He said in 2019, I'm not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air, unregulated crypto assets and facilitate unlawful behavior, including drug trade, blah, blah, blah. I don't know, she's like, old man yelling at cloud

kind of stuff where like clearly, you know, neither, like both these people are obviously extremely old. they don't have the time or the capacity to do fundamental research on like what even are these things they have these legions of advisors and trade groups and interest groups that are constantly coming at them whispering in their ear telling them what to do and with Biden in particular we know or at least you know i've heard now for many people that more or less when Biden won the primary against Elizabeth Warren Elizabeth Warren and Biden had a handshake deal that Elizabeth Warren was going to choose basically Biden's economic cabinet and so that's why we have this last lineup of these, you know, these warinomics type people in Biden's camp we're setting economic

policy, right? Biden, in and of himself, he's like an 80s, you know, pro-union kind of Democrat, right? He doesn't have this like, you know, MMT kind of disposition. But, you know, why did this show up in his administration of this very far-left economic policy of people like Lena Kahn and Gary Gensler who are like, you know, all bigness and finance is per se bad and we should crush it, right? This is like straight out of the mouth of Elizabeth Warren. This is, like, not what Biden was saying on his campaign trail. On his campaign trail, he was like, I'm going to be a moderate. And what we get out of his presidency is very immoderate, very far left policies that are basically kind of anti-big business. And of course, they've not been working, right?

It hasn't been bought by the courts. The courts, you know, Lena Khan has lost every time. Gensler has lost most of the time that he goes up against these actual policies in front of the judges. And so it's a very activist administration, right? And, um, I'd say a lot of this, to come back to your question, Laura, of like, is this going to matter in the election? It matters how close it is. If the election is not close, then of course it doesn't matter. If the election is close, which it looks like right now, things are trending pretty close,

right? Like if you look on polymarket, it's like 55-45, whether it's going to be Trump or Biden. And if you look at just by party, it's closer to 50-50. So, you know, basically the difference is that Biden drops out is like a non-trivial likelihood. And so it actually is a very close election. And if it's going to be a very close election, at least looking at everything right now, something that 40 million Americans care about. And let's say not everybody's going to vote on that basis.

But let's say, you know, 10% of them. Crypto is a meaningful part of how they end up voting. That's a big block. That can absolutely swing an election. Now, of course, there are many things like that. Right? Crypto is not, you know, it's not the most important chess piece on the table. But in the last election in 2020, crypto wasn't even on the chess board.

Now it is. You could say, oh, it's like a, you know, it's a pawn. Does it swing the chess game? No, probably not, right? But is it a part of the chess board? 100%. When I play chess, every single pawn sways the other one. Let me just put that out.

All right. Okay, sorry. I forgot who I was speaking with. I just wanted to pick up on something Tom said, which this goes back to my tweet threats or tweets, which is that you're totally right that Trump is not somebody, at least I personally think that the crypto industry can really. trust. He's the kind of person. He's very self-interested. He pretty much his whole life, like everything he does is just anything that can benefit him. And so right now he sees crypto as

something that can benefit him, but I don't think from his speech, like you heard Hussie, you know, imitating him. There was nothing in there that was like substantive or, you know, that kind of- Was I imitating Trump? I wouldn't call that invitation. Yeah, whatever, you, you know, you quoted him. But there was nothing in there where, you know, you could say like, oh, wow, like he's really thought about this and really understands, you know, how this fits into his policy and like, you know, like, there was just nothing where, um, you kind of felt like, oh, he really gets it. Now he's like orange pills.

Like literally there was none of that. It was definitely more like, oh, you like crypto, vote for me. Vote for me. Give me money. Send me your crypto. Like, like that was kind of the subtext. I hear that. I hear that.

And what I will say is a lot of policy positions. in politics are at a very high level. I am for this. I am against this. AIDS will work out the details, right? Like he was putting a stake in the ground saying that he was for something, and a lot can be read into that. And the thing I'll add is we're talking about one election. There's 435 congressional elections and a third of the Senate as well. There's a lot of races up and down the ballot where this is going to be talked about this year. It's a lot more in your one race. But Robert, I guess what I'm asking is, do you, do you agree with me that, like, he's going to go where the wind is blowing? Or do you think that? I do. I think he's saying,

I actually disagree with this. I actually disagree with this. I think that if you look at Trump's broad, his broad platform, even in his last administration, right, he was very pro kind of, draining the swamp, kind of dismantling the administrative state. Now, how much did he really do along those lines and not that much. He also had obviously a lot of pushback from the administrative state in that he just wasn't very successful in actually implementing his policies. But, you know, he's been very clear, like, I think Gensler's bad. I think Wall Street is good. I think capitalism is good. And I want America to win, right? He also, we just, I think we just had these financial disclosures released recently. Crypto, sorry, Trump is the, has the single largest holdings of

crypto of anybody in government. You know, there was some form. I guess on which they have to declare what holdings they have of stocks as well as of crypto. And there's like a few Congress people who own some crypto and basically Trump beats them all by a large margin. But wait, was it just because of the NFTs that he sold? Yeah, presumably. Yeah, but he still holds the crypto. Yeah, but he still holds the crypto, right? He didn't sell it for cash.

So he still holds, I think, ether. I'm not sure. He holds some crypto. But also like, I mean, he was doing this, which is a little amazing to me, right? He's supposed to be a multi-billionaire. But he's doing this fundraiser for these NFTA. T's that he sold two years ago, which have plummeted in value, which are like, you know, he made a couple million from, which must be a tiny portion of his net worth. And he thought that

was worth doing an entire day event for, you know, crypto and his trial, by the way. He's flying in the middle of his trial back to Florida. Just didn't even with the Trump NFT holder. Yes, because crypto is an incredibly powerful wedge issue. And like to Lars's point, I think it is politically expedient for him to take this. I don't think he's thought through it down. Right, right, right. But the question of like, will he's a flip-flop on this? He sees it. So the question of will he flip-lob on this? I don't disagree with you. I think he's a consummate businessman and hoxter. But at the same time, he very much follows incentives. I mean, he's been doing that basically for eight years since we've been seeing him do this. So the question is, do you find it

plausible that his incentives would flip to the opposite? Yes, absolutely. Something would happen. Like, how? Tell me a story how that would happen. Oh, this is that he would be anti-crypto? That he become anti-crypto. I don't think that's likely. I think he flipped from being ambivalent slash letting his administration take whatever views it wanted to staking out a campaign position to be pro-crypto because of the polling

in the demographic. Yes, yes. But this is the claim that Laura made, right? Is that like, oh, well, you know, Trump, you can't rely on him because he's kind of a flip-flopper. Like, the thing you can rely on him is to narrowly follow his self-interest. And I would say a man who holds crypto and apparently loves his NFT holders or whatever, it's now in his self-interest to be team crypto. Correct.

And it's also in most politicians self-interest to be pro-crypto. In any district, there's going to be a lot more people that are pro-crypto than anti-crypto. And I think we're going to see a whole lot of trickle-down effects into down-ballot races as people figure this out in this election and the next one. Wait, but I don't know if I totally agree with all that. Like you guys probably saw that OSU, Ohio State University clip where somebody mentioned Bitcoin and it was just roundly booed like an entire stadium of people booing the mention of Bitcoin. Because it was like a commencement speech.

That's like a really rude. That guy was also insane. I don't know if you watched the rest of the speech, but he started like singing halfway through and he said he like took mushrooms or ayahuasca to help him write the speech. He was just some random guy, actually. Like, you look at his bio and he's not notable in any way. So I really don't know the backstory as how that guy ended up as the OSU commencement speaker. But I think the Bitcoin is really one piece of this bigger theatrical performance.

I was really bad. Okay, okay. Okay. But still, I mean, haven't you had that experience where you're talking to a random person? And when they realize that you work in crypto, they are skeptical and say, like, you know, I view it this way or that way. And it's just like these negative talking points that they've gotten from. you know, whatever affiliation they have.

Like, haven't you have this experience? Yes. Totally. Yes. Yes. Yes. So I get that. We live in this industry.

Yes. Yes. I get that way more than I get people who are like, oh, crypto's so cool. I want to know more about it. Like I get more of the people who are like, oh, well, isn't the fact of the environment? But you like run with journalists in Williamsburg, right? Like that's kind of a very distinguished subset of society. No, no, no.

No, no. I'm not talking. Yeah. It's just random people. And this is why polls exist to get outside of our individual, you know, indirect friend groups, you know, to get a broader swath of America. And like, this is why the macro numbers on this are important. And like this is why I think it's like some of the polls on by like paradigm, et cetera,

are like so game changing because for the first time you're able to get macro data on this issue, which has never really been macro studied before. So, okay. Robert, you've said this a couple times now. I kind of feel like, okay, maybe this is true, but it seems implausible to me that the Democrats would be so kind of rank and file aligned with being anti-crypto if it actually is not in their electoral interests, right? Well, that's why they're not.

There's all these ones that voted to repeal. Right. So there's 29 out of 180 who wanted to repeal. Yeah, 21. 21 out of like 180, right? Is that correct? Are those numbers correct? 21 out of 210.

Okay. 21. Okay, so there's basically 10% of Democrats who vote in that direction. And they're mostly young, right? They're mostly younger Democrats. Correct. And so, like, I can understand why, okay, you're a younger Democrat. You're in touch with it.

Like, you have friends who own crypto. Like, you're open-minded. You are willing to learn about these things. And if you're in your 70s, you're just like, oh, I heard that North Korea does that, that's for drug dealers. And you just don't bother unless somebody forces you to reconsider the issue. And so I guess, like, I would think that if you're right about that, Robert, that you should see people breaking from the president to preserve their own electoral odds. But doesn't seem like people are doing that.

Well, there have been very few opportunities where this has come up in votes so far in the House and or the Senate. And I think it's very early. Like, this has been a hot herb-button issue for like two weeks. And we're already... What exactly within two weeks do you feel like has accelerated that? Well, SAB 121 was like one of the first major votes on this in quite some time in front of the full house, right? So, like, there was a number of bills that came out of financial services and certain committees that after the SAB 121 repeal vote were queued up for a full vote in the house. There was a number of bills that passed committee but never came up for a full vote before.

Like, SB 121 was basically the first House vote on this issue directly. And I think it's like teeing up the first of multiple votes. Like it's like a domino that has fallen. It's like that's the barometer that has brought this back into people's attention. Absolutely. The rebound in crypto markets and rebound in sentiment. One other thing that I would say about that 10% number is. is that you have to remember a couple things, starting with the fact that SBF cultivated the Democrats

much more than the Republicans. And so they were much more burned by the whole FTX situation. And so they're kind of already starting at a much more skeptical place than Republicans who weren't, you know, their public image was not as sullied by the FTX thing, right? So there's that. But then there's this, there's just the fact of human nature where most people will follow what the leaders say. Like, that's just kind of how human nature works. And so the 10% are just the ones that have gotten educated and actually know what they're talking about and, you know, whatever. And maybe there are others who are educated and still against it. But all I'm trying to say is that probably some huge percentage of the 90 who voted against repealing, they are probably the ones where they're just

like the sheep right now. They're just following the leaders. But pretty soon, they'll probably like, realize like, oh, actually, I probably need to understand this. Like, you know, in a real way. And, you know, so I think all of those factors are why that 10% number is potentially low right now, but could change later. And one other thing that I would just say is back to the comments about Elizabeth Warren earlier. You know, I'm sure, you know, you've heard this multiple times, but it just bears repeating again, which is that, you know, before crypto, she was very much against big banks. And so it is kind of strange how a lot of the policies now are ones where they would advantage big banks over crypto. And so I do think that there are other

Democrats who probably maybe are either understanding that contradiction or maybe they just understand crypto better. And so they understand that that is that it that's even a contradiction, which he may not get. But the point is that, yeah, I basically think that kind of within the Democratic Party, we probably will see more of a shift. for all those factors I mentioned. Switching gears. Let's talk about what's happening with Roaring Kitty and GameStop. So if you don't know, Roaring Kitty was one of the big catalyst

behind the 2021 Wall Street's Betts meme coin frenzy that led to the rise of GameStop and AMC going up more than a thousand percent and the whole meme stock phenomenon that took place during COVID. And so you guys might remember the key players in this saga disappeared. until Sunday night when Roaring Kitty, his real name is Keith Gill, his account woke up suddenly on Reddit and Twitter for the first time in about three years,

and he posted a meme, which a very well-known meme of a gamer sitting in a chair and leaning forward as if to be suddenly more engaged. He's getting locked in. Getting locked in, okay. So this meme of a gamer getting locked in. Perfect, perfect. On the back of this, basically overnight trading in GameStop went crazy to the point where

the stock was, I think, between AMC and GameStop, the two stocks were halted 38 times combined from all the times in which they stopped upwards so frequently. It closed up 61% or I'm sorry, it closed up, what, 70% on Monday. And then today it closed up another 60%. So GameStop has just been going absolutely nuts. apparently it was the most traded stock overnight, did four billion of volume in the first 30 minutes of the market open. It did more volume than Tesla or Apple. And so it's now all of a sudden you have everybody talking about the revitalization, apparently through one man of the meme stock frenzy.

It was even to the point where Jay Clayton, the former SEC chairman, went on CNBC and basically calling out Roaring Kitty for, I'm unclear what? exactly he was claiming some market manipulation or not insider trading because of course there's no you can't insider trade on what you are going to personally do but basically talking about how this is terrible for markets and how you know this is not the kind of thing we want to be seeing in our great American institution of stock trading and so on and so it looks like this stuff is back and this may be in some sense good for crypto as well of this revitalization of the retail narrative. What do you guys' thoughts on seeing GameStop 2.0? Are we running it back?

And are we going to see things with the same velocity that we saw in the COVID cycle? Yeah, well, I'll start by saying, you know, I feel bad for any hedge funds or individuals that were short GameStop and AMC. This was, you know, a market being irrational and inefficient. I don't think anyone is calling this an efficient or rational market or response. I will say it was widely reported about a billion dollars was lost by short sellers yesterday. On the first day, on the first day, when it went to like 30, it went to 80 today, okay? Like some people have been carted off in body balance, metaphorically speaking. Okay. Like, it went from $15 to $80 based on somebody posting a meme on Twitter, right?

The fact that a meme on Twitter can move a stock from $15 to $80 in two days of trading should continue to scare people about the irrationality of financial markets when there's a lot of coordination of purchasers using social media, right? This was talked about years ago when it went away and like it's back and it's back with a vengeance. I think one of the reasons why retail quieted down is because there was too much of a frenzy and like there wasn't enough fundamentals and, you know, these companies weren't worth. you know, extremely inflated prices. And, you know, I definitely think this is, you know, a revitalization of the retail meme stock mania. And it's interesting because I don't think

financial markets actually learned anything. Over the last couple of years, there was a lot of talk about changes or reforms. And structurally, nothing has changed since last time. So, okay, what's interesting was that many people attributed. this to two things. One was ZERP, zero interest rate policies, right? Is that, okay, well, you know, interest rates are so low, everyone's looking for yield. And so people are willing to gamble and take crazy amounts of risk, and that's what accelerated this. And then second was stimmy checks, right? So people getting free money to just hang around at home and do nothing. I guess the third was also people being stuck at home, right? This was the tripartite explanation everybody

gave for the meme stock phenomenon. And here we are, interest rates are at five and a half, there's no semi-checks. And everybody's going to normal work. There's no reason to stay home. So the fact that this stuff is happening again, and it's catalyzed by one dude posting a meme, tells you that we do not have a good theory of why this happens or what is going to stop this from happening again in the future.

So this feels like just kind of a permanent function of internet culture, is that when the right forces materialize and, like, you know, the weather formation just kind of happens perfectly so that a hurricane forms, people are like, oh, awesome, I'm going to join the hurricane too, and like this will be super fun. Yeah, I mean, I don't think it's more complicated than that. Financial assets are somewhat liquid. If everyone crowds into any financial asset all at once, it goes way up. Like, this is just a law of financial physics.

And so society figured this out. Reddit figured this out. You know, 4chan figured this out, whatever. Like, you know, that's not going to go away. the fact that people can all jump on the same bandwagon together at the same time and all temporarily get extremely rich together, you know, that knowledge has not been lost, you know, and structurally nothing has changed. So, you know, I think this is going to continue. The other thing I'd say is that, you know, when you think about GameStop, you know, people are

obviously freaking out and there's a lot of, you know, with Jay Clayton going on TV and being like, oh, my goodness, you know, I'm so shocked in Nepal and all this. it does feel a little bit precious because like GameStop you know it's like you know when all the started GameStop was worth less than 10 billion market cap right what was it like six or something or seven I don't know um wasn't worth a lot so driving up a six billion dollar stock right and of course with with a company worth six billion and of course like most companies don't have a lot of shares floating right so like having four billion dollars of volume in the first 30 minutes of trading You know, imagine it's like, I don't know, optimism, right?

It's probably worth around $10 billion or so. That, you know, optimism suddenly trades $4 billion and the price goes up, you know, four or five X. Like, yeah, we see this kind of thing happening in crypto frequently. You know, it's not that crazy, right? It's not like, you know, Apple suddenly became a meme stock, right? That would be impossible just from the sheer scale economically of what it would take to move a stock that big.

But for GameStop, like, yeah, it's like, you know, a $10 billion stock. Like, we can pick one or two. that retail gets to push around like a school of fish. And it happens, and technically it's in the S&P 500, and it's a real stock. But this is also not a widespread phenomenon in the way that it is, for example, in other stock markets that are actually retail-driven. So this is the other thing that I find, again, a little bit precious about the reaction to this, is that if you go to the Chinese stock market or the Japanese stock market

or the Korean stock market, these are retail-driven stock-driven stock. markets, right? It is retail is a much larger portion of the people who are trading stocks every single day, in large part one, because day trading is much more normalized as an activity for normal people to do, whereas in the U.S., it's like kind of rare to come across somebody who's day trading. And then, but the second is that these countries don't have as much institutional capital as the U.S. does, right? The U.S. has a lot of institutional capital because we have very old institutions. You know, the U.S. has had a stable government for like 200 plus years, whereas Korea and Japan basically have had their entire governments and their entire economies turn

over within the last hundred years. And so you don't have so much capital concentrated in these big stalwart institutions that just own all the money and coordinate all of it, right, which is what happens in the U.S. So like China, if you think about China, the Chinese stock market famously is very retail driven. And there's like companies like, you know, Maotai, the company that makes the drink, which is Maotai, which is, you know, a hard liquor in China. that's like worth a huge amount of money

because Chinese people love Mautai and they feel like it's like a patriotic thing that it should be worth a lot of money and as a result it's like one of the most valuable companies in China even though it doesn't make a lot of money because people feel like it's like the Chinese meme stock you know so this kind of thing is a lot more normal outside of the U.S. markets

and so the fact that retail has claimed like three stocks or two stocks it seems like right now of AMC and games are like these ones are ours and we're going to decide what to do with them. And when we want to, we're just going to move them around and fuck over hedge funds. It's like, okay, yeah, that sounds doable, you know, but like that's not going to happen to Apple or to, you know, I don't know, Netflix or, you know, one of these other stocks that are much, much harder to move. You can argue maybe Tesla is this, right? And many people obviously have complained about, oh, my God, Tesla, it's this retail driven mania and, you know, there's no fundamentals.

And it's hard to tell sometimes to what extent that's true. Obviously, it's a very retail-owned stock. It's also very heavily shorted stock. But I would say this is not a widespread phenomenon in the U.S., even after seeing Roaring Kitty and GameStop do a lot of volume. So I don't know. I think people are freaking out a little bit too much about this. But it makes a good story.

Does anybody have a theory about why he resurfaced right now? Because he bought a lot of call options on GameStop and AMC. Which is legal, by the way, which is totally legal. as Jake had to admit on TV. There's a conspiracy theory that he sold his account, which also seems unlikely to me. I think he walked away with like tens of millions of dollars from the whole GameStop saga,

so why would he sell his Twitter account? It didn't really make a lot of sense to me. So, yeah, I'm not sure. I don't really have a theory of the case here. I mean, we'll learn soon, right? If he's getting this much engagement, he's going to do more stuff and we'll get a sense of what's going on. Yeah, I just find it interesting that he resurfaced

at the same time that we have like our own meme coin mania in crypto. So I just find that timing kind of, yeah. I mean, it is a bit late in the meme coin cycle because, you know, this has been going on for months now. Yeah, maybe it took them a while to take notice. Yeah, but he also was not the meme coin guy, right? He was like the fundamental research.

I think GameStop is undervalued and then everyone plowed into it and then became, you know, the meme coin guy. But that wasn't really his whole thing to begin with. and, you know, I don't know. I agree with you. I think it seems, you know, people love to, I think, overfit and over pattern match. And in reality, this is a very small one-time thing that rhymes like this thing from three years ago. But it's, I think, very hard to say that this is now going to be a whole other, you know, meme stock cycle.

What do you think, what do you think markets will do? Let's say that what I just described of, like, retail claims two states, stocks, AMC and GameStop. And it's like, these are ours and we're going to do what we want with them and you can't stop us. What do you think, do you think like people will delist these? Do you think that they will create special rules around these are manipulated assets and therefore we're going to not allow, you know, so da-da-da-da-well AMC filed to create and

sell like a bunch of shares a couple weeks ago. And I just did too much. Yeah. So they're just going to keep doing that. They're just going to keep, you know, taking money out of the market. And I just, I think at a certain point, you know, the market taps out. Well, maybe they move on to the next one. Sure.

Yeah, maybe the market moves on to the next one. I mean, even I think Bethany beyond went bankrupt like a year or two ago, right? So I think, you know, there are only so many vintage stocks, vintage mean stocks you can pump. But that's the thing is like this is the paradox of financial markets. The fact that the stock is high means the company is better because the company can sell stock at the high price to give itself cash to stay alive longer and do more things, right? The fact that that AMC is doing these shelf offerings to raise capital means the company is actually worth more. If they could sell unlimited shares at this stock price, then suddenly the business is

firmly worth that value, not based on me medics, but based on enterprise value and cash. Totally. I mean, this was like a loose. narrative around GameStop that like, oh, they were going to start an NFT marketplace and they were going to do all these things. And it's like, the core issue is not, yeah, they don't have the cash or, you know, there's, oh, if only we had more capital, then our business would be saved. And it's like, no, like, fundamentally these businesses are fucked and they don't have the DNA to like unfuck themselves. And so, yeah, maybe you can have some more cash on the balance sheet by, you know, selling shares onto retail. But like, that is not AMC. That is not GameStop's core

issue. Wow. Tom, you might get more hate for this than for your politics comments. Yeah, right. Sorry. Yeah, it's interesting, actually, because if you compare this to meme coins, right? In a way, what's the upside of betting on a bedbath and beyond or a GameStop is that everyone knows Bedbath and Beyond. Everybody knows GameStop. So memetically, it is like just everybody knows it.

It's already got all this mind share, even if people don't think the business is good, per se. They all remember it from their childhood or whatever, right? So in that sense, it's like great. meme real estate. Now, what's the downside? The downside is that, one, you have to trade it during daylight hours and, you know, whatever, all this annoying stuff of, like, having to do it in your Schwab account. But the second thing that's annoying about it is that the company can kind of take advantage of the fact that we're all betting on this meme stock by selling shares to us and

raising cash and further being bad companies and then just, like, you know, eventually diluting themselves over time by just selling, they're basically forced sellers, right, effectively, and they're constantly putting sell pressure on everybody because we have to keep buying their stupid stock insurances in order to keep the game going. And so it almost is like a meme coin where if that meme coin went up a lot, governance could vote to like sell more shares

of the meme coin. People'd be like, no, this is the worst meme ever. I don't want that. Like, that's horrible. I want the supply to be fixed and for us to just gamble on the meme

and keep everything as zero sum as possible. Right? So like no tokens get created, no, none get destroyed. And so in some level, like, there's some equilibrium point where like the brand of the meme is good is like good enough, but like the amount of shares that they can sell is, is low relative

to the market account or something where like actually at a certain price, you're like, you know, I'd rather just buy a meme coin than to buy this stock that can dilute me. And it sometimes has a fiduciary obligation to dilute me and fuck me and like break the meme game. The meme coin markets are more orderly. You know, they also, there's no circuit breaker. You know, you can always log in. You're not going to get blocked out. So maybe there's some lesson to be had there.

Maybe you could argue that over time, people will just converge on trading meme coins rather than trading meme stocks because they're just better. Like you said, no circuit breakers, no worrying about Robin Hood turning off the buy button and like trades 24-7. And like there's no company to sell into you. Right? It's just okay.

It's a picture of a dog. Like that's it. There's nothing more. Why do you need more than that? I guess, no, here's the thing. Here's the thing is that you need at some point a, a company to decide to launch its own meme coin and pre-commit to how much of it they're going to sell into, right?

Such that, like, with a stock, if the higher the stock goes, the more the company has to sell into the crazy meme, the memetic bull run, because it's just a fiduciary obligation effectively to, like, go raise money when capital markets are good. So, but if they were like, look, I know you want to gamble on us. We're going to give you the product you want, but we are going to. going to make it sustainable to the extent that the current meme coin frenzy or the meme stock frenzy is not sustainable because we will have to pop the bubble every single time. Right. Like they're just mathematically, there must be more and more incentive for the company to sell the higher the stock price

goes. I don't know. I don't know. Am I wrong in thinking that it would be like there would be the risk that the meme coin would be labeled a security if a company did that? And so that's why they're not doing that. But they are they are secure. A meme stock, I should say, or a meme something. I don't know what you would call it, but somehow allow retail to trade it, but not make it as brutal on retail as a meme stock, which by its definition, the company will sell into you every single time that you pump up their mean stock. Or maybe the other equilibrium is that people keep searching for like the right meme stock shell or vehicle to become a meme stock that just like won't sell into it, right? That won't issue stock when the meme coin or the meme stock pumps like crazy.

Yeah, but I don't think companies have an incentive to do that. Right. So I don't know. I mean, it feels like GameStop is kind of selected for leaning into the madness where the CEO was like kind of vibing with all the crazy Reditors. And I mean, I don't remember, but I just remember it being kind of ridiculous the way the CEO would kind of feed into the frenzy. Yeah, I mean, AMC had like, if you, if you're a showholder, you get free popcorn and, you know, well, they had the ape share class. They were like really kind of exploding it in some ways. Yeah, they leaned in very aggressively into the idea that they were a meme stock as a company.

Yeah. Yeah. And I guess, you know, it's hard to avoid that. And when you do that, like at some point, you over harvest, right? You just, you're kind of destroying the ability for your stock to become a meme coin. The more aggressively you monetize it. So there's some. Yeah.

Anyway, it's very interesting. Well, we'll see how this plays out. It has trickle obviously into the meme coin. coin market to the point where now meme coin volumes are up. We'll see how long this plays out. This could be a short-lived thing. And maybe once we see Roaring Kitty settle back into his routine, volumes come down. And it was like, okay, well, I guess that was a nice, nostalgic moment. Or it could be a new regime where these meme stocks are back for good. Let's go around the horn real quick before we wrap the show. Do you think this is here to stay? Or do you think this is like

a weekend and then it's going to go back to normal? Laura, here to stay or temporary? Yeah, I think it just depends on what he does. He did like a bunch of these little videos that kind of foreshadowed he's planning something. So I guess it depends on how good that is. Well, it depends. Obviously it depends. Question is, what do you think?

Yay or nay? I guess. Yay. You think it's here to stay? Okay. Robert. Well, I think it's been here to stay since the first go around. Like, I think, you know, it depends on your perspective, but it's been here this whole time.

It hasn't gone away because there have been no structural changes, whether through rulemaking or legislative or market structure or through brokerages or whatever, to remove the ability for meme stocks to exist, right? The game itself hasn't changed. And so until the game itself changes, how could you remove the ability for meme stocks to exist? I don't know. That's one of the conundrums.

Okay. Got it. Right? But like there's no reason for it to not exist. Like now that it is. Okay. So you think here to stay? Yes.

Tom, what do you think? I think it's hard to unwind the retailiness of the U.S. stock market now. I mean, even before this, it was, you know, zero DT options. Right. Now we're back to meme coins. and it will always pop up in some way or another. But I think this current one, you know, looks too much like what we did in the past. And you can never run it back one to one.

It always looks a little bit different in some ways. So this feels like, you know, it's going to be over in, you know, a week or two. I, yeah, I tend to agree with you, Tom. I think this is going to be like a week or two and then it's going to die back down. Like, yeah, retail speculating in the stock market, that will not go away. But the vehicle of, ah, GameStop, AMC, let's do it again. I think it's going to be a kind of short. game, it's going to come back down, and then people will find something else to do.

But I guess we'll see. We'll check back in next week and see if we got that prediction right. So, Laura, thanks for joining us, sharing us your perspectives. Thanks for having me. And let's see how mad people get about this one. Awesome. All right. We'll be back next week.

Thanks, everyone. Bye.