Unchained - With Rate Cuts and Upcoming Elections, What’s the Best Play in Crypto? - Ep. 709

Episode Date: September 24, 2024

The Fed just made its first rate cut in years, slashing 50 basis points off interest rates—but what does this mean for the crypto markets? With Bitcoin lagging behind traditional finance, and the looming U.S. elections, uncertainty is growing.  In this episode, Quinn Thompson of Lekker Capital and Travis Kling of Ikigai Asset Management break down the major factors influencing the markets: from Bitcoin’s sluggish summer and the unwinding of the Japan yen carry trade, to why the 2024 elections could be a pivotal moment for crypto. Are these the catalysts we’ve been waiting for, or should we brace for more turbulence ahead? Also, they cover which assets could benefit the most under a Trump administration, and why they believe SOL could have a negative catalyst in the near future. Show highlights: Why the Fed cut rates by 50 basis points and what the chances of a recession are in the U.S. Why Bitcoin has underperformed the broader TradFi markets this summer The risks of the unwinding of the Japan carry trade for crypto How the election results might matter differently for different sectors of the industry Whether rate cuts affect stablecoin yields in DeFi  How the approval of Bitcoin ETF options will affect the price of BTC Whether Bitcoin miners will be affected by AI’s need for computing power Ether’s lagging performance this year and what might be a huge catalyst for ETH How SOL will manage through the huge unlock in early 2025 What Quinn and Travis think about investing in memecoins How the rise of Base will impact Coinbase Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Polkadot Mantle Gemini Guests: Quinn Thompson, CIO of Lekker Capital Travis Kling, Founder and CIO of Ikigai Asset Management Previous appearance on Unchained: With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold Links Rate cuts Unchained:  Fed Cuts Rates for First Time Since 2020; Bitcoin Remains Mostly Flat Fed Rate Cut Should Spur Crypto Investors to Load up on Memecoins, Asymmetric Founder Tells Token2049 Bitcoin Is Now in a ‘Classic Setup’ to Surge Higher Soon, Analysts Say Bitcoin and the Crypto Markets Slump as Fed Faces Tough Rate Cut Decision What Do Cooling Inflation and Rate Cuts Mean for Crypto and Bitcoin Prices? ETH performance and L2s: Unchained:  SOL on Course to Flip ETH, Says Multicoin Capital’s Kyle Samani Ether Has Been a Much Worse Investment Than Both Gold and Silver So Far This Year Are L2s 'Parasitic'? Analysis Shows Ethereum Only Gets a Tiny Percentage of Fees Alex Kruger’s tweet: “Ironically $SOLETH is barely up in 2024” Bitcoin ETF options: CoinDesk: BlackRock Bitcoin ETF Options to Set Stage for GameStop-Like 'Gamma Squeeze' Rally, Bitwise Predicts Mining and AI: TIME: Why So Many Bitcoin Mining Companies Are Pivoting to AI Timestamps: 00:00 Intro 02:09 Fed rate cut and recession chances 12:34 Bitcoin’s underperformance this summer 14:56 Risks of Japan carry trade unwinding 21:3 Election impacts on crypto sectors 38:00 Rate cuts and DeFi stablecoin yields 43:00 Bitcoin ETF options 49:31 AI’s impact on Bitcoin miners 54:38 Ether’s lagging performance and future catalysts 1:03:19 SOL’s 2025 unlock concerns 1:10:39 Investing in memecoins 1:18:15 Base’s rise and Coinbase impact Learn more about your ad choices. Visit megaphone.fm/adchoices

We've had the highest inflation in 30, 40 years under the most recent administration. If that continues, we saw what that can do, what the fiscal stimulus can do for the price of Bitcoin. And, you know, I don't think that really gets a ton better. Hi, everyone. Welcome to Unchained. Your no hay resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto nine years ago and as a senior editor of Forbes was the first mainstream reader reporter to cover cryptocurrency full-time. This is the September 24th,

2024 episode of Unchained. Mantles' Ameth is now the fourth largest LST with $1.3 billion in TVL. M-Eth offers holders cumulative incentives and airdrops, in addition to native ETH POS yields. This includes exclusive rewards like Eigen and Cook. Check it out at mith.mantle.xy-Z slash campaigns. Today's episode is brought to you by Gemini, a U.S.-based crypto exchange built for new and advanced traders. Gemini is offering new customers $15 in BTC when they trade. Sign up today to earn your Bitcoin. Pocod is the original and leading layer zero blockchain with over 2,000 plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem, making it faster, more secure, and adaptable. Perfect for GameFi and

DeFi to build, grow, and scale. Join the community at Pocodot.network slash ecosystem slash community. Today's topic is how the macro environment is changing and how that will impact crypto. Here to discuss our Quinn Thompson, CIO of Liquor Capital, and Travis Kling, founder and CIO of Ikega, Asset Management. Welcome, Quinn and Travis. Thanks for having us. Yeah, thanks for having this. We're recording the Monday after the Fed's first rate cut since 2020. This was a widely anticipated moment with a lot more divergence than normal over what people

expected the Fed to do. What did you think of the fact that the Fed decided to cut half a percent rather than a more conservative 25 basis points, which, like I said, that was not unexpected by most economists. And in addition to what you thought of that, what do you think it means for the economy and for crypto markets? Why don't we start with Quinn? Go ahead. Yeah, sure. So, yeah, it was a surprise. I think it was a pretty interesting meeting just from the fact that there wasn't a consensus going in. I can't remember the last time that happened and some last-minute communications.

But overall, I think, you know, the reason they did do that was because of the deterioration in the labor market, which everybody's been paying close attention to. That's had the number one focus. And then obviously, inflation coming down from levels it was to start the years, what gave them the leeway to do so. I think where the confusion is across, you know, economists, whether we're in a recession, heading to a recession, no recession, is around this two-speed economy. which it kind of first came about from COVID, whereas like the upper class recovered at a much

more rapid clip than the lower and middle income. But that has kind of only gotten worse since since, because immigration has been one of those things that we've seen upper class wages continue to grow and lower middle income wages, not grow. Inflation, obviously we know hurts the bottom and portion of the consumer much more because they spend a higher percentage of their total disposable income. So that has caused problems in the small and medium-sized business part of the market. You know, you look at the large-cap tech, these companies that finance themselves on the long end of the treasury curve, and those companies are doing just fine. We've seen record years across the AI and Meg7 trends. But then, you know, up until most recently, the small-medium-sized

business, regional banks, cyclicals had been really, really hurt. And so that's what caused them to do 50. I think in aggregate, the economy is okay. The consumer's fine. There's not really debt problems in either the corporate or household balance sheets. And I think, you know, it's going to probably restoke inflation and make things like Bitcoin and we've seen it with gold already, but come back into vogue as people are looking to hedge the currency debasement. And the one thing I think that isn't getting enough attention is the reflexive. of the Fed doing the cuts. So it's not just a Federal Reserve thing. It's now a global thing. We've seen China, you know, an announcement after announcement out of China because with the Fed lowering

rates, that weakens the dollar and gives the rest of the world ample room to then stimulate their economies and ease their monetary policies. And that's just this reflexive effect that feeds on itself to boost, you know, inflation protection assets, commodities, gold, Bitcoin. And I think we're going to see a reignition of the economy on the back of that. Travis, what do you think? Quain, you covered a lot there. I don't have very little to add to that, actually. Yeah, if I was going to guess why they went 50, maybe some kind of regret minimization

approach where you feel, you know, if the economy significantly, if they went 25 in the economy or labor inflation, we can significantly over the next six weeks, then, you know, there would be potentially a regret factor there that if you just kind of do 50 now and then if if the if the inflation labor data hangs in okay then you still kind of you don't feel too bad about going 50 I mean I agree with Quinn one of the weirdest things about it was just a lack of transparency going into the market it was essentially a coin flip going in and I saw a chart that from a Fed Fund's futures perspective I think it was the most it was the most uncertain meeting since 2015 and it was really just sort of out of alignment with how Powell has been, you know,

Powell has used Nick Timoros at the Wall Street Journal so liberally in his tenure to just really telegraph what he was going to do, try and be very straightforward. So I just thought that the fact that they sort of left it uncertain was just kind of interesting. I think the only other thing I'd highlight, which Quinn touched on, that I think is really important specifically for Bitcoin and just risk assets broadly is that we are now. in a global easing cycle. Every major central bank is is easing to varying degrees. The Fed is really kind of bringing up the rear for that perspective. And it's probably going to last for a while. I'm sure we'll probably talk more about later on today about, you know, the potential to

reignite inflation or not. You know, there's lots of conjecture, plenty of smart folks on both sides of the fence on that. But I think what's clear is that for the next, you know, few quarters, I would say, at least every major central bank is going to be easing. And we saw that the markets rallied after this news. Do you think that means people are generally not so worried about recession? Or are you guys worried about a recession? I mean, I would just say it feels like if you're going to try to wrap a narrative around a price action, the first thing that comes to mind is just that Powell just showed you

that the Fed put is firmly in place at the money. And that just gives people a lot of confidence. And he's cutting at a period that by most measurements, the economy's doing pretty well. There's one of the weird things that's kind of going on right now is there is people aren't exactly sure how good the economy's doing because there's just some noise in the data, in particular, the big jobs revision that we saw, right,

where you took out, I can't remember how many, was it 600,000 jobs that they took out? 800,000? I think it was 800,000. Yeah. So it's like, you know, sort of this weird thing. There's a lot, you know, I think a significant driver that is, is the illegal immigration situation that's like sort of muddying the jobs data type of stuff.

And so that's like kind of weird where, you know, and I don't know, maybe the Fed has better information than is what is available publicly. But there is sort of some just conflicting data or uncertainty. about how strong this economy actually is? And so it's like, is the Fed like cutting into like a strongish economy, a flat out strong economy, like a weak and rapidly weakening economy? There actually is sort of like a, it seems to be a pretty broad level of disagreement about that right now, which I just, I think makes this period of time pretty interesting for that

perspective. Yeah, I think I'm aligned. I actually think if you look at the last three to five, four quarters of GDP growth, it's been, you know, above 2% real. And we've had inflation 2 to 3%. So we're talking like 4 to 6% nominal GDP growth. And it's kind of funny to think that that level of economic activity is scary enough for the Fed to cut. You look back at the unemployment rate going, you know, decades, you know, sub five is still quite low. And I think some of that, as Travis mentioned is this immigration thing where I just spent some time in Europe and it was a

big topic there where policymakers needed to fight inflation and they basically just opened their borders unanimously to suppress wages and as one of the tools to do that. But I think the economy is fine. Different pockets in this fiscal dominant world where the U.S. government is spending six percent annually above what they bring in. That kind of puts a floor if you think about it on the lowest level of annual growth you can have in GDP. And that can be either via real growth or inflation growth, which we're seeing a mix. And I think in the future, it becomes more problematic if that inflation part of the equation rises.

But the other thing throwing a lot of these metrics off is with the government spending such large amounts of budget, it crowds out some of the more productive and private sectors. And so you see huge amounts of the job growth coming. from government funded, whether it's the government themselves, the public sector or health care and education jobs. And so that effect has kind of hurt in the capital markets, the productive sector, we call it the private sector. And so with them cutting, that helps the real, you know, mainstream economy quite a bit. And that's where I kind of expect the economy to get hot again in the next, call it three to six months due to that, you know, decrease in funding costs for

for the majority of, you know, individuals, consumers, and small businesses. Yeah, to the extent that this time is different, what you just highlighted is definitely one of the defining like this is different factors. Like we're out in this fiscal spend area that, you know, I think except for World War II, we just have never kind of been in this area before. And you're seeing that level of spending, you know, not during a recessionary period, but just like through a economy that like continued to grow and that just does kind of make you know just I feel like it makes this this kind of different yeah yeah the thing that people are debating also is

you know we saw the the interest rate hikes not be that effective on the way up and I've heard different debates around if they will be as effective less effective more effective on the way down and my my stance is that they will be more effective than they were on the way up because we've seen this kind of cyclical downshift a number of times last few years. It happened after the banking crisis. And in March 23, it happened in October of 2020. It happened in late 2020. But each time, it was either the Fed or the Treasury kind of coming to support of the, really, the debt market and rates and dollar kind of came down in each situation that reignited home purchase refinancing activity and consumer spending that then kind of powered the economy.

for another three to nine months. So I think that's what we're going to up seeing again. It sees like head fakes. But, you know, this time the problem is that they have kind of squeezed all there is to squeeze out of the inflation side of the equation. And they risk with their actions going too strong, you know, reigniting commodities and things. Yeah, something that also is interesting was even though recently the macro environment was pretty favorable. It was like a kind of choppy summer for crypto. And I wondered why you thought that was the case, especially, you know, we were seeing like the S&P 500 at all-time highs. The first thing that comes to mind for Bitcoin is you just had a lot of these like idiosyncratic supply shocks, basically. You had GVTC unlocks. I mean, those obviously

started in mid-Jan when the ETFs started, but that was just something that the market has been dealing with all years, GBT-C unlocks. And then you had a, Silk Road seizures being sold on the Alpahm market. You had the German government that like hammered 50,000 BTC through like July 4th weekend. That was very strange. And you had Mount Gox distributions as well too, which, you know, those are more opaque in terms of how much that actually hit the market. But I think it feels like a safe assumption that some portion of that did, I'll think a ton of it probably came for sale, but some portion of it did come for sale. And that was sort of, I think, my read through the summer.

Yeah, I agree. It was totally a lot of idiosyncratic crypto-related supply headwinds. And one of the, you know, crypto is such a momentum-driven market that you tend to get these blow-off tops to the upside where momentum kind of takes it further than it otherwise should have gone. And then same with the downside where throughout the summer, it's kind of a negative seasonality period, plus you have all these sales. And people kind of just becomes this growing apathy.

and sort of maybe dejection and lack of interest. And that kind of just causes these dead cap bounces and no rallies to really get followed through on until you have some catalyst that catches maybe a lot of participants off sides, which could have been the 50 basis point cut. We'll see. I'm pretty constructive here. The other thing is the best corollary is probably more small caps than it is large caps. Part of the reason I mentioned around this two-speed economy where crypto actually tends to be more correlated with the small. our businesses that are more reliant on liquidity. And for the large caps, it's kind of been okay. They've continued to grow earnings. So I would say if you're looking at an index, probably

that Russell is more the one to watch for correlations. Yeah. Well, one of the other big macro events this summer was the shock when Japan increased interest rates. And that's at least started the unwinding of the Japan-Yen-carry trade. At that time, the Bitcoin price dropped about 7%. but I've seen other analysts and investors are seeing the unwinding of the trade has barely begun and I wondered what your thoughts were on whether we would see more of that and if so, how you thought that would impact Bitcoin and crypto.

I have a view on this one that I actually been talking to some traditional macro people and who I see the other side on where I think it's consensus that this is going to continue and it might just in terms of like positioning in the assets

that were bought with the carry proceeds. So let's say large cap tech and Meg 7, which was kind of the safe haven for global investors. But I don't think there's going to be in the near term anyways, another violent leg to that. Because the big cause for that was really that soft CPI print that we had in the U.S. That basically was raise the flag that the Fed can now start easing. And then from there, we had some.

some events that were more like market liquidation events than they were real economy events, but it kind of continued to spur this narrative of recession, which, again, is different than the financial markets, but they kind of play on each other. And so we saw yields in the U.S. get hit really hard to the downside that obviously affected the dollar and then allowed the market to start pricing in a very accommodative path for the Fed. But zooming out, like the yen isn't, a very clean shirt itself. You know, that Japan is about 10 years forward on their QE experiment than the U.S. and their fiscal deficit, you know, debt to GDP and all of their metrics that you look at from a sovereign balance sheet perspective are far worse than the U.S. So they're actually

quite limited in what they can do from raising rates and being very hawkish because it's a reflexive thing. They already spend about 20 to 30 percent of their annual fiscal budget on interest expense. And so for the U.S., that's, you know, single digits. So it just gives you kind of an idea of how much further along they are in this problem where if they were to continue hiking rates significantly, it would really, it would, you know, if there's a point, it takes up their whole fiscal budget. So I think we've, you know, probably just kind of range bound mean reverting type action. And I don't really see a huge, huge, you know, risk of this violence in the leverage unwind again in the near term. Yeah, it's kind of weird.

it's it's it's weird that it feels super doomer to be like the yen is going to collapse at some point but just sort of objectively you know you to Quinn's point you look at their balance sheet metrics and then you just look at monetary history and every fiat currency in human history has collapsed and the longest running fiat currency is the British pound and it's lost 99 and a half percent of its value versus silver over the life of the British pound. And you just, you know, objectively look at the yen. You look at the demographic trends in Japan. And you go, this is a currency that does not look like it's got, maybe it's got a

couple decades left in it or something like that. It doesn't look like it's got a hundred years left in it, just honestly. And that feels weird, but I think it's true. And then you hold that at one hand. And then I think in the other hand, it's like, you know, I did 10 years in traditional. before I got into crypto. I've been crypto for six, seven years now, full time. And so this yen blow up with, this is like, I don't know, the 20th one of these that I've

seen in some form or fashion since I got out of college. And by some measurements, this one was more extreme than the others. But as it was happening and you were looking at it and you were like, is today going to be the day that the yen collapses? And it just didn't really. I mean, it was going the wrong way anyways, but it just, I don't know. It just gets my mind thinking about like, what is that actually going to look like the day that those chickens, I think inevitably come home to roost.

And then I think the last thing I would just say about that is that major central banks are all very coordinated. Like this is, we live in an era of highly coordinated central bank actions. And so it's like, Powell can just call. I can't remember what the finance. minister's name is now in Japan, but you just call the guy that runs a B.OJ and you go, hey, stop doing that shit. And then if you remember, like, they had the headline that came out, I think like 24, 36 hours afterwards where he like walked back what they were doing, basically.

And, you know, by that point, I think the VIX was already, you know, 50% off the highs. And then obviously it just kept collapsing. The near term stuff, I don't really have that much of an informed view on. I mean, I think VAR based risk parameters. are pervasive in global financial markets. And I spent enough time existing in a var-based risk model in my prior career path that I have a pretty good understanding of how they work. And you know, you have these big VAR shock events and then they ripple through cross assets. This is a very levered global financial system. So it causes these like ripple effects across all these different asset classes. But then usually that sort of like clear stuff.

out for a while. The people that were so off sides that they get carried out, they get carried out, you know, and you kind of, you have this like calm again. And then it usually takes some time, you know, for people to kind of get back into into the sort of trade. So that would be my knee-jerk reaction. I mean, how quickly that dissipated was impressive. That was an impressive dissipation of that risk event, I would say. Yeah. Well, let's also throw in now the other factor that everybody's been talking about into this mix, which is, obviously, the upcoming U.S. presidential election. We're recording on Monday the day after it was reported that Kamala Harris mentioned crypto for the first time.

It was in a positive light. She said, and I know this is literally just a single sentence, but it was, quote, we will encourage innovative technologies like AI and digital assets while protecting our consumers and investors. at the same time, obviously, we've seen, you know, Trump be very pro-Bitcoin, very pro-Crypto, giving a speech at Bitcoin 2020, you know, making all these promises that are pretty much exactly what the crypto community wants. Recently, he went to PubKee, a Bitcoin bar in New York. And on top of that, his family is launching a D-5 project, World Liberty Financial,

although obviously the crypto community tends to be skeptical about that. But I just was wondering how you thought the U.S. presidential election would affect crypto generally, you know, whether Harris or Trump wins. And last thing I'll just throw in there. I saw something super interesting. Vanek came out with this like projection about Bitcoin. But one of the things they said that was contrarian, I think, was that they thought a Harris presidency could be better for Bitcoin kind of like in this sort of geopolitical macro way that we've been talking about. And their point was that her administration might continue the policies that sort of gave rise to Bitcoin and crypto.

So totally contrary intake. But anyway, just interested for your thoughts on all of those things. Yeah, I think, well, you know, Trump rubs some people the wrong way because he says what's on his mind. But I think the only thing worse than that is someone who doesn't believe in anything and just panders to whatever they need to. I think the simple solution, if the Democratic Party was interested in being supportive of the industry, they just get rid of Gensler and probably make some very easy. changes along lines of stable coin bills and allowing banks to custody digital assets, things like that that they haven't moved an inch on. So I don't really buy it. It's just trying to win votes around the edges. But I think to the Van Eck point, I'm less concerned about the election

on like a six to 12 month horizon because I think the macro plays out and it is what it is. I think there's parts of the market that the election matters more for. Like if you're talking DFI projects or companies that touch, you know, what might look like securities, what might not look like securities and staking and things like this. And a coin base would be an example that is probably one of the more assets in the space levered to the election outcome. But, you know, at the end of the day, like for Bitcoin, the Vannac point might be right. You know, we've had the highest inflation in 30, 40 years under the most recent administration. If that continues, we saw what that can do, what the fiscal stimulus can do for the price of Bitcoin. And I don't think that really gets a ton

better. And to the point on like more tactics, when you look at the traditional asset markets, there's a number of what you might basket as Trump trades, private prisons, maybe coal stocks, energy stocks, things like that that historically benefited from, say, Trump or a Republican election. and those are all at their year-to-date lows. And so there's everybody I talk to within crypto is, you know, just extremely nervous, anxious and afraid to be long going into the election. But what I, my message is that's kind of consensus. I think, you know, the macro is the macro and that's going to be very positive for the

next, you know, a couple of quarters. And if everybody's on one side of the boat, nervous about being long into the election and you look at the traditional corollaries that would, you know, suggest, if there's any Trump bump priced in right now, it kind of says otherwise that there isn't, it doesn't actually concern me as much. Obviously, there's heightened tail risks, you know, geopolitical things, et cetera, that come with the election. But I probably carry a more constructive view than most similar to the Venet report going in and kind of on the backside of November. We could talk about this for a long time. We could talk about the election for a long time as it relates to

to crypto. Yeah, I think we don't know. I think it's very safe to say that a Trump administration would be meaningfully more positive for crypto and for Bitcoin than a Harris administration, but we don't actually know how big that gap is because Harris has stayed so silent, basically. there is conjecture that Gensler is gone regardless that Gensler wouldn't be the head of the SEC even in a Harris administration

and now I think it's probably safe to say that whoever Harris like let's say Gensler's out either way I think it's probably safe to say that whoever in a Harris administration whoever she would replace Gensler with would probably be

less crypto bullish than whoever Trump's going to pick. I think that's probably safe to say. There's conjecture about who Trump might pick, but it's very safe to say that whoever Trump would pick would be very constructive. And I think it's my base case that in a Trump administration, relatively quickly, you would get a series of settlements and no action letters out of the SEC and the CFTC in conjunction with executive orders out of the White House that in aggregate would create this sort of of de facto regulatory framework, even if we don't get legislation. I think the whether or not we get legislation is different. That depends on what happens, obviously, with the Senate and the House in the

election in November. So that's sort of like a different path. But I think you could probably get a de facto regulatory framework without getting legislation. And I think that that would be the path for a Trump administration. So if Harris wins Bitcoin and crypto are going to go down as a knee-jerk reaction. My guess is the however much Bitcoin would go down. There's not financial advice. Obviously, I'm wrong often. My guess is the Bitcoin dip would be shorter, like faster, not as deep and probably easier to buy.

The dip in alts, I think, could be a little more challenged, deeper, longer. There would just be a lot of uncertainty. People would just feel like, oh, we're mired down. another, you know, several years of uncertainty, regulatory uncertainty for ALTS. You know, I think that would be my guess about the knee-jerk reaction. On the election, I agree with Quinn that I don't think there is much of a Trump win priced into, you know, I think he was talking about more traditional asset class, quote-unquote, Trump trades to the extent that crypto and Bitcoin is a, quote-unquote Trump trade.

I don't think there's a lot in there right now. If we were trading 75 instead of 65, I would feel differently about that. And I think that with Bitcoin, Bitcoin is totally separate from the rest of crypto. And it's never been more separate. It's just never been more separate than it is right now in my mind. I think of it separately. I have for years its value proposition, its investment case is very different. And in my view, it's basically an insurance policy against monetary and

fiscal policy, irresponsibility from central banks and governments globally. It's this, it's like this edge against that. And that stuff is kind of, kind of going to be going on regardless of the administration. We can argue about, you know, is a deficit to GDP going to be higher in a Trump administration or in a Harris administration? We can have a conversation about that. Trump certainly spent plenty in his administration. But I think either way, I just think that Bitcoin is just probably going to continue to garner sort of an outsized share of central bank balance sheet growth into money supply growth. And so if you're bullish that on a both on a domestic and a global basis, I think Bitcoin is just a good investment. And that whole setup is very different than the

crypto investment. The last thing I'll say on this, and we could, I don't know if you got follow up, Lord, because there is a lot of, I think a lot of vectors to the election. But the last thing I'll say is that I haven't heard that many people talk about is Trump has been talking about shrinking the government a lot, shrinking the budget a lot. And he's talking about putting Elon in charge of efficiency, right? Elon, Department of government. Efficiency, doge, right? This thing. J.D. Vance is like really on board for this. Vivek is on board for this. Vovac was like the zero-cost budget. When he was actually running for president, he was like, oh, I'm going to do like, like zero cost budgeting for the whole, the whole government.

Trump definitely has adopted some of those. Trump was on the all-end podcast talking about abolishing the Department of Education or like shrinking it by 90% and then just giving the money to the states. So you hold like that in one hand, this idea that a Trump administration may shrink the government a lot. But then on the other hand, there has been discussion of like a explicit dollar devaluation strategy to try and bring domestic manufacturing, you know, a lot of onshoreing. You cannot have a strong dollar and onshore it.

Like that math just don't math, so to speak. And so there are these two things that are opposite with one another. And it's going to be interesting to see exactly how that plays out in a Trump administration, especially Quinn, I'd be curious to know what your thoughts on this is you can't shrink the federal budget meaningfully without causing a recession in my view. And Trump is so laser tied to a, he, like, he, he, he thinks of the stock market. This is his report card, right? And he just loves it when stocks are ripping. So this idea that he's like going to, quote unquote, like take the tough medicine, shrink the budget, push the economy into a session, juice unemployment and, and assumedly caused stocks to decline a lot. I kind of find that, I don't know, it's a bit of a stretch. And so I don't know. Yeah, I agree.

I think it is interesting because you're right, people haven't talked about that aspect. And I would say given the rhetoric and people, like this Trump presidency would be extremely different from his first one, just in terms of who he's surrounding himself with. And at this stage, it definitely looks like there would be more responsibility on the fiscal budget from if he were to be elected, which kind of is. is how you view the Republican Democrats split historically, I would say. But to your point, over half the federal revenues are from income taxes and capital gains tax is part of that. And so you all of a sudden don't have stocks at all-time highs and, you know, your tax receipts

fall by 10, 15, 20 percent. And then that's just reflexive, meaning your budget deficit increases by a percentage like that. So, you know, like you said, I think the, the, The stars are kind of written in the sky in terms of where this ship is headed on a medium horizon and who wins probably changes that path a little bit. But at the end of the day, how much you can actually cut is, you know, it's uncertain. I wouldn't say it's a very rosy picture. The other part about Trump is there's this, you know, two sides of the picture in multiple these areas, as you pointed out, Travis. The other one would be inflation where, yeah, people point to tariffs, but he's also going to open up. nuclear commodities, you know, exploration, which is extremely disinflationary. If you look at every

inflationary bout we've had, it's, it's been caused by commodities price spikes. And the other big component of that is geopolitical relations and tensions. And Trump's four years were some of the calmest, most peaceful the world has seen in the last decade or two, whereas the last four have been quite different. And we saw the direct result of that in the Russia, Ukraine and the oil inflation price spike resulting from that. So there's also the immigration thing. If Trump, you know, halts immigration, we know that's been a big downward pressure on inflation due to wages. So there's a lot of things. I think that's where I kind of like to zoom out a little bit here and not get too wrapped around, you know, what's going to happen on that day in November,

because the truth is we won't know for six months after. And most likely there's a trade going into the election on speculation. There's a trade on, you know, the one or two months coming out of the election on speculation of what's going to happen. And then there's the, you know, remainder of the tenure after that is to actually what does. And oftentimes those all three look very different shapes. One other thing I'll say on that just because you sort of touched on the timeline real fast. Just from a trading tactical perspective, it could potentially be really weird because the likelihood that we don't have a results, the results to, the election immediately after the election is actually like reasonably high like you think back to

the florida recount in 2000 and i went back and like read about that a couple weeks ago and it actually took like six weeks before that election was entirely done the last few weeks of that was highly likely that bush was going to win but it wasn't actually locked in until like six weeks after the election and so there is this potential for you know it's not one day after the election that you know whether or not Harris or Trump won, but it could be days or weeks or even a month or longer, you know, because of the potential for some kind of, you know, recount type of situation, go to the courts, you know, that whole deal in in one or more states just because it certainly looks like it is going to come down to tens of thousands of votes or, you know, or whatever.

Yeah. All right. I could let you guys talk forever. This is so fascinating. But we have a lot of other things to discuss, but first we're going to take a quick word from the sponsors who make this show possible. Mantle LSP is a permissionless and non-custodial ether liquid staking protocol deployed on Ethereum and governed by Mantle. M-Eath serves as the value accumulating receipt token of Mantle LSP and is now the fourth largest ETH LST with $1.3 billion in TVL. In addition to native ETH POS staking yields, M-Eath holders can access various yield opportunities

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Think big, bills bigger with Pocod. Join the community at PogoDOT.network slash ecosystem slash community. Back to my conversation with Quinn and Travis. So we kind of referenced this earlier in the conversation. It sounds like you guys think the Fed will do more cuts. I don't know if you have commentary on exactly how much. But I wondered also like how you thought that all would affect crypto markets, but in particular, defy just because obviously we're seeing, you know,

stable coins are just growing and growing. and the yields are tied to the rates. And yet at the same time, you could also see if people feel like they can get more yield in defy. They might go that way. I don't know what your thoughts are on any or all of those things. Yeah, I think on the Stapaguin side, that's the lowest hanging fruit, I would say,

from a regulatory improvement, whether that's with the new president or not. but that I think carries such a, let's say, large amount of torque that could really, you know, put the, put the industry's growth and overdrive is getting banks ability to custody and issue stable coins. But as it relates to the interest rate environment on chain and defy, it's this reflexive situation where it's all very tied to the amount of speculation, leverage, demand, and on chain activity. and obviously we're coming out of a summer period that's very, very quiet and has been kind of doldrums from both price and activity perspective. But you do tend to see these things pick up when there's a bit of life in prices. And it's very reflexive in that sense. So I wouldn't say I have a crazy outside view in terms of where we're headed there.

I am constructive on crypto prices over the coming like two quarters, let's say, at least into Q1 of 2025. I think the Fed rate cut path as expected now will not come to fruition because I am of the belief that the economy is probably healthier than consensus and therefore we will start seeing better data over the coming months, both from a growth and potentially a, you know, in a few months inflation side of things, which would probably slow the amount of cuts that are priced in it. But I do expect them to get another probably, let's say, 25 at least off at the next two meetings and then we'll see from there. But I think that's enough to get the economy going at that

point. The yield curve's already uninverted and positively sloped. That's really healthy for the banking sector as they can now lend profitably. The last two years, we've had declining or negative growth and bank lending. And that's part of the reason it's felt like this recessionary vibe in the market. So I think just even 100 bips of cuts is enough to kind of get things going again in the economy. And I would not be surprised at all if what's priced in now ultimately gets priced out, similar to what we saw kind of early 2024. There was six or seven cuts priced in in January. And obviously, you know, that went down to almost zero middle of the year.

I could see something like that, you know, to start next year out. How don't I have too much to say about rate cuts as it relates to like defy yields? I mean, other than the knock on effects of increased global liquidity just as it relates to crypto prices brought, you know, in general. I think that it's a little hard to look too far out for the U.S. economy because I do think the election is going to matter a lot and that you could potentially have two pretty different paths when I think about a Harris administration, which means millions and millions of more illegal immigrants, you know, there's just a continuation of open border, basically.

that versus something that looks like a mass deportation. I'm not exactly sure how that's going to look or how quickly that's going to come to fruition in a Trump administration. But I feel like those two outcomes, they feel different enough to me to meaningfully impact the trajectory of the economy of the labor market of inflation

to the point that it will probably, that would probably be two meaningfully different rate path trajectories, I think. And I just don't have any particular insights on who I think is going to win the election. So you just got to wait and see. I mean, one thing that I would definitely look out for from a crypto price perspective, Bitcoin price perspective, is if you do like 100 biffs of cuts and then you have inflation pick back up and then the Fed holds the rates steady for some period of time, and then the market starts to get a sense that the next move is going to have to be a hike instead of a cut, say back part of next year

or something like that. My guess is the crypto market and Bitcoin would, that would not be a welcomed development for prices of Bitcoin. Yeah, I think that would be pretty tough. I really don't know how to wait the likelihood of that, though. I really do not. Yeah. Yeah, it's further out. And like you said, I do think the election will play a big role. Well, we did recently see news that Bitcoin ETF options are getting a green light. And Jeff Park, head of Alpha Strategies at Bitwise, published a fascinating write-up of what he thought the Bitcoin ETF options could, how they could impact the Bitcoin price. And one of the key effects he talked about was something that he was calling the Bitcoin gamma squeeze. I thought maybe you could explain, you know, why he was saying that.

I don't know if you guys read that. Yeah, I did. I thought he kind of skipped some stuff or I was not in large agreement with that or kind of mischaracterized some stuff. So what's, yeah, what's your opinion on how they would impact the price? So the issue that I'm having with this, it's a big deal. I think the approval of I bit options is a big deal. And it could be a big deal in a few different ways. And I don't actually feel like I know how to weight the likelihood of the various ways.

And I'll explain to you what I mean. Could you have gamma squeezes the way that he describes that? Yes, you could have that. Could you have large scale overrights that are done? Long Ibit sell an upside call, generate yield. Yes. Do boomers and stratify love yield? Yes, they do.

Is the is call overriding going to produce an attractive yield? Yes, it is. Could you have large scale buying of downside protection? Yes. Is Tradfai terrified of Bitcoin drawdowns? Is that like one of the most, like this is like one of the biggest reasons that that Tradfai is not long Bitcoin is because of the size of the drawdowns and how scary they are. Yes. So then those are some potential outcomes. and I don't really know how to wait the likelihood. One thing with the gamma squeeze deal is I have not gotten an answer. I don't know if either one of you saw this. If the approval on Friday included zero DTE options,

I haven't gotten or whether or not that's a separate approval process. I don't know. I think, yeah, I didn't see that. I think that that matters from a market structure perspective. I've read long blog posts. I think there's also been academic. papers that have been written about the grind-up, like zero-d-te-e options and the sort of grind-up effect that they have. And so I just don't know how to weight the likelihood. My knee-jerk reaction

is that this causes a decrease in realized volatility and more of a grind-up. It allows more capital to come into and be directionally long, the price of Bitcoin. And so that is going to be constructive for Bitcoin prices, but that it's also going to simultaneously dampen volatility. And there's going to be less explosive moves to the upside. And you're going to dampen volatility to the downside as well, too. I'm in general agreement with Travis, actually. Laura, you need to ask some questions that we don't agree on because I think everyone so far. I've really liked what he said. But I think what Jeff pointed out is this gamma squeeze potential that is there, yes.

And what I would say is the delineation is more like what does this do for Bitcoin secularly and what does it do like and then look at where we're at cyclically? Because like secularly, I think the trend in volatility dampening over time is pretty clear. the cycle over cycle that continues to be the case. And it makes a lot of sense as the asset gets larger, it takes more and more capital to move at the same percentage as before. But then cyclically, we know we're in a very positive price environment over the last, six, 12, 18 months for Bitcoin.

And we know in those cyclically positive environments, volatility is higher than in bare markets. And we're in that now. And so, yes, you can have these gamma squeezes. but there's this sometimes notion I hear that the price can just kind of go up to infinity. And, you know, but you would have seen that in like gold or other commodities if that were the case. Options, futures, et cetera, exist on all these assets for for dozens of years. But, you know, higher prices bring out more sellers. And so I think, as Travis mentioned, there are very important structural changes.

As we've seen with the ETFs, now the majority of volumes happen in the nine to five U.S. market trading hours, which was not always the case. And so you're getting different market structures because of it. And I do think it's a huge positive because of all the activity and things sophisticated players do with it. But I think it's just regime dependent as to if it's heightening, vault dampening, gamma squeeze to the upside to the downside, what have you. It's tough to really just put a one-size-fits-all blanket on it. there's obviously, you know, MSTR, I think is an interesting thing to talk about what's related to the options because, you know, there's this MSTR call writing ETF that's got over half a billion in assets, which, you know, to some extent has allowed the premium to exist. Retail's interest and demand for for call options on MSTR has allowed the stock premium to exist, which has allowed them to issue shares and buy more Bitcoin. So there's things like this that affect other parts of the market, too, that I'm interested in and seeing how they play out.

Yeah, it's no question retail loves, you know, when something's hot and there's a, you know, chasing the next, next big thing. Having call options available on a, on an ETF, make that more likely to happen. But it's tough to say that it must happen just because they exist. Yeah, Bitcoin's scarcity, his cash settled derivatives diminish the scarcity that is inherent in the way that Bitcoin is created. that's unequivocally true. And you're seeing more of that, not less of that. And so like this idea that Bitcoin, I just disagreed with his characterization of the scarcity of Bitcoin in that post that you mentioned more. Okay.

Well, one other kind of macro trend, I guess, that is affecting Bitcoin is, the fact that, you know, we've seen this massive interest in AI. And apparently a lot of Bitcoin mining companies are either pivoting to, you know, AI or at least adding that on to their businesses. And I wondered how you thought that would affect Bitcoin in terms of hash rate and security and price and all that. I think in a lot of instances, what happened is Bitcoin miners have a balance sheet. with assets on it. And one of the assets is their, their procurement of electricity. And that looks like different things for, you know, that's a, that's on a case by case basis. Where are you in the country? You know, what's the source of electricity? What is the PPA power purchase agreement that you

have? How long is it at what price? Is it interruptible? You know, there's, there's a lot of nuance to that. But it's, it seems like what happened is that with the raw. of the demand for compute driven by AI that this asset that is a power purchase agreement maybe went up like fivefold or tenfold or like 50 fold in value or something like that. And so these Bitcoin miners can't help but take a look at this because they just so happen to be perfectly positioned to have previously procured. you know, a tremendous amount of electricity, basically. So it's just like, it's like sort of this, you know, kind of right place, right time type of

deal. It's not the kind of deal like you can take an ant miner and then like start, you know, you can just like magically start training LLMs on it. It's not, it's not like that. You obviously, there's some similarities between running a Bitcoin mining facility and running a AI model training data center. But there's also a lot of differences as well, too. There's a lot of cost differences. I think the AI training center stuff, this is like super duper gold-plated, you know, the most expensive everything type of deal. Bitcoin mining is is less like that. And I think it's my understanding that a lot of this does just boil down to the value of the electricity procurement that Bitcoin miners had already had done.

Yeah, I agree. There's a very large degree of bifurcation across these miners, I would say, because they all vary in how their businesses are set up. Some of them are completely vertically integrated where they have direct access to the power and they're much closer to the grid. Others are more contracted, don't actually own that connection. and some of them don't even have these long-term power agreements in place, so they're paying market prices.

We're invested in a few of them, and I think it is an overall healthy development for the industry because one of the problems heading into this year, and it's pretty funny how I'll kind of flip down its head, is the halving occurring without the same, you know, say 10 or 20x price improvement in Bitcoin has created a situation where hash price, which is the revenue or, you know, a metric for profitability of Bitcoin mining is that the lowest ever. And for a lot of these large

public miners who might not have the contracted power agreements and lowest cost production available, it's a bloodbath, frankly. They're basically only existing because they're continuing to fund themselves via share issuance in the open market, which is extremely dilutive to equity ownership. And most of their share prices have reflected that. And so when you have this, you know, kind of positive sum development out of nowhere where you all of a sudden have the largest companies in the world needing to secure HPC and power agreements in a, basically the largest arms race we've seen in the technology front in ages. They're direct beneficiaries. So the core scientists, the Terra Wolves, and there's kind of a new announcement every

day, and V-Divya just invested in applied digital, which hit the tape today. So I think it's going to be a trend you continue to see. And overall, you know, that on the margin reduces the amount of Bitcoin that these miners have to sell to fund themselves, because before it's just Bitcoin in, Bitcoin out to kind of harvest cash to pay expenses. And it overall reduces their cost to capital because they have this other avenue open to them. That's more sustainable, contracted cash flows. And it's better for the space. I don't think, it solves the profitability issue for Bitcoin mining generally, but it definitely helps. The ETHBTC ratio is the lowest it's been since March 2021.

And there's also been a lot of chatter about whether Ethereum layer 2s are parasitic to Ethereum's layer 1, which, yeah, if you're looking kind of at, you know, fees and all that, it does look that way. But on top of that, despite the fact that Ethereum ATFs launched, they've also underperformed. They're at about a $6 billion market cap compared to about $75 billion for Bitcoin ETFs, which is about 8% of what the Bitcoin ETS are. And I know obviously there's a bit of a lag because they came out later. But people still, like even with conservative estimates, still thought they would get more market share. So I was interested for your thoughts on any or all aspects of that.

Yeah, I think, I think, ETH is, it's a little lost at C from a narrative perspective. The L2 scaling, you sort of fractured, in order to solve or to alleviate scaling issues, you fragmented market cap. and now people don't really, and then the whole modular, you know, the modular aspect of the EVM ecosystem as well too and all, let's break up, you know, consensus and data availability and this sort of deal. And I think what you're really just kind of seeing is just a fragmentation of market cap in conjunction with what continues to be, you know, really tepid on chain activity.

And it's a little hard to actually, there's, it's pretty classically crypto that like, it's kind of hard to actually know what the level of on chain activity truly is because there's so much like Ponzi-esque, airdrop farming, like points farming type of stuff that you can't really get through that to be like, what are,

what is the crypto ecosystem actually interested? in doing on chain. And that's just sort of this classically crypto thing that you can't act. You can't. It's like, oh, we're like, it's like, oh, the blockchain is transparent. And then you're like, oh, let me look at this transparent blockchain activity. So I understand what's going on on this blockchain. And then you can't actually draw any conclusions from it because we're scamming each other so,

so hard. But that's what's going on. And so, you know, but I think it is safe to say that we are continuing to struggle to sort of find use cases. They're driving, you know, real, real on-chain activity. I think it is safe to say that. And it remains to be seen. I think there's a lot of people that are of a traitor mindset that are just saying, oh, this is bottom talk. This is bottom talk. You want to be buying Heath with both hands when the sentiment is as poor as it is. It is certainly a fact that buying really bad sentiment and selling euphoria historically has produced tremendous outperformance in

crypto. That's just a fact. And I think there's a lot of people that keep that in the back of their mind. I think things that can change very quickly in crypto. So I hope all that in one hand. And then I think in the other hand, it's also that like nothing is set in stone in this ecosystem something, this idea that like Ethereum is going to forever be the second largest asset and cannot be usurped by Solana or anything else or just, you know, maybe there's some structural, maybe we see some structural rise in BTC dominance as the market collectively, you know, you know, reallocates market cap to Bitcoin relative to everything else, basically. I think all of that is on the table. And, you know, I think what the last thing I'll say on this is, if Trump wins, it would be my base case, not financial advice, that ETH will go up a lot in the immediate response to that for some period of time. Because I just think ETH as a Trump trade, as you get a more constructive SEC, you get a lot of these settlements out of the way. potentially you get a de facto regulatory framework that allows for the restructuring of tokens

so the tokens can have these sort of equity-like features that allow for more compelling value accrual. You know, ETH is a great way to play that. You can now play that through ETH spot ETH. So you have this financial instrument that allows more big, deep pockets from traditional to come in and play this. So at least on a short-term basis, you know, I think there is a trade right out there that is a Trump trade. I think you can make the argument that ETH might be, you know, sort of maybe size adjusted, you know, liquidity adjusted, you know, ETH might be one of the purest short-term Trump trades there is out there. But that doesn't mean that, you know, you get a few weeks or a few months after the election

and there's still a lot of questions about Ethereum, which I highlighted the first part of this. Yeah. I agree with Travis on all that. I have a pretty balanced view because on the one hand, I liked what he said earlier in the show was that he's never felt that there's a more compelling investment case for Bitcoin than today, which I think is the case. You can very clearly, to traditional investors, paint Bitcoin as an asset that has more utility and just as a superior asset to gold, but trades at, say, 1.15th or whatever of the market cap. And there's people that are willing to bat on that gap closing to some extent.

and the ETFs allow that. But one of the things for ETH that the ETS did, and it probably didn't get talked about enough in the lead up to the launch was, you know, puts it on a, on a, you know, this stage with every other investable asset in the universe. And, you know, the fundamentals don't back it up, right? So it's at 250 billion market cap,

ETH is the size of, you know, a number of the large big banks combined. And you have traditional investors sitting there saying, well, but it produces, you know, peanuts of the cash flow. I just can't get comfortable with this as an investment. So where we've seen these rallies in the ETH BTC ratio, as Travis has mentioned, has been, let's say, stabs by people with the kind of mean reversion trading mindset, and there hasn't been anything prolonged.

The Trump election victory would obviously help that. But I don't view any like ETH, Solana, these other things is necessarily, well, there are some bad assets. There's a lot of bad assets, I should say, but more often there's bad prices. And I think just getting this re-rating lower is part of the solution. And on the other hand, the devil's advocate is, well, I actually personally, from not crypto perspective, but from a macro perspective where we are in the business cycle and kind of where I think asset performance will be over the next three to six months in gold and oil and other

kind of cyclical sectors. I think it's like a Q4 2020 is kind of the best analogy. Obviously, it might not be to that extent of, you know, price appreciation. There's a different fiscal and monetary regime at that time. But that's kind of how I'm viewing the world in the business cycle timing. And so if you take that perspective, that's right where the ETHBTC ratio at that point of time bottomed. And you could be thinking that, you know, it's just playing out like normal cycles do where it's BTC led. And then particularly, you know, if it so happens that Trump wins, you get the everything else rally that kind of outperforms Bitcoin in the back half of the move. So I see both sides and kind of weight them. I don't have a terribly strong view at this point.

I like ETH a lot more at 0.04 than I do at 0.05. But, you know, I think there's a lot of information to be gathered. We haven't seen ETF inflows pick up at all, even post 50 basis point cut. So if that does. You better believe there's probably going to be a ton of momentum behind it to kind of power that trade. But I think everybody's waiting for that all clear first. And a lot of mean reversion traders have gotten burned trying to stab long. So it might be a little bit more of a choppy period ahead than just kind of straight up for ETHBTC. I also saw, so speaking of just generally, I guess, the different crypto assets competing with each other that Kyle Somani predicted. that Salana breakpoint, that Salana would flip Ethereum at some point.

You know, that got some chatter. But then I saw Alex Kruger tweeted, quote, ironically, Saul Eath is barely up in 2024. And Saul's performance has been lackluster on a risk-adjusted basis. He noted that the sharp ratio since January 1st was 0.7. So I was curious where you thought Saul was headed, especially in comparison to ether. Well, I think Salon's price got, I think the pop dot fun mania. really hurt Salana's price meaningfully. And it makes complete intuitive sense

why that would be the case. And the relationship between the rise of Popda Fun Mania and Salana's price. So that seems like relatively straightforward to me. And the other thing I'll just say about Salana's kind of price action is I have this view that the FTX estate sold like 42 million units of Locke Solana.

They sold like 20 million around 60 bucks and 20 million around 100 bucks. And there's some of that that's been unlocking linearly. And then there's this big cliff in March 2025. I think it's a 25% cliff, I think, in March of 2025. And that is a huge amount of capital that came in and did that trade. And that huge amount of capital is sitting on a really big unrealized P&L. And some of that, there is a desire to hedge a portion of that. And I think that the management of that hedge, my guess is probably on any given day,

the largest factor for price discovery for Solana. And I don't know for sure that the hedge, is being put on more at 180 and it gets taken off around 120 but you could look at Salada chart and you could say that's kind of looks like what's going on it's going to be interesting to

see how Salana manages through that big of a token unlock a lot of which was done in SPVs and they're just you have to sell when you do like there's just the structure of raising

money in an SPV to buy Lox Solana when 25% of it gets unlocked and you're up a double or a triple from where you bought it, you know, somewhere in between, you know, I guess somewhere in between you're up 50% and a triple from where you bought it. You have to sell it. And then it's like, well, who's going to be on the other end of that? And I just, I think that's a really, really unique aspect. That's just a really unique setup for Solana. Yeah, I'm not sure we've ever seen a, we've obviously had billions of unlocks in the alt market, but I'm not sure we've ever seen one of that notional size, just given where Solana as a whole sits at FDV. I do think, I think a good

chunk of that is. Especially, sorry to interrupt, especially when you combine that with the strength of the narrative of Solana. It's the combination of those two things that make it so interesting, right? Solana as a quote unquote, Eith killer, has made it way further than any other Eith killer ever. Like we just started rattling off names of of Heath killers, which all three of us could do because we've been in this space for a long time. Salaada got way further in that effort than any of the other ones. And also was able to make it out of the FTX thing way better. You know, it's like in December 2020, you could look at Salon.

You could be like, this thing's probably cooked. Right. And it really did just through the strength of the community. And I think its competitors not being able to put distance between it and you know i don't know maybe some of the meme coin stuff i don't know it was just able to weather that and get out the other side of it so much better at it's and it remains very well positioned relative to ethereum which like what like we've been talking about is is um you know ethereum is uh exposed right now the narrative the the investment case for Ethereum is challenged right now. And so it's just interesting that you have the juxtaposition of those two things.

Yeah, I like the way Travis is describing both of these assets because it's a very open kind of mindset and sort of happy to be wrong, right? Because at the end of the day, I think a lot of times people get caught up with the tribalism of one of these assets making you a lot of money and kind of falling down a trap that maybe, say, early Bitcoiners did and not being open to other new innovations in the space. And when you zoom out, all these things are still venture assets. You know, they might have very large traded market caps, but they're all, they're not all that liquid compared to traditional assets in the grand scheme of things. And we probably won't know who the winner is between Seoul or Eith or maybe

Sway or whatever the next L1 is for another five or 10 years. And in the meantime, you know, these things aren't trading on multiples of cash flow or revenues. They're trading on momentum, narrative, and kind of headspace, attention, where the next new app is that's onboarding, you know, tens of thousands of users or where the next coolest innovation is. So that's kind of how I view it and keep an open mind and kind of respect what the market is telling you a little bit. You know, Seoul is, has probably traded heavy, you know, in the last few months is, you know, people have gotten more pessimistic on the market. When you look into funding and OI and perps,

you have tended to see a little bit more negativity skewed on Solana. Let's just say lower funding rates is probably these hedgers have come in, where you started to see people on Twitter saying the cycle might be over. So that's another component to it, right, where you get these long stretches of summer doldrums or other negative market environments. And despite everyone's best intent, of buying at 60 and hedging at 180 and 200, what tends to happen is they tend to be very bullish at

the 180,200, and then get really scared at the 120, 150 and hedge. And you could see something like a Trump victory ignites everything non-Bitcoin and all these hedgers who put in, who kind of bottom sold to try and lock in have to chase higher, which we sometimes see with short squeezes and other unlocks. So there's just so many factors here to take into play. And those unlocks do still sit, you know, six-ish months out, which is, you know, in eternity and crypto. So I'm kind of watching and the way we trade is a little bit more tactical around these. But I would expect that both Ethan Sol outperform BTC in the last, let's say, three to six months of the run. All right. So we're, we're closing in on time. But I did also want to ask about meme coins.

they tend to be controversial. They've obviously been one of the best performing categories this year. They're roughly double in market cap since the beginning of the year. But I find people either, you know, look down on them or, you know, have some thesis around, you know, why they have some, I don't know, fundamental value is their praise. But why there's more there there than other people would think. So what's your opinion? Are you bullish or bearish on them? I don't, at Lecker, we don't.

really invest in them. I think it's like many, many innovations in the industry, things, there's a ton of experimentation and people try things out and some things fail, some things take off and have longevity, you know, stable coins, NFTs, on-chain gaming, old L-1s, everything has started as a small innovation that came about to something bigger. The meme coin front, you know, at this stage, I think you just need to treat it as is a lottery ticket. and gambling, which, you know, people love to gamble in real life. So you, there's probably a market for that. And I also think, you know, if there's, I get some sorts of it where like, you think if you had a list of the 10 most popular memes of the last five or five years or

something and how many views and eyeballs and attention and clicks, those have gotten, you know, you could probably put a metric on that and maybe meme. coins innovate to a way where you can tokenize, you know, the attention from that and actually generate cash flow or something. It's not a view I hold. I don't really spend much time on the sector. It's a little too new for what we're doing. We're trading more on a macro lens. And so when I'm looking at the 10-year gold and, you know, things like that and it doesn't translate so well to what the next salon of meme coin is going to do. So I just, it's something I pay attention to, but not really, you know, spend a lot of time pontificating on where I think prices will go.

So we'll see. It's not something I'd want to be a long-term holder of. Like if you do make some profits of it, I would put that into Bitcoin. But, you know, people are going to do what they want, no matter what I have to say on it. And, you know, it's just not a place I really focus on. I don't have too much of strong feelings towards it. Travis. Yeah, we don't. Yeah, we also don't. We don't own any in the fund at the moment. We could. I've owned, I've owned Doge before. Made money in Doge before.

I wrote these two pieces at the beginning of the year that went very, the two most viral things I've ever written on Twitter. The first one was called a lack of pretense that any of this shit does anything or will ever do anything. The second one was called financial nihilism, the zeitgeist of Young America. And meme coins are very, very. very wrapped up in both of those thesees, which I won't recount here for the sake of time,

but I do not think meme coins are going to go away. I don't think that their current form strikes me as sort of sufficient to kind of take it to the next level. And it kind of reminds me of NFTs in that way. Like I don't think NFTs are going away either. but like the way that we did them last cycle, that just strikes me as like not enough. Like it's just you need more innovation. You need people to be more creative about how to use this new standard to do interesting things. I think meme coins are are similar in that way. I also just think that the meme coin mania, it devolved so rapidly. into the like the sort of the worst parts of humanity and I think well I mean one there was just the the sheer

dilution right people have seen the like pump dot fun yeah I don't know there's like 19 bajillion meme coins that have been launched on punk dot fund or whatever people have seen the statistics of of you know how many of them rug and how many of them don't even make it to a 50,000 market cap how many of them you know it's like one one thousandth of one percent make it to a $1 million market cap or something like that. So I think there was just a tremendous dilution. But then it was also just, you know, there's a lot of racism. There's a lot of, you had the like C-tier celebrities come in.

And you're just like, oh, it's like, oh, Iggy Azalea is going to like carry us to the promise land or whatever for crypto. It's like super embarrassing and just, you know, not the kind of thing that I think anybody with an ounce of sense would like get excited about and believe in and want to support and um thinks has significant legs to it so i the idea i do not think is going away i think in its current form i i think it probably remains relatively small then the last thing i'd say maybe put the question maybe to both of you actually if you took because one of the things you said laur you said mean coins have outperformed year to date. I take a little bit of exception to that because you

had to have picked, you know, there's like a bajillion of them. And in order to have outperformed, you needed to somehow like pick the ones that were the outperformers, right, as opposed to the 99% of them, which collapsed or whatever. It's like huge survivorship bias. Yeah, an unbelievable, like unbelievable survivorship bias. That's exactly right. So then my question is, let's just say, how many memes are in the top 50? You got Doge, you got Shib, you got Whiff, you got Pepe, you got, there's Bulk in the top 50. Bork's probably still in top 50. All right, let's just take that as a basket of names.

Do we think that basket of names is going to outperform BTC over the next six months? I think it gets really tough when these things get large, I mean, the lot of large numbers, It's like people are willing to trade things up to a billion. It seems like that's the goal with every meme coin. And then when you get over a billion, they stagnant. And it's like you get these bouts where Elon tweets something and they might double quickly. But I think at that size, expecting your meme coin to become a 10 or 100 billion dollar asset, whereas we expect Bitcoin will do multiples over the next couple of years. It's very tough.

I have a hard time paying that case. That's why I think it's such a lottery ticket. because as the price goes higher, you should be getting out because presumably the upside gets capped. Yeah, I mean, the one thing I would say is I'm pretty sure right after the rate cut, I think Alts outperformed Bitcoin. So like this notion that people kind of get excited and want to get more speculative when there are these rate cuts that could put some gas, I guess, on the meme coins.

but we are totally running out of time. So I'm going to ask you guys for a one sentence take on one other topic that I had, I wanted to ask you about. So try to be concise if you can. But obviously, like, base has been a breakout performer among the different L2s this year. Its TVL is near $2 billion, which is, you know, pretty close to what arbitraim's at.

It's also launched its own version of wrapped Bitcoin, CBVTC. And I was just curious for your take on base because obviously that activity is on chain. And I wondered what you're, what you thought that impact would be on it on coinbase i know it's hard one sentence one sentence is coin base it would make it actual coin base is the one of if not the most uh or crypto asset that is most levered to the outcome of the election and base is wrapped into that alongside you know stable coins their ownership and circle all these things so um if you want to play the upside potential of of base, you better hope for a Trump election for it to reflect in the stock price, I'd say.

The activity that we've seen on base year to date is mostly crypto natives. I would say very large majority crypto natives that are just, we're paying attention to another ecosystem and are now paying attention to this ecosystem. And a lot of that is driven by points to airdrop, daisy chain. Maybe there's going to be a base token launched one day, let me do a lot of activity on it, and that the sort of like longer term investment case is converting Coinbase users to on-chain users. And I would say there's just very, very little evidence of a desire for those types of users to do that. Okay. All right. Well, you guys, this has been a fantastic conversation. Where can people learn more about you and your

work. Yeah, you can find me on Twitter at QTHOMP as well as leckercapital.com. We are a 506C liquid digital asset hedge fund macro focus strategy taking high net worth accredited investors, family office, etc. So feel free to reach out if interested. Yeah, Twitter is good for me. Travis underscore Kling and there's links to the fund and all that stuff there. Thanks for having us. Laura, there's a good conversation. We covered a lot. Yeah, we did. It was really, fun. Thank you both so much for coming on Unchained. Yeah, thanks a lot. Thanks so much for joining us today and to learn more about Quinn and Travis and how Macro is affecting crypto. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with her from Matt Pilcher,

Juan Aranavich, Meckenkavis, Pamma Shimdar and Market Korea. Thanks for listening. Unchained is now a part of the CoinDesk Podcast Network. For the latest in digital assets, Check out markets daily five days a week with host Noel Atreson. Follow the Coin Desk Podcast Network for some of the best shows in crypto.