We Study Billionaires - The Investor’s Podcast Network - BTC078: Bitcoin Mastermind Discussion w/ Joe Carlasare, Jay Gould, & Jeff Ross (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this week's episode of the Bitcoin Fundamentals podcast. I can honestly say that my favorite part of this job is having the macro and Bitcoin mastermind discussions because it's such a raw and unscripted conversation where we talk about a whole host of important things that are happening in the markets. This episode is no different, and I have backed by popular demand, attorney and a junk professor Joe Carl Lassari, entrepreneur and venture capitalist Jay Gold, and medical doctor turned fund manager Jeff Ross. We cover the Luna meltdown, the global bond market sell off,

Starting point is 00:00:36 the equity sell off, commodities blowing out, Bitcoin policy and legal and many other topics. Get ready. You're not going to want to miss this banter and just canned it back and forth. And with that, here's the second quarter mastermind discussion. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish All right, hey everyone, welcome to the show. I've got the crew here. Jay, Joe, Jeff, guys, welcome back.

Starting point is 00:01:20 We got a lot of really good feedback on the first discussion because it was so candid. And we started chatting as soon as this connected. And I said, wait, stop. Let me hit record. And let's get this going because, holy moly, what's going on here? What is going on? My Lord. As everybody knows, it's May 11th, 9 p.m.

Starting point is 00:01:40 We've seen a show today. Yeah, I mean, most of the people listening to this are from the future. And I'm sure this event's going to go down in the books, right? The Luna stable coin meltdown just happened. We're literally still experiencing it. I think Luna's trading the stable coins, trading it like 60 or 70 cents right now. I'm pretty sure it's going to go straight to zero with enough time. But yeah, just throw it out there to you guys just around the room from the last time we talked,

Starting point is 00:02:06 whatever you guys want to throw out there as you intro yourself, feel free to, to have at it. We'll start with Jeff. Go ahead. So yeah, quick intro, Jeff Ross, former doctor, now hedge fund manager, and I run a RIA called Bailshare Capital Management, discovered Bitcoin. I like to say I discovered Bitcoin in 2016, but I got held back to the class of 2019 because it took me that long to figure out what Bitcoin was and how special it is. And I spend a lot of my time on Twitter these days and doing podcasts like this, just talking about Bitcoin, why it's better money and how it's going to change the world for the better. So that's me in a nutshell. Go ahead. Yeah, hi, Joe Carlos Ari. I'm a commercial litigator with Smith Amundsen in Chicago. I'm also

Starting point is 00:02:45 the co-chair of the blockchain fintech and cryptocurrency practice group. Also a armchair economist and investor, been investing since before I was 18 through a custodial account with my dad and very avid follower of financial markets. Jay Gould, entrepreneur, investor, Bitcoiner since 2016, run a podcast as well, and angel investor in technology companies as well. So guys, before we get into the Luna explosion and all that stuff, one of the comments for me that really just sticks out in the past week that when I heard this, I was like, you have got to be kidding me that this was just said out loud. And it was when Powell described the current situation as de-leveraging as the landing is going to be soft-ish. And when I heard that, I was like,

Starting point is 00:03:34 oh my God, this is going to be a disaster. Correct? What was your guys take? Joe showed me a chart today. Joe, if you want to just talk about the Fed Fund, I never realized this. But like since 1990, every time the Fed Fund rate has hit a high, the next time it hits a high, it's never past that, which maybe you can speak to that, Joe, because I thought that was really an interesting data point.

Starting point is 00:03:55 Yeah, no. Historically, the Fed Fund has never gotten back up to the prior high, which is really, it just shows you at some point something breaks, right? And that's what we're watching. And I think the big question now is, is something broken? Are we at the point where, you know, this is it? Or are they going to keep the pedal on the gas? But to Preston's point, it's really interesting, Preston, because at this point, given they're so close to the lower bound, given the fact that they've had to do so much unconventional monetary policy to keep the system running, I really think they focus a ton on communication.

Starting point is 00:04:26 I mean, the Fed at this point is all about these press conferences and setting expectations right. And to your point, I thought when he said softish landing, because it's such an unusual phrase, that it might have just been an off-the-cuff remark. But if you go and look, the Federal Reserve Bank of New York's president, John Williams, used the exact same terminology in a press report. He said, we think we can curb inflation and ensure a softish landing. So that tells me they round-table this. Yeah, go look it up.

Starting point is 00:04:51 It's amazing. No way. No way. Go look it up. Google it. He just said it yesterday in a press release. He used the same terminology softish landing, which is a way. which means that they round-tabled it, they realized this is going to cause havoc in financial

Starting point is 00:05:04 markets. And they said, we have to do it. We have to take the pain. We have to take our medicine this time. Because if we don't, inflation is going to run hot and get out of control. So I think that's where their mindset is. We can talk about that later on, whether the inflation is real or how long it's going to stick around, what's driving it.

Starting point is 00:05:18 But to me, I think that shows you where they're at. I mean, they can say this as long as they want, but they're going to break something. Like something's about the break, and I think it's very imminent. I don't think that this is, I don't think something's going to break in six months. I think we are within a one quarter time frame, like in the next three months, it's something is. It's broken. No.

Starting point is 00:05:39 It's broken right now. I mean, look at fixed income. It's an absolute disaster. The last time we spoke, I was the lone bull in the podcast. Boy, do I have egg in my face and kudos to Jay for getting it right about this going further. But what I will tell you is, you know, my expectation, and I think Jeff was in the same place of the time, I thought yields were going to top, right?

Starting point is 00:05:58 I thought we were entering a peak where yields were going to fall at that point. And oh my God, I mean, a 10 year above 3.1 with the Fed having done 75 bit hikes. I mean, that's a catastrophe. It's unreal. That's just, yeah. And look at where mortgage rates are. You see it across every sector. Credit conditions are so tight right now compared to where they were even a year ago.

Starting point is 00:06:17 Well, in Joe, he, he, Scott, I'm sorry. No, no, I was just going to say on Joe's behalf, I really enjoyed your take on the last round because typically what you find is, with all these higher prices, and I mean, we're seeing, we're not seeing 8% like they're reporting. Like, I'm looking at the gasoline prices. I'm looking at diesel prices and like, they're up over 100%, just on the year to date, let alone annualized, right? So, like, typically those scenarios are going to stall things out. You're going to see it kind of plateau.

Starting point is 00:06:49 You see the fixed income market. For 40 years, we've seen this. The fixed income market starts the front run that. They start bidding it and you see those yields come down. And so I think to your, and historically when that's happened and when that's played out, you see equities continue to run. And after our chat, I mean, you were right there for quite a few weeks. You and I saw each other down in Miami. And I was like, hey, Joe, buddy, you nailed it. And only for kind of what we were seeing, I guess, just totally stranglehold what has traditionally played out. And now it's just getting disgusting. thing. You've had a four standard deviation move in bonds across up and down the curve. That's catastrophic. You're not going to be able to get any traction and equity market run without yields coming down, particularly at the long end. But to your point about the inflation,

Starting point is 00:07:38 I mean, today's report, which we'll get to, I'm sure, the most concerning thing about it, I finally got a chance to dig into it this afternoon, is you're seeing some of the stickier components of CPI actually start to pick up. And that's really concerning, like shelter. That's not coming back down quickly. So to me, that's, that's really troublesome. And they're really stuck. I wouldn't want to be a central banker at this point. Who does? Jay, what were you going to say? No, I was just going to say that, you know, when the Fed spoke recently, he said the 75 basis point increases something that's basically not in a car, it's not actively considering. Yeah. So the risk, in my opinion, is that they're going to drag this on and they're going to keep hiking

Starting point is 00:08:15 maybe 25 bibs, maybe 50 and then 25 and 20. And I think that's kind of the prolonging this could be a problem. I heard somebody make the argument so when you're looking at what's causing the inflation, it's a breakdown in supply chains. It's a total, I mean, at the core of it, and I think what all bitcoins agree is at the core of all of this is you're mutilating the economic calculation that's taking place. And so you could maybe, and this might be a stretch for me to make this argument, but I've heard this argument, and maybe it's valid. So as you tighten and you make it more difficult for these businesses to do the performance of the labor that they're doing. Maybe you actually disrupt those supply chains even worse than they already are by tightening

Starting point is 00:08:58 into it, causing the inflation, which is materializing itself out of not enough supply, getting to all this demand that's in the market. Maybe you accelerate that. And at this point, I have no idea. This thing's a monstrosity of just, I mean, it's a disaster, right? It's a total disaster. So then, so you have that happening in just traditional markets. And then we have Luna explosion, you know, for people who aren't familiar with Luna. So here's the idea around it.

Starting point is 00:09:32 So this guy, Doe Kwan stands up this stable coin. He also has his own coin that was an ICO. They raised a bunch of funds by just dumping these things into the market. I have no idea what their strategy was to offload them and how many VCs were involved or whatever. But anyway, they have a stable coin that is supposedly supposed to be synthetically pegged to the dollar. And it's backed by Bitcoin. But not completely backed. It just has some backing.

Starting point is 00:10:01 And then they have some other, I guess, things in their treasury to defend the peg. Well, it appears, was it Citadel? Who was? I know Citadel was in... That's a rumor. Yeah. Nobody really knows exactly who pulled this off, but they obviously saw that they could exploit it, and they did.

Starting point is 00:10:18 And they're just, they're absolutely clobbering the thing right now. The Luna token was, you know, out of $100, $100 per coin, it's down to a dollar right now as they're selling those to try to defend the peg. They've sold all their Bitcoin. I mean, the thing is just a ticking time bomb before it literally, literally, Leak, both go to zero. And what I think people aren't understanding about this who maybe aren't intimately familiar with the space is you have this whole defy, or as I referred to it today, as clownfi, has all these dependencies wrapped around derivatives, contracts, and quote, unquote,

Starting point is 00:10:53 yield farming that's taking place all around this, quote, unquote, synthetic stable coin. And when you look at why this coin, this stable coin is different, in my opinion, I'm really curious to hear Joe's opinion on this one. But the reason why I think that this stable coin was so highly used is because it had a total lack of KYC attached to it like you do with USDC and also Tether, which supposedly, who the heck knows, I don't deal with these things. I just don't have U.S. dollars that are actually in a treasury backing them. So, yeah, I mean, so you have the whole defy space, all these.

Starting point is 00:11:35 other coins that are tethered to these things, that are tied to these things in these off, unbanked derivatives that is just a total cesspool of activity. And so, you know, when these things blow up, of course it's going to take whatever's tethered to it or whatever's the closest to it with it, at least in the short term, provided some amazing buying opportunities in my humble opinion for Bitcoiners. But that doesn't mean that the bottom is in. And it doesn't mean that this broader macro setup might continue to apply severe pressure on the price of Bitcoin. So that's me talking way too much, but I feel like I need to give an overview of what this is, especially for people that aren't intimately familiar with the space. Now, I'll open it up to

Starting point is 00:12:19 you guys and just, do you guys have any additional thoughts or considerations or things that I'm not talking about that you think are important? Joe, do you want to talk about stable coins at all and your thoughts on it? Yeah. Again, stable coins is the main focus of the Federal Reserve of policymakers. They talk about it constantly. In fact, I think Jay and I were both in a clubhouse from yesterday. We were talking about the Fed Financial Stability Report, which is really fascinating, particularly because they're talking about some of the hard sell-offs in the bond market and the commodities market. But they're super focused on this. They think that this is a contagion risk for the global

Starting point is 00:12:52 economy. It's kind of amazing considering it's like $200 billion market. Globally, you shouldn't think that, but I think they're really concerned about the stable coins threat to the dollar. But to your point, Preston, I think the real key thing to look at this with respect to the market structure is that Bitcoin really is, we all know, it's what matters in this space. And all these other coins and D5 protocols and even Ethereum to an extent, I view it all is sort of a barnacle on the hull of the ship that is Bitcoin. And when there's the turbulence in the macroeconomic environment and Bitcoin starts to sell off, you see all these things blow up.

Starting point is 00:13:25 So it's kind of a chain reaction here. And it wasn't dissimilar from what happened in the 2018 pop, right? Once Bitcoin starts to go down, all these projects fail. People flee, they try to get out, they need liquidity, and it's just a cash run. So that's the way I think you look at it. And with respect to Luna in particular, I think it's a little bit of a different dynamic. And there's going to be, my prediction is there's going to be serious litigation that comes out of this for the simple reason that unlike most of the other stable coins, which purport to

Starting point is 00:13:52 reflect the dollar, these things were promising. substantial amounts of yield. They had venture capital backing them in excess. They had people sticking their necks out saying, don't worry, this thing's fully collateralized. And if you have exposure to U.S. regulators and to the U.S. legal system, you are going to have to bear consequences for that. That is not going to get off the hook. And in particular, Yellen is going to use this as the number one talking point to advance some regulation of the stable coin market. She needed this. I think this gives her the perfect example, Exhibit A. Here, this market's blowing up. So we need to step in and save you from yourself. So I expect that to come in.

Starting point is 00:14:26 Wow. I did not think of any of that. So what you're really saying is there's some VCs out there. So it's probably be pretty concerned right now. Oh yeah. Because here's the thing. As many people know, once you get big enough and you have a target on your back, it's pretty easy to file a lawsuit. And there will be people coming after them based on their representations. And I mean, not going to name names, but there was a fairly famous person in the crow and crow crypto space that has a lunat tattoo on their arm. So I'm just being nervous. He can't get away from that. Right.

Starting point is 00:14:55 I mean, it's, when you have that exposure, don't be surprised if you come, somebody comes knocking with a subpoena on your door. Wow. I mean, let's be honest, that tattoo was, it was embarrassing before a Luna even collapsed. Sorry. Can't help it. Sorry. No.

Starting point is 00:15:12 I need that. I don't think, I think, I think everybody listening to you right now, Jeff is nodding their head. How about your thoughts on, on how it's interconnected? with all the defy stuff. I mean, does this continue to unravel as we're looking at this in the coming couple weeks? Does the pain train? I mean, I'm looking down coin market cap and like everything there is down 20, 30 percent today that's not Bitcoin.

Starting point is 00:15:38 Does that continue to roll out today? Oh, Jay, it's a disaster. Jay, go ahead. No, no, I just said I'm going to look. I haven't even looked at it. What he just said? I'm looking at now. Take it, Joe.

Starting point is 00:15:48 Yeah, you know, so my view on this is it's the same. the story. I think that if you're only focused on Bitcoin and crypto and you're ignoring what's going on in the legacy markets, you're missing the whole picture. If we can't, if we can't get stability in the bond market, most importantly, even more than the equity market, we can't get some stability there. I think everything continues to sell off. Yes. That is the necessary condition to give us any sort of chance that even forget a rally at this point. We need to stabilize. We need a base. We need something that stops the free fall. This has all the hallmarks of a classic liquidity crisis across the board. That's why you see everything selling on.

Starting point is 00:16:24 And I think depending on when they step in, right, Joe? Like, depending on when they step in, this thing can keep ripping down like hard. Like, at this point, it can really accelerate. Preston, there's a huge assumption, I think, out there. And this is, I don't want to get all, I'm not a super bear. Okay, I'm not Mr. Doomsday on this. But I'm just telling you, I think there's assumption out there that stepping in is going to stop this necessarily. Like, oh, they can they can totally backstop it. I don't know if that's the case. I think it's a huge assumption. Well, I think you're going to talk with market. So like if you're talking the bonds, I'm with you. I think if they step in right now, it's going to accelerate the sell off in bonds.

Starting point is 00:17:04 Because at that point, I think any bond trader with even an IQ of 10 can look at this and say, hold on a second. I'm pretty sure this is unsustainable. And if I'm sitting on a 30-year bond, I'm about to get my face ripped off. And now I'm really became, now I just, really became a seller. In equities, I think it could bounce. And I think you could, depending on what magnitude they step in with the printing, I think it could bounce significantly. What's the catalyst for them to step in right now? Things breaking. Like, there's the total lack of liquidity in credit markets, right? Yeah. So if you go to that, it's fascinating, guys. And anybody who's listening, I totally

Starting point is 00:17:43 recommend that you'll check out. It just was released on Monday. It's a May 9th financial stability report from the Fed. It's released twice a year. You can go in. They specifically cite Jay. We were reading portions of this yesterday, that lack of liquidity across the S&P 500 E Mini, lack of liquidity across sections of the bond market, even commodities. I mean, there are people getting squeezed. And I think that, you know, you see this 40-year line of truth, right, in the long bond in the 10-year. And I think people were trading off that. I think people took a leverage position saying, okay, yields half the peak here. And they were buying the long bond, and they've gotten cross. and you've seen this cascade of liquidity issues from that.

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Starting point is 00:22:13 sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. I would, Jay, I would describe it like this, like in your boss. body, you got the blood that flows through your veins and you got large arteries and then you got your capillaries, right? They're already seeing like out on the extremities that there's no

Starting point is 00:22:45 liquidity anywhere to be found. These low vol like locations, like you're just seeing the liquidity just evaporate. Once some of those larger like veins and arteries start losing liquidity, I mean, they have to step in and just pump the patient with more liquidity is fast and at rates that I don't I don't even think we can comprehend. I think that the amount that they're going to have to stuff into this, at whatever point that is, is going to make the March 2020 liquidity insertion look like a total joke. Well, the crazy thing, Preston, and I'd like to get Jeff's take on this, is that why is there no liquidity? I mean, if you think about it, we still have accommodative policies. You've got negative real yields. You've got fed funds at 75 bibs. It's all consolidating

Starting point is 00:23:31 in the market cap, right? So like they're going to do, so like this last round, They inserted all that printing into the system via the bond market. Most of it went in via the bond market. Some of it went in through triple P, you know, but collectively across the globe, they've been doing it via the bond market because nobody understands the bond market. And if they did understand how much they were debasing the currency, they would, people would be up in arms, right? Like, look at, here's an example.

Starting point is 00:23:59 But QT hasn't, what QT hasn't stopped, started yet, right? June 1st is when they're starting QT. Yes, correct. So do you think it's just traders? They're just pulling liquidity. They're just being risk up. I think you have some of that going on, but I think where most of the liquidity goes is into the ownership of equity and it bids the market cap of equity.

Starting point is 00:24:19 And so you have total consolidation of equity into the hands of a few people, right? And so when you put all this money into the system and people are out there spending it and it just percolates straight into the hands of the equity holders. And so then what does equity holders do? they have to own something scarce. Well, you can only own, you can only bid up so much commodities. They're perishable for the most part. Equities, there's scarcity in the shares, if it's, if it's a company that's profitable or has, you know, exponential growth on its revenue. So they're just taking all that, that buying power and they're just stuffing it into a higher

Starting point is 00:24:54 and higher market cap of equity, anything equity based, right? And so when we're watching the credit it explode like we are in the fixed income market, and then they're having to reprice that equity because of those cost of capital is going up. You can clearly see that it's 8.3% after today. Those valuations have to come down. They have to come down. So I think we're seeing that playing out. And so some of it's going into liquidity. Some of it's just total impairment, you know, broken promises. And then a lot of it's just getting stuffed into, or at least it was, not right now, but, you know, leading up to all this, this contraction that's happening over the last since Christmas, we'll call it, it was just getting bid into market prices up to that point.

Starting point is 00:25:39 Jeff, what do you think? I'm going to say something shocking, you guys. You know how I've been a bear since early January, right? Oh, boy. Right? Okay. Don't do it. Don't do it. I'm going to do it. I'm tilting, I'm tilting bullish for the short term. All right. Now hear me out. The macro environment. For what market? For what market? You need to specify this. For risk on assets, including Bitcoin, I think that for several reasons. In fact, I tweeted this yesterday morning, so before CPI came out, before we knew anything, I said, I am very macro-bearish, but here is something that could help tilt me to become slightly bullish for the next three months. And I said three things would need

Starting point is 00:26:20 to happen. Number one, the CPI would need to come out at approximately 8.5% or lower. Check, we got that, right? What does that say? Now, we all know the CPI isn't real, right? Blah, blah, blah. We have all our reasons for it's actually much higher than that. Okay, so that's a different discussion. CPI came out, 8.3% a little bit lower. What does that say? We've probably peaked in inflation for the short term, for the time being. That's what I was saying would probably happen a couple months ago. I got lucky. It did. happened here, right? I was actually a month early. I thought we might have peaked two months ago, but it turns out we just peaked last month, probably. We could go higher again, but I don't think we

Starting point is 00:26:58 will. I think we're now talking about disinflation for the rest of 2022. If we have peaked and the rate of change now is on a disinflationary path that takes the pressure off of the Fed. And I think we saw that. And that's what I was talking about last week when I said, I feel like something changed a little bit it and they gave themselves a little bit of a little bit of wiggle room for the first time. Versus being 100% hawkish, they tilted just ever so slightly dovish by saying, we're taking the 75 BIPs rate raise off the table. We're delaying it a little bit for when we start actually doing the quantitative tightening things.

Starting point is 00:27:33 I still think they're going to go through with this. I still think they're going to raise 50 bips at the next meeting for sure. But that's factor number two. If the market senses that inflation has peaked and it's no longer running away, it's no longer accelerating, but it's actually disinflationary. That takes a little bit of pressure off of the Fed. But here's the third and most important thing. I think that third quarter data, GDP data, may actually surprise slightly to the upside. I think it may be actually flat to actually slightly accelerating relative to a year ago third quarter 2021. So what do we have so far?

Starting point is 00:28:08 Right now, right Q1 was negative 1.4 GDP. Q2 is definitely going to be a negative GDP number we're in a recession right now. I think what we're going to get is a double-dip recession. And in between, I think, Q3, so basically, and again, markets look ahead usually one to two months. I like to say just one and a half months. We're about a one and a half months away from the third quarter. Markets are basically completely pricing in this terrible Q2. I think they're going to start looking at what was coming in Q3. And we could have a bit of a resurgence in risk on assets. Other things that tell me that I'm possibly right on this. I know this is a crazy call, right?

Starting point is 00:28:47 Because I've been so bearish for so long and I'm still tilted bearish in my fund, but I'm less bearish now. The 10-year treasury this morning after the CPI, what did it do? It spiked up above three, right? Caught a bit. Yep. And then suddenly, now what is it? Right now I'm looking at it 2.88 right now.

Starting point is 00:29:01 So it dropped about 15 bips intraday today. So I think the bond market actually possibly believes that we may start entering a disinflationary period. Normally, I don't like it when risk on assets don't like it when it's disinflation coupled with a decelerating GDP. But like I said, looking ahead now, Q3, I think we see some disinflation and a flat to slightly accelerating GDP. Risk on assets actually like that. One last thing. And then I'll throw this out for discussion. Back in 2007, 2008, before all that stuff happened, the markets knew something was going on, right? There were cracks in the foundation. People were kind of starting to freak out.

Starting point is 00:29:43 The market started to tank down into, I believe it was March of 2008. A good chart to look at is go look at the NASDA, go look at the Q's back then. They bottomed in March of 2008, and then we had a rally, strong rally up and through like kind of mid-Mayish of 2008. That's what I think is going to happen. And then it really crashed, right? Then we all know what happened. And then it tanked after that.

Starting point is 00:30:05 So I think we get a bit of a relief rally. And then I think we go into a second stronger recession, Q4. and Q1 of 2023, and that's when the Fed pivots. That's when things get super ugly. That's when QE4 comes on, and it's going to utterly dwarf QE1, 2,3 combined. And that's a whole different story. But for now, I'm actually slightly bullish that we're going to get a risk-on-asset relief rally. Lay into me.

Starting point is 00:30:30 I actually, Jeff, I actually totally agree. I think you get a, I think what you're saying here is you get a bare market rally. You effectively get a bear market rally, which I think we're, you know, nothing goes straight down in financial markets. So I think we're prime for a rally here. Whether we go lower, which is, you know, it's possible nobody knows. Nobody knows where the bottom is on this. But nothing is going to go straight down like this. They're going to try and pop it and everybody shorting these. So I don't think you're just going to see it continue to decline at this rate. I mean, this has been one of the most vicious rallies in history at this point, especially in the bond market. It's been a route,

Starting point is 00:31:05 an absolute route for standard deviation move. One quick caveat to what. You just said, Joe, when I think of a bear market rally, I think of kind of like a one to two, maybe three week long sort of thing that gets up basically to the top of its volatility range, like Bollinger band kind of stuff. And then it tanks again. And so everybody shorts it at the top. I think this is going to be strong enough that it's going to fool people into thinking the bear market's over. We're going to regain moving averages, like serious moving averages, the 200 day, the 100 day. We're going to squirt through the Bollinger bands to the upside. And it's going to pull lots of people with it into thinking we got through it and that the Fed did the right thing.

Starting point is 00:31:42 And then it's going to crash and just destroy everybody. So to your point, totally agree, bare market rally. But I just want to emphasize, I think it's going to be a very strong bear market rally. That will fool a lot of people. And not to nitpick, but I thought I saw a tweet from you that and maybe things have changed in last cold days, but didn't you think Bitcoin to a new all-time high? It's the summer. I've said it's possible that it reaches a new all-time high by mid-May, although I don't think so. I think it's going to do similar to what the NASDAQ did in 2008, where it ramped up very high, didn't quite get to that previous all-time high. I think NASDAQ, risk-on assets in general, so small-cap stocks, things like that, and Bitcoin. I could see Bitcoin

Starting point is 00:32:17 getting up to 60K, 55K, somewhere in that range, and then just collapsing from there again. So just a historical note for people, the NASDAQ in 2008 sold off 25%. Then it had a bounce of 23% for almost a full recovery, not a full recovery, but it was kind of what you're describing, where it went outside of what you would expect of all range would be. It then sold off from that level down 50%. And from the original top, it was down 54%. Now, what I think's interesting is once it got beyond, let's see here, well, once it went back down to the previous low that was negative 25% in 2008, it came completely unglued that second time once it got through that negative 25%. Now, when we look at the existing setup that we have right now, and I'm just talking

Starting point is 00:33:18 about the NASDAQ, we are down, I believe we're down like 28% right now. Right. Okay. It's about 17 for S&P too. Yeah. Okay. So on the NASDAQ, we're down 29% right now. We've already had a sell-off that was, as deep as 23 to 24%, and we had a bounce that was like the 2008, which was up 18%. And now we're back down to 28%. I don't, yeah. So I guess where I'm going at, Jeff, just to try to challenge your idea, it almost seems like we've already kind of had that bounce. And it also appears that like when you get in a situation where the Fed doesn't come to the

Starting point is 00:34:02 rescue and you get through a 30% drawdown, that things can get a little mess. and you start getting contagion. So I don't know if we're there, if we are, it's happening next week or the week after, right? My opinion is we're seeing hiring freezes happening now. I think you're going to see the Q2 earnings calls in July and August. They're going to have weak guidance moving forward. Potentially there's going to be some layoffs happening at some point. I think you're going to really see a real, it's really going to get worse, in my opinion.

Starting point is 00:34:29 I think the economy is definitely grinding down. It's expected to continue to further, you know, slow. I disagree on the Federal Reserve. I don't think they're changing course. And I think the market's seeing that. And they're going to do their 50 basis point rate hike. What he said is, and I just, I took the note here when you were talking, there's a broad sense on the committee that additional 50 basis increases should be on the table for the next

Starting point is 00:34:50 couple meetings. I think they're going to do 50 and 50 again. You forgot the, you forgot the first part of that sentence. The first part of that sentence, 75 basis point increase is not something in the committee is considering. Yeah. The beginning part of that sentence you just read said, assuming the conditions evolve with expectations. That's the first part of that sentence. Assuming the exhuming conditions of all

Starting point is 00:35:09 in line with expectations. I'm saying such a good lawyer. That's what it says. He leaves himself and out. He says assuming conditions of all which you should read to mean that is declining inflation. You have to have that month or more change. If you don't get the month over month change, 50 bips are on the deal. He said also, we are not going to stop. He literally said these words. We would just go back to 25 basis point hikes. Right. So they're not. They're not stopping. They're not stopping, is my point, right? They're not reversing their monetary policy.

Starting point is 00:35:38 The question isn't whether they're stopping. The question is if they're keeping their foot in the gas pedal. This is the first time in 20 years they did a 50-bit pike. No, they're increasing, is my point, right? They're not going to stop. So as they continue to increase, which means they haven't really changed their policy, which is rate hikes, right? That's going to happen.

Starting point is 00:35:54 We're talking past each other. And the last point is that stocks are not, they're not cheap, right? So, and this is the thing we were talking about a clubhouse the other day with you, Joe. If you just look at, what are we at, 220 EPS for this year's expectation, right? That's going to get downgraded. And when that happens over the summer at some point, I believe you got to look at that and you say, we've been generally trading around, what, 20 times, 20 times on the S&P, right? So if they get downgraded to 200 even and you take that 200 and you give it a 17 multiple,

Starting point is 00:36:24 you're at 3,400, S&P's coming down, NASDAQ's coming down. I don't see this balance. I think Preston's right. I think we saw the balance. The S&P jumped up 10%. NASDAG went up and it pulled back. And I think you're just going to see deteriorating conditions where it's just going to continue to sell off.

Starting point is 00:36:38 That's my opinion. I love the, I'm a little bit in Jay's camp, to be honest with you. I mean, I'm open to any array of outcomes in it from my vantage point. It doesn't really all matter that much. My positioning is pretty straightforward. We know the end game, right? This is the thing we all agree on. Yeah, that's right.

Starting point is 00:36:57 So I don't know. I'm a little concerned that you're starting to get to that like 30%. mark where it's going to get ugly unless the Fed comes in and says, oh, we're going to reflate all this. We're going to stuff everybody's hands with liquidity. And they don't seem to be saying any of that. They seem to be saying this kind of needs to sell off so that we can dampen inflation. They're taking away what they gave us. It's softish, right? It's softish. Well, they're just taking away what they gave us in 2020, right? They gave it to us so quickly. And they're just pulling it back now. I think the language he used at the press conference

Starting point is 00:37:31 already showed that they were concerned about the sell-off and risk assets. They basically did, they went out of his way to appear doveish while still hiking to Jay's point. The question is not whether they stop hiking in my mind. The question is that they keep the foot on the gas and do multiple 50-point hikes. Because right now, effectively, Fed funds is supposed to be at around 2.25 by the end of the year. And the question is, do we get there? Do they just do 25 from here run out, which would put it around two. 2% Fed funds in this economy is still a substantial drag just because of the leverage in the system.

Starting point is 00:38:03 So for me, I don't think anything's going to stop until it gets much, much worse. But to Jeff's point, the reason I tend to favor him is because I think on this call here is because I just don't think you're going to see consistent selling across the board in this market. I mean, you always see these bear market rallies in any condition. But it's all about what happens with the economic data as is coming out, the jobs reports, and all this stuff is going to come out. It's not going to be good.

Starting point is 00:38:26 And also large companies announcing layoffs is going to be a problem. We're in this perverse dynamic where bad news is good news for risk assets. And the reason for that is because if there's really bad GDP, if we get a second quarter contraction two in a row, that's a technical recession. And there's going to be at least speculation or hopium among Fed watchers that say maybe they'll stop. Maybe they might put their foot on the break at this point. I think that gives hopeium to the market.

Starting point is 00:38:53 I'm not saying it's justified. I don't think they believe that. I don't think they'll believe that. But that's an opinion. Here's a crazy. Here's a crazy stat for you guys. So the top before the COVID meltdown, which was just two years ago, we are currently today on the NASDAQ, 23% higher than the top before COVID right now, 23% higher.

Starting point is 00:39:21 Now, if I'm adjusting, and I have to do this because I got to adjust this for him to. By the way, as you're doing that, we pulled back five years at the bottom there. The 35% decline was 2015 prices. So there's no reason why we can't pull back two years right now as they adjust the EPS. Well, I think when the Fed officials are looking at that, that's how they're viewing it optically, just totally in nominal terms. They're like, hey, we're still up 23%. The market can handle this coming back down, right? But in an M2 world, if you adjust that number that I just told you where you were up 22%, and you adjust for M2, you're actually down 13% from the previous high in 2020 right now.

Starting point is 00:40:02 So look at the EPS. Look at the EPS, right? If we're at 220 this year and this gets downgraded to 180 as an example, even with an 18 multiple on that, what is that? We're looking at, and the market looks at this stuff, right? So you look at 180 times 7, let's say 18%. It's 3,200 S&P. That's very, that's definitely in the.

Starting point is 00:40:23 cards. That is definitely a possibility. I even think 3,000 is a possibility on the Dow. I mean, on the SABB. I think you're describing the Fed opinion really well, Jay, as far as how they're viewing it from a number standpoint. But if I can just talk for your common everyday person who doesn't have a whole lot of money in the stock market and all that's and they're basically living paycheck to paycheck. Right now, they are experiencing severe pain in the market. Now, if you step outside the U.S. And you look at the everyday citizen outside the U.S. that's dealing with dollar-denominated debt, like infested inside of their country,

Starting point is 00:41:04 and dealing with the DXY blowing out to like 20-year highs against every other fiat currency. Dude, it is, it is mind-bending. How far are stretching things right now? Let me give you a data point. So prior to COVID, the average home equity had $48,000 in home equity, roughly. roughly $50,000. If you look at the price of the average home in 2012, it was about $260,000. Right now the average price of a home is about $450,000. And the average home equity right now is

Starting point is 00:41:33 $185,000. So they're not feeling the pain because they don't really own stocks. Most people have their wealth tied to their house. So when that starts to happen, as interest rates go up, and they are going up, and you see mortgages go from 3.5% to 7%, you're going to see a direct correlation and an inverse on the home prices going down by 30%. And that will shave off from 4%. 50 to 300 and knock out the home equity, which is home equity they didn't have anyway when you really think about it. So they're feeling the pain because they look at what they did have on a number, you know, but it's, they really had it to begin with, you know.

Starting point is 00:42:06 I've got one. I've got one I want you guys to cover here. Midterm elections coming up, right? If this market sells off hard because the Fed is acting independent and all that kind of stuff, right? And this market sells off going into that midterm election. Does J. Powell get fired? And do they bring in like some super Uber doveish Fed chair at that point?

Starting point is 00:42:33 Like what's what? Joe just said to me a couple hours ago, right, Joe? That he hasn't been confirmed. I didn't even realize that. What? Joe, what are you talking about? Well, Powell was re-upped, right? Renominated.

Starting point is 00:42:46 But as far as I was checking, the Senate hasn't confirmed him, right? or maybe it recently happened. They haven't voted on the confirmation. And if they haven't, it's like they're hanging this over his head. Let me double check. I think if that's the case, what you said earlier today, then that is more pressure than Trump going on television saying all the shit that he said. This is way more pressure.

Starting point is 00:43:04 You haven't even been confirmed for his job. So then off the fire him, they just don't confirm them. So that's political pressure. Yeah, I just can't imagine going into the next two years what pressures that are going to be there to reflate and pump this thing in preparation for the next presidential timetable and, you know, Congress election cycle. Let me ask you, Jeff, how low, because you had a call on, on, you've been right so far on the Bitcoin drop, right?

Starting point is 00:43:33 So how far down do you think this can go if we see this get worse? What do you think your bottom is, not saying when, but if, worst case scenario, what do you think it is? Sure. So I've been using 25K plus or minus 10 percent. So 22, 5 to 275. It could go lower, right? The 200 week moving average, I think, is about 21, 5 or so.

Starting point is 00:43:52 It could pierce that. It could go down. If it does pierce it, I think it's going to be a dip, a transient thing. It would be a massive buying opportunity. I would be buying hand over fist at that time. So, yeah, that's definitely possible. I will tell you, though, but because of my views where I'm tilting, you know, slate ever so bullish right now, I've been buying hand over fist already sub 30K.

Starting point is 00:44:13 So when I see the 29 handle, I saw the 28 handle, I bought more after market today. Yeah, yeah. And so, because I'm not convinced it's going to go. I don't know if it will hit 25K. There's some good evidence saying that it might not. When you look at things, I mean, there's, we can, I don't know if we want to take the conversation this way, but different pricing models, right? And you look at things like adoption curves, Metcalfe law-based kind of thing. Still waiting for Will Clemente.

Starting point is 00:44:37 He's supposed to put out a report, I think, May 16th on that. And I gave him a couple or a person to check out. There's some good work that's done on this. Urian-Nergerian Timmer from Fidelity has some work based on cell phone adoption. That's, I think, okay. I think it's kind of underestimating the growth of Bitcoin. But when I look at that kind of thing, I think Bitcoin right now is cheap. Like, it is trading along its adoption line right now.

Starting point is 00:45:02 And it would take, you know, massive market forces to get it to go lower. And it would be ugly because it's very rare for it to go lower and stay lower. The last time it did where it dipped significantly below was COVID, and then it quickly ran back up and got back on track again. So that's how I would envision it happening this time around as well. Just to correct, Jay, he's up for confirmation for a full vote of the Senate either tonight or tomorrow. So either tonight or tomorrow on the 11th. So I wasn't wrong on that. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:48:54 But if you get it, maybe he gets more aggressive and doesn't have to care. That's scary. Can I talk about that? And then we can come back to the adoption thing. if we want to, too, either way. I'm not into politics at all. Don't care. Don't have any horse in the game. Don't care. But I think Biden and the Biden administration, they are not Trump, right? They are not stock market junkies. They are not pump it and we are going to have the best stock market returns ever. They are all about inflation and they say, therefore, the little guy, so they're trying to bring

Starting point is 00:49:22 down inflation. I think they may continue to sacrifice the market without putting pressure on Powell. I don't think there's necessarily going to be a ramp up into the midterm elections. I do think the Democrats are going to get trounced, but I think they're going to run on the platform that, look, we actually got inflation under control. We sacrificed. We stuck together. Look at us. Go America.

Starting point is 00:49:43 We've ruined your 401K. Yeah, right. Your death prices are lower. Yes, you're all going to work 10 years longer because of it. But, you know, anyways. So that's what I think is probably going to happen. And I still agree with you guys that we're going to get to these lower lows. I just think we're going to delay a little bit.

Starting point is 00:49:58 I think we have a two-month interval or so. And then it really tanks at that point. When you look at that chart, I don't see a lot of support between 20 and 15, right? It starts to get really hairy there, right? And to your point, it would be a quick jump down, a spike down, rather, wick down. And I think there's going to be a lot of money that comes in saying, man, I missed this in a 2020 bull run up. And there's going to be retail coming in big and probably hedge funds as well.

Starting point is 00:50:21 So here are my reasons for, again, for this. And I started to keep harping on this. But do you know more than three people who are bullish right now? I can't think of three people who are. I don't think anyone on here other than you. Everybody when I talk about, so three months ago when I was Dr. Bear and going on Twitter spaces and talking about it, I literally was mocked and ridiculed all the time. Like people, you're stupid.

Starting point is 00:50:42 You're just a doc. Trust me. I wear my daughter's shirt. She got me for father's eight. Trust me. I'm a doctor. You know, blah, blah, blah. You know, people hacking on me.

Starting point is 00:50:49 And anyways, and not to, not to do my horn or anything, but just like, you could see this stuff coming, right? And now when I talk about being bullish on Twitter spaces, the same ones, I get mocked and ridiculed. Like, that's insane. How could you possibly think that? I don't know anybody who's bullish, right? Except the permibals.

Starting point is 00:51:06 Yeah, Joe. Joe is. David Hunter, he's always bullish. And who's that other dude? Tom Lee or whatever of, so a couple guys are still bullish. But the vast majority of people are all nodding their heads and talking about how it's going lower. When everybody is bearish, there's nobody left to short it, right?

Starting point is 00:51:20 There's nobody left to sell. That's when the price starts creeping up and nobody believes it. for a while. So that's kind of again what I'm going on. The issue is, the issue is, as I see it, is not one of pure sentiment. It's not a traditional orderly market. What we were talking about earlier and what I think was the key that Preston was hitting on is you have a liquidity issue. And in a liquidity crisis, you can't stop that just because sentiment gets really bad. It's like, you know, it's like a snowball down a hill that turns into an avalanche. That's the problem we have right now. If you can't backstop that through liquidity, resolving

Starting point is 00:51:51 the issues. And by the way, guys, this is the, I'll put this in the chat. You can check it out. But the Fed's own working financial stability report is talking about these liquidity issues in the commodities market, in the bond market, in the S&P 500. They're identifying this as a systemic risk. So I don't know. I think at a certain point, they're going to call Uncle, whether it's, you know, 10, 15 percent lower from here because they're just a little bit more hawkish than they were in 2018. That remains to be seen. And one, one, sorry, one quick thing, sorry, Sorry, Preston. One quick thing is I'm always early. I'm notoriously early. So this may take longer. We may still go lower for longer and I'll look stupid for a little while before we get this ramp up that I'm

Starting point is 00:52:27 hoping we see. Sorry, just wanted to throw that out. When the liquidity starts drying up, it becomes very mathematical. And the reason it becomes really, it's funny because when you talk to anybody who's not really intimately familiar with markets, they always say, oh yeah, it's the fear. Actually, it gets really mathematical at the end where the promises have been so broken. that everybody's just trying to cover their counterparty risk and they have to sell to cover it. So Preston, this is directly from the report that just came out Monday. I just got to read this one sentence for it. It says, it says a sharp rise in interest rates could lead to higher volatility, stresses to market liquidity and a large correction in risky assets, potentially,

Starting point is 00:53:07 potentially causing losses at a range of financial intermediaries. That's the Fed. The Fed is saying that these rates are going to cause potentially a liquidity crisis if they continue. And if you take that definition, then you put it up to an equal sign, it will equal softish. It's funny. What in the world is happening in China? What in the world is happening over there? Are you guys seeing these videos and stuff that are coming out? This is crazy. I've only heard a ton of theories about this. I've probably heard a dozen things, everything from their potentially trying to sack the supply chains and cause havoc for U.S.

Starting point is 00:53:46 consumers and they're willing to take the pain to inflict harm on the United States and do advance Russia's cause. I've heard theories about how it's related to Xi Jinping trying to get another term for life, like become president for life and his political issues and he's trying to stop some of his adversaries. But I agree with you, Preston. You see these videos and knowing what we know now about COVID, it seems, probably can't say that.

Starting point is 00:54:08 But yeah, it seems wrong. This is, so from some, I have grandparents. They're both in their 90s. They got COVID two weeks ago. They're perfectly fine now. They push straight through it and they fully recovered. The COVID that we've got right now has mutated to a point that is drastic. I got COVID when it first happened.

Starting point is 00:54:29 And let me tell you, I was down hard, like really hard. I did an interview with Jack Mullers. It was funny. Jack had it like two weeks before I got it. And I was like doing that interview, I distinctly remember this. I didn't even know what my next question was. Like, I was out of it. And so this thing is mutated.

Starting point is 00:54:46 it's completely different. And I'm looking at these videos from China. And I'm saying, oh my God, they're locking down cities that are three times the size of New York City, like literally welding people into their, into their apartments. People aren't allowed to go to work. You're watching the ships build up in the ports. It's Beijing and Shanghai. Who knows what else, right? Like, there is nothing normal that's happening over there right now. And I've heard the arguments of, oh, well, they're strategically doing it to disrupt supply chains and blow up the dollar. There's that argument. I've heard arguments that it's actually a political riff between Beijing and Shanghai that's kind of playing out in relation to Xi Jinping. I've heard that it's a resourcing constraint

Starting point is 00:55:30 or they don't have enough water. They don't have enough food because everything was so centrally planned the cities and everything was so centrally planned that it didn't materialize in like the whole social order and construct of how things function over there from a resourcing standpoint was completely centrally planned. And so now it's completely coming unglued as you're getting pressures in the broader markets. There's people talking about there being an invasion this fall and that maybe some of it has to do with that or in preparation or making social issues abroad greater by causing these dynamics. I don't know what it is. I've heard a lot of different theories, but I can tell you this, something is really wrong over there right now, like scary.

Starting point is 00:56:22 If I can chime in, I think all of those theories are giving them too much credit. I think it's stupid health care policy. I think it's people centrally controlled government. who thinks they can eradicate an endemic virus that's highly contagious by doing lockdowns. And that's just not how highly contagious viruses work. You have to play the game. You have to take your medicine. You have to let it run its course. You can help reduce it with vaccinations if you want to and we don't have to get into all that stuff. But they tried and they sort of eradicated it initially and then it comes back because it's highly contagious. And I just think it's stupid policy. And now the rest of the world has gone through our COVID time.

Starting point is 00:57:02 And like, to your point, pressing, like, now it's very tolerable. You know, most of us have some significant immune response to COVID. And we don't really have to worry about it anymore. That's what happens. These things take, they go through their course. China hasn't taken their medicine yet. And now it's coming back to hurt them. And so that's all I think is going on.

Starting point is 00:57:21 Let me ask you a question. My cousin lives down in Maryland. And he posted a photo himself with a surgical mask because he went in without a mask. And they said, you have to wear this in a doctor show. That doesn't do anything, right? Like, it's like, what is the point of the surgical mask in the doctor's office? Like, they're all making them wear these now when I go in. Yeah, I don't know if we really want to go down this route.

Starting point is 00:57:38 I'm just curious. Isn't it supposed to be an N5? Isn't it supposed to be an N95? I mean, I just, it seems like it's like virtue signaling or something's happening here and it's not. Most of it's so, yeah. And I, man, I can't believe we're going to do this. But so, so. Don't, don't answer.

Starting point is 00:57:51 We don't need, we don't need to hear this in the comments. I don't even want to hear it in my comments. Good, good. Okay. Save me. Just curious. You're a doctor. I don't know.

Starting point is 00:57:59 I think everybody can tell by our facial expressions what we think. Yes. That's my theory about China. I think that your simplicity of this is signal, for me, at least. I think you're right. Maybe it's just pure stupidity and just like, I mean, think about this culture over there. They have social credit scores tied to their phones. And if they complain about the policy being to whatever, like all of a sudden,

Starting point is 00:58:23 now they can't go out and get a loan on a house or something, right? or they can't be seen at the better clinic or they can't be whatever. And so who's going to speak up in an environment where you're penalized by saying anything negative as to whatever existing policies exist? Like that are, go ahead, Jeff. I'm just saying, think about how it was even here in a free country like America. You say something anti what the government protocol is. You get destroyed and you get canceled. You can't even give an opinion about a mask on the press.

Starting point is 00:58:55 Right, right. Now imagine living in China where the government literally will threaten you and put you in jail possibly and cancel your social credit score because you said something opposed to them. So who's going to say anything against it? You know, anyways. Sorry, Joe, I interrupted. No, I just think the art. I agree with what you've all said. The thing is, though, China is all about control from controlling the internet to banning Bitcoin miners to banning access to all sorts of different things we take for granted the United States.

Starting point is 00:59:23 So to me, there's an agenda behind it. It can't be just merely ignorance on the part of health care policy. There has to be something they're concerned about free people doing. So I don't buy the whole just ignorant, poor medical policy. They may have a role in it to some degree, but there's something in particular or a variety of things they're concerned about. I would humbly submit, Joe, that we had massive amounts of ignorance at our leadership level for our policies related to COVID. And we suffered for it. And some of it was okay and some of it was good. lots of it was terrible and we shouldn't get into this anymore. But I just think you might be given their leadership too much credit personally. I think it's really simple. Yeah. This is going to be shadow bad on YouTube. I know.

Starting point is 01:00:04 Sorry. Well, no, I just want to keep it focused on the finance and the markets. And Jeff does not need that type of action in his comments section. Let me promise you. He gets a lot of heat. It's all good. He knows how to take it. He does take a lot of heat.

Starting point is 01:00:18 I can take it. He likes the heat. Massacist. Joe, the regulations coming out of the Luna situation. What is this going to do? Well, the regulation was already coming, right? It was coming. They already had the executive order earlier in the year.

Starting point is 01:00:36 They're studying the stable coin market. They're talking about creating it. If you read that financial stability report to the Fed is made clear, again, that they're waiting on a directive from either the executive or Congress before they implement a CBDC. And again, check it out. I just put it in the comments to you. It's pretty fascinating. They have a whole couple of pages on the CBDC and the efforts and the benefits and what it would look like and how it would involve the banks. It's pretty detailed

Starting point is 01:01:00 breakdown of the Fed's view. But to your point, though, I think this is always coming. What this gives is a rhetorical talking point to hammer home. Look at this stable coin. Look at all this wild, wild west activity going on in crypto. We need to come in and we need to deal with it. That's really powerful, right? Because it's much harder to drum up support if you don't have a blowup. If you have a blowup, you can easily go into every legislator's office and say, guys, we got to act now. There's consumers at risk. There's people that have lost their life savings. I've seen, you know, there are some tweets out there today about fairly prominent lawyers in the space and people that I know personally, they lost a ton of money on this.

Starting point is 01:01:38 They lost their life savers. Really? And you can go, yeah, yeah, just awful. I mean, people were putting a ton of money into this token. They thought it was foolproof. There were entire companies, some of which, you know, had reached out to me asking for advice and support in my job, my day job, that literally built platforms based off staking tokens and getting 15% APY. Just a total mess. And, you know, full disclosure, I told a lot of these folks, this doesn't make sense. This is a house of cards. You're building on sand.

Starting point is 01:02:06 And once there's a run in the bank, we all know what happens next, particularly if you don't have somebody coming in to do open market operations. The whole reason that this, you know, the thing is the Ponzi of the Fed exists is because they can always come in and intervene and always inject liquidity, right? That's not happening in these stable coin protocols. Somebody gets left hold in the bag. How can anybody think that you can collect a 15% yield on something that not tied to anything? Like if you're going to have a token and the token's tied to some protocol or application that has a billion users, right? Like, sure, maybe there can be some type of utility there,

Starting point is 01:02:46 But even then, like, how are you pumping out a yield if you're not harvesting actual earnings from an equity-based business? Right. Like, these tokens are nothing. They are literally nothing. They are a piece of software that says that there's 10 million coins. Like, this is insane. You know how attractive this is, right?

Starting point is 01:03:08 How many times do we sit and talk with bitcoinsers? And they always ask the question, should I put my Bitcoin on this exchange? And should I get that yield? That's really attractive to people. And I think they're now finding out when you give up your keys, when you give them your Bitcoin to somebody else, you're compromising the best asset in the world. You're letting people for five bips or whatever and they end up paying. I mean, it's a joke.

Starting point is 01:03:29 And people are going to have to learn this lesson again and again until they get it. How about the ETH staking? So like, if we go back to whenever they rolled out this idea of ETH too and that you could stake ETH, I forget how many you have to stake. What is it? like 25 eth to stake it, right? And so, of course, most people that are buying this stuff don't have that much. Then they have to go through the exchange, which totally centralizes the clearing mechanism for a proof of stake system in a long enough time frame. But you pull back

Starting point is 01:03:57 the clock. I think we're in, are we in 2019 or 2020 when this became an option to start staking eth for quote unquote, ETH two that still is not rolled out, right? So now you got all these people, and those numbers of these people stake in this stuff just keeps going up. I forget what the number is, but I mean, you're talking billions that has been staked. And they can't get, they can't get anything out, but yet they're collecting yield, which is just the ETH protocol, the basing itself on ETH one. I suspect, I think, I don't know. It's so convoluted and confusing as to what the heck they're actually doing here. So when I'm looking at the ETH volume and things like that, you would think the volumes going down if these people keep staking their

Starting point is 01:04:44 eth into this ETH too, and they can't withdraw. They can't pull it out even if they want to. And so, Coinbase and other exchanges that are offering these services are complicit with this scheme. It's a scheme. Like, what the heck is going on? And now I don't even think, are they even doing it? And I'm not an expert on this stuff. So, you know, people listening to this, if you got Ethan, you think I'm crazy, feel free to think I'm crazy because I have, I don't dig into this stuff. I find the whole thing to be very Ponzi-like. But like, the timeline, when are they rolling this thing out? Are they going to roll this thing out? It doesn't seem like they can get off of a proof-of-work protocol and move to a proof-of-stake protocol without there being, like, severe,

Starting point is 01:05:24 like intense engineering gymnastics of 10 things you can't even pronounce the name of it, and they keep changing the name of that. Like, it just seems like it's so similar to all this Luna like disaster framework architecture of just noise, engineering software noise that you can't even wrap your head around. So I don't, I mean, I'm just kind of curious what you guys think of some of this. And I guess where I'm looking at you, Joe, is like, are these, are the exchanges complicit in this staking of these clown coins? And I know I'm going to upset people when I say that about ETH because everybody, there's a, there's a massive community around that. I don't own it.

Starting point is 01:06:05 I just, I don't understand it. I don't understand how people can't see the lack of sound engineering in this stuff. So I'll start. So from my perspective, I think you have to get everybody in Bitcoin has to get into their heads that the SEC's regulation by enforcement is purposely designed to be slow and inefficient. They're going to go after the biggest fish. It's going to be very long and painful before they get results. And with respect to the exchanges, in many cases, they've seen. taking a hands-off approaches for exchanges. So to your point, are they complicit? Most of the time,

Starting point is 01:06:40 like we're seeing right now with Luna, and as I alluded to earlier, it's going to take something to go really wrong before you start getting civil lawsuits filed against them. When people started saying, I had my life savings in this, it blew up, you're responsible because I can find you, I know where to serve you. I can sue you and, you know, have legal process in court. That's the way this goes down. So when these things actually blow up, or if, rather, they blow up, at that point, that's when you're going to get civil suits that are going to actually force these people to change. To your point, though, I mean, look, you've had these tokens listed and Gensler has come out publicly and he said, I look at these exchanges, I see tons and tons of unregistered securities.

Starting point is 01:07:18 The vast majority of these things are unregistered securities. Well, guess what we're seeing now? We're seeing not one, not two, but three separate class actions that have been filed against to Coinbase for aiding and abetting the sale of unregistered securities. They're pending in the civil format where people can bring these things on their own without waiting on the SEC or any other enforcement agency. So I think that's going to come. I think you're going to see a ton of litigation against these entities coming forward. And it remains to be seen if they can advance it.

Starting point is 01:07:43 But if you get one of these things to go forward and a judge to say, yes, a private investor or a private actor can sue Coinbase and advance these claims against an exchange, man, you're going to open up a plethora of litigation from the plaintiff's bar. And keep in mind, one of the things Congress loves to do, they love to give the ability for private rights of action. They can easily put forward a bill in Congress that empowers and gives attorneys fees. And they do this consistently with medical malpractice and all different types of litigation that gets filed. They give them the power to bring private suits to, because they don't have the enforcement capacity. They don't have the attorneys. It's just too broad of a market.

Starting point is 01:08:20 Yeah. And so I guess when I'm looking at it, it's like, if you, let's say the price of ETH, when I think it has, it's gone down 50% or whatever and you can't withdraw. You've deposited into this thing that they're acting as your representative for that you're supposedly collecting yield and you'll get it whenever they decide that it's done. And you're in this do loop of you can't even withdraw to get rid of it. I mean, it's all new tech. Like all this stuff is happening. There's no framework for what, what, because none of this has ever been done before. The most unfortunate thing is that you've got all this junk out there, right? Yes. And again, it's tied up in Bitcoin. We're associated. We're lumped in, which I've heard Jeff say this. I totally agree with it.

Starting point is 01:09:06 Bitcoin is totally different from all this other crap. Yeah. It really is. And the problem is it's all crypto. It's all blockchain. It's all buzzwords that people lump together. And we get caught up in this, you know, regulatory drive to do, something about this wild wild west market.

Starting point is 01:09:22 But it's really unfortunate that we have nothing to do with it. We're kind of only related loosely. The transaction fees today were $100 for an ETH transaction. $100. It's insane. That's insane. Who's buying this? Let me segue here, Joe, because I'm glad you're here.

Starting point is 01:09:43 Nick, dude on Twitter asked this question before we got on. His name is Small State Hoddle, so shout out to him. He said he'd like to know, and I'd say from Joe, what the ramifications of the SEC claiming alts as securities would be. This is what you're talking about. But do you think there's a point where litigation will go from beyond exchanges and actually to individual alts? Will they come after the founders of the founders of, you know, pick a thing, Luna, Cardano, whatever?

Starting point is 01:10:10 Yeah, how would that go down? How would that go down? Do you think that could happen? Yeah. So this is the biggest misconception. I think people think that one day Gensler can stand up in his office and say, I declare these hundred tokens to be unregistered securities. So that's not how it works.

Starting point is 01:10:23 He has to bring a civil suit, right? He has to make a claim that an entity or a person engage in the sale of an unregistered security. They violated the Act, basically, the Securities and Exchange Act. So from that standpoint, they have to be selective because they only have so many attorneys to bring these claims. And what we know from SEC versus Ripple, which is dragging on and on. We won't get even a motion for summary doesn't be briefed until later this year.

Starting point is 01:10:48 and then we won't get a ruling until 2023, that they have limited capacity. They're overworked. So to the point, Jeff, I think what you will see is you will see increasing enforcement. They've telegraphed this extensively, but it's going to be one-off case filed. Here's another case filed. Here's another case filed against individual actors. And it becomes really problematic when the entities that are creating these things and the individuals who are promoting these tokens are outside the United States. So to me, that exposes a lot of liability on the exchanges, because if the exchanges are aiding and abetting the sale of these things, that is a problem. That's where your legal liability is. Gensler will never, he will come to the conclusion eventually that you will never

Starting point is 01:11:28 get your arms around this market unless you stop the choke points of the exchange. And then the other problem is, well, now you've got these decentralized protocols, right? And are they, quote, unquote, decentralized or are there actual actors behind them you can haul into court? If there are actors, you can haul into court, they're not decentralized. And that's how he goes after those markets. Thanks. What's your thoughts on the ripple outcome? At this point, I don't see anything that takes us outside the context of a simple investment contract case. I think it is clearly a sale of an unregistered security.

Starting point is 01:12:02 I'm going to get a hack now. Once again, because I've said this publicly, and the ripple army comes after me every time. I don't care. That's my view of the law. You can prove to me wrong. I think when the judge comes down and says I was wrong, the good news for us is that, well, I guess depending on your perspective, the unfortunate news, put it this way, is that no matter what comes down, if the judge rules finding it's a security or it finds that it's not, either the SEC or Ripple Labs is going to appeal it. So you get a decision next year, unless there's a settlement. If you get a decision, it's going to go up to the Second Circuit. And the Second Circuit, the next court's going to review it and they're going to decide on it. The most interesting thing, though, in that case, anybody following it, is this fair notice defense, which today has been allowed to stand.

Starting point is 01:12:47 It's still moving forward to motion for summary judgment. This is a constitutional defense. And basically it argues the regulatory environment was too uncertain. It was too unclear for us to enforce anything. Therefore, you can't hold us liable. It violates due process. If that argument is allowed to stand and be advanced, every altcoin out there will cling to that argument.

Starting point is 01:13:07 They're going to say, it was too confusing for us to comply. with the law, even though we had lawyers telling us how to comply with the law, they're going to latch on to that, and that's going to really handicap the SEC. So my hope as a Bikoyner is that that defense is rejected, that you'd follow the traditional Howey test and the traditional securities laws, and you don't create a special carve out for quote-unquote crypto. Now, would the SEC try to get that case dropped into a certain jurisdiction of a judge that would rule on that? What would be their play to try to get the, the, the, the angle that they would want. Can something like that even happen? No, no, it's already in front of a judge.

Starting point is 01:13:44 I mean, we already have a judge Torres. She's ruling on it. She's going to rule on the motion for summary judgment. What's her track on on on being a liberal view of that or an ultra-conservative view of it? I don't think she's had an issue that's close enough on point to really make that assessment. She's a good judge. She follows a law. I've read some good opinions from her just in my limited research. But again, her ruling's not the final say. You're going to go up to the next level, the federal court system, the federal court of appeals. So their opinion in many ways is probably going to be more important. But there's also the potential that they settle it, right?

Starting point is 01:14:17 There's always this thing that, you know, you get later in the litigation, people say, that's enough. We've had enough. We don't want a risk a bad ruling. What would the SEC want from a settlement out of that? Like, what would that look like? Discorgement, a fine, can't list it anymore. Which you kept saying on Clubhouse that this is more likely than not, which is encouraging all the going to continue and perpetuate, right?

Starting point is 01:14:39 Yeah. I mean, if there's a settlement, then all this stuff, I mean, this is the big thing. I think that folks that aren't living day to day in the legal system, they don't realize that a lot of the vast majority of lawsuits end in a settlement, right? This is not a criminal action. Nobody's going to go to jail for this. Even if it's found to be a security, it's generally disgorgement and some penalties and maybe some other agreements that have to be fulfilled in the order. But ultimately, it's not going to be somebody's liberty taken away and thrown into court. That's not what the SEC does. They just bankrupted it or something.

Starting point is 01:15:09 If they have no money to pay. Disgorgement. Yeah, they get their money back. But again, you know, if it's anything that's short of a full loss of all profits, you know, that's a lot of people look at it like a speeding ticket, right? You know, they had to, I mean, look at, look at Blockfire, right? Look at the settlement they paid. I think it was $100 million.

Starting point is 01:15:27 Right. Was that the New Jersey one? Yeah. Yeah. There's $100 million. And they can still offer their yield product. That's a speeding ticket. How about the, and Joe, sorry for.

Starting point is 01:15:37 so many legal questions, but this is interesting. You'll get them. The Spot ETF, you and I were talking on Twitter a couple weeks ago, and you provided some really awesome insights as to where you thought this was at. Help everybody understand your vantage point on this one. Yeah. So a couple developments first on that. I am told through some pretty reliable actors, and I think it was publicly shared as well, that folks from Grayscale did meet with officials from the SEC. So that's positive. You want them to strike up a dialogue. Hopefully, they pivot and change their stance. But the confusing thing for me in the financial reporting on this has always been, well,

Starting point is 01:16:16 we can't figure out why they're not approving the spot ETF, that people say it's being held hostage or, you know, Gensler's concerned about Bitcoin growing and the price appreciating. I think that's wrong because they've been extremely clear what they want to see to approve a spot ETF. They want basically two things. Number one, they want market of sufficient size. and liquidity that is based in the United States that has some access for U.S. regulators to see, is there real trading going on? Is there real spoofing? To the extent that if there

Starting point is 01:16:48 is manipulate, quote unquote, market manipulation, it's not going to be enough to move the major spot price. That's their main thing. The other alternative that they cite in the orders is that they want exchanges to have a universal shared surveillance agreement, which basically means that any regulator is going to have full access to their books and records. So you can kind of see what they're looking at. They're looking at some U.S. exchange that has the majority of the volume, being able to peek into that market and know there's no funny business going on. The problem for the Bitcoin market, as I think everybody on the call knows, is that most of the major leverage exchange is all overseas. It's outside the jurisdiction and purview in the United States.

Starting point is 01:17:26 So that's a black box. And when the SEC is looking at, they're saying, listen, we don't know if this underlying market has integrity, if it's something that isn't just being manipulated by these offshore exchanges. So to me, hearing that in the order, if you're seeing them say repeatedly, we want surveillance sharing agreements, we want a market of sufficient size in the United States, unless something changes structurally with the market, you're not going to get them to just wake up one day and say, that's it, green light, we're going to make it move forward. It's possible, but usually regulators get stuck into their precedent. They get stuck into their position and their firm, and absent of political pressure or some rule change or a law or Congress

Starting point is 01:18:06 saying you have to approve this. You don't just see a random pivot on a Tuesday. Well, what about like the gold and the silver markets? Like, isn't there the same concern there? And how is that approved? How does it have an ETF for those? Yeah. So their answer, yeah, their answer to that is that the majority of the marketplaces, the majority of the exchanges and liquidity is in the domestic markets. It's done by the CME. And you can't accuse the CME of any market manipulation because they have a surveillance sharing agreement. The SEC or in the case of the CME with gold, they have the CFTC, they can come in, they can look at those commodity markets and the CFTC can say, yeah, there's nothing funny going on here. We trust this market.

Starting point is 01:18:46 So if you go back, why did they approve the futures ETF? I don't believe it was to manipulate the price of Bitcoin. Others may disagree with me. It's fair enough. They approved it because they couldn't legitimately claim with a straight face that the CME futures were being manipulated internally, that there was spoofing going on in the futures market, that there was something irregular in their order books. They can't claim that because the CME has pretty much world-class reputation and status. This was the last question I think we're going to cover here. And I think this one's fun. How to explain to your significant other that the magic internet money will go up after the last couple days for my parents. I'll take that one to start.

Starting point is 01:19:28 Yeah, go ahead. We're going on 23 years of marriage here. I got my wife to read the Bitcoin standard, and so she understands what money is. She understands why Bitcoin is better money. She doesn't care about the price. She trusts me to buy it at reasonable times when it's cheap. And she's totally orange-billed. In fact, one of the coolest things that happened, and we'll digress for slightly,

Starting point is 01:19:52 for just a second here, our mailman came by who sees, you know, I work from home, So he sees things coming for Vailshare for my financial business. And he was asking about using me as an advisor. And my wife said, oh, you don't need, Jeff. All you need to do is start buying Bitcoin. And he's trying to orange pill the mailman. He's like, really, just Bitcoin? So that was like my proudest moment as a husband.

Starting point is 01:20:13 Like my wife was trying to orange pill the mailman. That was fantastic. So anyways, that's no problem for me here in the Ross household. So really, it's education. Your answer is education, right? Education. Jay. There you go.

Starting point is 01:20:23 I was going to say it. Really, I point them to VJ's medium post. If you read that, I think you get a real understanding of Bitcoin. Think from there, you know, you can understand how the value goes up over time just by reading that. Come on, Joe. Yeah, my view is this. And it's actually, we're in the perfect environment for it right now. I don't like ever trying to talk to people of Bitcoin in a bumper slogan or some short little pithy statement.

Starting point is 01:20:47 I think you need to have a conversation with them and needs to just get down to some of the core fundamentals about what's going on right now. And if you look at financial markets right now, and I think this is the biggest, selling point for Bitcoin, everything we've been talking about in this show, they're completely broken. You have the Fed setting expectations of hiking and everything is selling off. If bond's selling off, you have equity selling off. That system is not sustainable. So the question only becomes, what are we moving towards next? And to me, it's an easy call. It's Bitcoin. Because there's nothing there, you know, our good friend, Bitcoin Tina, there is no alternative. I don't really see an alternative in the system that's out there.

Starting point is 01:21:26 I don't believe the world returns to a gold standard. I don't believe we return to Zoltan Poser's financial commodity-backed currency. I don't think that's coming. I think you have this pristine, perfect asset born into the internet that is unlike anything we've seen in history, it has all these unique characteristics that literally have to create new words like unconfuscatable to describe them. And in that paradigm, I think Bitcoin wins. It's just a question of when.

Starting point is 01:21:49 You can't focus on the day to day. I know it stinks to buy Bitcoin to $60,000 and have it evaporate down to $28 or whatever it's true. I was about to say, as you're saying this, because I was just talking to my father, my son's birthday, it's my son turned three today, right? So we had a little birthday before he came down here. And he's telling me, he's like, you know, a store value argument that you've been telling me about for years.

Starting point is 01:22:09 And, you know, this inflation against, you know, this hedge against inflation. He goes, what kind of hedge are we talking about? We're down 50% from 60,000, so it loses that argument when you talk. about those types of fundamentals and how it is kind of the, it's really difficult conversation to have, which is why I point them back to the article, because you got to look at the things you're talking about, the uncompiscateability. I call it the disc test, which is, is it decentralized, is it immutable, is it scarce, and is it censorship resistant? And there's really only one one thing that is, and that is Bitcoin. People don't understand how powerful the dollar is,

Starting point is 01:22:42 and how it's so powerful that it's a wrecking ball for anything that comes in its path. you know, and I don't know how you can distill some of those ideas and so the stuff that you guys are saying into something that people can understand without doing just an intense amount of hours and hours of research to wrap their head around all the variables. You can't. Just like you couldn't, if you're talking to somebody in 1991, you couldn't explain the potential of the internet. It's the same thing. Yeah. You know, you can use analogies. You can struggle to explain it. But ultimately, unless they really do the, the deep dive themselves, they're not going to get it. But everybody listening to this podcast has the ability to do that deep dive. And wherever you're at in your Bitcoin journey, I can tell you, we might not be at the bottom, but this is a pretty darn good time to start buying Bitcoin, I think. Yeah. The internet was different because you could use the internet and you can feel

Starting point is 01:23:36 how it made you feel using the internet in the 90s. You can say, wow, I definitely could see how everybody else would be sucked. For instance, A, well, chat rooms in the 90s, right? You started to use that and you fell into the chat rooms or IRC before that, you can see the addiction of it, right? Technology, give a two-year-old an iPad. You could say, right? There's an addiction, literally. J, have you, have you ever, have you shown a newbie how to send a Bitcoin transaction? You ever done that? Yeah, but they, but they, but they, they can flate that with, I could do that with PayPal. They don't understand. They think that it's the same thing. We, we already have digital money in their mind, right? So I think we have to really understand is the

Starting point is 01:24:07 value that it really has, it's unbreakable, right? That's the thing that to me makes the most sense. And then the argument that it's basically a digital gold, right? Except the difference is, you can't take a billion dollars of gold and move it, right? So from that perspective, large institutions, sovereign nations, they're going to want to hold on to digital gold versus actual gold, right? In my opinion, it's a better gold. One last thing I'd like to tell people, sorry, real quick, is just sometimes the dollar strengthens in the short term,

Starting point is 01:24:37 but over the long run, it's guaranteed to depreciate. It just does historically. Sometimes Bitcoin weakens in the short term, but it's just mathematically and physically programmed to appreciate and value over time. And so you got to just not put too much faith or stock into short-term price movements. I get hit all the time with, well, what kind of inflation hedge is Bitcoin if it's down 50%. Like back up, look at five years. I just showed a guy the graph of this yesterday.

Starting point is 01:25:03 Or if you look back five years, even with this huge drawdown we've just had, it's still up over a thousand percent. Like, come on. Yeah, I guess it's such a silly argument to talk about that. Short-term price movements are meaningless. They're emotional. You know, the weighing machine is the long-term price movements, and that's where you need to make your judgments from.

Starting point is 01:25:19 100%. And one way I got my father to really catch this is that he built his house, my dad's carpenter, so he built the home for $40,000 in 1985. That house today is like $4,500,000. I said, if you would have left that in cash, what are you buying for $50,000 today, right? Came him buy a piece of property, like land. So you understand that the dollar just loses 100% of its value

Starting point is 01:25:39 over 100 years, basically, 99.9% of the value. if you look at all the asset prices. And when people start to see that, and then to your point, Jeff, you zoom out on the chart for Bitcoin. Everybody always focuses on this myopic, like what happened in the last six months, one year, two years. You got to like zoom out, right? And to your point, again, I would say it's the Warren Buffett, voting machine in the short term,

Starting point is 01:25:59 weighing machine in the long term. Absolutely. And for those periods that you're talking about, Jeff, where the dollar is strengthening, it's strengthening against everything else. Everything else is going down relative to the dollar. are during those periods. And those periods don't typically last too long. I mean, if we go back and we historically look at how long the dollar just goes through these aggressive tightening periods where credits blowing up, and that's why it's strengthening and everybody's running to it. It's typically

Starting point is 01:26:29 about 12 months. I'd say 24 months at the longest period of time. I think if you went back to the Great Depression, like that was the longest that you let, you saw a sell off, which was from 1919 to I think 21 was probably, or I'm sorry, 31 was where it really kind of hit a bottom. So like these periods where the dollar will strengthen, you know, and I think recently they've actually been a little bit tighter and faster where they haven't been really tightening for more than a year. And again, it's strengthening versus FX versus foreign exchanges, right? It's not strengthening versus, you know, going to buy gasoline.

Starting point is 01:27:11 So that's a big distinction. That's a good point. All right. Well, I don't have anything else unless you guys had any other topics you want to hit up. Let's go back around the horn in the opposite order. Let's start with Jay. Jay, give people a handoff where they can learn more about you. Yep.

Starting point is 01:27:26 Just find me on Twitter or any other platforms. My username is my name, J-A-Y-G-O-U-L-D. And we'll have links for this as well. Go ahead, Joe. Yeah, same here. You find me on Twitter. I'm there pretty often. It's at Joe Carlisari.

Starting point is 01:27:40 and next time Preston, give me the memo that I need to wear a hat. Everybody in all your hats on this, I feel like I missed the dress code. I have a long hair now. Jeff. Yeah, so I am on Twitter way too much. My handle is at Vilshire Capp, V-A-I-L-S-H-I-R-E cap. And then if you want to learn more about Vilshire, the investment stuff that I do, I obviously manage money really differently than most investment advisors and financial planners.

Starting point is 01:28:07 So if you want to check that out, you can shoot me an email info. at Vailshar.com or just go to my website, balchshare.com. And thanks for having us on today, Preston. It was awesome. I love this. I really look forward to this mix because I know you guys are just going to be open, candid, just whatever flies and we're all vulnerable and our ideas and comfortable here and count our opinion.

Starting point is 01:28:28 So I just love this mix and I'm sure we'll do it in another quarter or whatever. So looking forward to the next one. One more thing. Joe owes me a happy meal. We bet three times. owes me $3, a dollar bet. And I'm going to bet you here, Jeff. I'm going to bet you a dollar that we're not hitting all-time highs. Well, I don't want to take that.

Starting point is 01:28:47 Jay, Jay, Jay, where do we get? Can we get really quick because we're wrapping up? But tell us where do the equities go from here? Where do you think in the next two months? In the next two months, let's hear, Jay. Next two months, let's go. Oh, man. So we're talking July 11th, mid-July?

Starting point is 01:29:03 Yeah. Oh, boy. Don't ever sign up. Rapid fire. Just, just do S&P 500. From here, I think we'll low. S&P 500. I think we're lower.

Starting point is 01:29:10 Okay. And by July, August. Because I think that's when earnings calls come out. We have weak guidance, as I was saying earlier. I think that's not a good sign in July. Jeff? I think we're higher. And I'm going to say, I'm going to give it, I'll say 4,600.

Starting point is 01:29:25 I'm going to go 4,400. Okay. I don't know. I try higher or lower than 4,000. I'll hire the lower than 4,000. Here's why I can over under. Here's why I don't know. Because it's not dependent on, in my opinion, it's not dependent on

Starting point is 01:29:40 any actual fundamentals that I can look at right now. It's dependent on like five people in a room, changing course on whatever they think is enough is enough. And I'm betting that's not happening. And I'm telling you, it's not going to happen either, but it doesn't matter. But this is another reason why. It's a rally. This is another reason why I don't sell Bitcoin.

Starting point is 01:29:59 I just buy it is because by the time I try to do the math on, all right, I think the market's going to go lower. I think Bitcoin's going to go with it. So I'm going to sell here. and then I'm going to have these massive realized gains that I've got to pay. And then I'm going to try to insert it at where I think the sell-off is going to be. Meanwhile, you have some Fed official that comes out and just completely changes course and becomes super doveish and eases into this thing.

Starting point is 01:30:25 I don't know where they're in what metric they're going to use, especially right now, because before, and I think what's so different, and here we are just, you know, continuing the conversation. but before we didn't have inflation. It was like inflation was a mythical creature, like a unicorn that didn't exist and nobody believed it was ever going to come back. And right now, for the first time since 2008, it's back. And not only is it back, but it's like literally like, God, it's unicorn horn like pointed

Starting point is 01:30:58 in the person's heart of these central banks. And like, like, what are they going to do? They're in a completely different situation than where they were before where the market would sell off 30%. They still had no inflation and then they would ease into it again. So I don't know what they're going to do. They have two mandates, right? They say dual mandate. Full employment and inflation, their target is 2%.

Starting point is 01:31:23 And there was for years, as you know, it was lower than 2%, right? At least how they reported on CPI. And I think they would like to see inflation run. This is why they started to raise the rates and what they're doing with their policy. It's gone a little bit too much, as we know, right? So they're pushing the rates, they're pushing a little bit further to try to pull that back. So I think that what's going to be the catalyst for them to change their policy is the employment, right?

Starting point is 01:31:45 So what are the two mandates? It's inflation, it's employment. So if they start to see that there is layoffs in the market or you see a crash that infers that there may be some layoffs in the market for employment, I think that's where you start to see them reverse or monetary policy earlier than we would otherwise see just based off of the rates itself and the math, right? It could happen sooner based off of what the market. market conditions are. So in the S&P, it's like a 30, 35% decline. If that happens quickly,

Starting point is 01:32:09 they have to respond, in my opinion. But this is why I'm a little worried about the 25 basis point, the 25-b hikes, because it may not rapidly sell off. If they do this 50 into 50, it could rapidly sell off and there could be reversal. But that's- I guess that's where I'm a little hesitant. Like, for me, it's a coin toss, whether it's higher or lower right now, because I do think that we're going to have things get really messy here in the coming like two months, like really messy. And if that's true, they might have to step in and reverse course. So I just don't know the timing of that. I just, I kind of feel like this is, this is getting very unorderyly real fast. You got to make a call higher or lower. It's a total coin toss.

Starting point is 01:32:53 I could go either way. So with that, you tell me, am I, am I up or am I down? Because either way, like I don't know which one it's going to be at this point of just because of where we're at. If this was our last recording, I was pretty bearish last, last recording. And it's easy for me to say that now. No, you said it last time. But yeah, I thought that there was a whole lot more selling to go because I was looking at the disparity. I didn't think that the inflation was going to go away. The market was only down like, I don't know, 10, 15 percent when we talked last.

Starting point is 01:33:29 And now we're approaching 30%. So I think things can get pretty nasty. And I think that they could come in and reverse course. So I don't know. I just don't know. Wait, what's 30%? What you're saying on the NASDAQ? On the NASDAQ, we're close to being 30% down from the high right now.

Starting point is 01:33:43 But see, the S&P is what I think the gauge is because that's the broader market. And so we've already seen the pain in the NASDAQ. I think you're going to start to see the pain in like kind of the value stocks and small caps, and mid-cats. I don't think they care anywhere near. I don't think they care about the bond market. They care about that because it's a leading indicator for employment, which is their second mandate. So I think credit conditions are even more of a leading indicator.

Starting point is 01:34:07 And credit conditions froze in 2018. So that's what if Larry Lippard and Greg Foss were here, they would be throwing up in their mouths hearing us talk about equity markets. They would be literally throwing up in their mouths and saying, you amateurs, stop talking about the equity market. He said we couldn't get to these 10-year rates. So Greg's wrong. He said, there's no way. There's no way. And we're there.

Starting point is 01:34:31 Can I make one final point that I think is good. And I'll stop talking. Just because it kind of piggybacked on what Preston said. And I want to leave people with this, at least from my perspective, people get fascinated with the idea of catching the bottom, especially in something as awesome as Bitcoin. And everybody wants to know what the bottom price is. And everybody wants to be that guy that said, I bought it at X price when it hit the bottom and then it rebounded up and look at how rich I am. I want to let people know that the way that wealthy, good, smart, long-term investors do it is they recognize value and then they start buying it in size when something is at an extreme valuation. Bitcoin right now, I'm telling you, on May 11th, sub-30,000 dollars is a very good value if you are a long-term holder. And by long-term, usually I mean at least 10 years, I'm telling you if you have a two-plus-year time horizon, buying 30,000 or sub-30k is a fantastic price.

Starting point is 01:35:26 I believe this is not individual investment advice, but learn to recognize value, quit trying to time the bottom. If you're still sitting in cash waiting to time the bottom before you get into Bitcoin, you might miss the boat. This might be the worst opportunity cost of your life. This may take off and go up again and you will kick yourself, I promise you, if you're not at least owning some Bitcoin. So my final message is quit trying to time it, recognize value.

Starting point is 01:35:53 Bitcoin is a value. you please, please, please buy a little bit at least of Bitcoin at these prices. And that's my final point. There's nothing else that needs to be said. Amen, sir. There's good words. Thanks. That's why I keep posting my buy.

Starting point is 01:36:06 I keep buying on the way down, right? You see it, Jeff. I keep buying on the way down. I'm not trying to time that either. So it's like buy, buy, buy. I'm signaling to the market. You should be doing the same. And I get these comments and replies.

Starting point is 01:36:16 They're like, it's only going to go lower. Wait till 15. I'm not doing a lump sum by trying to time the bottom. I'm buying as it's dropping. These are great buys. It's the way to do it. As the very famous Preston Pish said at Bitcoin 2020, 20, 2010, 2, buy Bitcoin and fall asleep for five years.

Starting point is 01:36:31 That's all you need to do. That's all you got to do. Great quote. That's it. All right, jents. That's a wrap. And thank you for your time, guys. That was fun.

Starting point is 01:36:39 Thanks, guys. Thanks, everybody. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin specific shows come out every Wednesday. I'd love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that.

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We Study Billionaires - The Investor’s Podcast Network - BTC078: Bitcoin Mastermind Discussion w/ Joe Carlasare, Jay Gould, & Jeff Ross (Bitcoin Podcast)

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