1
00:00:00,000 --> 00:00:02,480
Speaker 1: Hello, and welcome to another episode of the Mark Ma Show,

2
00:00:02,480 --> 00:00:05,360
Speaker 1: where we're talking about the decentralized revolution, the way the

3
00:00:05,360 --> 00:00:08,399
Speaker 1: world's changing through our eyes, and of course we're trying

4
00:00:08,400 --> 00:00:10,760
Speaker 1: to navigate this, and we're trying to navigate it um

5
00:00:10,840 --> 00:00:14,160
Speaker 1: not to survive this, but to profit from it. And

6
00:00:14,200 --> 00:00:15,680
Speaker 1: so I like to look at it, you know, from

7
00:00:15,680 --> 00:00:17,560
Speaker 1: a news perspective, to change the way we look some

8
00:00:17,600 --> 00:00:19,560
Speaker 1: of the headlines, we can see what's changing, and of

9
00:00:19,560 --> 00:00:23,120
Speaker 1: course bring to you some exciting guests, and that's what

10
00:00:23,160 --> 00:00:26,320
Speaker 1: we have today. I have on with me a returning guest,

11
00:00:26,760 --> 00:00:31,240
Speaker 1: Dylan Leclair. He is a macro strategist. He is a

12
00:00:31,360 --> 00:00:36,519
Speaker 1: senior analyst at the bitcoin magazine Pro and he is uh,

13
00:00:36,640 --> 00:00:38,680
Speaker 1: he's young, but he's years ahead of his age. This

14
00:00:38,800 --> 00:00:41,080
Speaker 1: kid is so smart. I love talking to him, and

15
00:00:41,120 --> 00:00:43,800
Speaker 1: we cover a lot of ground. We're talking the big

16
00:00:43,840 --> 00:00:47,160
Speaker 1: macro picture, what's happening in the global macro, what's happening

17
00:00:47,159 --> 00:00:49,760
Speaker 1: with the Fed, FED policy, liquid in the financial system.

18
00:00:49,920 --> 00:00:53,360
Speaker 1: We talk about the potential risks of Japan them moving

19
00:00:53,440 --> 00:00:56,240
Speaker 1: up their yell curve control, which shows are potentially flinching.

20
00:00:56,560 --> 00:00:59,000
Speaker 1: Then we dive down into risk assets. We take a

21
00:00:59,000 --> 00:01:01,440
Speaker 1: look at bitcoin, we look at big potential risk with

22
00:01:01,680 --> 00:01:05,560
Speaker 1: gray scale bitcoin trust, the tether situation, so and so

23
00:01:05,640 --> 00:01:07,720
Speaker 1: much more. Let's go ahead and just jump right in

24
00:01:07,760 --> 00:01:11,199
Speaker 1: with Dylan. All right, Dylan, here we go. Long overdue.

25
00:01:11,200 --> 00:01:13,120
Speaker 1: I've had you once on the show. I'm excited to

26
00:01:13,160 --> 00:01:16,120
Speaker 1: have you back against so much stuff to discuss. Uh. So,

27
00:01:16,200 --> 00:01:18,560
Speaker 1: first of all, thanks for taking the time. Yeah, thanks

28
00:01:18,600 --> 00:01:20,720
Speaker 1: for having me on Mark, it's going to connect again.

29
00:01:21,160 --> 00:01:23,280
Speaker 1: I saw each other in Los Angeles a couple of

30
00:01:23,319 --> 00:01:25,800
Speaker 1: months back, and uh, certainly a lot of a lot

31
00:01:25,800 --> 00:01:28,280
Speaker 1: of transpired since then, so we got some stuff to

32
00:01:28,319 --> 00:01:30,880
Speaker 1: catch up on. It makes our jobs easier when there's

33
00:01:30,880 --> 00:01:34,160
Speaker 1: actually stuff to talk about, right. Um, I started making

34
00:01:34,200 --> 00:01:38,080
Speaker 1: content for bitcoin and twenty sixteen then I made crypto content.

35
00:01:38,200 --> 00:01:40,280
Speaker 1: I I'm not really ashamed to admit I did for

36
00:01:40,319 --> 00:01:42,240
Speaker 1: a while twenty nineteen I kind of just got off

37
00:01:42,240 --> 00:01:44,959
Speaker 1: that and just went back to bitcoin only. But I remember, um,

38
00:01:45,560 --> 00:01:49,760
Speaker 1: like nineteen like there was just nothing to talk about,

39
00:01:49,840 --> 00:01:52,240
Speaker 1: Like there was nothing going on, like in the depths

40
00:01:52,280 --> 00:01:56,520
Speaker 1: of the bear market. Uh, this bear market has been fireworks.

41
00:01:56,800 --> 00:01:59,640
Speaker 1: There's plenty to talk about. Um, I want to talk

42
00:01:59,680 --> 00:02:02,520
Speaker 1: about Let's let's start like macro macro and then let's

43
00:02:02,560 --> 00:02:05,320
Speaker 1: kind of like dive down into that. So let's start

44
00:02:05,360 --> 00:02:10,240
Speaker 1: with the big macro picture, which it seems like regardless

45
00:02:10,280 --> 00:02:13,079
Speaker 1: of what any on chain data or technical analysis or

46
00:02:13,080 --> 00:02:15,840
Speaker 1: even fundamental analysis tells us, it seems like the macro

47
00:02:16,000 --> 00:02:18,560
Speaker 1: pictures in charge. And when I say the macro, like

48
00:02:18,639 --> 00:02:22,720
Speaker 1: the dollar, the FED. So let's let's start there. Um,

49
00:02:22,800 --> 00:02:25,040
Speaker 1: let's talk about the Fed. You know, obviously they started

50
00:02:25,080 --> 00:02:26,600
Speaker 1: they said they were going to raise rates. Well, first

51
00:02:26,600 --> 00:02:28,480
Speaker 1: they said they weren't even thinking about thinking about Then

52
00:02:28,480 --> 00:02:30,560
Speaker 1: they said they weren't gonna raise rates for four years.

53
00:02:30,840 --> 00:02:33,280
Speaker 1: Then they said, okay, we're gonna start raising rates in November,

54
00:02:33,560 --> 00:02:36,720
Speaker 1: and risk assets have just continued to sell off. They've

55
00:02:36,800 --> 00:02:40,720
Speaker 1: raised rates at the fastest and most aggressive rate in history. Um.

56
00:02:40,800 --> 00:02:44,040
Speaker 1: It seems like they're about to break something, which Powell

57
00:02:44,080 --> 00:02:48,600
Speaker 1: said he's happy to break something because they can rebuild it. Um,

58
00:02:48,720 --> 00:02:51,680
Speaker 1: which kind of shows what they're doing. UM. I tend

59
00:02:51,720 --> 00:02:53,280
Speaker 1: to kind of take them at their word. They're not

60
00:02:53,280 --> 00:02:55,120
Speaker 1: really trying to surprise the markets, are trying to really

61
00:02:55,160 --> 00:02:58,359
Speaker 1: kind of project what they're doing. What's your view on

62
00:02:58,360 --> 00:03:00,600
Speaker 1: this whole macro picture of what's going on? And kind

63
00:03:00,600 --> 00:03:02,799
Speaker 1: of where rat in the cycle have they? Have they

64
00:03:03,040 --> 00:03:05,280
Speaker 1: given us ultimate pain? Are we still got more pain

65
00:03:05,320 --> 00:03:08,280
Speaker 1: to go? Yeah? I mean that's the that's a trillion

66
00:03:08,280 --> 00:03:11,320
Speaker 1: dollar question. Uh. I I kind of ultimately believe that

67
00:03:11,360 --> 00:03:14,880
Speaker 1: there is more pain to go in this macrocycle into three.

68
00:03:14,880 --> 00:03:18,280
Speaker 1: I mean I don't know the specifics obviously, Um. You know,

69
00:03:18,880 --> 00:03:22,040
Speaker 1: equity bear markets, bear markets and financial assets in general

70
00:03:22,120 --> 00:03:25,800
Speaker 1: are characterized by you know, face ripping reversal rallies. But

71
00:03:25,840 --> 00:03:29,440
Speaker 1: I really think that higher for longer is the reality.

72
00:03:29,720 --> 00:03:31,680
Speaker 1: H and and everybody trying to front run you know,

73
00:03:31,840 --> 00:03:35,520
Speaker 1: this pivot, especially equity investors. Right, the more that financial

74
00:03:35,560 --> 00:03:39,480
Speaker 1: conditions loosen across the board, uh, the more rooms paradoxically,

75
00:03:39,560 --> 00:03:40,920
Speaker 1: you know, the more that people buy the dip and

76
00:03:40,960 --> 00:03:43,800
Speaker 1: the more that people chase uh chase stocks here, that

77
00:03:43,960 --> 00:03:46,040
Speaker 1: the more room it actually gives the FED to tighten

78
00:03:46,080 --> 00:03:48,080
Speaker 1: the belt more. Um. And so we kind of see

79
00:03:48,080 --> 00:03:50,720
Speaker 1: this play out, uh and kind of this uh this

80
00:03:51,080 --> 00:03:54,840
Speaker 1: uh like jigsaw pattern throughout two where you know, think

81
00:03:54,920 --> 00:03:57,800
Speaker 1: it too bearish and then and then it reverses, Volatility

82
00:03:57,800 --> 00:04:01,040
Speaker 1: comes back in and Pala goes Nope, guys like just

83
00:04:01,080 --> 00:04:03,960
Speaker 1: pack it up, go home. Um. So I don't necessarily

84
00:04:03,960 --> 00:04:06,680
Speaker 1: think that, like you know, UM, three thousand on the

85
00:04:06,760 --> 00:04:09,320
Speaker 1: SNP is going to happen tomorrow. But I do think

86
00:04:09,360 --> 00:04:12,440
Speaker 1: that most of the of the kind of the repricing

87
00:04:12,440 --> 00:04:15,760
Speaker 1: and global assets and in global financial markets was due

88
00:04:15,800 --> 00:04:19,000
Speaker 1: to the discount rate rising rapidly obviously UM, and that

89
00:04:19,120 --> 00:04:22,880
Speaker 1: was because of FED tightening, but also bond investors realizing, Okay,

90
00:04:22,920 --> 00:04:25,599
Speaker 1: if inflation, if we're out of this disinflationary regime and

91
00:04:25,640 --> 00:04:28,880
Speaker 1: potentially entering a new one, what's what's this new cost

92
00:04:28,920 --> 00:04:31,440
Speaker 1: of capital? How should I be you know, pricing the

93
00:04:31,680 --> 00:04:34,000
Speaker 1: discount rate ten years out, thirty years out. And so

94
00:04:34,839 --> 00:04:37,599
Speaker 1: I think, you know, the SNP at four thousand, there's

95
00:04:37,839 --> 00:04:40,000
Speaker 1: you know, the equity risk premium if you look at say,

96
00:04:40,080 --> 00:04:41,560
Speaker 1: and that's a big word, but if you look at

97
00:04:41,600 --> 00:04:43,880
Speaker 1: just say you know, because investing is relative, right, so

98
00:04:44,080 --> 00:04:47,119
Speaker 1: if you look at bonds compared to equities, it's actually

99
00:04:47,200 --> 00:04:49,960
Speaker 1: kind of paradoxically it's equities are more expensive here than

100
00:04:50,000 --> 00:04:53,159
Speaker 1: they were at the beginning of two relative to bond markets.

101
00:04:53,480 --> 00:04:55,960
Speaker 1: So I think that that's something that investors should keep

102
00:04:55,960 --> 00:04:58,520
Speaker 1: in mind, UM, just so they're not surprised if we

103
00:04:58,560 --> 00:05:00,560
Speaker 1: do see some more downside, because I I still think

104
00:05:00,600 --> 00:05:04,839
Speaker 1: that until said otherwise, Right, the FED pivot is kind

105
00:05:04,839 --> 00:05:07,120
Speaker 1: of this more and more so buzzword than anything, and

106
00:05:07,120 --> 00:05:09,159
Speaker 1: a pivot is actually going to require some real pain

107
00:05:09,200 --> 00:05:12,239
Speaker 1: to be felt an employment, housing, and more seven financial

108
00:05:12,360 --> 00:05:16,000
Speaker 1: and financial markets. So that last piece that you said there,

109
00:05:16,040 --> 00:05:18,320
Speaker 1: so it's going to require more pain in the economy,

110
00:05:18,400 --> 00:05:21,560
Speaker 1: the housing markets, etcetera. So, but you started out by

111
00:05:21,560 --> 00:05:23,920
Speaker 1: saying that the stocks going up give the FED room

112
00:05:24,040 --> 00:05:26,960
Speaker 1: more room to tighten, and so it seems to me

113
00:05:27,200 --> 00:05:29,840
Speaker 1: that the FED doesn't really care about your stocks. They

114
00:05:29,839 --> 00:05:32,320
Speaker 1: don't care about your house, they don't care about your retirement.

115
00:05:32,360 --> 00:05:34,360
Speaker 1: They actually want to bring those downs, are trying to

116
00:05:34,360 --> 00:05:37,719
Speaker 1: crush demand. What they do probably care about is obviously

117
00:05:37,800 --> 00:05:40,880
Speaker 1: liquidity in the banking system. Uh, they care about the

118
00:05:41,120 --> 00:05:45,320
Speaker 1: maybe the economy unemployment, that's one of their dual mandates. Right, So, Um,

119
00:05:45,440 --> 00:05:48,440
Speaker 1: do you think stocks being high actually gives them room

120
00:05:48,600 --> 00:05:50,920
Speaker 1: to tighten or do they not care about that and

121
00:05:50,960 --> 00:05:54,279
Speaker 1: really they're looking at again the employment and like bank

122
00:05:54,320 --> 00:05:58,840
Speaker 1: liquidity or do you see it more holistically? Yeah, I

123
00:05:59,200 --> 00:06:02,000
Speaker 1: think that just you know, a lot of investors, um

124
00:06:02,320 --> 00:06:05,039
Speaker 1: kind of haven't maybe not haven't realized but there was

125
00:06:05,080 --> 00:06:09,560
Speaker 1: somewhat of a regime change in May two, right where

126
00:06:09,560 --> 00:06:14,359
Speaker 1: for the past few decades investors were were rewarded with

127
00:06:14,400 --> 00:06:16,800
Speaker 1: buying the dip, and the FED and global central banks

128
00:06:16,839 --> 00:06:19,960
Speaker 1: could really inject an unlimited amount of liquidity and and uh,

129
00:06:20,000 --> 00:06:23,680
Speaker 1: it wouldn't show up in consumer price inflation. Obviously. We

130
00:06:23,680 --> 00:06:26,000
Speaker 1: we you know, saw cp I at forty year highs,

131
00:06:26,640 --> 00:06:28,080
Speaker 1: and the FED came out and said, all right, well,

132
00:06:28,080 --> 00:06:30,120
Speaker 1: we really got to get this lower. Um. You know,

133
00:06:30,160 --> 00:06:32,800
Speaker 1: inflation low inflation is one of our core mandates. And

134
00:06:32,800 --> 00:06:34,160
Speaker 1: we see that not just in the FED, but the

135
00:06:34,400 --> 00:06:37,120
Speaker 1: euro Zone, the Bank of Japan, etcetera. Right, So, um,

136
00:06:37,200 --> 00:06:38,839
Speaker 1: what that means? And they literally are telling you this,

137
00:06:38,920 --> 00:06:42,680
Speaker 1: They say, we want employment unemployment higher. Right. So, so

138
00:06:42,760 --> 00:06:45,000
Speaker 1: even though it's part of their dual mandate, Um, they're

139
00:06:45,040 --> 00:06:47,840
Speaker 1: they're honestly really like embarking on a on a mission

140
00:06:47,839 --> 00:06:51,880
Speaker 1: to reverse engineer the wealth effect, lower assets, uh and

141
00:06:51,960 --> 00:06:54,920
Speaker 1: also higher unemployment to crush that demand. Like you said.

142
00:06:54,960 --> 00:06:56,600
Speaker 1: And so I don't think that job is finished. I

143
00:06:56,640 --> 00:06:59,359
Speaker 1: think inflation, uh is is stickier than a lot of

144
00:06:59,360 --> 00:07:02,279
Speaker 1: people expect, despite uh, you know, kind of the reversal

145
00:07:02,480 --> 00:07:04,960
Speaker 1: in the year over year prince, we've seen over the

146
00:07:05,000 --> 00:07:07,280
Speaker 1: last five or six months, it's still a lot higher

147
00:07:07,320 --> 00:07:10,680
Speaker 1: than the two percent mandate, which is arbitrary. Yes, but

148
00:07:10,760 --> 00:07:12,920
Speaker 1: some of these things, like core CPI is a lot

149
00:07:12,960 --> 00:07:15,520
Speaker 1: stickier than I think a lot of investors expect um.

150
00:07:15,560 --> 00:07:17,840
Speaker 1: So for that reason, I think that you know, we're

151
00:07:17,880 --> 00:07:20,440
Speaker 1: still in a tightening cycle. Until I said otherwise, And

152
00:07:20,440 --> 00:07:22,680
Speaker 1: if you look at the history of of of FED pivots,

153
00:07:22,920 --> 00:07:25,320
Speaker 1: they don't pivot until things get bad, and actually things

154
00:07:25,480 --> 00:07:29,000
Speaker 1: often get worse after the pivot. So so we'll we'll

155
00:07:29,040 --> 00:07:31,360
Speaker 1: see here. But I think, uh, you know, for for

156
00:07:31,480 --> 00:07:34,760
Speaker 1: the bulls that are chasing here, uh, they might be

157
00:07:34,800 --> 00:07:38,440
Speaker 1: a little bit blindsided by you know, macro conditionings, liquidity

158
00:07:38,840 --> 00:07:42,680
Speaker 1: and real like economic data, not financial assets getting worse

159
00:07:42,720 --> 00:07:46,600
Speaker 1: in so we'll see how that stands. Yeah, I mean,

160
00:07:46,600 --> 00:07:48,680
Speaker 1: obviously of us have a crystal ball and and and

161
00:07:48,760 --> 00:07:52,280
Speaker 1: I constantly referenced the insanity that we all have to

162
00:07:52,280 --> 00:07:54,320
Speaker 1: sit around and try to read some guy's mind to

163
00:07:54,360 --> 00:07:56,320
Speaker 1: understand what's gonna happen with our money. I mean, it's

164
00:07:56,320 --> 00:07:58,520
Speaker 1: just the stupidest thing in the world, but it's the

165
00:07:58,600 --> 00:08:00,560
Speaker 1: it's the world that we have write the game. What

166
00:08:00,640 --> 00:08:03,640
Speaker 1: will what what's our fate? Let's all listen to Jerome Pal.

167
00:08:03,720 --> 00:08:07,160
Speaker 1: I I often liken it to, uh the insanity I'm

168
00:08:07,160 --> 00:08:10,240
Speaker 1: in southern California, but the insanity of the uh punk

169
00:08:10,240 --> 00:08:13,240
Speaker 1: satani Phil or whatever. Right the groundhog, like if he

170
00:08:13,280 --> 00:08:15,440
Speaker 1: comes out and sees his own shadow, like spring goes

171
00:08:15,440 --> 00:08:17,960
Speaker 1: longer or whatever, and like everyone watches the groundhog and

172
00:08:17,960 --> 00:08:20,640
Speaker 1: it's like that's kind of like we're all watching like

173
00:08:20,800 --> 00:08:23,640
Speaker 1: Jerome Pal. Uh, but it is what it is, right,

174
00:08:23,640 --> 00:08:25,960
Speaker 1: and so we so we kind of have to navigate that.

175
00:08:26,360 --> 00:08:30,640
Speaker 1: But um, it seems like Jerome pal tries to be

176
00:08:30,720 --> 00:08:34,240
Speaker 1: very clear, like, hey, there's more pain ahead, pain pain, pain. Uh.

177
00:08:34,280 --> 00:08:35,920
Speaker 1: He finishes to me, He's like, hey, guys, you're not

178
00:08:36,040 --> 00:08:38,600
Speaker 1: listening to me, like the stock markets rallying, but like

179
00:08:38,640 --> 00:08:41,600
Speaker 1: I'm telling you there's more pain, right, And it almost

180
00:08:41,640 --> 00:08:45,920
Speaker 1: seems like, um, the markets are calling his bluff, like

181
00:08:46,120 --> 00:08:48,040
Speaker 1: we get it. We get it, you're serious, and we

182
00:08:48,080 --> 00:08:50,080
Speaker 1: get it. You're committed to sticking with it, and we

183
00:08:50,120 --> 00:08:52,240
Speaker 1: get it. There's pain, and we get it. You're gonna

184
00:08:52,480 --> 00:08:54,760
Speaker 1: We understand it, and we believe you, and we believe

185
00:08:54,800 --> 00:08:57,680
Speaker 1: that you believe it. But we also see the constraint

186
00:08:57,720 --> 00:09:01,360
Speaker 1: that you're going to run up against, and so we're

187
00:09:01,400 --> 00:09:03,760
Speaker 1: betting that we can hold on longer than you can

188
00:09:03,800 --> 00:09:06,160
Speaker 1: hang on. Maybe the markets are saying something like that.

189
00:09:06,240 --> 00:09:08,040
Speaker 1: Do you think maybe there's like this little chicken and

190
00:09:08,080 --> 00:09:10,440
Speaker 1: egg or not a chick game of chicken going on

191
00:09:10,480 --> 00:09:12,080
Speaker 1: where the markets are like, Okay, we get it, we

192
00:09:12,120 --> 00:09:15,160
Speaker 1: get it, but we bet you the banking system the

193
00:09:15,200 --> 00:09:18,200
Speaker 1: quity is going to dry up before um that happens.

194
00:09:18,960 --> 00:09:20,400
Speaker 1: Or do you think it's just the people are stupid

195
00:09:20,400 --> 00:09:23,040
Speaker 1: and they're just trying to buy the dip? Uh? Yeah,

196
00:09:23,080 --> 00:09:25,760
Speaker 1: I mean I think, um, you know, a big driver,

197
00:09:26,400 --> 00:09:28,720
Speaker 1: a big driver, and equity markets is often just price

198
00:09:28,800 --> 00:09:32,200
Speaker 1: agnostic passive flows. Right. It's not actually like astute active

199
00:09:32,240 --> 00:09:36,160
Speaker 1: investors making you know, uh, really advanced financial decisions. It's

200
00:09:36,200 --> 00:09:40,199
Speaker 1: just pensions for owen Case, plowing money uh into broad

201
00:09:40,200 --> 00:09:42,560
Speaker 1: based equity and bond in disease. Right. And then and

202
00:09:42,600 --> 00:09:44,439
Speaker 1: they don't even know what they're buying at what price.

203
00:09:44,440 --> 00:09:47,000
Speaker 1: They don't care right there, investing for the long term,

204
00:09:47,240 --> 00:09:50,559
Speaker 1: and often that's why you see like the severe dislocations um,

205
00:09:50,720 --> 00:09:53,000
Speaker 1: whether over the short term or or the long term. Right.

206
00:09:53,040 --> 00:09:55,320
Speaker 1: And then you know, active managers on the margin, whether

207
00:09:55,360 --> 00:09:58,400
Speaker 1: it's long, short, etcetera. Right, kind of have to clean

208
00:09:58,480 --> 00:10:01,000
Speaker 1: up this mess. But sometimes the tail lacks a dog.

209
00:10:01,080 --> 00:10:03,200
Speaker 1: So I do think there's excess liquidity still in the

210
00:10:03,200 --> 00:10:05,440
Speaker 1: banking system. Right, there's still two trillion dollars in the

211
00:10:05,480 --> 00:10:08,959
Speaker 1: reverse repo just parked. They're getting four four and a

212
00:10:08,960 --> 00:10:11,960
Speaker 1: half percent yield, right, So until that draws down meaningfully,

213
00:10:12,240 --> 00:10:14,880
Speaker 1: you know there is excess liquidity in the banking system

214
00:10:15,040 --> 00:10:18,160
Speaker 1: at the very least um. But yeah, I think that.

215
00:10:18,280 --> 00:10:20,640
Speaker 1: You know, Powell, he's literally said right like, there was

216
00:10:20,679 --> 00:10:22,400
Speaker 1: this one I think it was a month or two

217
00:10:22,440 --> 00:10:26,480
Speaker 1: back when when uh someone incorrectly during the fom CN

218
00:10:26,520 --> 00:10:28,920
Speaker 1: beting said hey, bond and equity markets are rallying, and

219
00:10:28,960 --> 00:10:31,280
Speaker 1: that was a lie, right, and Powell like almost like

220
00:10:31,280 --> 00:10:33,880
Speaker 1: shook his head like cheese and came out like super

221
00:10:33,920 --> 00:10:36,920
Speaker 1: aggressively hawkish and was like guys, listen up, like and

222
00:10:36,920 --> 00:10:40,040
Speaker 1: and that was like, oh wow, he's just like he's serious.

223
00:10:40,080 --> 00:10:42,760
Speaker 1: So I think over the long term, right, everybody knows, Mark,

224
00:10:42,840 --> 00:10:44,280
Speaker 1: you talked about it a lot. I talked about it

225
00:10:44,320 --> 00:10:48,680
Speaker 1: a lot. These debt dynamics, right, federal debt to GDP,

226
00:10:49,080 --> 00:10:52,160
Speaker 1: global debt to GDP at you know three, these things

227
00:10:52,200 --> 00:10:54,960
Speaker 1: are unsustainable and the only way out is financial oppression.

228
00:10:54,960 --> 00:10:58,120
Speaker 1: Monetary debasement, right, a sustained period of inflation higher than

229
00:10:58,160 --> 00:11:02,040
Speaker 1: interest rates. Um so so titaning can't be the game forever.

230
00:11:02,720 --> 00:11:06,120
Speaker 1: But I think to get there right, the pendulum almost

231
00:11:06,120 --> 00:11:09,240
Speaker 1: has a swing to the far extreme of Oh wow,

232
00:11:09,480 --> 00:11:11,800
Speaker 1: you know, the easing is a must. And I don't

233
00:11:11,840 --> 00:11:13,880
Speaker 1: think we're there yet. So is it a game of

234
00:11:13,880 --> 00:11:16,800
Speaker 1: of of tea leaves and reading this magic ball? Yes? Right,

235
00:11:16,800 --> 00:11:20,040
Speaker 1: but unfortunately or fortunately that's the game. You know, we're

236
00:11:20,040 --> 00:11:23,160
Speaker 1: all we're all playing, Yeah, and and and again. I

237
00:11:23,400 --> 00:11:25,760
Speaker 1: take him at his word. I believe the FED tries

238
00:11:25,800 --> 00:11:27,520
Speaker 1: to project out what they're doing. So he said in

239
00:11:27,559 --> 00:11:29,599
Speaker 1: November twenty one that they're gonna start raising rates. He

240
00:11:29,640 --> 00:11:33,160
Speaker 1: didn't start raising rates until what March of so like

241
00:11:33,200 --> 00:11:36,120
Speaker 1: they give you this long wide time frame. Now again

242
00:11:36,200 --> 00:11:37,920
Speaker 1: he said we wouldn't raise rates for four years. He

243
00:11:37,960 --> 00:11:39,520
Speaker 1: did in two years. Now they're saying they're gonna keep

244
00:11:39,559 --> 00:11:42,679
Speaker 1: rates really high. But things change. But I think when

245
00:11:42,720 --> 00:11:45,959
Speaker 1: he said that would rather break things because we can

246
00:11:46,000 --> 00:11:47,719
Speaker 1: rebuild them. I think you have to take that part

247
00:11:47,760 --> 00:11:50,000
Speaker 1: pretty seriously. And so to your point, there's a lot

248
00:11:50,040 --> 00:11:52,679
Speaker 1: of liquidity in the system. He's prepared to see a break.

249
00:11:53,160 --> 00:11:56,320
Speaker 1: I think, and again this is just my whatever, my

250
00:11:56,360 --> 00:11:59,160
Speaker 1: opinion for what it's worth nothing, but I think that

251
00:11:59,400 --> 00:12:02,240
Speaker 1: probably this year we see it get worse faster than

252
00:12:02,280 --> 00:12:04,559
Speaker 1: he expects, and things do break, and then they need

253
00:12:04,640 --> 00:12:08,040
Speaker 1: jerk reaction and blow it back sky high again. UM,

254
00:12:08,080 --> 00:12:12,520
Speaker 1: but we'll see, um if we go, If we go,

255
00:12:12,640 --> 00:12:14,720
Speaker 1: I guess even a little bit further. Although the FED

256
00:12:14,800 --> 00:12:17,000
Speaker 1: is kind of driving that, I know, UM big news.

257
00:12:17,000 --> 00:12:19,280
Speaker 1: It seems like also I mean talking about like liquidity

258
00:12:19,280 --> 00:12:23,160
Speaker 1: in the system, Japan being one of the largest holders

259
00:12:23,160 --> 00:12:27,480
Speaker 1: of treasuries, UM has been selling treasuries right there, they're

260
00:12:27,760 --> 00:12:32,000
Speaker 1: they're Japan is basically just like f t X right

261
00:12:32,360 --> 00:12:33,520
Speaker 1: if you if you, if you look at it, like

262
00:12:33,520 --> 00:12:35,959
Speaker 1: a small microcosm like ft X, created a token and

263
00:12:36,000 --> 00:12:39,400
Speaker 1: a thin air their ft T token. UM. Nobody really

264
00:12:39,440 --> 00:12:40,880
Speaker 1: wanted to buy the f t T token, but they

265
00:12:40,880 --> 00:12:42,600
Speaker 1: manipulated the market so it made it look like there

266
00:12:42,640 --> 00:12:44,920
Speaker 1: was values, so people bought it. When nobody wanted to

267
00:12:44,920 --> 00:12:46,800
Speaker 1: hold the token anymore, they started dumping the f t

268
00:12:46,880 --> 00:12:49,160
Speaker 1: T token, and so then Japan then f t X

269
00:12:49,240 --> 00:12:50,920
Speaker 1: was forced to try to prop it up by it,

270
00:12:51,160 --> 00:12:52,880
Speaker 1: So they're selling whatever asse is they could to prop

271
00:12:52,960 --> 00:12:56,080
Speaker 1: up the token, but it didn't matter. Nobody wanted to NFL.

272
00:12:56,120 --> 00:12:58,000
Speaker 1: And if you look at that and then look at Japan,

273
00:12:58,240 --> 00:13:00,200
Speaker 1: Japan is the same thing, right, Japan is a as

274
00:13:00,240 --> 00:13:03,880
Speaker 1: a yend token. Uh, nobody wants the end token. They

275
00:13:03,920 --> 00:13:06,320
Speaker 1: manipulate the market to think it has value. Now they're

276
00:13:06,320 --> 00:13:10,080
Speaker 1: stuck selling treasuries to try to prop up the end token. UM.

277
00:13:10,120 --> 00:13:12,240
Speaker 1: But like it's just the only a matter of time, right,

278
00:13:12,280 --> 00:13:13,959
Speaker 1: And I think the big thing that I want to

279
00:13:13,960 --> 00:13:16,600
Speaker 1: I want to ask you about was the yield curve control.

280
00:13:16,720 --> 00:13:19,440
Speaker 1: So what seems to kind of catch me about this

281
00:13:19,480 --> 00:13:22,080
Speaker 1: story is so for people that don't really understand, is

282
00:13:22,120 --> 00:13:25,760
Speaker 1: that Japan basically manipulates their bond market to kind of

283
00:13:25,880 --> 00:13:30,080
Speaker 1: artificially peg the rates. And the thing that catches my

284
00:13:30,120 --> 00:13:33,360
Speaker 1: eyes that they had to change the rate they're pegging at.

285
00:13:34,000 --> 00:13:36,679
Speaker 1: And it seems like I've always said that pegs are

286
00:13:36,679 --> 00:13:38,559
Speaker 1: meant to be broken. Traders are always going to go

287
00:13:38,640 --> 00:13:40,960
Speaker 1: after the peg. George Soros got famously rich in today

288
00:13:40,960 --> 00:13:42,680
Speaker 1: from breaking the you know, the peg and the Bank

289
00:13:42,679 --> 00:13:46,480
Speaker 1: of England UM and once they've given once, the traders

290
00:13:46,520 --> 00:13:48,240
Speaker 1: are kind of like, Okay, now we know you're gonna

291
00:13:48,320 --> 00:13:50,960
Speaker 1: give in. Does that kind of open up the floodgates?

292
00:13:50,960 --> 00:13:53,360
Speaker 1: Do you think was that like you flinched first, now

293
00:13:53,360 --> 00:13:56,400
Speaker 1: you're probably gonna lose kind of sign Yeah, I think

294
00:13:56,600 --> 00:13:59,840
Speaker 1: certainly adjusting that policy rate, Uh, you know, kind of

295
00:13:59,840 --> 00:14:02,959
Speaker 1: a roads the credibility um and you know, people argue

296
00:14:02,960 --> 00:14:05,240
Speaker 1: back and forth whether central banks have any credibility left.

297
00:14:05,240 --> 00:14:09,280
Speaker 1: I think they, you know, somewhat they do, right and

298
00:14:09,360 --> 00:14:11,280
Speaker 1: given that right that the Bank of Japan has a

299
00:14:11,360 --> 00:14:15,679
Speaker 1: trillion dollars at their disposal. Yeah, so somewhat of an

300
00:14:15,720 --> 00:14:18,319
Speaker 1: FDx type situation, but they have all quite a big

301
00:14:18,360 --> 00:14:21,160
Speaker 1: war chest to keep this game going right now. Um

302
00:14:21,200 --> 00:14:23,440
Speaker 1: So I kind of think I I like to explain

303
00:14:23,840 --> 00:14:26,400
Speaker 1: yield curve control, quantity of using like these kind of

304
00:14:26,400 --> 00:14:29,800
Speaker 1: big terms that that seem very complex. Um like quantity

305
00:14:29,840 --> 00:14:31,800
Speaker 1: of using right is printing a fixed amount of money

306
00:14:31,840 --> 00:14:35,840
Speaker 1: and buying bonds at any price. Right. Yield curve control

307
00:14:35,880 --> 00:14:39,080
Speaker 1: is printing potentially an unlimited amount of money to keep

308
00:14:39,160 --> 00:14:41,720
Speaker 1: the bonds at a fixed price. Right, so goes lower

309
00:14:41,760 --> 00:14:43,720
Speaker 1: than this price, it goes higher than this yield Right,

310
00:14:43,720 --> 00:14:46,400
Speaker 1: because bond prices and yields are inverse of each other.

311
00:14:46,640 --> 00:14:49,400
Speaker 1: So if it if it goes above twenty five basis points,

312
00:14:49,440 --> 00:14:52,480
Speaker 1: which they switch to fifty basis points zero point five,

313
00:14:53,160 --> 00:14:55,760
Speaker 1: will print any amount of money to keep this ten

314
00:14:55,840 --> 00:14:57,600
Speaker 1: year yield at this rate. And they have to do

315
00:14:57,640 --> 00:15:01,080
Speaker 1: this why, because they're debt to GDP is the worst

316
00:15:01,080 --> 00:15:04,840
Speaker 1: in the world. I believe it's right. So some mathematically

317
00:15:05,200 --> 00:15:07,480
Speaker 1: they need to erode their real debt burdens. And how

318
00:15:07,480 --> 00:15:08,680
Speaker 1: are they going to do that, Well, they need to

319
00:15:08,760 --> 00:15:10,400
Speaker 1: let inflation ramp, and they need to keep their bond

320
00:15:10,440 --> 00:15:15,320
Speaker 1: yields pinned, because otherwise the sovereign, the Japanese government goes

321
00:15:15,760 --> 00:15:19,120
Speaker 1: goes belly up essentially, right. So so speculators all over

322
00:15:19,160 --> 00:15:20,640
Speaker 1: the market are saying, all right, well, if you're gonna

323
00:15:20,640 --> 00:15:22,960
Speaker 1: print this money, we're just gonna short the end. We're

324
00:15:22,960 --> 00:15:25,200
Speaker 1: just gonna short the en and and and get dollars.

325
00:15:25,600 --> 00:15:29,040
Speaker 1: And so the Bank of Japan comes in uh and

326
00:15:29,040 --> 00:15:31,160
Speaker 1: and and really to kind of stem this speculate the

327
00:15:31,400 --> 00:15:35,440
Speaker 1: speculators they sell a bunch of sell a bunch of dollars,

328
00:15:35,440 --> 00:15:37,240
Speaker 1: and button by the end. Right, So it's almost a

329
00:15:37,240 --> 00:15:40,200
Speaker 1: circular logic in a way, right, because they're printing en

330
00:15:40,600 --> 00:15:44,160
Speaker 1: to buy their bonds and then they're selling selling dollars

331
00:15:44,400 --> 00:15:46,400
Speaker 1: to buy the end, right, so they can keep this

332
00:15:46,440 --> 00:15:48,200
Speaker 1: game going for a while because they are one of

333
00:15:48,240 --> 00:15:51,440
Speaker 1: the world's biggest holders of treasuries. But eventually, right, the

334
00:15:51,760 --> 00:15:54,320
Speaker 1: speculators who are both shorting the bonds and the end

335
00:15:55,120 --> 00:15:57,280
Speaker 1: are gonna, you know, maybe not break the Bank of

336
00:15:57,360 --> 00:15:59,640
Speaker 1: Japan because they're you know, quite the titan in the market,

337
00:16:00,240 --> 00:16:02,040
Speaker 1: but they're gonna, you know, they're gonna burn through that

338
00:16:02,080 --> 00:16:04,640
Speaker 1: treasure chest eventually. Um. So it's gonna be really interesting

339
00:16:04,680 --> 00:16:07,960
Speaker 1: to follow that. So why do you think following that

340
00:16:08,120 --> 00:16:11,280
Speaker 1: is even important? I mean, if it's if it's so

341
00:16:11,360 --> 00:16:14,200
Speaker 1: far off, well, I think one of the biggest things,

342
00:16:14,240 --> 00:16:16,280
Speaker 1: right is is you can see um and Bloomberg has

343
00:16:16,280 --> 00:16:18,440
Speaker 1: released a couple of stories on this. Right. So there's

344
00:16:18,480 --> 00:16:20,720
Speaker 1: the bond, there's the bond yields, right, but there's also

345
00:16:20,840 --> 00:16:24,360
Speaker 1: the kind of the swaps, so traders, there's derivatives, and

346
00:16:24,400 --> 00:16:26,600
Speaker 1: there's there's these swap rates are almost like kind of

347
00:16:26,600 --> 00:16:30,160
Speaker 1: a bond futures. And so those swap rates while the

348
00:16:30,680 --> 00:16:33,880
Speaker 1: peg was at twenty five basis point zero point, those

349
00:16:33,880 --> 00:16:36,560
Speaker 1: swap traders had that that policy rate at like forty

350
00:16:36,680 --> 00:16:39,040
Speaker 1: or fifty basis points, so they were already front running

351
00:16:39,040 --> 00:16:41,600
Speaker 1: the move. And now those swap the swap rates for

352
00:16:41,680 --> 00:16:43,440
Speaker 1: the for the ten year yield for the Bank of

353
00:16:43,720 --> 00:16:46,720
Speaker 1: uh for the Japanese government bonds are at about eighty

354
00:16:46,840 --> 00:16:49,840
Speaker 1: nine basis points, so eight zero point eight zero point

355
00:16:49,880 --> 00:16:52,280
Speaker 1: nine percent, right, so they're already front running that next

356
00:16:52,360 --> 00:16:56,040
Speaker 1: kind of capitulation move um by by shorting these bonds.

357
00:16:56,080 --> 00:16:58,680
Speaker 1: And I think what the the key here is is

358
00:16:58,720 --> 00:17:01,520
Speaker 1: that sovereign debt, rather whether whether it's the Eurozone or

359
00:17:01,520 --> 00:17:05,600
Speaker 1: the you know, U. S. Treasuries or or Japanese government bonds,

360
00:17:05,960 --> 00:17:09,000
Speaker 1: right these are the biggest markets, sovereign debt is fungible

361
00:17:09,280 --> 00:17:11,879
Speaker 1: on a on a on a FX hedged basis. What

362
00:17:11,920 --> 00:17:14,399
Speaker 1: I mean by that, it means that global debt, especially

363
00:17:14,400 --> 00:17:17,399
Speaker 1: from sovereigns, that that won't nominally default on their debt. Right,

364
00:17:17,600 --> 00:17:19,960
Speaker 1: a corporation may or may or may not default on

365
00:17:20,000 --> 00:17:22,240
Speaker 1: their debt. Well for a sovereign, you know, they're just

366
00:17:22,240 --> 00:17:25,320
Speaker 1: gonna print the money essentially, so they're never gonna nominally

367
00:17:25,359 --> 00:17:28,000
Speaker 1: default on their debt. So there's derivatives that that you

368
00:17:28,040 --> 00:17:30,840
Speaker 1: can basically hedge out the currency risk, So investors of

369
00:17:30,920 --> 00:17:34,359
Speaker 1: Japanese government bonds would say, hey, maybe I'll just hedge

370
00:17:34,400 --> 00:17:37,680
Speaker 1: my yen exposure and buy treasuries instead. So, so when

371
00:17:37,680 --> 00:17:39,640
Speaker 1: the Bank of Japan is printing a ton of money

372
00:17:39,680 --> 00:17:43,119
Speaker 1: to keep their bond yields artificially suppressed, that actually affects

373
00:17:43,240 --> 00:17:45,399
Speaker 1: the bond yields of every other market in the world.

374
00:17:45,760 --> 00:17:47,879
Speaker 1: And so you saw when they capitulated, and when they

375
00:17:47,880 --> 00:17:50,159
Speaker 1: went from twenty five basis points to fifty basis points,

376
00:17:50,240 --> 00:17:54,840
Speaker 1: global bond yields immediately ratcheted upwards. Right, So bonds sold off.

377
00:17:55,160 --> 00:17:57,199
Speaker 1: And so I think that's that's the kind of the

378
00:17:57,200 --> 00:17:59,600
Speaker 1: move here, is that you know, who knows what their

379
00:17:59,640 --> 00:18:02,280
Speaker 1: policy you will go to next? Right, They certainly have

380
00:18:02,480 --> 00:18:04,960
Speaker 1: a huge treasure chest and are willing to burn through it,

381
00:18:05,840 --> 00:18:09,080
Speaker 1: but the yen the and really that the Japanese government

382
00:18:09,080 --> 00:18:11,240
Speaker 1: bond market is basically one of the one of the

383
00:18:11,280 --> 00:18:13,159
Speaker 1: biggest currency is one of the biggest bond markets in

384
00:18:13,200 --> 00:18:15,720
Speaker 1: the world, aside from the dollar and the treasury market.

385
00:18:16,040 --> 00:18:18,240
Speaker 1: And so you know, they own a whole bunch of it.

386
00:18:18,240 --> 00:18:21,840
Speaker 1: They own the government bonds. But depending on where those

387
00:18:21,920 --> 00:18:28,399
Speaker 1: yields go global markets could react quite quite meaniqually Okay, So, um,

388
00:18:28,400 --> 00:18:31,960
Speaker 1: it's it's interesting for traders. It maybe isn't as important

389
00:18:32,000 --> 00:18:34,439
Speaker 1: for the global macro picture because they have quite a

390
00:18:34,440 --> 00:18:36,399
Speaker 1: long runway of a trillion dollars worth of bonds in

391
00:18:36,400 --> 00:18:39,040
Speaker 1: front of them, So nothing really imminent there. It's more

392
00:18:39,080 --> 00:18:43,160
Speaker 1: just kind of interesting than it is potentially imminent imminent

393
00:18:43,160 --> 00:18:45,960
Speaker 1: moves for the rest of the global market. I think

394
00:18:45,960 --> 00:18:47,480
Speaker 1: that's fair to say. I mean, certainly some good to

395
00:18:47,560 --> 00:18:49,359
Speaker 1: keep an eye on. Um, you know, maybe for the

396
00:18:49,359 --> 00:18:52,920
Speaker 1: average investor, uh, that's just you know, maybe passively holding

397
00:18:52,960 --> 00:18:55,280
Speaker 1: up a portfolio or investing for the long term. It's

398
00:18:55,560 --> 00:18:58,400
Speaker 1: it's you know, following the yen or the Japanese government

399
00:18:58,640 --> 00:19:01,480
Speaker 1: bond policy rate probably believe isn't you know, top of

400
00:19:01,640 --> 00:19:04,479
Speaker 1: top of mind. But for for you know, macro traders

401
00:19:04,480 --> 00:19:06,320
Speaker 1: and the weeds, this is certainly one of the bigger

402
00:19:06,359 --> 00:19:09,280
Speaker 1: variables in the market. Yeah, I think. I think when

403
00:19:09,320 --> 00:19:12,960
Speaker 1: it eventually breaks, uh, then it will have massive impacts

404
00:19:12,960 --> 00:19:15,480
Speaker 1: through the global economy. But you know, maybe that doesn't

405
00:19:15,480 --> 00:19:17,399
Speaker 1: happen for a while. So now that we've kind of

406
00:19:17,440 --> 00:19:20,240
Speaker 1: talked about the big macro, is there anything else big

407
00:19:20,280 --> 00:19:22,440
Speaker 1: on the big macro before we maybe kind of start

408
00:19:22,480 --> 00:19:25,719
Speaker 1: diving down in anything on the ECB or Euro that

409
00:19:25,920 --> 00:19:29,920
Speaker 1: is like maybe big and happening that you see. Yeah,

410
00:19:29,960 --> 00:19:32,320
Speaker 1: I mean I would just say, um, I expect you

411
00:19:32,480 --> 00:19:34,840
Speaker 1: despite the recent weakness. Um. And I don't really have

412
00:19:34,920 --> 00:19:38,480
Speaker 1: like a set timeline for this, for this thesis or

413
00:19:38,560 --> 00:19:40,320
Speaker 1: or for this this move, but I think that the

414
00:19:40,359 --> 00:19:43,440
Speaker 1: recent dollar weakness is something that I don't expect to

415
00:19:43,480 --> 00:19:46,199
Speaker 1: continue forever. Right. You know that everybody says I and

416
00:19:46,240 --> 00:19:49,440
Speaker 1: I agree over the long term, the dollars is guaranteed

417
00:19:49,480 --> 00:19:51,959
Speaker 1: to debase and value, right, But what's you're what you're

418
00:19:52,000 --> 00:19:54,240
Speaker 1: comparing it to when you're looking at like say the

419
00:19:54,240 --> 00:19:57,000
Speaker 1: the d X Y, the Dixie um or when you're

420
00:19:57,040 --> 00:19:59,439
Speaker 1: looking at you know, FX markets, you're comparing it to

421
00:19:59,480 --> 00:20:02,840
Speaker 1: a basket other fiat currencies. Right. So uh, the Euro,

422
00:20:03,080 --> 00:20:07,120
Speaker 1: the end, the pound, um, the Yuan right um uh,

423
00:20:07,160 --> 00:20:10,600
Speaker 1: Well the biggest component of the Dixie is the Euro. Right. Uh.

424
00:20:10,760 --> 00:20:14,280
Speaker 1: These are these their economies, their demographics, and and their

425
00:20:14,280 --> 00:20:16,560
Speaker 1: monetary policy is actually in a far worst position than

426
00:20:16,560 --> 00:20:18,600
Speaker 1: the U S and the and the FED. Right. So,

427
00:20:18,600 --> 00:20:20,400
Speaker 1: so you know people say the FED is trapped, Well,

428
00:20:20,440 --> 00:20:21,879
Speaker 1: you know, the bank of Japan is a lot more

429
00:20:21,920 --> 00:20:23,720
Speaker 1: trapped than the FED ever was, and the and the

430
00:20:23,720 --> 00:20:25,800
Speaker 1: ECB is a lot more trapped than the FED also

431
00:20:26,000 --> 00:20:29,400
Speaker 1: was or is right, So um, I just suspect at

432
00:20:29,400 --> 00:20:32,080
Speaker 1: some point, whether it's you know, next week, next month,

433
00:20:32,160 --> 00:20:35,680
Speaker 1: next quarter, next year, I think this the dollar pool

434
00:20:35,720 --> 00:20:39,600
Speaker 1: market against other currencies will continue against other currencies will

435
00:20:39,600 --> 00:20:44,080
Speaker 1: continue because there's just this massive global dollar short position. Right,

436
00:20:44,119 --> 00:20:46,560
Speaker 1: There's all this dollar denominated debt around the world. The

437
00:20:46,640 --> 00:20:48,680
Speaker 1: U S is um and has been for the last

438
00:20:48,720 --> 00:20:51,680
Speaker 1: fifty plus years the world reserve currency, and so because

439
00:20:51,720 --> 00:20:55,120
Speaker 1: of that, there's this natural global short position. Right. People

440
00:20:55,160 --> 00:20:58,000
Speaker 1: that are familiar with short squeezes and stocks, right, whether

441
00:20:58,040 --> 00:21:01,040
Speaker 1: it's like meme stocks like game stock up, or you know,

442
00:21:01,080 --> 00:21:04,080
Speaker 1: they're short squeezes in Tesla or whatever it may be, right,

443
00:21:04,160 --> 00:21:06,280
Speaker 1: But the biggest short position in the world is dollars.

444
00:21:06,320 --> 00:21:09,400
Speaker 1: So so I think that's kind of an important dynamic

445
00:21:09,400 --> 00:21:11,640
Speaker 1: to understand as as we are in a tightening cycle,

446
00:21:11,960 --> 00:21:14,600
Speaker 1: as the fat is tightening the belt, as rates an

447
00:21:14,600 --> 00:21:17,520
Speaker 1: interest expense around the world for variable rate debt goes up,

448
00:21:18,080 --> 00:21:20,560
Speaker 1: you know this game of musical chairs that is this

449
00:21:20,640 --> 00:21:24,080
Speaker 1: global debt based monetary system the music is slowly stopping, right,

450
00:21:24,240 --> 00:21:26,359
Speaker 1: And I'm not saying the music is gonna outright halt,

451
00:21:27,160 --> 00:21:29,719
Speaker 1: but as these you know, as these chairs fill up,

452
00:21:29,720 --> 00:21:31,600
Speaker 1: it's going to be interesting to see how it all

453
00:21:31,600 --> 00:21:35,000
Speaker 1: plays out for the dollar and for for risk assets. Yeah,

454
00:21:35,000 --> 00:21:37,639
Speaker 1: and risk assets have been catching a bid. Even specifically,

455
00:21:37,640 --> 00:21:39,119
Speaker 1: gold has been catching a bit. I mean, if you

456
00:21:39,119 --> 00:21:41,399
Speaker 1: look at the d X Y where it really started

457
00:21:41,400 --> 00:21:44,240
Speaker 1: breaking down, and I mean that's right when gold and

458
00:21:44,440 --> 00:21:46,640
Speaker 1: silver and pressures medals really caught a bit and done

459
00:21:46,640 --> 00:21:49,080
Speaker 1: really well in that same time frame. And if you

460
00:21:50,119 --> 00:21:53,040
Speaker 1: then go, well, DIXIE has only measured against these other

461
00:21:53,080 --> 00:21:56,160
Speaker 1: basket of currencies which are even more weak than potentially

462
00:21:56,160 --> 00:21:57,639
Speaker 1: the dollar rallies again, and what does that do for

463
00:21:57,760 --> 00:22:01,200
Speaker 1: risk on assets? So typically you know, gold has moved

464
00:22:01,200 --> 00:22:04,280
Speaker 1: off of real rates. Um, but it seems to really

465
00:22:04,320 --> 00:22:07,280
Speaker 1: be correlated with the Dixie for now, So I guess

466
00:22:07,280 --> 00:22:08,439
Speaker 1: we'll have to kind of keep an eye on that.

467
00:22:08,760 --> 00:22:11,200
Speaker 1: But um, if we if we jump down even further

468
00:22:11,320 --> 00:22:13,359
Speaker 1: back into risk assets, I mean, risk assets have been

469
00:22:13,359 --> 00:22:16,480
Speaker 1: catching a bit. Specifically, bitcoin and cryptocurrency has been catching

470
00:22:16,480 --> 00:22:20,240
Speaker 1: a bit. Bitcoin is trying to get to that nineteen

471
00:22:20,920 --> 00:22:23,119
Speaker 1: dollar level, which is pretty amazing. We've been kind of

472
00:22:23,119 --> 00:22:25,960
Speaker 1: stuck in this like sixteen thousand dollar range for for

473
00:22:26,119 --> 00:22:29,960
Speaker 1: months now. UM Bitcoin was kind of almost traded like

474
00:22:29,960 --> 00:22:32,680
Speaker 1: a stable coin there for a minute. You know, I've

475
00:22:32,720 --> 00:22:35,040
Speaker 1: talked about extensively, and I know you dig into the

476
00:22:35,160 --> 00:22:38,800
Speaker 1: on chain data a lot, and you know, really simply,

477
00:22:38,800 --> 00:22:40,919
Speaker 1: I've always believed that UM. I think I think a

478
00:22:40,920 --> 00:22:44,320
Speaker 1: lot of economics can be really boiled down simply, right,

479
00:22:44,320 --> 00:22:46,640
Speaker 1: Like markets stopped going down when there's no more sellers,

480
00:22:47,480 --> 00:22:49,399
Speaker 1: markets stopped going up and there's no more buyers, right,

481
00:22:49,440 --> 00:22:51,760
Speaker 1: the price is typically set by supplying demand, right, things

482
00:22:51,800 --> 00:22:53,919
Speaker 1: like that. And so if you look at like you know,

483
00:22:53,960 --> 00:22:57,760
Speaker 1: from the Tera Luna Domino through the three Arrows and

484
00:22:57,760 --> 00:22:59,960
Speaker 1: Celsius all the way to UM and then and then

485
00:23:00,040 --> 00:23:03,680
Speaker 1: we had Celsius and then we had the minor capitulation

486
00:23:03,680 --> 00:23:06,200
Speaker 1: where the miners basically dumped all their bitcoin and the

487
00:23:06,240 --> 00:23:09,200
Speaker 1: bitcoin kind of hit that fifteen sixteen thousand dollar price point,

488
00:23:09,320 --> 00:23:11,280
Speaker 1: and it seemed like we hit capitulation there. Then you

489
00:23:11,320 --> 00:23:13,440
Speaker 1: see like ft X happened and it didn't really push

490
00:23:13,440 --> 00:23:17,600
Speaker 1: bitcoin down anymore. Of course, we found out bitcoin uh

491
00:23:17,800 --> 00:23:20,440
Speaker 1: ft X had what one point four billion of a

492
00:23:20,520 --> 00:23:22,359
Speaker 1: bitcoin on their books and didn't have any to sell,

493
00:23:22,400 --> 00:23:23,680
Speaker 1: so maybe it had something to do with it. There

494
00:23:23,720 --> 00:23:27,000
Speaker 1: was no more sellers, And it seems like bitcoin kind

495
00:23:27,000 --> 00:23:30,040
Speaker 1: of found that bottom massive buying volume when it tried

496
00:23:30,080 --> 00:23:32,200
Speaker 1: to touch that, you know, just below the sixteen thousand

497
00:23:32,200 --> 00:23:35,280
Speaker 1: and fifteen thousand dollar price point. Um, so it seems

498
00:23:35,280 --> 00:23:37,080
Speaker 1: like it's found to bottom. It's now starting to catch

499
00:23:37,080 --> 00:23:39,720
Speaker 1: a little bit of a bid here. I'm just curious

500
00:23:39,800 --> 00:23:42,800
Speaker 1: what you think about that potential bottom. Uh, do you

501
00:23:42,800 --> 00:23:45,520
Speaker 1: think it's found a good bottom, is an intermediate bottom?

502
00:23:45,680 --> 00:23:48,280
Speaker 1: Or do you think really back to this global macro

503
00:23:48,359 --> 00:23:50,199
Speaker 1: pictures still really in charge and we have to kind

504
00:23:50,200 --> 00:23:53,560
Speaker 1: of see what happens there. Yeah, I think you know,

505
00:23:53,600 --> 00:23:55,439
Speaker 1: in terms of the amount of fourth selling that happened

506
00:23:55,440 --> 00:23:57,760
Speaker 1: in two, it's gonna be extremely hard to I mean,

507
00:23:57,760 --> 00:24:02,600
Speaker 1: maybe even impossible to replicate that again. Right. Uh, they're

508
00:24:02,600 --> 00:24:05,399
Speaker 1: at a certain point, especially for an absolutely scarce you know,

509
00:24:05,440 --> 00:24:08,879
Speaker 1: fixed supply asset, the marginal seller does get exhausted. Right.

510
00:24:08,880 --> 00:24:11,320
Speaker 1: So if you haven't sold your bitcoin uh in the

511
00:24:11,400 --> 00:24:16,320
Speaker 1: latter months of one or two all two? Right, Uh,

512
00:24:16,359 --> 00:24:18,199
Speaker 1: I'm not sure what's going to get you to to

513
00:24:18,200 --> 00:24:20,920
Speaker 1: to dump all of your bags here, right, and certainly

514
00:24:20,960 --> 00:24:23,560
Speaker 1: like if if equity is reverse, if the dollar strengthens,

515
00:24:23,560 --> 00:24:26,679
Speaker 1: if global bonds sell off again, Uh, it's all off

516
00:24:26,720 --> 00:24:29,280
Speaker 1: the table. But in terms of like bitcoin specific crypto

517
00:24:29,359 --> 00:24:33,760
Speaker 1: specific force de leveraging, I think we've seen the brunt

518
00:24:33,800 --> 00:24:36,080
Speaker 1: of that. But I think there's a key distinction between

519
00:24:36,440 --> 00:24:38,920
Speaker 1: you know, if the low is in or at least

520
00:24:38,920 --> 00:24:41,119
Speaker 1: you know, the low in terms of a range, right,

521
00:24:41,160 --> 00:24:44,679
Speaker 1: whether it's you know, the tick of fifteen five or

522
00:24:44,680 --> 00:24:47,240
Speaker 1: whatever it may be, or just like this sixteen k

523
00:24:47,440 --> 00:24:50,159
Speaker 1: to eighteen k, twenty k range, whatever it is. I

524
00:24:50,160 --> 00:24:52,480
Speaker 1: think there's a real difference between Okay, maybe the lows

525
00:24:52,560 --> 00:24:56,280
Speaker 1: in which I believe is a strong possibility, versus the

526
00:24:56,320 --> 00:24:59,239
Speaker 1: start of a new secular bull market. Right. So uh,

527
00:24:59,440 --> 00:25:01,040
Speaker 1: you know, well, I think we'll see but I think

528
00:25:01,760 --> 00:25:03,440
Speaker 1: three at least for bitcoin, at least for the start

529
00:25:03,480 --> 00:25:05,800
Speaker 1: of it. Um, and maybe we see a nice you know,

530
00:25:05,880 --> 00:25:08,280
Speaker 1: bear bear market rally, but I think it's going to

531
00:25:08,320 --> 00:25:10,920
Speaker 1: be kind of characterized by a lot of chop. Right. Uh,

532
00:25:10,960 --> 00:25:13,760
Speaker 1: There there are buyers a bitcoin here, and anecdotally and

533
00:25:13,920 --> 00:25:16,040
Speaker 1: on via the data, I can see that there are

534
00:25:16,080 --> 00:25:18,840
Speaker 1: priced agnostic buyers a bitcoin at any price that just

535
00:25:18,880 --> 00:25:21,679
Speaker 1: continue to buy a hold and accumulate and not sell it. Right,

536
00:25:21,720 --> 00:25:24,239
Speaker 1: So there are those flows, But in terms of you know,

537
00:25:24,800 --> 00:25:28,119
Speaker 1: uh kind of this up only up only you know,

538
00:25:28,200 --> 00:25:32,080
Speaker 1: generational bull market resuming at least today, I think that's

539
00:25:32,080 --> 00:25:33,800
Speaker 1: a little bit of a waste off. So I think

540
00:25:33,840 --> 00:25:35,639
Speaker 1: we got some time. I think bitcoin will consolidate for

541
00:25:35,680 --> 00:25:38,280
Speaker 1: a while. Could certainly be wrong there, but I kind

542
00:25:38,280 --> 00:25:41,960
Speaker 1: of expect just uh, you know, minimal volatility relative to

543
00:25:42,040 --> 00:25:45,600
Speaker 1: maybe one up only bull market and relative to the

544
00:25:46,040 --> 00:25:49,439
Speaker 1: forced de leveraging of two I think, you know, somewhat

545
00:25:49,440 --> 00:25:54,080
Speaker 1: of a calmer period um fortunately or not for for

546
00:25:54,080 --> 00:25:57,159
Speaker 1: bitcoin is ahead in sure. I mean that's what it

547
00:25:57,119 --> 00:25:59,560
Speaker 1: always happens, right, That's that's the cycle of a market, right,

548
00:25:59,600 --> 00:26:02,320
Speaker 1: So at the bottom you have you have the fouria

549
00:26:02,320 --> 00:26:04,040
Speaker 1: at the top, right, the volatility of the top, and

550
00:26:04,080 --> 00:26:05,840
Speaker 1: then the massive sell off. And so those are those

551
00:26:05,840 --> 00:26:10,320
Speaker 1: two are both um traits of that. All the people

552
00:26:10,359 --> 00:26:11,960
Speaker 1: that came in at the top of the mania that

553
00:26:12,040 --> 00:26:13,600
Speaker 1: drove it higher are the ones that get out of

554
00:26:13,600 --> 00:26:15,399
Speaker 1: the top and then force it back down and faster.

555
00:26:15,480 --> 00:26:17,480
Speaker 1: And then at the bottom, the pit of despair. Nobody

556
00:26:17,480 --> 00:26:18,919
Speaker 1: wants to touch it, and so you have to kind

557
00:26:18,920 --> 00:26:21,880
Speaker 1: of sit there and wallow in this very slow uh

558
00:26:21,920 --> 00:26:25,280
Speaker 1: increase again until eventually it starts to catch onto people's

559
00:26:25,280 --> 00:26:28,520
Speaker 1: imagination and long before even that euphoria gets there. But

560
00:26:28,560 --> 00:26:31,160
Speaker 1: that's kind of the market cycle we'll see. But yeah,

561
00:26:31,160 --> 00:26:33,159
Speaker 1: it just seems like it could be there. And to

562
00:26:33,200 --> 00:26:35,199
Speaker 1: your point, I would agree, I don't. I wouldn't expect

563
00:26:35,200 --> 00:26:39,399
Speaker 1: the big firework here, um. But then you have this

564
00:26:39,480 --> 00:26:42,320
Speaker 1: looming macro thing kind of hanging. So that seems to

565
00:26:42,320 --> 00:26:44,160
Speaker 1: be the big thing which I want to come back

566
00:26:44,160 --> 00:26:46,199
Speaker 1: to before we wrap it up, and I'll ask you

567
00:26:46,240 --> 00:26:50,240
Speaker 1: about that. UM. Bloomberg had put out a piece of

568
00:26:50,560 --> 00:26:52,920
Speaker 1: research at the end of last year and they said

569
00:26:52,960 --> 00:26:56,359
Speaker 1: that they believe that bitcoin would um turn into a

570
00:26:56,480 --> 00:27:02,280
Speaker 1: risk off asset by Q three of me too if

571
00:27:02,280 --> 00:27:04,760
Speaker 1: you look at the world from a bigger perspective, you know,

572
00:27:04,840 --> 00:27:07,680
Speaker 1: geopolitical perspective, and how the world's kind of breaking up,

573
00:27:07,720 --> 00:27:10,760
Speaker 1: and you know, supply chains are being reshaped, and uh,

574
00:27:10,920 --> 00:27:12,439
Speaker 1: I believe I talked about the time we're going into

575
00:27:12,440 --> 00:27:15,240
Speaker 1: a decentralized world, We're going into a multipolar world. I

576
00:27:15,240 --> 00:27:17,600
Speaker 1: think trade and supply chains is gonna suffer, right, It's

577
00:27:17,600 --> 00:27:20,680
Speaker 1: gonna have to be reimagined. Um, a lot less trust.

578
00:27:20,760 --> 00:27:24,880
Speaker 1: You know, there's new payment networks being set up. Um.

579
00:27:24,920 --> 00:27:27,280
Speaker 1: I think that could be good for bitcoin, right, and

580
00:27:27,320 --> 00:27:29,399
Speaker 1: we see a lot of nations are buying massive amounts

581
00:27:29,440 --> 00:27:33,040
Speaker 1: of gold. Gold doesn't really work very well in technological age.

582
00:27:33,640 --> 00:27:36,320
Speaker 1: Do you think, like Bloomberg that maybe we could see

583
00:27:36,320 --> 00:27:39,359
Speaker 1: bitcoin kind of transform from this risk on asset to

584
00:27:39,440 --> 00:27:41,159
Speaker 1: maybe more of a risk off asset and could that

585
00:27:41,200 --> 00:27:45,439
Speaker 1: be this year? Yeah, I think that's uh, you know,

586
00:27:46,000 --> 00:27:47,639
Speaker 1: I think it's a it's a it's a good narrative

587
00:27:47,640 --> 00:27:49,560
Speaker 1: and and I would be delighted to see it actually

588
00:27:49,600 --> 00:27:53,920
Speaker 1: unfold um in the in the interim, I think that

589
00:27:54,359 --> 00:27:57,400
Speaker 1: you know, like bitcoin, like think of it as a fraction,

590
00:27:57,440 --> 00:27:59,679
Speaker 1: which it is all all financial assets arts, you know,

591
00:27:59,720 --> 00:28:02,840
Speaker 1: the new murrator, the denominator of the numerators BTC. It

592
00:28:02,920 --> 00:28:08,360
Speaker 1: certainly has its own wave of adoption speculation, uh, you know, buying, selling,

593
00:28:08,400 --> 00:28:11,000
Speaker 1: forced to leveraging. And then there's the USD component, right,

594
00:28:11,119 --> 00:28:15,240
Speaker 1: and as bitcoin kind of monetizes across global balance sheets, uh,

595
00:28:15,280 --> 00:28:17,639
Speaker 1: it's it's kind of nestling itself on the asset side

596
00:28:18,080 --> 00:28:22,000
Speaker 1: of the global balance sheet. So there's assets you know, equities, bonds.

597
00:28:22,320 --> 00:28:25,000
Speaker 1: Bonds are both on the asset and liability side. Bitcoin

598
00:28:25,080 --> 00:28:27,560
Speaker 1: is only an asset, it's not a liability of anybody,

599
00:28:27,560 --> 00:28:30,000
Speaker 1: similar to gold. And then on the liability side there's

600
00:28:30,080 --> 00:28:33,040
Speaker 1: you know, dollar, zeros en all the currencies. And so

601
00:28:33,320 --> 00:28:37,560
Speaker 1: I think that it's uh, you know, people necessarily are saying,

602
00:28:37,600 --> 00:28:40,600
Speaker 1: you know, when's the decoupling? Is is bitcoin ever going

603
00:28:40,680 --> 00:28:43,440
Speaker 1: to not be a risk on asset? And and personally like,

604
00:28:43,760 --> 00:28:46,520
Speaker 1: I don't think the correlation with global risk is actually

605
00:28:46,520 --> 00:28:48,720
Speaker 1: a bad thing. I think it's almost a good thing. Um,

606
00:28:48,760 --> 00:28:51,760
Speaker 1: So we'll see. I think there's gonna be you know, momentary,

607
00:28:51,920 --> 00:28:55,440
Speaker 1: momentary periods of decoupling or you know, like for instance,

608
00:28:55,440 --> 00:28:57,880
Speaker 1: bitcoin could have an update due to a short squeeze

609
00:28:57,960 --> 00:28:59,840
Speaker 1: or you know, a big buyer coming in while stocks

610
00:28:59,840 --> 00:29:02,200
Speaker 1: are down and the dollars up. Um. But you know,

611
00:29:02,240 --> 00:29:05,560
Speaker 1: a sustained period of inverse correlation to global risk is

612
00:29:05,600 --> 00:29:08,680
Speaker 1: not something that I really expect here, um, But again,

613
00:29:08,720 --> 00:29:10,800
Speaker 1: would be delighted to see it happened because that would

614
00:29:10,800 --> 00:29:14,200
Speaker 1: certainly be a really strong narrative shift. Now you one

615
00:29:14,200 --> 00:29:17,120
Speaker 1: thing that you've been all over and you're getting quite

616
00:29:17,120 --> 00:29:21,160
Speaker 1: the following for is uh is breaking down some of

617
00:29:21,160 --> 00:29:24,800
Speaker 1: these big moves you know, FTX, etcetera. And one you've

618
00:29:24,800 --> 00:29:27,240
Speaker 1: been following a lot is this whole gray Scale GBTC

619
00:29:27,440 --> 00:29:30,320
Speaker 1: thing now we talked about, you know, has the market

620
00:29:30,320 --> 00:29:32,960
Speaker 1: bottomed as it has exhausted seller as you think that

621
00:29:33,040 --> 00:29:35,000
Speaker 1: maybe it has exhausted sellers sort of like I was

622
00:29:35,080 --> 00:29:37,680
Speaker 1: kind of saying, but what is the risk of a

623
00:29:38,040 --> 00:29:40,320
Speaker 1: massive sell off in the GBTC thing? Why don't you

624
00:29:40,440 --> 00:29:43,640
Speaker 1: kind of framed that that deal up for us? Yeah?

625
00:29:43,640 --> 00:29:47,800
Speaker 1: So you know, essentially gray Scale GBTC as a closed

626
00:29:47,880 --> 00:29:50,640
Speaker 1: end bitcoin trust. Um. Actually, Mark, do you want me

627
00:29:50,640 --> 00:29:52,480
Speaker 1: to like kind of break down what GBTC is or

628
00:29:52,560 --> 00:29:55,440
Speaker 1: are you let's let's let's do that give it a

629
00:29:55,480 --> 00:29:58,400
Speaker 1: quite a little over you Okay? Cool? Yeah. So so

630
00:29:58,960 --> 00:30:02,160
Speaker 1: GPTC as a trust offered by gray Scale. Gray Scale

631
00:30:02,160 --> 00:30:05,240
Speaker 1: as as a subsidiary of Digital Currency Group, a big

632
00:30:05,520 --> 00:30:08,080
Speaker 1: conglomerate in the crypto industry. Uh. It was kind of

633
00:30:08,120 --> 00:30:11,640
Speaker 1: the first bitcoin trust that was offered via O t

634
00:30:11,760 --> 00:30:14,280
Speaker 1: C over the counter rails. Right, so, um, you know

635
00:30:14,320 --> 00:30:16,520
Speaker 1: you could buy it in New Roth, Ira or you know,

636
00:30:16,800 --> 00:30:20,600
Speaker 1: uh in especially in one I was kind of a

637
00:30:21,480 --> 00:30:24,000
Speaker 1: favorite of Wall Street to get bitcoin like exposure. This

638
00:30:24,160 --> 00:30:26,320
Speaker 1: was before you know, the micro strategies of the world.

639
00:30:26,400 --> 00:30:29,280
Speaker 1: A lot of the bitcoin miners go public before future

640
00:30:29,360 --> 00:30:32,600
Speaker 1: z etf, right, so there wasn't really an easy vehicle

641
00:30:32,760 --> 00:30:36,160
Speaker 1: for bitcoin like exposure to be access So so GBDC

642
00:30:36,560 --> 00:30:38,920
Speaker 1: was that product, right. And and because it was a

643
00:30:38,960 --> 00:30:41,320
Speaker 1: closed end trust, there was only creation of shares, no

644
00:30:41,800 --> 00:30:44,800
Speaker 1: no redemptions, right, so you could bring dollars or bitcoin

645
00:30:45,160 --> 00:30:47,520
Speaker 1: to to gray Scale and they would give you a

646
00:30:47,560 --> 00:30:50,840
Speaker 1: shares of gptc um. And and because it was only

647
00:30:50,880 --> 00:30:52,920
Speaker 1: one way, there was traded at a premium for a

648
00:30:53,000 --> 00:30:55,240
Speaker 1: long period of time. So it was you know, say

649
00:30:55,280 --> 00:30:57,240
Speaker 1: you'd you'd bring a dollar to gray Scale and they'd

650
00:30:57,280 --> 00:30:59,880
Speaker 1: give you GPDC shares that were locked for six months.

651
00:31:00,440 --> 00:31:03,240
Speaker 1: That's a big story. Uh. And and now those years

652
00:31:03,400 --> 00:31:06,560
Speaker 1: a premium would say trade out a dollar twenty um.

653
00:31:06,640 --> 00:31:08,360
Speaker 1: So so there was a lot of investors that even

654
00:31:08,360 --> 00:31:11,400
Speaker 1: didn't really have much like interest in getting bitcoin exposure

655
00:31:11,760 --> 00:31:14,440
Speaker 1: that would that entered the g BTC trade just to

656
00:31:14,560 --> 00:31:17,640
Speaker 1: kind of harvest that premium. And that was a huge, huge,

657
00:31:17,760 --> 00:31:21,000
Speaker 1: huge driver in the bull market. Right. So so everybody

658
00:31:21,080 --> 00:31:23,320
Speaker 1: thinks of sailor Um, which he was a big driver

659
00:31:23,760 --> 00:31:26,360
Speaker 1: of the bull market. But everyone thinks Sailor was the

660
00:31:26,360 --> 00:31:30,760
Speaker 1: biggest catalyst um. Sailor bought, you know, hundred thousand bitcoin.

661
00:31:30,800 --> 00:31:33,120
Speaker 1: He has a hundred thirty thousand bitcoin micro strategy currently

662
00:31:33,200 --> 00:31:36,200
Speaker 1: does gray Scale from twenty two when they stopped buying

663
00:31:36,240 --> 00:31:39,440
Speaker 1: bitcoin after the premium went to a discount, gray Scale

664
00:31:39,440 --> 00:31:41,880
Speaker 1: bought like four hundred thousand bitcoin, right, So, so they

665
00:31:41,920 --> 00:31:46,080
Speaker 1: were a massive, massive driver of this bull run momentum um.

666
00:31:46,480 --> 00:31:49,200
Speaker 1: And what happened was that premium um as a bunch

667
00:31:49,240 --> 00:31:50,440
Speaker 1: of you know, as it turns out, a bunch of

668
00:31:50,520 --> 00:31:53,520
Speaker 1: firms were levering up to take on this trade, and

669
00:31:53,640 --> 00:31:58,960
Speaker 1: and a subsidiary of of DCGH, Genesis Global, a trading firm,

670
00:31:59,320 --> 00:32:03,520
Speaker 1: was lending against these collateralized GBTC shares to to lever

671
00:32:03,680 --> 00:32:05,880
Speaker 1: up and and kind of repeat the trade. Right, So,

672
00:32:05,960 --> 00:32:08,360
Speaker 1: there's a bunch of people going in giving bitcoin to

673
00:32:08,720 --> 00:32:12,320
Speaker 1: to gray Scale, getting GBDC shares. They'd give those shares

674
00:32:12,360 --> 00:32:14,480
Speaker 1: the Genesis borrow more money and do the trade again.

675
00:32:15,080 --> 00:32:17,480
Speaker 1: Three arrows. You know, one of the industry's biggest hedge

676
00:32:17,480 --> 00:32:19,840
Speaker 1: funds did this trade and made a whole lot of money.

677
00:32:20,160 --> 00:32:23,480
Speaker 1: As it turns out, GBDC is not a very liquid

678
00:32:23,520 --> 00:32:26,400
Speaker 1: market at least relative to bitcoin and all that leverage.

679
00:32:26,720 --> 00:32:31,160
Speaker 1: As that premium in February whittled to zero and actually

680
00:32:31,320 --> 00:32:34,240
Speaker 1: turned into a discount and net asset value, UH, the

681
00:32:34,320 --> 00:32:36,080
Speaker 1: one of the biggest cattles for the bull market actually

682
00:32:36,120 --> 00:32:38,040
Speaker 1: turned to be a big drag. And so right now

683
00:32:38,560 --> 00:32:41,800
Speaker 1: that that premium or slash discount, the net asset value

684
00:32:41,840 --> 00:32:45,200
Speaker 1: for GBDC shares is about thirty six percent discount that

685
00:32:45,320 --> 00:32:49,240
Speaker 1: reached as lowest fifty and as it turns out, yeah,

686
00:32:49,560 --> 00:32:51,400
Speaker 1: so so it has been getting a bid recently and

687
00:32:51,440 --> 00:32:56,080
Speaker 1: there are some activist campaigns to organize shareholders um and

688
00:32:56,240 --> 00:32:58,640
Speaker 1: so so we'll see what happens there. But those around

689
00:32:58,640 --> 00:33:01,440
Speaker 1: six hundred thousand, six d eight thousand bitcoin wrapped in

690
00:33:01,480 --> 00:33:03,840
Speaker 1: this trust and there's no kind of way out. It's

691
00:33:03,880 --> 00:33:07,800
Speaker 1: almost like a hotel California of sorts UH and and

692
00:33:07,840 --> 00:33:10,880
Speaker 1: a financial asset rapper. And so we'll see what happens.

693
00:33:10,960 --> 00:33:12,880
Speaker 1: But I think this is one of the bigger stories

694
00:33:12,920 --> 00:33:15,680
Speaker 1: and and genesis UH and and specifically d c G

695
00:33:16,320 --> 00:33:18,880
Speaker 1: as this big industry conglomerate UH is kind of in

696
00:33:18,920 --> 00:33:21,280
Speaker 1: the middle of of some big issues with with liquidity

697
00:33:21,320 --> 00:33:24,080
Speaker 1: potentially solvency, and you have big claims from you know,

698
00:33:24,160 --> 00:33:28,640
Speaker 1: say the Winkelvost Twins running Gemini Exchange, calling calling for

699
00:33:28,760 --> 00:33:33,120
Speaker 1: fraud of of the CEO Barry Silbert of DCG. So

700
00:33:33,480 --> 00:33:35,600
Speaker 1: we'll see what happens. They owe Genesis a whole lot

701
00:33:35,640 --> 00:33:38,520
Speaker 1: of money about nine hundred million dollars um for their

702
00:33:38,600 --> 00:33:40,960
Speaker 1: yield product, geminised yield product. There's a whole bunch of

703
00:33:41,080 --> 00:33:44,440
Speaker 1: kind of crypto contagion that actually still hasn't played out.

704
00:33:44,480 --> 00:33:46,960
Speaker 1: That was a story of two and it's not yet finished.

705
00:33:47,360 --> 00:33:49,920
Speaker 1: So I think most of that for selling, that deleveraging

706
00:33:50,000 --> 00:33:53,560
Speaker 1: and solvencies has taken place. But as it turns out,

707
00:33:53,640 --> 00:33:56,800
Speaker 1: that daisy chain of leverage has a few potentially a

708
00:33:56,800 --> 00:33:59,280
Speaker 1: few more victims to kind of washed ashore. So we'll

709
00:33:59,280 --> 00:34:01,840
Speaker 1: see how it resolve. But I think that's certainly one

710
00:34:01,840 --> 00:34:04,800
Speaker 1: of the things to watch into. Yeah, that's the thing

711
00:34:04,840 --> 00:34:07,320
Speaker 1: with leverage. It works really good on the way up,

712
00:34:07,360 --> 00:34:09,520
Speaker 1: and it works equally good on the way back down

713
00:34:09,560 --> 00:34:12,600
Speaker 1: to destroy you. I often often call it like fire,

714
00:34:12,719 --> 00:34:15,120
Speaker 1: right where like I can use fire to warm my house,

715
00:34:15,560 --> 00:34:17,279
Speaker 1: or it can burn my house down. You know, like

716
00:34:17,680 --> 00:34:19,759
Speaker 1: you've got to be really careful with that leverage. But

717
00:34:19,880 --> 00:34:23,719
Speaker 1: in regards to that, I mean back to the original question, Um,

718
00:34:24,680 --> 00:34:27,279
Speaker 1: you don't see in your research, and you've done a

719
00:34:27,280 --> 00:34:28,920
Speaker 1: lot of them, you're doing really well with it. Follow

720
00:34:29,000 --> 00:34:31,040
Speaker 1: the Dylan for that if you want it, Um, But

721
00:34:31,280 --> 00:34:34,600
Speaker 1: you don't see I mean, so the company DCG at

722
00:34:34,640 --> 00:34:37,839
Speaker 1: the top in genesis, you know, subsidies, etcetera. You don't

723
00:34:37,880 --> 00:34:40,600
Speaker 1: see any risk of like a forced liquidation. I mean,

724
00:34:40,640 --> 00:34:43,680
Speaker 1: if anything, it would be returning the bitcoin back to

725
00:34:43,840 --> 00:34:46,080
Speaker 1: the owners that are owners of the trust. There's no

726
00:34:46,120 --> 00:34:47,880
Speaker 1: reason why they would be like a forced liquidation or

727
00:34:47,920 --> 00:34:50,560
Speaker 1: a mass dumping onto the market because of that, other

728
00:34:50,640 --> 00:34:53,200
Speaker 1: than maybe going back to the owners the holders and

729
00:34:53,239 --> 00:34:56,960
Speaker 1: then they want to sell it. Yeah, there's I think

730
00:34:57,000 --> 00:34:59,000
Speaker 1: there's a lot of scenarios that can play out. I'm

731
00:34:59,040 --> 00:35:02,000
Speaker 1: not sure how to how to quantify these things, um,

732
00:35:02,239 --> 00:35:05,040
Speaker 1: And there's you know, I think that actually the smallest

733
00:35:05,040 --> 00:35:08,680
Speaker 1: probability is that the status quo is remains for the

734
00:35:08,760 --> 00:35:11,120
Speaker 1: next you know, two or three or four years. That's

735
00:35:11,160 --> 00:35:16,000
Speaker 1: the smallest possibility. You know, maybe that's a bolt take, um,

736
00:35:16,120 --> 00:35:18,359
Speaker 1: but I just you know, off of the allegations, off

737
00:35:18,360 --> 00:35:22,400
Speaker 1: of the recent momentum in shareholder activism, Uh, you know

738
00:35:22,560 --> 00:35:26,680
Speaker 1: the stories that have come across the PR newswire about uh,

739
00:35:26,840 --> 00:35:29,279
Speaker 1: you know the sec uh and some other you know,

740
00:35:29,560 --> 00:35:33,359
Speaker 1: potentially d o J looking into d c G S operations. UM.

741
00:35:33,800 --> 00:35:35,920
Speaker 1: You know, there's there's the real potential for this thing too,

742
00:35:36,040 --> 00:35:38,080
Speaker 1: for the trust to be unwound or to be acquired

743
00:35:38,120 --> 00:35:41,719
Speaker 1: by new owner or manager of the trust. Um and

744
00:35:41,800 --> 00:35:43,760
Speaker 1: potentially you know. One of the biggest things that's dragging

745
00:35:43,800 --> 00:35:46,360
Speaker 1: out this uh, this discount, right is the fee structure.

746
00:35:46,600 --> 00:35:49,440
Speaker 1: It's a two percent annual fee forever. Right. So so

747
00:35:49,640 --> 00:35:52,840
Speaker 1: you know, similar to how you discount stocks earnings or

748
00:35:52,880 --> 00:35:56,319
Speaker 1: a bond for you know, ten years, fifteen years, twenty years. Uh,

749
00:35:56,440 --> 00:35:59,279
Speaker 1: the market is discounting is two percent fee in perpetuity, right.

750
00:35:59,320 --> 00:36:01,080
Speaker 1: So why would I hold GBTC shares at a two

751
00:36:01,120 --> 00:36:03,279
Speaker 1: percent feet forever when I could just hold bitcoin. So

752
00:36:03,400 --> 00:36:05,680
Speaker 1: that's a big reason for the discount. Another big reason

753
00:36:05,719 --> 00:36:08,680
Speaker 1: for the discount is like Genesis and DCG being levered

754
00:36:08,719 --> 00:36:11,360
Speaker 1: against GBTC shares. UM. So I mean, you know that

755
00:36:11,440 --> 00:36:13,560
Speaker 1: force selling that had to be absorbed didn't really have

756
00:36:13,640 --> 00:36:16,800
Speaker 1: any natural buyers. Um. But in terms like what's resolved,

757
00:36:16,800 --> 00:36:19,600
Speaker 1: I think there's a small, small chance. Um. And again

758
00:36:19,640 --> 00:36:21,680
Speaker 1: I don't know how to exactly quantify this. I would

759
00:36:21,719 --> 00:36:24,080
Speaker 1: love to if I could, UM, but I think there's

760
00:36:24,080 --> 00:36:27,439
Speaker 1: a small chance that the trust is liquidated. I don't

761
00:36:27,480 --> 00:36:29,800
Speaker 1: think it would be a six hundred thousand dollar you know,

762
00:36:30,080 --> 00:36:33,000
Speaker 1: a six thousand bitcoin markets sell on coin base. I

763
00:36:33,040 --> 00:36:35,960
Speaker 1: think there'd be a lot of interesting, uh interested OTC

764
00:36:36,120 --> 00:36:40,160
Speaker 1: buyers potentially, you know that the buyers that had GBTC

765
00:36:40,280 --> 00:36:42,719
Speaker 1: shares just stepping in with the cash they received. Um,

766
00:36:42,840 --> 00:36:45,440
Speaker 1: It's really unclear how it all works legally, but I

767
00:36:45,560 --> 00:36:49,799
Speaker 1: do know there's mounting pressure from regulatory bodies, from shareholders

768
00:36:50,160 --> 00:36:52,520
Speaker 1: and and just you know, judging off some of the

769
00:36:52,640 --> 00:36:55,759
Speaker 1: names that I've heard through the through the grape vine

770
00:36:55,800 --> 00:36:58,480
Speaker 1: that are kind of interested in this, in this activist play,

771
00:36:58,680 --> 00:37:01,480
Speaker 1: there's there's some serious momentum here. So um, you know,

772
00:37:01,680 --> 00:37:04,880
Speaker 1: DCG potentially is on the ropes here. Uh. And I

773
00:37:05,040 --> 00:37:07,560
Speaker 1: think that there's you know, potentially some change coming over

774
00:37:07,600 --> 00:37:10,320
Speaker 1: the coming I don't know aboute like, I don't have

775
00:37:10,400 --> 00:37:13,279
Speaker 1: a specific timeline for it, but uh, you know, it's

776
00:37:13,320 --> 00:37:14,920
Speaker 1: more momentum than there ever has been to get a

777
00:37:15,000 --> 00:37:17,560
Speaker 1: change to the structure. But the change, I guess the

778
00:37:17,560 --> 00:37:19,440
Speaker 1: point I was trying to clarify for myself and for

779
00:37:19,480 --> 00:37:21,960
Speaker 1: everyone else, is that the change whether that be you know,

780
00:37:22,880 --> 00:37:25,360
Speaker 1: breaking it apart from dcg S grip, you know, getting

781
00:37:25,440 --> 00:37:27,520
Speaker 1: silvered out of the way, putting somebody else there, or

782
00:37:27,640 --> 00:37:30,319
Speaker 1: even potentially unwinding it and given the bit went back

783
00:37:30,360 --> 00:37:33,760
Speaker 1: to the owners. Uh, there's not a big liquidity event.

784
00:37:34,000 --> 00:37:36,200
Speaker 1: Most likely is not the base case that there's a

785
00:37:36,239 --> 00:37:39,120
Speaker 1: big liquidity event off of this, And there's change for sure,

786
00:37:39,320 --> 00:37:42,640
Speaker 1: but it doesn't mean there's a mass liquidation. Yeah, okay,

787
00:37:42,640 --> 00:37:44,680
Speaker 1: I agree there. Um, I think there's you know, there's

788
00:37:44,680 --> 00:37:47,440
Speaker 1: a tail risk for everything. But also interestingly, Mark, Um,

789
00:37:47,560 --> 00:37:50,400
Speaker 1: there's even the chance that and again, you know, unsure

790
00:37:50,440 --> 00:37:52,680
Speaker 1: how to quantify this, but I do know, just off

791
00:37:52,719 --> 00:37:55,480
Speaker 1: of my own intuition and just some chatter. Uh you

792
00:37:55,560 --> 00:37:58,040
Speaker 1: know with some market participants that a popular trade that

793
00:37:58,080 --> 00:38:02,279
Speaker 1: has arisen recently give and you know, say GPTC is

794
00:38:02,280 --> 00:38:04,920
Speaker 1: at a fifty discount to net asset value. Right, So

795
00:38:05,200 --> 00:38:09,920
Speaker 1: a popular trade, um even at not maybe thirty thirty

796
00:38:10,040 --> 00:38:13,719
Speaker 1: six percent to net asset value is long GBTC short

797
00:38:13,760 --> 00:38:17,080
Speaker 1: bitcoin futures, right, So if that has to be unwound,

798
00:38:17,160 --> 00:38:19,279
Speaker 1: what's what's the result, and I think the result is

799
00:38:19,280 --> 00:38:21,920
Speaker 1: you have to unwind that short leg um. So unsure

800
00:38:21,960 --> 00:38:23,960
Speaker 1: how of how it plays. I think, you know, it

801
00:38:24,040 --> 00:38:26,880
Speaker 1: could interestingly go both ways or it could just you know,

802
00:38:27,200 --> 00:38:29,719
Speaker 1: kind of resolve without without a bang and just kind

803
00:38:29,760 --> 00:38:31,920
Speaker 1: of a little murmur So, so we'll see what happens

804
00:38:32,520 --> 00:38:34,000
Speaker 1: on a on a On a little bit of a

805
00:38:34,040 --> 00:38:36,840
Speaker 1: different note, but referencing the two percent premium on the GBDC,

806
00:38:37,239 --> 00:38:39,400
Speaker 1: which is a very healthy premium. I mean, it's kind

807
00:38:39,400 --> 00:38:42,239
Speaker 1: of industry standard, but it is very healthy premium. And

808
00:38:42,320 --> 00:38:43,920
Speaker 1: why would they want unwind it when they're making so

809
00:38:44,000 --> 00:38:46,040
Speaker 1: much money? But I recently just did a video on

810
00:38:46,840 --> 00:38:51,400
Speaker 1: on counterfeit capitalism and Ponzi finance, and um, I was

811
00:38:51,480 --> 00:38:54,600
Speaker 1: looking at black Stone. So black Stone has become like

812
00:38:54,680 --> 00:38:56,880
Speaker 1: the largest owner of real estate like in the world,

813
00:38:57,160 --> 00:38:59,879
Speaker 1: and they have this like sixty eight billion dollar breed.

814
00:39:00,200 --> 00:39:01,520
Speaker 1: They call it like a reat but they call it

815
00:39:01,600 --> 00:39:04,759
Speaker 1: a breat. Um. They charged three point six percent a year.

816
00:39:05,719 --> 00:39:08,200
Speaker 1: They're pulling in two billion a year just off of

817
00:39:08,280 --> 00:39:12,560
Speaker 1: that alone. Uh So, anyway, put the two perspective, Blackstone

818
00:39:12,600 --> 00:39:15,680
Speaker 1: is charging you three point six and and with black Stone, um,

819
00:39:16,520 --> 00:39:18,840
Speaker 1: they don't you know, they it's a real estate portfolio.

820
00:39:18,840 --> 00:39:21,000
Speaker 1: They don't mark to market it right, um, and they

821
00:39:21,080 --> 00:39:24,080
Speaker 1: don't even bring an auditor, so they have their own

822
00:39:24,360 --> 00:39:29,360
Speaker 1: internal accounting team set the value of the portfolio that

823
00:39:29,480 --> 00:39:32,640
Speaker 1: they then charged three point six percent on. So um

824
00:39:33,000 --> 00:39:35,440
Speaker 1: at the investors of the breat have no control over

825
00:39:35,560 --> 00:39:37,760
Speaker 1: what they're buying. So they're buying a bunch of probably

826
00:39:37,880 --> 00:39:41,040
Speaker 1: toxic assets at this point, shopping centers and business parks

827
00:39:41,040 --> 00:39:43,080
Speaker 1: in San Francisco, for example, who knows. You don't even

828
00:39:43,080 --> 00:39:46,000
Speaker 1: know what you're getting. Um. And then you're getting uh

829
00:39:46,320 --> 00:39:49,200
Speaker 1: it's not even being marked to market. Uh, they're setting it,

830
00:39:49,320 --> 00:39:52,200
Speaker 1: they're controlling it, they're skimming three point six percent off

831
00:39:52,239 --> 00:39:55,520
Speaker 1: the top of it. I mean, it's just a disaster, um.

832
00:39:55,680 --> 00:39:58,960
Speaker 1: So Sign of the Times, right, that was the point

833
00:39:58,960 --> 00:40:01,160
Speaker 1: of the video Sign of the Times, pondsy Finance time.

834
00:40:01,200 --> 00:40:03,840
Speaker 1: That's gonna where we're mark. I think one of the

835
00:40:03,880 --> 00:40:06,319
Speaker 1: most interesting things, just to just add one little quick

836
00:40:06,360 --> 00:40:09,320
Speaker 1: tidbit to that point, is that you know, one of

837
00:40:09,400 --> 00:40:12,520
Speaker 1: the biggest, uh, one of the biggest beneficiaries of this,

838
00:40:12,760 --> 00:40:15,239
Speaker 1: you know, ten twelve year up only bull market and

839
00:40:15,320 --> 00:40:18,800
Speaker 1: everything has been private equity, right, and you know private

840
00:40:18,840 --> 00:40:21,080
Speaker 1: equity is this magical vehicle that has all of the

841
00:40:21,160 --> 00:40:25,520
Speaker 1: upside exposure to financial asset market beta with none of

842
00:40:25,600 --> 00:40:28,479
Speaker 1: the downside volatility because these things aren't marked to market

843
00:40:28,560 --> 00:40:31,640
Speaker 1: on a daily basis. And as you see with Blackstone

844
00:40:31,680 --> 00:40:34,799
Speaker 1: and some other private equity funds, as the withdrawals start

845
00:40:34,840 --> 00:40:38,680
Speaker 1: to come in, are those marks real? Uh? Is there

846
00:40:38,680 --> 00:40:41,640
Speaker 1: by side liquidity to to meet those withdrawals. I think that's,

847
00:40:41,760 --> 00:40:45,080
Speaker 1: you know, maybe a potentially a big story in it's

848
00:40:45,080 --> 00:40:47,440
Speaker 1: gonna be a real big story. Private equity is the

849
00:40:47,560 --> 00:40:50,320
Speaker 1: big ponds e that I believe is gonna collapse assuming

850
00:40:50,400 --> 00:40:52,719
Speaker 1: the market kind of continued on the directory that it's on,

851
00:40:52,840 --> 00:40:55,000
Speaker 1: like we talked about before, If there's more pain ahead,

852
00:40:55,160 --> 00:40:57,120
Speaker 1: I think private equity is going to take a massive hit.

853
00:40:57,160 --> 00:40:59,560
Speaker 1: I was reading this article by Matt Staller. He writes

854
00:40:59,600 --> 00:41:02,759
Speaker 1: a substance act called Big and he talks about monopolies,

855
00:41:03,000 --> 00:41:04,680
Speaker 1: and he was talking about the private equity and how

856
00:41:04,800 --> 00:41:07,840
Speaker 1: they've taken over like the medical industry, the hospital industry,

857
00:41:08,000 --> 00:41:10,320
Speaker 1: and they're raising all this money. They're buying the hospitals

858
00:41:10,360 --> 00:41:12,320
Speaker 1: and then they buy the they own the land separately,

859
00:41:12,880 --> 00:41:16,319
Speaker 1: and UH, private equity they do all these roll ups,

860
00:41:16,680 --> 00:41:19,239
Speaker 1: and they're not specialists in running these businesses. They bring

861
00:41:19,320 --> 00:41:21,960
Speaker 1: in generalists to run a specialized business, and in most

862
00:41:22,040 --> 00:41:24,319
Speaker 1: cases they do a horrible job at it. So they've

863
00:41:24,400 --> 00:41:26,880
Speaker 1: rolled up these hospitals. They're having a horrible job. The

864
00:41:26,920 --> 00:41:29,880
Speaker 1: hospitals aren't being run properly. Uh, they're going out of business.

865
00:41:30,200 --> 00:41:33,560
Speaker 1: They can't afford the lease on the land that the

866
00:41:33,680 --> 00:41:37,440
Speaker 1: PE also owns, and the PE is the private equity

867
00:41:37,600 --> 00:41:40,719
Speaker 1: is loaning money to the hospital so the hospital can

868
00:41:40,760 --> 00:41:42,919
Speaker 1: continue to pay the land lease, which they also own.

869
00:41:43,719 --> 00:41:46,719
Speaker 1: So they're loaning money to get their payments back. But

870
00:41:46,800 --> 00:41:49,719
Speaker 1: because they're separate entities, then private equity can go Look,

871
00:41:49,760 --> 00:41:53,440
Speaker 1: we've never missed a payment. Oh look the revenues are

872
00:41:53,440 --> 00:41:55,520
Speaker 1: still coming in even though they're losing over on this side.

873
00:41:55,560 --> 00:41:59,319
Speaker 1: So it's Ponzi finances. Is back to that kind of thing.

874
00:41:59,440 --> 00:42:02,879
Speaker 1: But yeah, private equity is a disaster waiting to happen. Um,

875
00:42:03,200 --> 00:42:08,720
Speaker 1: you know, it'll reset like everything else. I guess. Um, Okay,

876
00:42:08,920 --> 00:42:12,040
Speaker 1: what about what about tether fud. Let's talk about that

877
00:42:12,120 --> 00:42:16,719
Speaker 1: for a second. Now, I got into this space in uh,

878
00:42:17,400 --> 00:42:20,279
Speaker 1: as long as I can remember, there's been tether fud. Uh,

879
00:42:20,560 --> 00:42:24,560
Speaker 1: tether prints you know, princes uh dollars to prop up bitcoin.

880
00:42:24,719 --> 00:42:27,160
Speaker 1: You know, bitcoins price wouldn't be where it was if

881
00:42:27,160 --> 00:42:29,719
Speaker 1: it wasn't for all these fake dollars. Which if that

882
00:42:29,840 --> 00:42:31,120
Speaker 1: was the case, then why has it been sitting in

883
00:42:31,120 --> 00:42:33,000
Speaker 1: a sixteen thousand? Like? Can't they can't they pump up

884
00:42:33,000 --> 00:42:36,879
Speaker 1: back up already? But you know, um, there's there's there's

885
00:42:36,920 --> 00:42:39,680
Speaker 1: a there's a lot of there's a lot of fund

886
00:42:39,760 --> 00:42:42,319
Speaker 1: right fear, uncertainty and doubtcast on to tether a couple

887
00:42:42,320 --> 00:42:45,840
Speaker 1: of things. I want to ask you one, um, what

888
00:42:45,960 --> 00:42:48,760
Speaker 1: do you think the reality is of some of this danger?

889
00:42:48,960 --> 00:42:51,640
Speaker 1: And then to the bigger one kind of back to this,

890
00:42:51,880 --> 00:42:54,359
Speaker 1: is there more mass liquidations in front of us? Does

891
00:42:54,400 --> 00:42:56,560
Speaker 1: it even matter? Right people are hold a bunch of

892
00:42:56,600 --> 00:42:59,040
Speaker 1: dollars that they lose their dollars, does that matter to bitcoin?

893
00:42:59,160 --> 00:43:02,040
Speaker 1: So what do you think about these two things? Yeah?

894
00:43:02,080 --> 00:43:05,960
Speaker 1: I think the long term answer is no, it doesn't matter. Um.

895
00:43:06,840 --> 00:43:10,600
Speaker 1: You know, like like bituoin is just this this machine

896
00:43:10,719 --> 00:43:13,080
Speaker 1: that is unaware of any of us and how we

897
00:43:13,160 --> 00:43:15,200
Speaker 1: interact with it, and it will continue to just chug

898
00:43:15,560 --> 00:43:17,360
Speaker 1: a new block every ten minutes, and it's just this

899
00:43:17,440 --> 00:43:20,600
Speaker 1: immutable network of value settlement and storage. Uh. In terms

900
00:43:20,640 --> 00:43:23,920
Speaker 1: of the dollar exchange rate, Tether is obviously a massive player. Uh.

901
00:43:24,080 --> 00:43:25,800
Speaker 1: You know, like I think I believe something like fifty

902
00:43:25,840 --> 00:43:30,080
Speaker 1: sixty billion dollars in market capitalization. UM has a shoddy

903
00:43:30,120 --> 00:43:34,040
Speaker 1: pass for sure, potentially you know, some some kind of

904
00:43:34,120 --> 00:43:37,080
Speaker 1: commingling with bit fan x. Uh. They've you know, been

905
00:43:37,120 --> 00:43:40,200
Speaker 1: sued by the New York A g Uh. All of

906
00:43:40,239 --> 00:43:43,040
Speaker 1: these things have you know passed question marks UM and

907
00:43:43,280 --> 00:43:46,480
Speaker 1: certainly like maybe they like that. That's the reason, right

908
00:43:46,520 --> 00:43:48,680
Speaker 1: they can't get an audit is because there's there's somewhat

909
00:43:48,680 --> 00:43:50,560
Speaker 1: of a shady pass. So do I hold Tether? No,

910
00:43:50,680 --> 00:43:52,920
Speaker 1: I don't do. I think tether is is going to

911
00:43:53,000 --> 00:43:56,200
Speaker 1: imminently collapse. No, I don't. Uh they I believe they

912
00:43:56,280 --> 00:44:00,279
Speaker 1: have a big portion, a big chunk of treasuries and

913
00:44:00,400 --> 00:44:03,000
Speaker 1: just based on everything that's happened in two if that,

914
00:44:03,120 --> 00:44:05,600
Speaker 1: if that wasn't enough to kind of topple Tether, UH

915
00:44:05,760 --> 00:44:09,000
Speaker 1: don't really see what's going to come that will. With

916
00:44:09,200 --> 00:44:12,040
Speaker 1: that being said, Tether has had a history of saying, hey,

917
00:44:12,200 --> 00:44:15,160
Speaker 1: like we don't we you know, we hold just assets

918
00:44:15,239 --> 00:44:18,680
Speaker 1: backing our dollars. Right, and then Celsius when they go under. Uh,

919
00:44:18,880 --> 00:44:25,560
Speaker 1: It's revealed that Tether actually was lending Celsius collateralized loans,

920
00:44:25,600 --> 00:44:29,919
Speaker 1: was creating Tether's um through bitcoin collateralized loans. So Alex

921
00:44:29,960 --> 00:44:32,800
Speaker 1: Maschinsky sent over some bitcoin over clatteralized of course, so

922
00:44:32,880 --> 00:44:36,680
Speaker 1: Tether didn't actually sustain losses, but they printed Tether backed

923
00:44:36,800 --> 00:44:41,439
Speaker 1: by bitcoin collateralized loans. So that was something that Tether

924
00:44:41,520 --> 00:44:44,920
Speaker 1: said they didn't do. So are there are the questions? Certainly, um,

925
00:44:45,360 --> 00:44:48,280
Speaker 1: would that actually help support the price of bitcoin? Certainly,

926
00:44:48,840 --> 00:44:51,200
Speaker 1: But at this point Tether has done you know, they

927
00:44:51,480 --> 00:44:53,279
Speaker 1: used to hold all this commercial paper, all of this.

928
00:44:53,760 --> 00:44:56,359
Speaker 1: They are sitting on a on a portfolio mostly short

929
00:44:56,520 --> 00:45:00,239
Speaker 1: term treasuries at this point, um And so I think

930
00:45:00,239 --> 00:45:02,560
Speaker 1: they're okay. I think that the yield that they're now

931
00:45:02,640 --> 00:45:04,920
Speaker 1: getting on this massive portfolio is certainly going to help

932
00:45:05,600 --> 00:45:08,120
Speaker 1: bolster their reserves over the long term. UM And I

933
00:45:08,160 --> 00:45:11,120
Speaker 1: don't really have a kind of an immediate doomsday prediction

934
00:45:11,160 --> 00:45:13,239
Speaker 1: on Tether, like I've you know, like I've called out

935
00:45:13,280 --> 00:45:15,040
Speaker 1: a whole bunch of these yield products right like to

936
00:45:15,080 --> 00:45:19,560
Speaker 1: take off the box uh Celsius Voyager block five ft X,

937
00:45:20,120 --> 00:45:23,800
Speaker 1: right like I've um among others rights like called for

938
00:45:23,920 --> 00:45:27,040
Speaker 1: all these things to collapse before they did. Um. Do

939
00:45:27,160 --> 00:45:29,440
Speaker 1: I think there's question marks about tether? Of course? Do

940
00:45:29,560 --> 00:45:31,960
Speaker 1: I think that they, you know, are the next domino

941
00:45:32,080 --> 00:45:34,560
Speaker 1: that's going to collapse this entire industry and bitcoin is

942
00:45:34,640 --> 00:45:37,360
Speaker 1: a a scam like all these all these you know

943
00:45:37,440 --> 00:45:39,719
Speaker 1: bears are saying for the last seven years, and now

944
00:45:39,760 --> 00:45:42,920
Speaker 1: I don't believe so. Um, certainly it's a you know,

945
00:45:42,960 --> 00:45:45,440
Speaker 1: a big market player, so you know, the dominant trading

946
00:45:45,480 --> 00:45:47,880
Speaker 1: pairer on binance, right, But I think it's more so

947
00:45:48,040 --> 00:45:50,239
Speaker 1: propping up, if it is propping up anything, it's more

948
00:45:50,280 --> 00:45:54,200
Speaker 1: so propping up the broad based crypto industry rather than

949
00:45:54,280 --> 00:45:57,360
Speaker 1: you know, bitcoin as a global as a global you know,

950
00:45:57,800 --> 00:46:01,120
Speaker 1: free float financial asset. Yeah, yeah, I mean that that's

951
00:46:01,160 --> 00:46:02,920
Speaker 1: kind of my take. And and and I guess just

952
00:46:03,000 --> 00:46:07,080
Speaker 1: kind of back to the question is that it it's

953
00:46:07,080 --> 00:46:09,239
Speaker 1: propping up the entire ecosystem to to the kind of

954
00:46:09,280 --> 00:46:11,920
Speaker 1: point that you made on Binance etcetera, crypto coins, etcetera.

955
00:46:12,239 --> 00:46:14,399
Speaker 1: But uh and and to your point, uh, and that's

956
00:46:14,440 --> 00:46:17,000
Speaker 1: one thing that people should take from this is when

957
00:46:17,040 --> 00:46:20,200
Speaker 1: you see that these like stable coins are percent reserved

958
00:46:20,440 --> 00:46:24,319
Speaker 1: well reserved in what like if you're reserved in ft

959
00:46:24,440 --> 00:46:26,839
Speaker 1: T token, your reservings up at zero, or like if

960
00:46:26,880 --> 00:46:30,840
Speaker 1: you're like uh, um, Tara Luna was reserved in Tara token, right, Like,

961
00:46:30,920 --> 00:46:32,719
Speaker 1: well then it went to zero. So reserved and what

962
00:46:32,880 --> 00:46:34,960
Speaker 1: And to your point about tether, a good majority of

963
00:46:35,040 --> 00:46:38,400
Speaker 1: that is now in treasury, so it's like basically in cash. Um.

964
00:46:38,760 --> 00:46:41,319
Speaker 1: But I guess the question is if if they were

965
00:46:41,440 --> 00:46:44,040
Speaker 1: hypothetically um, you know, a bunch of stuff comes out,

966
00:46:44,120 --> 00:46:46,160
Speaker 1: they don't have the reserves, there's a run on tether

967
00:46:46,440 --> 00:46:49,040
Speaker 1: orchestrated by whatever reason, and uh and tether were to

968
00:46:49,080 --> 00:46:52,000
Speaker 1: go to zero, would that really have a big effect

969
00:46:52,120 --> 00:46:54,560
Speaker 1: on bitcoins specifically? I mean they're not dumping bitcoin. I

970
00:46:54,600 --> 00:46:57,239
Speaker 1: mean the people that had dollars there had those tether

971
00:46:57,320 --> 00:46:59,800
Speaker 1: tokens now can't redeem it for the dollars they hoped for.

972
00:47:00,440 --> 00:47:05,360
Speaker 1: But it doesn't really cause a mass liquidation of bitcoin necessarily. Nope,

973
00:47:05,680 --> 00:47:07,960
Speaker 1: it doesn't. It would be really interesting to see happen

974
00:47:08,120 --> 00:47:10,680
Speaker 1: mark because um, again, like I don't think this is

975
00:47:10,760 --> 00:47:14,279
Speaker 1: a high probability, but we've seen temporary kind of like so,

976
00:47:14,480 --> 00:47:17,040
Speaker 1: so tether trades free flow, right, it's it's it trades

977
00:47:17,120 --> 00:47:21,240
Speaker 1: against other stable coins it trades against, like bitcoin, BTC

978
00:47:21,480 --> 00:47:24,160
Speaker 1: U s D. Also there's there's BTC U s D

979
00:47:24,280 --> 00:47:27,359
Speaker 1: T right. And so we've seen in the momentary kind

980
00:47:27,440 --> 00:47:30,440
Speaker 1: of periods of of market panic, whether it was a

981
00:47:30,719 --> 00:47:32,680
Speaker 1: collapse of terror Lune, at the collapse of ft X,

982
00:47:32,840 --> 00:47:35,520
Speaker 1: we've seen tether trade from you know, a dollar to

983
00:47:37,520 --> 00:47:39,880
Speaker 1: ninety seven cents, right, and it was quickly bought back up.

984
00:47:40,160 --> 00:47:41,920
Speaker 1: But a lot of those traders, a lot of those

985
00:47:41,920 --> 00:47:46,200
Speaker 1: people that bought tethers at cents went to tether and

986
00:47:46,280 --> 00:47:49,239
Speaker 1: redeemed those redeemed them, right, so they got they got

987
00:47:49,320 --> 00:47:51,279
Speaker 1: the cash, whether you know, through a bank wire or

988
00:47:51,320 --> 00:47:54,759
Speaker 1: whatever the means. Maybe so uh And and at that time, right,

989
00:47:54,960 --> 00:47:57,680
Speaker 1: it was interesting to see on say a binance that

990
00:47:57,840 --> 00:48:01,040
Speaker 1: the price of of bitcoin in in USD was like

991
00:48:01,080 --> 00:48:03,080
Speaker 1: twenty eight thousand, and the price of bitcoin and U

992
00:48:03,200 --> 00:48:06,239
Speaker 1: s DT was like right, So it would be really

993
00:48:06,320 --> 00:48:10,480
Speaker 1: interesting to see, uh, you know, bitcoin pump if if

994
00:48:10,600 --> 00:48:14,759
Speaker 1: you know, the denominator of BTC U s DT was collapsing, right,

995
00:48:14,800 --> 00:48:16,279
Speaker 1: And it would be interesting to see kind of what

996
00:48:16,440 --> 00:48:18,959
Speaker 1: percent or what share of global market value was set

997
00:48:19,040 --> 00:48:21,680
Speaker 1: by by tether. Uh And and you know, what would

998
00:48:21,719 --> 00:48:23,560
Speaker 1: be the resolution I don't know, and I don't think

999
00:48:23,600 --> 00:48:26,719
Speaker 1: really anybody knows. Um And and for some people, right,

1000
00:48:26,920 --> 00:48:28,919
Speaker 1: for some people, they say Bitcoin is un investable until

1001
00:48:28,960 --> 00:48:31,440
Speaker 1: Tether is out of the ecosystem. That's why That's exactly

1002
00:48:31,520 --> 00:48:34,520
Speaker 1: exactly what I was thinking. Um I see, I think

1003
00:48:34,600 --> 00:48:37,920
Speaker 1: that's uh, you know, that's an interesting take. Um I.

1004
00:48:38,280 --> 00:48:40,520
Speaker 1: The the problem with that is that they might be

1005
00:48:40,600 --> 00:48:45,240
Speaker 1: waiting for a very very, very very long time because

1006
00:48:45,280 --> 00:48:46,840
Speaker 1: you know, there's a whole lot of vested interest in

1007
00:48:47,080 --> 00:48:49,319
Speaker 1: kind of keeping this game going. And I think, uh,

1008
00:48:49,480 --> 00:48:51,800
Speaker 1: you know, the longer that that Tether is is around,

1009
00:48:51,880 --> 00:48:54,560
Speaker 1: and you know, they have now a very liquid portfolio

1010
00:48:54,640 --> 00:48:57,319
Speaker 1: short term treas furies, uh, it's gonna be really hard

1011
00:48:57,360 --> 00:48:59,480
Speaker 1: to bank run uh or you know, to see that

1012
00:48:59,640 --> 00:49:02,880
Speaker 1: that unresolved. So I'm not making any like bold predictions

1013
00:49:03,000 --> 00:49:05,719
Speaker 1: or not. Like, I'm not saying that there is absolutely

1014
00:49:05,760 --> 00:49:08,480
Speaker 1: a non zero percent chance that there's you know, bad

1015
00:49:08,520 --> 00:49:11,759
Speaker 1: outcomes with with Tether and with their holdings and maybe

1016
00:49:11,800 --> 00:49:14,279
Speaker 1: potentially with the prince of Bitcoin. But I think it's

1017
00:49:14,719 --> 00:49:18,799
Speaker 1: it's a you know, not it's not certain either way.

1018
00:49:18,920 --> 00:49:20,840
Speaker 1: I don't and I like and I don't think it

1019
00:49:20,840 --> 00:49:24,719
Speaker 1: would be really uh, I would really be in the

1020
00:49:24,880 --> 00:49:26,359
Speaker 1: in the right to come out here and make one

1021
00:49:26,440 --> 00:49:31,200
Speaker 1: both claim either way. Okay, all right, Well, I think

1022
00:49:31,280 --> 00:49:35,919
Speaker 1: that there's definitely risk, as you said, certainly risk there.

1023
00:49:35,960 --> 00:49:38,720
Speaker 1: I just don't I think the risk to actually bitcoins

1024
00:49:38,760 --> 00:49:40,600
Speaker 1: prices maybe a little bit overblown. To your point, a

1025
00:49:40,640 --> 00:49:42,520
Speaker 1: lot of people said it's un investable until we figure

1026
00:49:42,560 --> 00:49:44,160
Speaker 1: this out. It's like, why, Like, I don't see that, Like,

1027
00:49:44,640 --> 00:49:47,359
Speaker 1: they're not gonna sell it now. If they had said, hey,

1028
00:49:47,440 --> 00:49:50,439
Speaker 1: well you know, half of our collaterals in bitcoin will

1029
00:49:50,480 --> 00:49:52,200
Speaker 1: shoot them that had be forced to dump the collateral,

1030
00:49:52,600 --> 00:49:54,919
Speaker 1: that's not the case. So like, I just don't see

1031
00:49:55,080 --> 00:49:58,799
Speaker 1: why anybody would make that assumption. But but to your point,

1032
00:49:58,840 --> 00:50:00,480
Speaker 1: to a lot of people have I think a lot

1033
00:50:00,520 --> 00:50:02,319
Speaker 1: of people that are outside that are probably wouldn't buy

1034
00:50:02,320 --> 00:50:06,000
Speaker 1: bitcoin anyway. Uh, and they don't really understand how that works. Um.

1035
00:50:06,840 --> 00:50:10,680
Speaker 1: One last potential big blow up kind of just going

1036
00:50:10,760 --> 00:50:12,640
Speaker 1: back to are there any more sellers? Are there any

1037
00:50:12,680 --> 00:50:15,640
Speaker 1: more forced liquidations? Um? Something you've been talking about quite

1038
00:50:15,680 --> 00:50:19,239
Speaker 1: a bit is silver Gate Bank. Now, there's a lot

1039
00:50:19,360 --> 00:50:23,240
Speaker 1: of problems with silver Game Bank, including potential legal problems

1040
00:50:23,360 --> 00:50:26,880
Speaker 1: because apparently they were handling wires for Alameda and f

1041
00:50:27,000 --> 00:50:29,440
Speaker 1: t X and they weren't doing proper kyc and putting

1042
00:50:29,440 --> 00:50:31,359
Speaker 1: money into the wrong accounts. Some who knows what will

1043
00:50:31,400 --> 00:50:34,839
Speaker 1: come with that? Um, lots of other risks with silver Gate.

1044
00:50:34,880 --> 00:50:37,160
Speaker 1: What are you seeing with risks with silver Gate? And

1045
00:50:38,040 --> 00:50:41,960
Speaker 1: I guess frame that up. Yeah, So I mean I

1046
00:50:42,080 --> 00:50:45,239
Speaker 1: really I was aware of silver Gate and their role

1047
00:50:45,280 --> 00:50:48,480
Speaker 1: in the kind of the bitcoin crypto ecosystem dating back

1048
00:50:48,520 --> 00:50:51,160
Speaker 1: to one uh. There it was kind of big news

1049
00:50:51,200 --> 00:50:53,160
Speaker 1: because they were, you know, a FED member bank that

1050
00:50:53,360 --> 00:50:57,440
Speaker 1: was giving clatteral lized loans to micro Strategy and Marathon, um,

1051
00:50:57,520 --> 00:50:59,879
Speaker 1: some big public names. Right. It was the first FED

1052
00:51:00,040 --> 00:51:03,400
Speaker 1: member bank to to extend USD credit against bitcoin collateral.

1053
00:51:03,440 --> 00:51:06,080
Speaker 1: Like that's obviously a big story. Aside from that, like,

1054
00:51:06,480 --> 00:51:08,759
Speaker 1: they had a really dominant role in the crypto ecosystem,

1055
00:51:08,800 --> 00:51:12,279
Speaker 1: the bitcoin ecosystem due to the Send Network s e

1056
00:51:12,480 --> 00:51:17,120
Speaker 1: N network silver Gate Exchange Network, that's what SCN stands for. Uh.

1057
00:51:17,200 --> 00:51:20,879
Speaker 1: And and really that was just crypto firms. Bitcoin firms

1058
00:51:21,160 --> 00:51:24,120
Speaker 1: could deposit to silver Gate and then transact with each

1059
00:51:24,120 --> 00:51:28,160
Speaker 1: other seven uh kind of on dollar rails, so similar

1060
00:51:28,200 --> 00:51:30,160
Speaker 1: to kind of a dollar stable coin, but not it

1061
00:51:30,280 --> 00:51:32,880
Speaker 1: wasn't a public ledger and and and unlike a stable

1062
00:51:32,920 --> 00:51:36,719
Speaker 1: coin like tether or even a USDC, this was in

1063
00:51:36,840 --> 00:51:40,160
Speaker 1: an account at a FED member bank, so so they

1064
00:51:40,480 --> 00:51:43,040
Speaker 1: you know, their deposits grew massively. I believe it was

1065
00:51:43,120 --> 00:51:45,719
Speaker 1: over tens of billions of dollars UH and and you

1066
00:51:45,760 --> 00:51:47,759
Speaker 1: know some of these seven of these exchanges that had

1067
00:51:47,840 --> 00:51:51,399
Speaker 1: trouble getting you know, official dollar rails like an ft

1068
00:51:51,640 --> 00:51:55,239
Speaker 1: X per se UH kind of leveraged silver Gates UH

1069
00:51:55,400 --> 00:51:58,879
Speaker 1: send network to do so and so UH. Post ft

1070
00:51:59,040 --> 00:52:01,800
Speaker 1: X collapse, there's been a ton of regulatory pressure. And

1071
00:52:01,880 --> 00:52:04,479
Speaker 1: that's when I really started to pay attention to them, was, Okay,

1072
00:52:04,560 --> 00:52:07,640
Speaker 1: what's their dollar rails? Because this is a massive fraud FTX,

1073
00:52:07,719 --> 00:52:10,520
Speaker 1: al amita what they were doing, the commingling of funds.

1074
00:52:10,560 --> 00:52:13,359
Speaker 1: This was a massive fraud. And it took about three

1075
00:52:13,400 --> 00:52:16,320
Speaker 1: to four minutes for me to just land on on

1076
00:52:16,400 --> 00:52:19,760
Speaker 1: silver Gate's website and you know, funny enough, uh FDx

1077
00:52:19,800 --> 00:52:23,160
Speaker 1: collapsed on the eighth right. I went on silver Gate's website,

1078
00:52:23,600 --> 00:52:25,759
Speaker 1: I believe in the ninth and I posted this and

1079
00:52:25,920 --> 00:52:27,879
Speaker 1: on the main page they didn't even delete it yet

1080
00:52:28,200 --> 00:52:31,279
Speaker 1: was a quote from SPF saying, like silver Gates really

1081
00:52:31,320 --> 00:52:34,719
Speaker 1: revolutionized the role of for for for blockchain companies. It's

1082
00:52:34,760 --> 00:52:37,360
Speaker 1: it's made this all so much easier, UM and so.

1083
00:52:37,560 --> 00:52:39,719
Speaker 1: And I look in you know, silver Gate connects all

1084
00:52:39,719 --> 00:52:43,040
Speaker 1: of these counterparties through this send network. UM so. I

1085
00:52:43,120 --> 00:52:45,239
Speaker 1: mean since then, the shares of silver Gate or down.

1086
00:52:47,040 --> 00:52:50,280
Speaker 1: Um they're down nine percent from the all time highs

1087
00:52:50,840 --> 00:52:52,800
Speaker 1: uh And I don't really know how it resolves. I

1088
00:52:52,880 --> 00:52:55,640
Speaker 1: just know that there's been a big run on their deposits, right,

1089
00:52:55,719 --> 00:52:57,759
Speaker 1: so they've had to sell a lot of their their

1090
00:52:57,800 --> 00:53:01,239
Speaker 1: bond and securities portfolios to stem that run. They now

1091
00:53:01,320 --> 00:53:03,759
Speaker 1: have more excess cash than they do crypto deposits. So

1092
00:53:03,800 --> 00:53:06,480
Speaker 1: I don't think like an insolvency is around the corner

1093
00:53:06,560 --> 00:53:08,920
Speaker 1: per se. But what I do think is going to

1094
00:53:09,000 --> 00:53:12,600
Speaker 1: really intensifies the regulatory pressure, right not just for Silvergate,

1095
00:53:12,640 --> 00:53:14,960
Speaker 1: but also like say a signature bank. There's like really

1096
00:53:15,000 --> 00:53:18,120
Speaker 1: the only two crypto banks UH for for US UH,

1097
00:53:18,320 --> 00:53:21,640
Speaker 1: for US companies that that worked with US crypto firms

1098
00:53:21,680 --> 00:53:24,479
Speaker 1: at scale. And due to just like the Alameda ft

1099
00:53:24,760 --> 00:53:27,600
Speaker 1: X money laundering situation, I think that the you know

1100
00:53:27,840 --> 00:53:30,440
Speaker 1: a m l Anti money laundering and you know, the

1101
00:53:30,560 --> 00:53:33,239
Speaker 1: the bank regulators are really going to clamp down hard here.

1102
00:53:33,600 --> 00:53:35,960
Speaker 1: So I mean I don't have a you know, bullish

1103
00:53:36,040 --> 00:53:39,320
Speaker 1: or bearish view on silver Gate stock here disclosure like

1104
00:53:39,360 --> 00:53:41,799
Speaker 1: I was short at the stock, I'm no longer um.

1105
00:53:41,960 --> 00:53:44,160
Speaker 1: But but yeah, I think that's just an interesting story

1106
00:53:44,200 --> 00:53:46,680
Speaker 1: from a crypto native liquidity standpoint, is that there's only

1107
00:53:46,760 --> 00:53:50,560
Speaker 1: so many dollar rails here on ramps, off ramps and

1108
00:53:50,760 --> 00:53:54,280
Speaker 1: at silver Gate you know Serves, Circle, coin Base, Gemini

1109
00:53:54,440 --> 00:53:57,080
Speaker 1: like all of these big names use silver Gate at

1110
00:53:57,160 --> 00:54:00,480
Speaker 1: least partially for their dollar on and off ramps. So uh,

1111
00:54:00,560 --> 00:54:02,600
Speaker 1: depending on what happens there, that could have an impact

1112
00:54:02,680 --> 00:54:04,759
Speaker 1: on the on the crypto NATed liquidity. So I don't

1113
00:54:04,760 --> 00:54:06,360
Speaker 1: have a strong stance of how it resolves, but I

1114
00:54:06,360 --> 00:54:10,239
Speaker 1: think it's something worth watching. Yeah. Uh if we put

1115
00:54:10,360 --> 00:54:12,719
Speaker 1: that aside, I mean, what what happens with silver Gate

1116
00:54:12,880 --> 00:54:14,800
Speaker 1: and uh do they stay in business or not? The

1117
00:54:14,960 --> 00:54:16,839
Speaker 1: stock go up down whatever, put that at the side.

1118
00:54:16,920 --> 00:54:19,759
Speaker 1: But if they were to go down, what does that

1119
00:54:19,840 --> 00:54:22,920
Speaker 1: have effect on bitcoin? If any? Uh? Yeah, So I

1120
00:54:23,000 --> 00:54:27,040
Speaker 1: mean there's uh really There's one one thing I think

1121
00:54:27,080 --> 00:54:28,759
Speaker 1: of is that you know, micro Strategy has a two

1122
00:54:29,120 --> 00:54:32,200
Speaker 1: million dollar bitcoin collateralized line of credit with silver Gate. Uh,

1123
00:54:32,320 --> 00:54:34,320
Speaker 1: silver Gate doesn't hold the collateral, so it's not like

1124
00:54:34,360 --> 00:54:39,239
Speaker 1: it's gonna be a force force sell, but it would potentially,

1125
00:54:39,680 --> 00:54:41,719
Speaker 1: you know, there would be maybe a call of of

1126
00:54:41,880 --> 00:54:44,799
Speaker 1: margin or a call to to to pay off that loan.

1127
00:54:44,880 --> 00:54:47,480
Speaker 1: I'm unsure. I can't speak with with certainty of of

1128
00:54:47,560 --> 00:54:51,680
Speaker 1: how the loan documents work there, but that's a potential.

1129
00:54:52,120 --> 00:54:54,840
Speaker 1: I know that that USDC, who has like eight or

1130
00:54:54,920 --> 00:54:58,080
Speaker 1: nine banks but banking partners, but one of one of

1131
00:54:58,160 --> 00:55:01,239
Speaker 1: their relationships is with silver Gate, so is potentially, uh

1132
00:55:01,520 --> 00:55:03,719
Speaker 1: some some risk there. I mean, again, I'm not saying

1133
00:55:03,760 --> 00:55:06,480
Speaker 1: that USDC is unsafe, but I just think that you know,

1134
00:55:06,760 --> 00:55:08,520
Speaker 1: it would put it would just kind of be another

1135
00:55:08,600 --> 00:55:11,440
Speaker 1: problem for a lot of these crypto company companies, and

1136
00:55:11,600 --> 00:55:15,200
Speaker 1: specifically the unregulated ones. Right. So we we've seen that

1137
00:55:15,280 --> 00:55:18,400
Speaker 1: silver Gate, uh and and and say even Signature right

1138
00:55:18,640 --> 00:55:22,759
Speaker 1: have serviced Binance on and off ramps for dollars through

1139
00:55:22,840 --> 00:55:25,560
Speaker 1: like Shell Corps. Right, So they have a different name

1140
00:55:25,719 --> 00:55:28,759
Speaker 1: than than Binance because they're not a US institution, but

1141
00:55:28,880 --> 00:55:31,320
Speaker 1: they've you know, accessed dollar rails, same with like Huabi

1142
00:55:31,400 --> 00:55:33,960
Speaker 1: and other names. So who knows how many you know,

1143
00:55:34,040 --> 00:55:38,600
Speaker 1: crypto crypto relationships they have disclosed. They're not underneath the surface,

1144
00:55:38,840 --> 00:55:40,360
Speaker 1: and so if they blew up, like I don't know

1145
00:55:40,400 --> 00:55:43,439
Speaker 1: if it would have an immediate impact on the bitcoin market.

1146
00:55:43,520 --> 00:55:46,240
Speaker 1: Right bitcoins a three hundred four hundred billion dollar asset.

1147
00:55:46,520 --> 00:55:49,400
Speaker 1: Silver Gates market cap is like less than a billion,

1148
00:55:49,719 --> 00:55:51,759
Speaker 1: So it's not like a massive, massive thing at this

1149
00:55:51,800 --> 00:55:54,319
Speaker 1: stage in the game, but just certainly, you know, something

1150
00:55:54,440 --> 00:55:57,520
Speaker 1: just maybe keeping the back of the mind. Yeah, yeah, good,

1151
00:55:57,640 --> 00:55:59,520
Speaker 1: well man, we walked through a whole bunch of stuff.

1152
00:55:59,560 --> 00:56:02,080
Speaker 1: I feel like we've done a pretty good job there.

1153
00:56:02,400 --> 00:56:03,919
Speaker 1: I want to just kind of circle back to where

1154
00:56:03,920 --> 00:56:05,360
Speaker 1: we started at the beginning and talking about this the

1155
00:56:05,600 --> 00:56:08,919
Speaker 1: big fed kind of macro Outlook, you threw out something

1156
00:56:08,960 --> 00:56:12,000
Speaker 1: I didn't ask you out, but you said, uh you

1157
00:56:12,239 --> 00:56:16,320
Speaker 1: you you you mentioned the SMP going down to three thousand.

1158
00:56:16,640 --> 00:56:18,879
Speaker 1: We're at about four thousand now, going down to about

1159
00:56:18,920 --> 00:56:23,480
Speaker 1: three thousand. Is that you're charted kind of a case

1160
00:56:23,600 --> 00:56:26,719
Speaker 1: of where you think it could go to this year? Uh? Yeah,

1161
00:56:26,760 --> 00:56:28,520
Speaker 1: I mean I I think that's certainly in the realm

1162
00:56:28,560 --> 00:56:31,680
Speaker 1: of possibility, probably more so than market participants expect um.

1163
00:56:32,239 --> 00:56:34,399
Speaker 1: I think that would that be would that be your

1164
00:56:34,520 --> 00:56:38,239
Speaker 1: base case? Like above fifty chance that that happens. It's

1165
00:56:38,280 --> 00:56:39,919
Speaker 1: a tough question mark, you're putting me on the spot.

1166
00:56:40,320 --> 00:56:42,319
Speaker 1: Uh yeah, I think I think we see a thirty

1167
00:56:42,320 --> 00:56:45,799
Speaker 1: two at least UM, and maybe not even in three UM.

1168
00:56:45,920 --> 00:56:48,279
Speaker 1: One of the things that I've been pleasantly surprised with

1169
00:56:48,440 --> 00:56:51,040
Speaker 1: is how strong and resilient the economy has been to

1170
00:56:51,080 --> 00:56:53,000
Speaker 1: the rate hikes. But in terms of you know, if

1171
00:56:53,000 --> 00:56:57,440
Speaker 1: you just think about the pricing of of stocks, right, um,

1172
00:56:57,520 --> 00:56:59,840
Speaker 1: whether you look at you know, market value to g

1173
00:57:00,080 --> 00:57:06,439
Speaker 1: DP historically over over bloated, overvalued in two UM, that's

1174
00:57:06,480 --> 00:57:09,480
Speaker 1: reset a bit, but it's still historically overvalued in uh

1175
00:57:10,160 --> 00:57:13,359
Speaker 1: historical measures, and so something like that. I think really

1176
00:57:13,360 --> 00:57:15,319
Speaker 1: the only thing that's been discounted in equities has been

1177
00:57:15,360 --> 00:57:19,240
Speaker 1: the discount rate. Right. Earnings haven't really been revised lower

1178
00:57:19,320 --> 00:57:21,840
Speaker 1: at all. If we see a recession, that will happen.

1179
00:57:21,880 --> 00:57:24,280
Speaker 1: And also credit standards, right, So if you just think

1180
00:57:24,320 --> 00:57:26,520
Speaker 1: about one of the biggest drivers of the bull market

1181
00:57:26,640 --> 00:57:30,520
Speaker 1: for the last ten twelve years, then debt finance corporate buybacks. Right,

1182
00:57:30,640 --> 00:57:33,120
Speaker 1: So if that's done, if the boomers are retiring and

1183
00:57:33,200 --> 00:57:36,240
Speaker 1: forced to liquidate, right, like two was the line in

1184
00:57:36,280 --> 00:57:39,640
Speaker 1: the sand for the boomers actually crossing the threshold of

1185
00:57:39,800 --> 00:57:43,840
Speaker 1: average retirement age the biggest generation in history. So are

1186
00:57:43,880 --> 00:57:46,240
Speaker 1: those boomers now and that buyers or sellers of equities

1187
00:57:46,240 --> 00:57:48,160
Speaker 1: as they're retiring, right, So these are all things that

1188
00:57:48,200 --> 00:57:50,440
Speaker 1: I think are more structural. I don't you know, I

1189
00:57:50,520 --> 00:57:53,000
Speaker 1: think making a call with a specific number line in

1190
00:57:53,080 --> 00:57:55,840
Speaker 1: the sand is like, is you know, not something that's

1191
00:57:56,040 --> 00:57:59,680
Speaker 1: you know, it's it's tough to do, right, But I'm

1192
00:57:59,720 --> 00:58:03,880
Speaker 1: not uber uber bullshe with SNP at fourth thousand, I'll

1193
00:58:03,880 --> 00:58:06,120
Speaker 1: say that you throwout the number three thals and I

1194
00:58:06,200 --> 00:58:08,480
Speaker 1: was just circling back to that. That just for frame

1195
00:58:08,520 --> 00:58:11,160
Speaker 1: of reference, that's about where we were in twenty nineteen

1196
00:58:11,600 --> 00:58:13,440
Speaker 1: in uh so we'd kind of go back to a

1197
00:58:14,160 --> 00:58:15,840
Speaker 1: level we kind of sat there for most of the year.

1198
00:58:16,280 --> 00:58:18,200
Speaker 1: Um In reference to what you were just saying about

1199
00:58:18,320 --> 00:58:20,360
Speaker 1: our you know, the baby boomer generation, the largest secment

1200
00:58:20,400 --> 00:58:23,280
Speaker 1: of the population. They're all retiring. Will they be been

1201
00:58:23,320 --> 00:58:25,440
Speaker 1: net buyers or net sellers? Will The answer is, actually

1202
00:58:25,440 --> 00:58:27,240
Speaker 1: they'll be net sellers because if you go back to

1203
00:58:27,360 --> 00:58:29,800
Speaker 1: a law that was passed in the nineteen seventies, which

1204
00:58:29,960 --> 00:58:33,120
Speaker 1: is called ARISA, which is basically allowed people to put

1205
00:58:33,200 --> 00:58:36,240
Speaker 1: money into their pensions but they have to start selling

1206
00:58:36,360 --> 00:58:39,760
Speaker 1: them when they retire so that the government can now

1207
00:58:39,840 --> 00:58:41,480
Speaker 1: recoup that tax dollars. So they were able to put

1208
00:58:41,520 --> 00:58:44,040
Speaker 1: money in tax free. The government knew that they would

1209
00:58:44,040 --> 00:58:45,840
Speaker 1: have to sell, and then they get the tax dollars back.

1210
00:58:45,840 --> 00:58:48,520
Speaker 1: So there will be they're they're forced to sell, uh,

1211
00:58:48,560 --> 00:58:50,440
Speaker 1: And they're certainly not buyers, right, They're gonna be moving

1212
00:58:50,440 --> 00:58:51,880
Speaker 1: out of the market. They're forced to sell. They're not

1213
00:58:51,880 --> 00:58:53,960
Speaker 1: gonna be buyers. So I think there's gonna be massive

1214
00:58:54,000 --> 00:58:57,920
Speaker 1: downward pressure from that law. Unintended consequence of government intervention

1215
00:58:58,280 --> 00:58:59,920
Speaker 1: in the seventies is gonna come home to us now.

1216
00:59:00,360 --> 00:59:03,920
Speaker 1: And then with the interest rates so high, these corporations

1217
00:59:03,920 --> 00:59:06,400
Speaker 1: are gonna have a very hard time rolling over debt

1218
00:59:06,520 --> 00:59:09,480
Speaker 1: and getting in getting financing at all. And over the

1219
00:59:09,560 --> 00:59:12,320
Speaker 1: last couple of years, the majority of the stock buybacks

1220
00:59:12,320 --> 00:59:14,320
Speaker 1: were being done with cheap, cheap access to credit exactly.

1221
00:59:14,520 --> 00:59:16,680
Speaker 1: And so you take away the cheap acts to credit,

1222
00:59:16,760 --> 00:59:19,080
Speaker 1: then the then the buy backs go away, and then

1223
00:59:19,160 --> 00:59:21,680
Speaker 1: you have the force selling from the baby boomers. There's

1224
00:59:21,680 --> 00:59:23,880
Speaker 1: a lot of downward pressure on stocks. I don't see

1225
00:59:24,480 --> 00:59:26,880
Speaker 1: where the upward pressure is gonna come from. And so

1226
00:59:27,080 --> 00:59:28,640
Speaker 1: I think that's gonna be a big trend to follow

1227
00:59:28,680 --> 00:59:30,600
Speaker 1: for sure. Yep, I think you nailed it on the head.

1228
00:59:31,000 --> 00:59:32,840
Speaker 1: The biggest biggest trends for me in terms of equity

1229
00:59:32,880 --> 00:59:37,000
Speaker 1: markets in three two was the year of duration. Right,

1230
00:59:37,280 --> 00:59:41,320
Speaker 1: yields repriced higher, the valuations repriced lower. I think three

1231
00:59:41,400 --> 00:59:44,280
Speaker 1: the story it's earnings. We'll see how that, how that

1232
00:59:44,400 --> 00:59:47,120
Speaker 1: plays out, and maybe that goes into four. And also

1233
00:59:47,760 --> 00:59:50,919
Speaker 1: we have credit standards, right, so credit, credit spreads, credit risk,

1234
00:59:51,520 --> 00:59:54,200
Speaker 1: these are the things that really equity markets today have

1235
00:59:54,400 --> 00:59:57,240
Speaker 1: not experienced in the last in the last two decades,

1236
00:59:57,280 --> 00:59:59,520
Speaker 1: and so you know, if it comes throost, then you know,

1237
00:59:59,560 --> 01:00:02,560
Speaker 1: the pressure certainly remains skewed to the downside. Yeah, the

1238
01:00:02,720 --> 01:00:06,160
Speaker 1: one benefit that they might have is that inflation is

1239
01:00:06,160 --> 01:00:09,480
Speaker 1: gonna push up their earnings and it's gonna it's gonna

1240
01:00:09,520 --> 01:00:11,640
Speaker 1: look like maybe maybe that might help them a little bit.

1241
01:00:11,680 --> 01:00:15,439
Speaker 1: We'll see. But anyway, man, Dylan, we've covered so much.

1242
01:00:16,120 --> 01:00:18,200
Speaker 1: I think we've we've hit it all, starting with a

1243
01:00:18,240 --> 01:00:20,320
Speaker 1: big picture and kind of diving all the way down

1244
01:00:20,720 --> 01:00:23,280
Speaker 1: into kind of bitcoin risk assets and and back out

1245
01:00:23,320 --> 01:00:26,200
Speaker 1: to Dylan's prediction of where the market's going. I'm just kidding.

1246
01:00:26,560 --> 01:00:29,400
Speaker 1: We won't put that out but anyway, man, I appreciate

1247
01:00:29,440 --> 01:00:32,320
Speaker 1: it so much. Uh, you can check them out Dylan

1248
01:00:32,840 --> 01:00:36,160
Speaker 1: Leclair Underscore on Twitter and you certainly should give him

1249
01:00:36,200 --> 01:00:39,120
Speaker 1: a follow. Um anything else we missed, I think we

1250
01:00:39,240 --> 01:00:40,880
Speaker 1: covered it all, Mark. This is a good written man,

1251
01:00:40,920 --> 01:00:43,720
Speaker 1: A lot of a lot of action packed our Yeah. Well,

1252
01:00:43,760 --> 01:00:45,720
Speaker 1: thanks so much for joining me man, always a pleasure.

1253
01:00:46,160 --> 01:00:48,320
Speaker 1: Uh look forward to seeing you sometime soon. And with

1254
01:00:48,440 --> 01:00:51,000
Speaker 1: that we'll go ahead and sign it off. Cheers. That's

1255
01:00:51,000 --> 01:00:52,400
Speaker 1: what I got. Thanks so much for listening.