Bits + Bips: Ethereum and Solana ETFs and Why Crypto Is Poised for a Breakout - Ep. 668
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Think is very interesting what's happening on the long rates on basically, uh, long rates, uh, a bonds with very longer the longest maturity or duration. So basically right now, its rates are uh, ruling quite i'm so it's a sponsor. Our tanking has been very significant move today.

We have what is IT the third year of futures now, uh, one point six percent. That's a rather very large move and do not think is a coincidence. I think this is basically being driven by this is the trump trade and european, uh, trade on basically a little right, taking over politics and the and the market getting concerned about fiscal responsibility lies.

Hi everyone, welcome. The bits of bits expLoring how cyp t to a macro o collide one basis pointed a time. I'm your most James safe try fy archives.

Ter, lord of bloomers and i'm here with the joba can ord matter of asia metric and master book. We're here to discuss the latest stories in the world's cypher mro news. Just remember nothing we say here as investment voice check on cyp to dock com slash bits and bits for more dislosure.

Yes, we're missing alex this week um so it's it's the worst. It's a holiday week is your life forth week it's going to to be relatively short pog gas. But apparently alex, our argentine friend is is celebrating july for little early. So we're going to have to do this .

one without classic argentinian. We love you, alex. Just getting yeah I mean, so there's honestly.

there really hasn't been much for us to discuss your everything kind of happened that we had a lot of stuff to talk about last time we I think we went that was our longest episode yet and we probably could have kept going for another thirty minutes.

Want to well, no, James, there is one thing, one thing that happened last week. Do you have any idea what that one was .

that you said? We are going to a get a sona eat of.

I'm just taking a small Victory lap. C and now um look um yeah that there's loney. T F I mean, um I think about a month ago when we were doing the pot, I I I had disappoint that sona would probably be next.

Now granted, to be clear, we were talking about the approval. Um we weren't talking about necessarily just the filing. But can you have to give the back story on on what happened last week with with van twenty one shares and we can dive in from there.

So we're recording this on monday, july first or so. We time stay up in case something changes by the time this goes out. But vanek, uh drop the surprise filing um a perspective document known as an s one for a salona trust etf. Um so van act basically is throwing in their their hat in the ring to launch hopefully the first solar et that was thursday um on friday the next day um twenty one is actually failed to launch their own.

So on a etf, that said, there are some nuances here, right? Well, so first of all, this, as far as I concerned, is a call option on trip in the elector, right? So this is, this is a bad that if trumps the election, he's going to have somebody.

Dcc, this can be much more favour to cyp to, we can talk about and going to the Kitty, greedy weeds of what that means down the line. But the one thing I do want to say is these s one documents do not start the clock. So every time we told these E T S, we have these deadlines, these dates of when the S T S.

To respond and ultimately that make a decision. Um this clock is not started with the s ones. The s ones is basically what those theory mt.

S was talking a bit are going through right now. The nineteen before documents are what these issues, the partner within exchange and no file, those once those are filed, the S S C, accept them. That's when the clock starts.

So assuming like even if they filed today, the final deadline for this one etfs is going to be some time on march seventeen, eighteen, the range. So we're still looking at a ways out before we even get a final deadline. That said, we haven't even had a filing for the ninety before. So both of these guys, um I believe that we listening A C V. So we'll see some sort of fing most likely over the coming days or weeks, I guess if they really think this is possible, but time will tell.

Do you think you know that the argument has been made around any of these uh crypto E T S bacon in theory um needing a um I know a futures market like on the C M E. And I think van x argument was that it's actually not actually necessary but thus far IT feels like that the clear path. And so although and maybe you can share a little bit about more about what this means, but although you may not necessarily need to have a futures market on the C M. A to large a spot, um IT feels like that kind of what's necessary yeah I mean.

we I tend to actually agree so I was math van head of had of research uh or digital research to be specific and he basically said focusing on needing a regulated futures market is dumb literally what he said twitter are stupid, he said used the were stupid. There's plenty of examples of ets that don't have that type of situation that hold commodities and digital and other type of assets.

Um you don't have a regulated futures market for them to survey. So that's a good point to make. The problem is, as you said, like the president that has been set over the last over decade now eleven years or so, the HTC has been the dying these it's first of his big in etf, but they're been denying or accepting etf, stating the need for an underlying regulated market.

They were saying of significant size for a long time. Um when they approved the big one etf, they basically said the cm is not of significant size but the courts are forcing them and the same reason refusing the ethie etf that there's enough correlation there for them to detect what's going on. So the C M E is regulated by the C F T C, which is H S C C sister agency.

So right now, the only way that we know of getting this through that, at least this current S C C administration, as as you said, like the steps, go launch uh, C M E or launch cftc regulated future market, allow that market to build a history, volume, open interest, all these things you need to make sure that IT has enough correlation and there's enough but um actually going on there. Then you launch a futures etf based on those futures and then all the certain the S C sees back into corner and they kind of have to approve spot tip that would happen with theory this what have a bitcoin but theoretic ticket, you don't need that. Um we saw with black rock filing for the big que T F last summer, the reason why we got um basically bullish in the possibility was something that actually denied the matter.

They they said they were gonna a surveilLance agreement with A, A north american cyp to exchange in that case had never been coin base. And in our view at the time was that should be enough to satisfy the S, C, C, S. Concerns if the futures market isn't enough, having the futures market in termination with the surveilling sharing agreement with coin base, that should be enough, right? So I in my mind like if they can get surveyed chairman grins with coin base with crack in, uh, bias.

Now that is basically comply to under control the federal government. There's all these things that like yeah that makes sense, that should build to get some more of these assets. The problem is, one, the S C C is actively claiming a lot of to be a security, not one .

minor hang up.

Yes, there are also there also in active litigation against uh coin base and crack in and now matter mask would be consensus via matter mask. So there they're still like not okay with all this does. So basically my view is like this is in happening unless an active congress comes in and gives us a market structure.

Bill for twenty one isn't getting through the way it's currently structured as far as I understand. Or you get a completely new admin trump in the election and put somebody is so prytany that this happen in march. So I am I still think it's unlike even a trouble wins.

I think it's unlike good happen in march. But the trouble wins, I think twenty, twenty five is on the table depending on what he does at the S. C C.

That said, when gary ginza was going to the S. C, C, I was like, I we're definitely getting big on etf. The student teaching block shade I M, I, T, so will be set.

So I I won't hold my breath. anything. There's a lot of things that still need to happen, but obvious.

I mean, a lot of people i've seen the galaxy referred to as long as the third chain, I think it's pretty evident that it's basically become bitcoin a theory. And then salon is is the third chain as far as i'm concerned. I tend to agree with that.

But so IT makes sense. This would be them trying to get another etf and why not why not push the envelope? Why not try to have a conversation with the S C.

About IT? Well, look, I mean, I don't have to tell you the etf pro how how these asset managers and issues make money, right? You continuing to launch new products is a very, very valuable business. And a your black rock has has come out and said that they they plan on token nizing everything. And so if the worldling's asset manager has that view, it's not a to see the potential first laf, which is why I had this view back in may.

And a lot of IT has to do with what i'll repeat, which is that a lot of folks and trade fy, have they kind of either worth able to invest in cyp T A cycle and or just flat out missed theoria. And whether people like you or not, people see salona as a potential catchup trade on a relative value basis is and so if you look at like g soul, which is gray scales slater trust, I mean, I don't know if you can pull that one up the premium to nav on that instrument alone is, is I got A I mean, i'm not a etf. Sure probably never will be. But like if I look at the G, G, sol premium to nav and go, why don't we just try to launch our old T F, yeah. Look at this four .

hundred percent.

right? So do you think there's demand for this product, right? So you know and granted, like a premium business, not necessarily directly apply demand, but I mean, come on, right, you had big in a theoria. So your G P, T, C and eve e trading at significant discounts for quite some time.

And yes, there was always in basic strains involved in that you don't only have that option just yet with sana, I look at something like g so and and and the fact that the vanek has Frankly been bullish ed on sana for quite some time. I mean, they had a bullish call of a Price target of by thirty three hundred dollars or something. Know i'm not a huge fan of Price targets because obviously they just made up.

But like vanek is not some tiny little startup putting this type of information out there in the fact that they're putting wood behind the arrow of of being first to market with trying to get a sana a spot T F approved. I mean, IT feels again like I hate to say that seems like celano is the obvious choice into your point. Like you've got institutional uh, shops like galaxy and others that are who have likely made significant amounts of money off and finally kind of coming around to the idea that hey, like this, this chain isn't going away.

There's a lot of activity on IT. It's fundamentally different in the way that it's design in the types of use cases are very, very different than what you would end up with something gona serum or even you know bitcoin with the coin's layer two as well. And I think that's also evident from folks like G C R.

I mean the the post that G C R put out was um if a spot tf is approved, there's an eight point nine x potential increase in sonus Price right? Again you start talking to near the raw polls of the world who are big slab les have massive platforms with lots of people that are listening to him and his perspective. And you see things like G C R suggesting eight point nine x or van axing thirty three hundred dollars of token. It's not that difficult to see a world where people end up getting exposure to this. Just on the speculative nature of how high that they could actually go.

Yeah, I mean, just to put the numbers in perspective on what's going. So that thing has like seventy million dollars of the soul inside of IT. Um but right now, which trading is though that has five hundred and thirty million dollars inside of IT, that's of the premium means.

So those numbers are a little crazy. But yeah, I these these issues are they're going to try to launch and they are going to push the envelope. And I mean, honestly, if your vane or twenty one shares like you're up competing its black ck and fidelity, which are two of the biggest asset managers, not just in the U.

S, but just fly out in the world with like massive reach and you got to kind of push the envelope. If you want to compete with them, you've got to be first. Um right is lightly.

The S C C is basically been forcing everyone to launch at the same time. I suspect at some point that's gotto stop because that's not how they have handled all the things. Otherwise, theyve got to basically make IT part of their initiative or make IT stated that that's the way they are going to handle things going forward. That will be very interesting to see what they do. I don't think that's the right way because you're basically in one way I understand why they didn't allow the big conn theoria guys like for the big one E T S in the theory, I T S A large separately.

And I want to move the same time everyone have been trying to file IT makes complete sense, right? But at the same time, by making everyone go the same time, yeah, you're not picking a winner in the sense that you're not letting some random person go first and get all the money like today, but the process futures etf. But at the same time, if you're just letting black rock go at the same time as every other issue or like they have like that, just not fair, you're basically picking your winner that you're picking black rock, which is no shade the black rock.

I be good for them, but there's a lot of new ones here in the way they need to handle this. But I I think twenty, twenty five is a possibility with thump winning. I mean, after that debate, I don't know if you want to say about the day, but I mean, biden did did not, did not uh, give me any confidence in in instability to run the country. I think everyone is kind of in the same vote here or so if trump win and hold his promises right to to to be bullet crypto o and take care cyphered anything .

can happen in twenty twenty five I who knows I was on a podcast a couple years ago talking about the election and I kind of interview by position on this is like crypto pecked IT almost doesn't who is selected in my opinion because trop has clearly come out gigabit sh on trip to um and and all the sudden n has tapped into a let's call IT prevent online community a supporters and bh his real election team you know and I think his administration as well as has had two kind of one eighty on this topic.

Now sadly for almost crypt u that topic didn't come up at on the debate um however, I I do want to remind folks that you know the job of a politician is to either is to get elected and stay elected and so you know irrespective of your ethical views on trump, biden, like they will say anything to get elected like that is how IT works and in some cases, yes, they do need to follow through with certain aspects of what they ran on. And you you saw this with trump and his, you know, the folks that he got into the supreme court. You saw this who biden with some of his was called IT social identity politics and police.

I added the policies that he decided to to run on and and put into place. Does that mean they will follow through with that with cyp to who knows? You know, to your point, like when gary answer became the head of the S.

C C, we were like to do lita taught blockchain and M, I, T. Like, this is a slam dunk. And look what had happened. The belt way got a hold of him. And and before, you know, you know, he becomes a full bloom politician. So I do you think IT is worth mentioning you know the betting markets as well as like the meme coins associated with trump biden like look, i'm not going to take any political sides here, but I think it's hard to argue that brightened well during that debate. I mean, i'm trying to be really diplomatic but and trump is just, you know, so empathic liar so like, so he he looked healthy.

I'd like he would survey, would survive over years.

He lie a lot. I was another friends house watching the debate. I was, uh, and we kind of created a drinking game, whatever.

No truck does one of these of his hands gonna drink. But like we were we were drunk with they like eight minutes. Just kidding.

Um but uh, no, look, I I was looking at the T V going like so you have you are options are like a elusive, cogent sociopaths and like a translucent cadover like that's what IT felt like. And I know that mean and aggressive you guys can beat me up in the comments or whatever. I just couldn't believe what I was watching, but that's where we're at.

And so what does this mean from like the markets perspective? Because that to me is kind of the ultimate arbiters of of what matters matters in terms of like the potential outcome, right? So the bedding markets now have biden pluming at a nineteen one nine percent chance of winning.

Tromp is in the mid fifties, and you see folks like Gavin newson and even Michelle ama rising in the ranks in terms of the potential for them to actually we win the election. But was also interesting to me is that both the boat in and trump mean coins limited during during the debate. IT was kind of like a sell the news for both entities.

So I don't think the mean coins are actually uh, a strong signal. The betting markets on the other hand, I mean, at less, there is some unbelievable black magic that they've got cooked up with the bite election team. It's hard it's hard to currently see uh, him winning.

That being said, there's a lot of time between now and november and and you know if you look back to the twenty twenty to twenty sixteen, specifically twenty sixteen election, a lot of stuff changed in those, you know even like the last weeks heading up until until people went to the ballot. So I don't think this is a rap for either candidate. I think the bite administration has some work to do.

Clearly, I I do want to come out. This might be somewhat contrarian because everything i've seen in the media, whether it's stand traditional media, political media, so many people are talking about biden actually stepping down and having someone else come in. And I kind of like I walk through the game theory of this and i'm like, if you stepped down and the democrats lose, then they can blame the fact that, you know, uh, we should have state the course changing at the last minute was a bad idea if they win after him dropping, dropping out.

Oh, you know, this was we have a new trump slater and bite and put his country first. You could just see how they could spin this type of stuff. But I think what's more important is, is the idea that the folks that are in bitten orbit, so whether that's his family is his staff and his administration eeta, like D, C, is about power, and they are closest to the most powerful on the planet.

And you tend to not tell that person to step out of a position of power. So I don't actually believe, barring some like clear, you know medical reason, I don't see bite and stepping down. And I could be dead wrong about this.

There are there are obviously path to him stepping down, but I just don't think that's how it's going to work. This is his legacy. This is what he's wanted his entire career, his wife is sharing him on his family and his administration are all still saying, you know, stick IT out. You're gona win at at at a um what does that mean for cyp to I don't know again, I get back to the fact that politicians are just going to end of saying whatever they have to to get elected.

The at new york times, I think, came out like today that I saw basically said that his fair he was with his family at camp David over the weekend and they were like encouraging him to stay in the racing still today. So I mean, this was just going, who knows what going to happen? But they have like, I think, five weeks until democratic convention, sometimes in early August. So I don't know that I I, I can't imagine being like Gavin news, so being like yeah i'm onna jump in with like three months to put together a campaign like he's thinking I might have shot in like twenty .

twenty eight exactly I would .

I jump into a race words like I have I know yes exactly .

I mean yeah I imagine imagine your anybody that's gonna potentially step into the role for and you're going up against trump whose whose leading in the majority of the polls even though it's you know thin margin.

What you're going up against trump and now all the sudden like you're going to put your political career at risk um because you would be the the guy or gal that got you know that lost to trump when you were supposed to step information and a big kind of like the cheerly the person that saves democracy in the country, right? That being said, there's still some ef news that we have to discuss. And that's the that's the a theory etf update. So what happened, James?

Yeah I mean, maybe maybe next time record this in two weeks. Uh, i'll have Better news. Um essentially what happened is nothing happened.

The S, C, C, took forever to get back to issue as they had they given a deadline or him exactly what the deadline was um and uh the S C C just took forever to get back with comments IT sounds like there is gonna another round of comments on those s ones. The same type of documents that we just offer, alona, they are dealing with the division of corporate finance. And um I wouldn't say they're like going really slow.

It's just that there's there's no urgency. So this is probably going a little fashion than I would Normally go for a Normal type of etf launch like this. For the most part, you line up the ninety before and last ones way, we did a pickin, which is why there's an indication that this wasn't exactly planned.

Um but nothing has happened and I they're not onna do IT this week. There's no way I I we haven't seen enough movement. Um they're not to launch during a holiday week even if you looked at the big one.

E T S, they did. I don't think they wanted to launch them on a friday or monday. They want to launch a midweek.

So they launched them on thursday. So the odds of IT happening this week or slim the nun, honestly, I was thinking the week of the eight. So that's next week.

Um IT might not even happen that that might be when everything is finalized and then they launched the week immediately following. I'm very confident in saying these things are almost certainly going to launch in july. Um it's just a matter of when in july.

And I mean, gazer came out instead like things are going smoothly with the thr m etf process and whatever that means. But I think it's just like things you're just going according to plan and they're likely launch sometime. I'll say I think I will launch early the week of the fifteen th.

I believe IT is, but there's a possibility they could launch in the who knows exactly was onna happen. Um that sounds like there's at least one more round of comments at the s that these issue is are going to have to respond to from the S C, C. Update their dog, submit them again. And if this S C C takes another weekend, I have to get back to them. Then we're looking into the week of fifteen properly but you know .

I don't know of you you uh you you seem to be like the the the E S P N sport center of etf going to ask you have one here. Has there's been uh or can you recall all a relatively high profile ef that launched on a holiday week or that actually ever really matter?

Um no yeah sometimes they do a lot of times. So people a lot of times you you actually see a bunch of etf launch like right between Christmas and new year's, which seems like an awful time to launch. But if you're not expecting like immense demand and whereby your first day you might want to have that tracked word for year to day and stuff like that, so is there are some benefits to doing that.

So people try to game the system. Um and honestly, if if they do give them to go ahead, they are gonna launch this week. I not gona happen. Um so what I mean I mean you can look at the markets today. I was pretty frickin sleepy as far as i've concerned.

Um yeah so I there's just no indications ready to go though honestly, this situation is like unique, like for the most part, like you get the nineteen before or approval and then you go sometimes they mostly their find up over the big que t if they are lined up. In many cases, they are lining up because the s one isn't like super complex or unique asset in the case of like hash decks is product IT took a months between getting the nineteen before buu and actually listing. Um so there's a lot of new on here and exactly what is that isn't going to happen.

But I mean, who knows? Well, we'll see what happens. It's it's not very exciting.

It's not sexy. Well, I I I always thought I was I was a little bit of a stretch to launch IT on you ahead of a holiday. We especially with the holiday being on thursday, july forth. Yet that doesn't stop the non foregone payroll from coming out until I five, uh, were pivoting in the mro. If you guys couldn't tell that, that very obvious.

Same way why i'm bringing this up is um you know as we talk a little IT about the the macro landscape, um the non form payroll comes out um you know the first friday every month just happens to be the day after the U。 S. Independence day, july four, which is on thursday and been chatting with no my head of trading and other folks in the space that they have a post on mro.

And there could be some pretty wild volatility on friday across markets because, let's be honest, those guys and gals are not down on wall street. They they're in connecting in in out of the hamptons on friday. And so um when the number comes out, if it's you know, I think I think the estimate is like a hundred and ninety one k or something to that effect. Um if that thing comes in light, uh, meaning below estimates, um I think you're going to see you know the potential for rate cuts to come up significantly higher potentially in july.

I am i've gone on record saying I think there's a non zero chance of july is a slim chance but nfp could absolutely influence that that decision especially if if it's a huge man um but I did more importantly, uh we we were talking about the James like we're start to see a september rate at you know move on up in terms of the the odds of IT actually happening. I think it's roughly like sixty to sixty one percent something that of fact and this is important because, uh you know obviously I ve been pound of the table les saying I think great cuts are coming. Uh, I think I think there will be two this year potentially end up get A A maintenance out of fifty bps, which I don't think anybody y's really pricing right now.

But at a minimum, you gonna get twenty five and twenty five, uh, september in in december. And IT has a lot to do with some of the the economic and it's been coming out, right? unemployment.

Is that the kind of the one two pinch of the feds Mandate of the taming inflation to target level? And then employment, if that employment data continues to start to soften and as we've seen from employment data being revised lower, we talked about this last time, the last N F, P. Print that the headline number was huge.

But when you dig into the details, it's not as press IT may seem. And so I think, uh, the market is coming around to the idea that the fed actually wants to cut and they're starting to get potentially economic dated to support that sort of thing. And you're seeing IT in the futures markets.

yeah. I mean, the futures markets right now is great. I have the image up if anyone are watching on youtube, they're like sixty to sixty nine percent chance of cuts september.

Honestly, economy make sense. Like as you said, employment seems to be softening a little bit. Inflation is definitely be softening um in the way that these like monetary policy things work.

I mean, what if what is a long and variable lags like this? The stuff that's causing the market to do what it's doing now is not like the is not like anything. The fed is done recently.

It's like what the fed did a year ago. So like if if if the market the economy is actually softening and slowing, like I don't see any reason in waiting to cut. Like it's not like cutting twenty five basis points are going to cause like the market to heat up and we're going na have inflation blow up.

I'm none of a convivially ly after tf analysts, but um I tried to pay attention to this stuff and it's just like I don't see any reason to wait and honestly and and I think you were one of the first people I know saying that you thought you were going to see a cut september um and till I was in off the table. So september obviously is becoming more and more more more likely um and obviously will see what the data shows over the next two to three months. But um i'm in the camp that I think we might were probably likely to see a twenty five basis point in september. I think our rates strategies here, a blogger are expecting the first one to come in, in november.

So yes, I will look I mean, kind of tacking on to that. We talked about the U. S.

Election, but there was an election across the pond in in france that was actually pretty important. And he gave me a lot of like black backs to bracket what was happening in the U. K. Years ago. So um many of the crown ended up, I think, just getting decimated in this election uh, by a popular candidate, the pen.

You know you can kind of uh i'm certainly not painting a one for one picture here of of kind of a trump like character but probably as closely you can get or at least aligned with a trump like character in france. And what was interesting today on monday, H, I guess in the overnight session as well, like you saw the euro actually strengthen. It's pulled back little bit as we're talking.

now. This is kind of interesting that you're seeing on the rise of a popular st candidate winning uh and the local called the local currency of you l the euro actually strengthen ing a against the U S. dollar.

And so for folks that have been involved in clipper for a long time, it's always prudent to track the dollar index because there's there's a pretty strong inverse correlation between, say, the Price of bit point and in the U. S. dollar.

And the dollar has been kind of hanging out that I should say, the dollar index around this kind of one of five fish level for quite some time. The the yen a continues to weaken. I actually thought I had top or see me, yeah, I thought I had had bottom, the the dollar and I was wrong.

I don't get them all right, James, but I genuinely thought a when the the bank of or when japan, the ministry finance h was was intervening a month than a half a month ago that this was kind of a done deal. No, we're now like the the lowest yen level since one thousand nine and eighties. And IT doesn't IT doesn't appear to be slowing down.

So I was dead wrong on that one. Um that being said, the fact that the euro is strengthening as well as the eu is cutting is has recently cut is like kind of interesting to me and I think this is something to pay attention to as release the U. S.

Election um what does that mean for the dollar if biden remains uh president? What does that mean for trap if he was to gain uh, the see to the White house again? I don't have a clear view on IT yet because I was a little surprise to see the euro strengthening against the dollar with a little pen Victory. Um I know what what are your thoughts, James?

Yeah I don't have a lot of complex stocks on IT. Just I just built as like a populist moving that's going on um and the right wing of the french politics which has been in power had any someones of power basics world or two is all the sudden rising again. Um so it's interesting.

And obviously, anything that's going on in currency markets are impacting anything that we're paying attention. so. It's fact. I don't I don't have anything complex add to what you said. Agree with I agree with everything you said though.

Yeah one thing I do you want to add is that is the first day of two, three. Yeah, we're halfway through the year. We we made IT thus far um and global quidd tends to increase in the summer time, which is q three. I think some are officially kicked off to twenty first.

Um but it's probably worth you know since it's the begin of q three talking about q tools performance, I can show you I am really paying attention to this yeah a couple of things that stood out to me um yeah q two and I would talk about this months ago on various podcast. Q two historical is the um the the worst quarter for bacon um since its inception. And you know you don't want to read too much into that, but IT played out the same way this quarter.

I think biton was down to over thirteen percent um a theory um was the bright spot only down single digits, I think five or six percent um but one thing that did kind of stand out to me as we were talking about sona at the a beginning of the of the episode is that they were down about twenty seven and a half percent or so for for q two um in which you know that includes the etf announcement um that includes a lot of the F T X uh a state sale of locks salona. So is some concerns about that. But what also really struck me was the mean coin book actually outperformed salona on a relative basis.

The master of everyone is bring up again. I just look.

last year I was on I guess was yeah was november of last year. I was basically saying my head to pick one as a trade for next year I would be bonover salona um just because I thought I was going to be more ba to salona IT turns out as less so this past quarter. And I don't think box is along with that.

I think there's other mean coins that that um outperform salona or some of the majors. Uh the months june um man, after the first week IT was down, only IT was just that the entire market was offered. And because we kind of got back to you know roughly unchanged to slightly down at the end of may and you were the rally that happened.

I take on the back of the H M T F news and uh that nice rip into into months n and and Carry over in the first week to you. But since then I mean sentiment on on twitter and the internet has been just in the absolute gutter. Um I think we saw the fear great index or bitcoin print a thirty handle twice last week.

Uh it's you know trading sixty three k it's not like it's lost fifty percent off at all time high. This hasn't really been a lot of flow, a lot of volume coming into the spot Marks. And you can see that uh, on the charge there just hardly any interest in in buying.

And the the question is people always ask me as why why the more sellers and buyers is why the Price was down. But a lot of folks will look at you know the correlation between c cyp to or you know total of the market capture whatever and the attack. And I think we would be remiss to not mention the absolute heater that the attack has been on, uh, especially in youtube after a ripping q one. And bitcoin has completely inversely or negatively correlated with that. Why, James, why is that?

I wish I knew so I have i've chored up here that blue line is the is the NASA that's the use. The orange line is the theory um and the White line is is bitter, the orange line funny because IT Spiked up like crazy with the news that the the mt. I we're going to be proved because no one was expecting that. But obviously, given back a lot of those gains, I don't even think it's going on a limit.

It's a good thing that we're not seeing bitcoin in the theory of these cyp to as digital assets correlated with accused like you want them to be uncorrelated, they should be on correlated either tiny growth plays their risk assets um but like one of the benefits of Normal people investing in these things, adding IT to a portfolio, they want uncorrelated ted assets with like different uh risk ward paz s and we're seeing to play out right here. There was a lot of correlation um but but that kind of just fell off a Cliff in june. I mean, a lot of the cues rally is, uh, apples done decently well in recent months, uh recent weeks and it's all in video.

In video is just Carrying I think that was the largest in the world for a little while here. Um but I yeah I don't know why they're fully diverging. Um if you look at what I I like to I actually in middle ready a note about, I like a chart pack looking what's going on the big one E T S.

And no matter how you sliced IT like that, if you're spent range bounds, it's march. Like you look at asset, you look at everything they've been arranged around. And if you look at asset, uh, trading volume like dollar volume, we're at like all time lows.

We even been this lows since like the DDL january, which there was like the pic just one into a low. So there's just a lot less interest in the space as far as the etf go. I think most people who are really wanted to get in and dive and as quickly as possible have bought the etf.

Uh, a lot of the money that came in over the last month or two is started to come out, uh, which I think we thought this last time is almost certainly a basic state where people were basically uh, shorting the future etf because you got like a one two percent premium, maybe more up to the Price of Victorin. Where is currently trading at spot and then you just buy the etf and then you're not neutral, you're just earning that trade once that collapses, once the the spot Price of bitcoin or the T S. themselves.

Um join up with, uh, what's going on with the futures. We actually have a surprise guest here and by surprise guest I mean um guest is a little late and come in here. So i'm going to add you in alex, we're talking about the fact we're talking about the fact that um the uh gypt oo currency digital asset markets have completely broken down in their correlation since the beginning of june， roughly with text text stocks and girl stocks in general. I mean, you obviously proud we've seen this breakdown correlation.

but I know if you have any thoughts in mind. Yeah actually it's arted little bit earlier stated in may. I think think this is quite remarkable and unfortunate. I do not have the answer and if you got if you guys have the answer, would love to to hear you out and I know.

but that before you join this, that's why I ask the guy who's the non trader on the the pod to explain why I mean, look, James brought up a really good point though which is the the basis trade you know it's free money for the most part is as long as like you know you don't get um you're not like having to pose a significant and all that is a thing runs away from the the the uh open interest that that short the C V futures.

Just incredibly, I think is that a lot high? And I think for folks that are probably not familiar with trade fy or that are just what I would consider crypto natives like, you know earning one two percent a month doesn't sound super interesting. But if you're a trade fed fund like that's awesome.

So if you can learn hundred fifty two other BBS, you know relatively risk free, I would say risk ray, on this basis like you're doing. And the other thing is a lot of these funds will do this with leverage. And so you know I I am not convinced that that's why the open interest and the that all open interest on the C M E futures as high IT is.

But um these folks definitely use libraries when they do these types of basic trades in other markets. And I could see a world where they actually do that. Now does that imply that the Price of bit going should be trading sixty three K I don't know.

I mean to me, weren't arrange like we absolutely ripped out of the gates from december and in the january pull back on the G, B, T, C dumping and then just ripping into fab. Uh and in the march with with the etf flows in the narrative there. And now I mean, it's probably a good thing that we're consolidating a bit sideways.

I mean, obviously, everybody wants the Price to go higher because you see your network increase. But you know from a technical perspective, we're painting like a massive bull flag on the daily time frame for bitcoin. And the longer this flag goes sideways, typically that the higher the extension is just from a technical perspective when you're trading IT.

So I don't see you know I haven't seen of a an invalidation of this bull flag. I haven't seen you know some absolutely massive amount of selling. And in fact, I think the amount box news from last week, I don't know the exact number, but I think IT was in the billion plus in terms of total sales like the market absorbed in pretty thin books.

And like to me, that's pretty bullish. Like, yeah, we diploid sixty k again, pop back above IT. Now we're trading sixty three.

Who knows we're trading by the time this this this episode air。 But I don't think IT is as bad as people think. I think people just got really excited and you want and work expecting a continuation of that. I think you need some console lida, some digesting of of the moves so that hopefully as global liquidity takes up and over the summer as well as the the the potential for rate cuts, which will be, you know Emily, a week or dollar, these could be the potential know all micro catalyst that actually enable bit point to break out new heights.

You know, guys, i'm not gonna lie. I'm prety disappointed by Price action, but I I I fully agree. I don't see any reason to have my my bullsh business validated where in arrange a macro is doing good. Our risk cases are are performing actually extremely well.

Um um IT IT IT makes sense for a Price to, I think consolidate for a while and start taking a pie and at the same time all the selling pressure what is what is setting up is is is in a way that is a very good set up uh, for a breakout. Once we get closer to the top as humid, we do get closer to the top, which. I do think is gonna happen.

Um I I would presume you guys already talked about trump and buy them like the first thing, the biggest thing and I I firm ably think that is it's reasonable to believe that trump winning is gonna very positive for crypto to in general. And um that debate was such a disaster that is because I guarantee that he wins. I think I mean.

it's a guarantee.

I think it's it's politics, right? I was already pretty bullish trim before now it's that or can I put that way that that debate is the second most bizarre thing i've seen in my life after .

the corona virus .

IT was that crazy?

You didn't like the two the two potential presidents, uh, arguing about their confine caps. You didn't .

think that was going yeah like I think i'm ten handicap h tomorrow. I'm i'm i'm one twenty four right now. But yeah, I mean.

we did touch on on a bit, alex expert. I think one of the things to to take into consideration, I just kind of reiterate my point earlier, is that there's a lot of time between now and you know, november and people forget stuff in the new cycle all the time. And I I do think to trumps strength, he finds a way of constantly staying in the new cycle.

Unlike the biden administration in real election team, he has people that create means, uh, they're not looking to hire somebody right like they're all over this stuff. And I am convinced that the reelection team was looking at that almost every minute of that debate as potential content and father to um generate and discredit biden as um you know the potential leader of the free world. I don't think that that is a an unfair argument based on their performance, but I do what folks to understand that there is a lot of time between now and then. Alice, you call back in two thousand sixteen like call me the end of the FBI released something like a week or two before the election.

That was fun. Yes.

I my point is like I don't think anybody saw that coming, right? For Better or worse, IT definitely influence and impacted the outcome of that election for the clinton versus truck. There could be myriad things like that, that could come in the next few months that could could swing the election one way or the other.

But um I think my point still remains like IT almost as a matter, it's elected at this point. Crypto o is front and center as as a real issue. IT wasn't mentioned on debate but I should just feel like um both sides the IOR2 kind of force at this point to acknowledge and have some point of view on .

a one one thing a cyp on on the elections of the thing is very interesting。 What's happening on the long rates on basically long rates bonds with very long ger the longest maturity or duration. So basically right now its rates are uh ruling quite and so it's a sponsor are tanking, has been very significant move today. We have what the thirty year, uh uh, futures now, uh one point six percent. That's a rather very large move and do not think is a coincidence. I think this is basically being driven by this is the trump trade and european, uh, trade on basically little right taking over politics and the and the market getting concerned about fiscal, uh, responsibility so that that hits mostly a the a the the longer side of the yell curb and uh what we are seeing basically is, uh, uh, bare steepening move. Uh, basically uh, rates going up, uh, Prices going down and the and the fire and moving even further up.

This is great now because I would like for you to kind of explain a couple things. First, what a bear signer is in the second, you know why a populist or right for right leaning administration would affect the long end of the curve like this.

Uh it's basically um how to put IT um fiscal irresponsibly. It's it's an expectation that trump is going to to push forth higher spending or let this put this way, let's say stable spending with tax cuts, increased deficits. Increased deficits increases the risk of inflation, getting out a walk down far, very, very far out in the future.

So what we have is what in finance, we call the borne vigilantes, the bond vigilantes, spacial. They come in. And when when they see that the market, the governments baby behavior responsible, they started selling the long end of the curve, long bonds.

And that I think the trump trade is is basically precisely that is is higher rates on the long end and at the same time, higher equities and higher crypt to as well. And that that eventually that relationship breaks down. We we cannot have that forever. This is very interesting at some point if this continues, the bonds win the battle and and IT IT delicious a risk of move on the equity side and basically everything just goes tumbling down. That's my my very long A A bigger picture um left tail and uh with trump winning and may he may accelerate this this happening I think .

yeah we have have a charge. You are showing that the rates basically one for four four over four six um so that is I mean encysted o that's not a huge move. But when you're come with the government treasury board, that's pretty big, big talk about the fact that interest rates are likely going uh the additive coming in september uh have increased to sixty, sixty nine percent. Um alex, what your thoughts they are on on interested in short.

ter rates IT just makes sense. We have some very good cpr pcd numbers last week. I think it's in line with what we're sitting on the economy.

Uh, something else that I think is interesting to point out is the expectations in the market that the U. S. Economy is going to be slowing down into year.

And it's a if you're looking at expectations from economists there, they were getting a very, very tame, uh, for the remaindered of the year. So there that's another risk in the market. Basically, what happens if a the U.

S. Economy does not slow down, slowing down east Price in if if the use economy does not slow down, that would be basically that would mean that the defeat would not cut rates the way we're pricing IT in. Uh, I think we'd be Better for cyp to I think would would be good for equities.

Why would not cutting rates be good quality?

I think growth matters most OK in this case. So I think equitas we be dream by growth equities in on the cyprus. Where can I like hoping that rates gonna come in and and uh kind of like a lation and bringing back the correlation with with risk. What do you think of that? Do I I feel that way?

Yeah, you bring up a good point, which is stock Prices keep going up as long as they continue to have earnings growth. And so if you start to see earnings get hit up, then you'll see stock Prices go out, not rocket science, right? I mean, to be clear, we didn't see nike have the biggest downside move in its history as the stock up on, on their earnings support and that, that was shocking.

But also, you know the market has been overheated for quite some time. I'm not suggesting nike some you know in video like gross stock, but the the correlation trades started to kick in with in video point back. Nike point back. Does this imply that earnings growth has picked? Probably not.

I don't see enough evidence currently to support that, but IT is an interesting thought exercise to say, hey, you know, if they don't cut rates, it's probably good for equities because the economy is likely chugging along just fine and that means earnings continue to grow. Not a bad idea. I also think that you know history, ally, they've cut rates in election years.

We've cut rates when the economies been running hot. The question is the fed, does the fed have the data to support and justify a rate cut? Uh, I think we'll find out more later this week.

We talked about the alex about A P on friday. Maybe that thing comes in light. Uh, and the revisions will continue to revise lower and that gives the fat enough cover to start you know pounding the drum on rates.

If not yeah I think crp, du and and you know other call them rate sensitive Chrism assets are not gonna be favorable uh, in a continued and persistent higher higher interest environment. Feels like with the economies becoming out since April as well as the election year, how things tend to get used during election year. Um i'm on the side. I still think there's two cuts coming uh, for 4 yeah I am going .

to wanted to camp quite likely I think is going to be want to be honest um I am also on the camp that IT doesn't matter that much。 What matters is the direction, not the actual number. Uh, what matters is what what the fed is going to be doing in twenty twenty five if we get three or five or six and two and twenty five more than if we get one or two. And this year, it's yeah i'm i'm not very very um um concerned about how many cuts we get this year.

Yeah, that's another that's a good point though. Typically when the the fed initiates uh, a tightening, loosening cycle, it's like it's kind of like getting this big engine started. And then you know, once it's moving, that keeps going until IT reaches some sort of steady state and then they either pause uh and start to move back up the other direction. Uh, and I think that that to your point, like if it's one cut this year and four and five next year, fine or two this year and three to four next year, that's fine because the direction of where it's going is actually what's most important as or related to .

their rapes yeah um on going back to cyp, the two things are if you guys already discuss alison when I guess you really talked about the f is a delay yeah yeah yeah yeah the other one is is something that in the way I think explains partially only partially because it's I hate trying to find and answer to all our questions. This is how markets don't work that way is often times that wait too many variables.

We are trying to guess really what's happening, but we don't really know. I think it's is very important technology. Gy, the flows from the german flows are they are sending money back in uh into cracking and coin base.

Uh, the us. Has been a lot of just around the U. S. Sending coins into coin base.

There was a funny news today coming up talking about how basically the U. S. Is going to be using coin basic studio.

And the joke there are being like the the U S. Wants to suit coin base for being uh uh custodian. Yet at the same time another agency is using coin base house custom, which is kind of ironic.

The other thing is the the F T X there was an article from from J P bringing this APP. Uh which I thought was very interesting. The fact that we haven't the narrative has not been focusing on F T X and eventually ally basically F T X P in the reverse mount x, meaning has been quite significant selling already they're ready， cashed a very significant sum.

I don't have the number hand the unfortunately. Uh, but a those those funds a big chunk, I think is reason to expect that they're na be flowing back into. So sometimes starting between october to march this october to march next year, we should be seeing very significant inflows from F, T, X. creditors. And almost nobody is talking about this and and that that matters.

I was not I not thought about that once. I, I, I had thought about about gos coins a lot. We didn't. We touched on a little bit, but there there's there's a lot of coins there.

And I know um galaxy research for examples been saying there is not going to be as much selling as some people are worried about. But time will tell and I love the fact that the sec is suing going bed saying their legal security broker, and then like, but as the U. S.

Government were going to use them to sell all the coins we got from from criminals, from we trace down this untractable money that we got, yeah, that's basically what they they ve been saying. Yeah, this is the shorter week what you're probably going to have a guest next time, uh, to join the three of us. But thanks for joining us for the episode. Bits of bps will be back in two weeks to discuss more about how the world's hypo micro colliding. Until then.

we'll see you soon. Thank you again, everyone. 拜拜。