Bits + Bips: Will Rate Cuts and Trump's Policies Spark a Bitcoin Supercycle? - Ep. 737
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So I think we continue going up and this is the time where if you're running spot, you just let it ride. Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide one basis point at a time. I'm your host, James Seifert, trad by Archmeister, Lord of Bloomberg's End. Here with Alex Kruger, Kruger macro of House Asgard, protector of the realm.

We're here to discuss the latest stories in the worlds of crypto and macro news. Just remember that nothing we say here is investment advice. Please check UnchainedCrypto.com/BipsAndBips for more disclosures. Today, we're joined by David Greider, Lord of Finality from the restaking realm. How's it going, David? Hey, everyone. Glad to be here. Yeah. Before we get into it, why don't you give a little background about who you are, what you do, how you started in crypto, and then we'll get into the current topics of the day.

Yeah, happy to. Let's see. So I run the Liquid Fund at Finality Capital. Finality is originally a venture fund. I've done very well in crypto. We've made some early investments in known for things like Eigen Layer, Babylon, Monad, Athena, Celestia, Ondo, Dewey, being early in many of those. I launched the Liquid Fund back in July. I've been in crypto a while. I've been in crypto personally since 2015, professionally since 2017.

launched one of the early waves of crypto funds. I launched a small crypto fund in the 2017-18 cycle. So I've been at this a while. It did really well, but it was just our money didn't get big enough. So I went to somebody, most people probably know Tom Lee and Fundstrat.

I was head of crypto research there. So I was head of a digital asset strategy, ran that business for a number of years, eventually went to Grayscale. And I was head of research there for a bit, launched some innovative products, you know, someone being like Solana Trust and others. I got back to investing at another fund, $50 million fund called Tefra. And then before coming back over the start of the year here to watch the liquid fund finale.

Jeez. Good timing, eh? Brilliant. We definitely did pretty good. But, you know, Alex, that's the job, right? Got to time the mark. All right. So let's jump into it. I mean, so just so everyone knows, we're recording on November 18th. It's a little after 5 p.m. on the East Coast.

And I mean, in the last couple hours, it's been a flurry of news. I mean, I feel like we recorded two weeks ago and not quite two weeks ago, but like things have changed so much since then. But even just today, there's been a bunch of news. So let's start with some of the political stuff.

News just came out being reported that Brian Armstrong is set to meet privately with Trump and they're going to discuss appointments. I guess one of those topics is likely to be Treasury Secretary. Who knows exactly what they're going to discuss? I mean, this is a complete 180 from the Biden admin. I mean, no one could talk to anyone in the inner circle of the Biden admin, let alone the person at the head of the administration. So, I mean, first of all, this is just a huge turnaround for the entire crypto space.

Let's get into it. What are your guys' thoughts on this news and potential appointments? So do you, Alex. I just saw it. I learned about it by chance because it just happened. I have nothing to say outside of the fact that it's absolutely incredible. It's literally bananas that this is happening.

Also, they're talking, from what I saw, they're talking about acquiring Bakkt. Basically, the talk, I think, was Trump acquiring Bakkt or something like that, which is quite a bizarre turn of events because Bakkt is sort of like a debt exchange, like a truly debt exchange from...

It came out live in 2019 with a lot of fanfare, or however you say fanfare, and literally marked a very major local top in 2019. It's like back to when live, it was a massive disappointment. Within three days, we collapsed. What was it? We collapsed from 10,200 to...

to uh uh 72 in like one day yeah yeah i mean back loss the last i heard of backed was uh

it was going bank. I thought it was going to cease to exist. I knew they were trying to stop. I thought it was just going to go to the wayside. To be clear, Bakkt is owned by ICE, Intercontinental Exchange, which also owns NYSE. So this is part of the NYSE family, which, again, it's just kind of crazy that Truth Social, a social media company, might be buying a cryptocurrency trading platform. David, what are your thoughts on Trump meeting with...

Brian Armstrong of Coinbase. And what is your thoughts on what's going on with what or what's being reported with that at least? I think it just shows why crypto is repricing so much higher over the last several weeks. It's just there's a complete regulatory turnaround and de-risk that you can't price with macro. You can't price with a lot of the adoption fundamentals that exist. And I think that the market is just stepping in and saying,

This is incredible. You have a president who's launched a crypto coin. He's made all these statements on the campaign trail. We'll see what happens with them.

You have this Republican sweep of many crypto-sponsored, PAC-sponsored candidates. And I just think it shows why we've repriced so much higher over the last couple of weeks. But I think there's still probably more to go from it, just given so many regulatory implications. And I'm sure we can talk through those over the call. But I mean, it's definitely good that he has people like Brian in his ear and people listening to industry and seeing what we have to say to be...

proactive and working with business. Yeah. I mean, I guess donating to PAX and actually donating to your election to the tunes of tens of millions of dollars from your company and the fact of Fairshake and Stammer Crypto, Coinbase is largely behind, actually does get you some years with the higher level. So that's definitely to play here. But yeah, I agree completely. This is a complete and utter shift. And it's funny, a lot of the people

It was a very common talking point of in the last like month or so. It's like, he's just saying this to get elected. He does not actually going to do anything about it. And meanwhile, it's like, okay, his, the two social companies are going to buy back. He's meeting in person with the CEO of the largest crypto company in the U S and it's like, okay, I,

At some point, some of the people who have been discounting how true and serious Trump is about this space are going to have to take it on the chin because all the indication is that it's being taken seriously. One thing there I want to say, James, is the beauty of bias.

a very large chunk of the market who is basically anti-Trump because of, well, many, many reasons, right? In many cases, very valid reasons, I would add. Yeah, absolutely. But there is still bias, a bias so strong that basically drove a lot of people to literally

override and say, this is not happening regardless, even if he wins. He's a liar. All of these things that you're talking about are not going to happen. And they're all happening. And that actually also helps the move because positioning was not there and it still is not there, I believe, besides short-term exuberance, which is part of the game.

Let's say a little bit on politics. I mean, he's made a lot of, shall we say, out of the box picks for his cabinet. We don't need to get into all of them because for the most part, they're not too relevant to the crypto space. But let's talk about the fact that he hasn't picked treasury secretary. The leading candidates on PolyMarket right now are Kevin Walsh, Howard Ludnick, Gott Besson, and Mark Rowan right now. There's a few others on there, but those are the only ones that are in the double digit percentage points.

Do you guys have any thoughts on who he's going to pick, what it means if he picks them? I think, David, who do you think would be the best for the space, I guess? And after that, who do you think is most likely to be picked? And do you think it'll be somebody that's on the Polymarket page right now? Well, you know, I'll start with this. I don't actually have a view who he's going to pick. I think Letnick was the original pick. There's some news articles out about him, how valid those are.

I don't know. I do think Letnick would be perceived by the market as the most positive for crypto in specific. As a reminder for folks, his bank is the bank that banks tether.

So, you know, that's very, you know, deep into the industry. So they hold all the treasuries there. I think from that standpoint, he's made he also has a two billion dollars bank is a two billion dollar credit facility for lending against Bitcoin collateralized loans that they've announced. I don't know if that's implemented yet, but they've announced that.

Um, and I think he's made some statements that he has quite a bit of Bitcoin himself. So I think the market would view him as the most positive, but I don't, I don't know who's going to ultimately be picked. I think the point though is either way, you know, we just have a, we have an administration that is either way, it's going to be much better than previously had. So a net positive, just to what degree?

Yeah, I think Howard's, it's funny because like he'll be on TV and like they'll ask him questions about like, I don't know, interest rates or like what's going on with Bitcoin. And he goes out of his way to tell, let me tell you about this company, Tether, whose money I hold. And it's like, he loves Tether. It's funny to watch him talk about this stuff. And obviously he's part of the Tether show.

Yeah. I mean, he's part of the transition team. So even if he's not treasury secretary, he's heavily involved in what's going on in this administration, at least it seems like he is for now. And I'll throw out the numbers now. Kevin Warsh is the leader at 44%, Mark Rowan at 8%, Scott Besson is in second at 21%, and then Ludnick's at 13%, according to PolyMarket.

Alex, do you have any thoughts? Do you have any picks from outside those top four right now? No, no picks. I'm going basically by Polymarket in this case. Whoever is trading Polymarket is more informed than me. The one thing I think, like I've seen chatter about how Kevin Warsh is not as good for, or is actually not a great pick. He's not in team crypto.

But that being said, it's quite likely. I don't think the market would care that much if someone who is not pro-crypto is chosen, but would care greatly if someone pro-crypto is chosen.

So let's see. Warsh is coming up first, as you said, 44%, which means there is some room for a surprise, positive surprise for the market. And one last comment is, well, one is it was interesting that Elon Musk was supporting publicly Latinx.

So, it looks like he would not be getting his way. And secondly, there was a breaking news this morning, early Easter time, that basically the administration would be favoring Warsh. That's when Polymarket spikes up. I'll throw one out there that's not on the list real quick before we change topics. I'll say

Larry Fink seems like a very outside pick because he's typically thought of as Democrat. He does donate typically to Democrats, but there's some rumors spreading around that he could be in consideration, which would be very interesting to say the least. Well, I just think, James, Trump's taken a lot of Democratic former Democrats, right? RFK, Tulsi, Trump, I mean, Musk. Issue on himself, right? So not completely crazy.

Yeah. Let's get into something we don't typically talk about too much just because this is so eye popping. I mean, we talked about, uh, micro strategies, you know, 21 billion in debt, $21 billion in equity offering, and they're going to own 42 billion worth of Bitcoin essentially today, just within the last hour or so, they announced that they did an offering of $1.75 billion of convertible notes with a zero percent. So they're, they're, they're earning zero interest in just convertible notes. Uh,

at $1.75 billion to buy Bitcoin. And it's being gobbled up by the market, which I mean, I don't really have anything intelligent to say on the topic other than that it just kind of blows my mind. I don't know if you guys have any thoughts on what's going on there, David? Well, I think we should also mention that in tandem with that, this morning it was announced that he bought another $4 billion, I think, roughly at Bitcoin as well this morning, which I guess you could say that's

That's bullish or bearish because, you know, he announced $40 billion of, you know, planned buys over the next three years, and that's 10% of it. So I guess one question I have is how much of this market move that we just had was, you know, organic outside traditional money coming in on the de-risking versus how much is Saylor kind of front running that move and amplifying it?

But, you know, I think this offering and the others, I think it just shows like how much demand there is for the different ways he's securitizing different products. I'm not sure that this offering is fully closed, but it seems like he's

he's raising an extra, two sides of the cap structure, right? He's raising these ATM offerings on the equity side, doing that by diluting, by selling shares in the market periodically on the shelf, and then doing these underwritten or these debt offerings. And I think just the way that he can structure them, at those rates, it does show that there's a lot of demand for these types of structures and eventually flows into crypto and Bitcoin. So that's positive for the underlying. Howard's thoughts? Howard's thoughts?

Well, I was a little bit concerned this morning that he would be marking a local top when it came out, which is nothing to be concerned about, I think, bigger picture or even mid-picture. But if you're running leverage and a lot of leverage, a little local top and a little Bitcoin leverage,

5% drawdown can generate quite a bit of a move. It didn't happen. It didn't happen. Also, equities turned around pretty quickly. I thought it was meant to happen, given that we're going a little bit off topic here. But last week on Thursday, we had Powell come in, basically saying, in my opinion, nothing new, but at the same time,

spelling out that there may be no cut in December. So rates on the short end went up a little bit. Market didn't like it. It was quite a bit of a sell-off, quite large, actually. I was surprised on tech markets.

mainly on the Nasdaq. It's pretty remarkable. It dropped 70%. It pulled back, retraced 70% of the Trump move between Thursday and Friday, mostly Friday. And my view was on Friday and still is that that move is uncalled of. That is noise. Interestingly, Tesla, which is basically...

proven with Bitcoin and Dodge to be the main runners of the Trump move. Tesla dropped the three days before. And since Thursday morning, like on Thursday, the Nasdaq was down 2%. Tesla was up, I think it was 3%. And now it's up like 28 points. It's a lot. It's like 7%.

So what's your view? What's your view on the cut in December? You think it's happening? You don't think it's happening? I don't know, to be honest. I think both the cut and no cut makes sense. We have a little bit of time and we also have the payrolls that take place before. So I think cut or no cut is actually noise, even though it matters in the market.

But what we really care about the most is if they get hawkish on the dots and more like the path going forward. David, what's your view on interest rates? After you're done, I'll give mine. I'll give the Bloomberg House view as well. All right. Well, that's the real view we need to know. But, you know, I think...

I think everyone did expect somewhat higher for longer, higher growth, higher inflation as the Trump trade, but the deregulation being the overriding factor that's just taking risk assets higher. But along with that trade, it has been higher dollar. I think a lot of that's in the short to medium term at that price. You see rates kind of at the top end of the range. You see the dollar kind of at the top end of the range starting to roll over here.

Um, and we have seen quite a bit of hawkishness on, you know, some, you know, some interpretation of what future fed speak may be. Um, I think right now it's about, it's about almost 60% pricing a cut. So not very definitive. You're pretty split in between meeting. There's going to be quite a bit of data between now and then, you know, my, my view is probably that, you know, the fed is going to tinker with their models and say, you know, these, these policies around potential for tariffs. I think there was a paper that was released by the fed outlining that recently.

potential for deportation risk, what that could do is going to be, you know, need them to potentially stay higher for longer. So you could reflect that in the dots. I don't ultimately think, you know, it's going to, I think we'll probably come down a bit farther than people think, you know, maybe next year, we'll see. Maybe that's a bad policy mistake if not. But, you know, I think that's, that's, that is just part of the Trump trade, but I think the deregulation right now is the most important factor for general markets and especially for crypto.

You know, on that, two things on Trump's policies. And also, I want to say that there's a lot of people in the market, on the macro side, that are actually concerned about basically Trump tanking the economy. I actually think that that speaks more about

political bias. There's an absence or a lack of full objectivity there taking place, which is unavoidable when a persona generates such massive emotions in different directions. By the way, Republicans also thought

Many Republicans, the hardcore ones, thought that the Harris victory would crush the market, which also made no sense. We even talked about it in the pod here quite a bit, actually, for many months, how the bigs high into election night would unwind afterwards and how risk would come back into the market and pop up regardless of who would win. But Trump would be much better for crypto.

But on the policies, two things. One is the tariffs are quite likely not going to be as bad as people think. I see a lot of fear around tariffs from people in Europe, and I think it's misplaced. So I don't find reason to be concerned there, at least not yet. And then on immigration, if he were to implement policies

A very aggressive deportation, mass deportation of illegal immigrants would be quite negative for the economy because like them or not, immigrants drive and illegal or legal, they drive growth.

And they also help keep labor markets more in balance. And therefore, immigrants help keep inflation down and drive growth. So reversing that would basically lower growth, increase inflation, and you get basically what people like to parod about on Twitter, which is stagflation. I don't think this will happen. Yeah, yeah. I was going to add one more, and maybe we're going to get there, but

To the extent that Doge, and I'm not talking about the meme coin, but the actual Department of Efficiency is implemented, I don't think we know how much they're going to cut. But the government right now is 44% of the whole economy. So, yeah.

Those outlays, depending on what extent you cut, there could be some GDP hit there too in the short term. I think that's probably the other factor that makes people worried. But I think it's too early to really say without knowing how the policies are going to be implemented. It's just a lot of, like you said, Alex, potentially oppressing your bias maybe. Yeah, I get a feeling that they're going to focus mainly on criminals. It's going to be mass, but for people with, how do you say this, criminal history, not just everyone.

Yeah. I would say I agree largely with what you guys are saying. And then to your point, David, I think part of the reason there's been that divergence, you talked about gold a little bit. I mean, I think the divergence is solely based on dollar strength. So we've seen the divergence between gold and Bitcoin. And I think it's solely a dollar story, whereas Bitcoin has way more tailwinds coming from this potential administration, which we should get into in a minute. But I also, on rates, what we were just talking about,

Yeah, like the market is basically a coin toss on whether or not we're going to get a cut in December. I think they're going to pause personally. The market is basically saying they're either going to pause in December or they're going to pause in January. They're not going to do both.

And they think the market is pricing for three cuts by the end of next year. So basically getting to just below 4% somewhere in that range by the end of 2025 is what the markets are expecting. I personally think they're going to cut in December. I guess we'll see what happens with different economic indicators and we can go from there. And the other thing I would say, what you guys were talking about with tariffs potentially impacting the economy with...

you know, potential rounding up of illegal immigrants impacting the economy. The thing with Trump is like, and I said this in the last one, it's not my saying, take him seriously, but not literally. So I kind of agree with like, it'll be less literal than what he was saying on the campaign trail. The other thing I'd say is like, this man loves the stock market. Like when he was the president, he kept pointing to the stock market and how well it was doing. And if he's implementing policies and the stock market is tanking, like,

he's going to take that into consideration when he's putting things out there. So that's the one thing that I say could limit exactly what he's going to do. And honestly, I would say it's something that Biden should have done more of. Everyone thought the economy was horrible and the stock market was ripping. Pretty much everything was ripping. And the Democrats didn't do a good enough job of pointing out the positive things they did. They just kind of like, people are going to realize we brought jobs back to these

these areas with the Inflation Reduction Act and the CHIPS Act and all these things. And they just didn't, I don't think they did a good enough job saying exactly how well they did or at least trying to make that story come true. So maybe they'll learn from that mistake. Any other topics on macro rates, potential regulatory implications from here? I'll just add that on the...

On the rate side, on the Fed cut side, I subscribe to the David Zervos view at Jefferies, which is essentially that the short end has to come way down because normal, which the Fed doesn't really know, is, you know, he thinks normal is about 20, 25% balance sheet as a percentage of GDP. And you get there by middle of next year.

And he thinks that he's been really selling this, you've got to look at the balance sheet plus the rate story. And if that's true, his view is you should be somewhere in the mid to high twos. So I think the Fed's going to want to keep it a little higher for longer until they get a little more certainty around the policy outlook. But I think if inflation can continue to come down, if Trump can do what he does with energy and deregulate that sector and bring energy prices down,

inflation with it, I think you could, maybe the Fed's a little slower in their reduction, but I think you could go ultimately lower than, depending on how the policies play out, lower than what's currently priced.

Yeah, I realize I also didn't say that. The house view from our rate strategists is they're going to pause in December. And it looks like the Bloomberg economics team is also expecting the pause in December. So it seems like that's generally the consensus view from most people here. The other thing I would say that to watch out for is we're probably going to bump up near the LCLOR, the lower comfortable level of reserves. Basically, there needs to be a certain level of liquidity there.

in the market. And the Fed is still doing QT, but they're getting to a point where they're going to have to stop QT and do some minor level of QE to keep their reserve levels around that $3 trillion mark. So they're not going to go below probably 2.9, 2.7. That should happen sometime in the spring.

So that's another potential tailwind for global liquidity if the Fed stops the QT process sometime in the end of Q1, beginning of Q2 of next year. So that's something else to watch for on the macro front. On the liquidity front too, just to add, we haven't seen that TGA rundown.

That's a treasury general account, which is the spending of the government budget, which is like 800 some odd billion that, you know, I think you're probably not going to have a debt ceiling fight, you know, with the, you know, the Republican house and Senate and presidency. So maybe there can be a, you know, spending bill, which is why it hasn't run down as much.

But, you know, the ASDA, it's going to have to run down some into year end. So that should add liquidity to the U.S. market at least. David, could you be great, I think, if we could explain to the audience what the TGA, why would that be bullish? Like the mechanics. Yeah, so the mechanics are, you know, when money is held with the government in what's called the Treasury General Account, that money is parked at the Fed.

And that money is not in the economy and it's not in the banking system to go out and be used within the economy. So when the government spends that money that's parked at the Fed and the balance sheet in the real economy, that money goes to the economy, it can go to financial markets, can make its way back into the banking system. So the TGA, when it goes higher, when the balance the treasury has goes higher, it sucks money out of the economy. And then when it goes down, it adds money back into the economy.

Yeah, and we had Sam Callahan on with a paper that he did with Lynn Alden. And I'm sure everyone here kind of knows this already, but Bitcoin specifically is one of the top assets when liquidity goes up, both in the US and globally. Go ahead, Alex. I wanted to add on two things, one on gold.

I agree with you, James. Gold is a dollar story and the dollar is going up because it's part of the Trump trade. Eventually, I think it's going to mean revert, not just yet. Why? There's a lot of confusion I perceive in the market by a lot of people out there that think that actually Trump is bad for the dollar because he's seen by many as...

Drives inflation, dollar goes down, either or, like whatever cause and effect are both happening. And that's not the case at all. That's exactly the opposite on the dollar. It's fiscal policies, his fiscal policies and his pro-growth policies. And the tariffs, all three are good for the dollar. That's why the dollar has been basically ramping up since he won.

And that is why gold is down the way it is. It's a dollar story. And interestingly, this has put a lot of traders out there that fail to understand this in a difficult position where something is happening that basically like the correlation changed. Like normally they would think they would see dollar go down, Bitcoin go up, risk assets go up.

Now it flipped. Now everything is going up at the same time. So, for example, misunderstanding that has kept a few people from amping up their risk exposure because they think, okay, something is wrong here. Something may be breaking when things are trading just the way they should be trading. And on long rates, I think I'm not sure about the short end, if it's going to go lower or

or is going to be higher next year than what's priced in. It's going down regardless, but I'm not sure about relative to the market, which is something very important. But I'm very confident about the long end coming down. The long end, 10 year, 20 year, 30 year. And basically expressing that view with a small long position on long bonds. And I think it has a little bit room to run.

And this is something important because at some point, if this continues running, it's going to generate a lot of a mini panic, like maybe panic for a week. When once like the 10-year note, the yield goes across this 475% and even more once it hits, if it hits 5%, which we were just discussing with David. David, you were the view that we had in there, right? 5%.

I can see that over the medium term. Maybe short term, we top out for a bit. Great. All right. I'll give a shout out to Alex here because one of the quotes from our podcast that we did the day of the election was, the question is, are you long enough? And we're just going to read off some of the prices from just 12 days ago. Bitcoin was at 76,000. Ethereum was at 2,700. Solana was at 188. And right now, Bitcoin is 91.3%.

Ethereum is about just shy of $3,200 and Solana is way up at $240, just shy of its $259 all-time high, though its market cap is way higher due to new Solana tokens out there. So I guess that call was correct, Alex. Do you guys have any thoughts about the run? I asked this question last week. Do you think this kind of makes sense? Do you think it's a little bit overdone? We're due for a pullback before we potentially go higher?

Where do you think we're going right now in the current environment for, I guess we'll start with those top three, but the crypto overall, but Bitcoin, Ethereum and Solana specifically. Alex, do you have any thoughts? Maybe, want to start? Yeah, maybe I'll start with this. You know, there's a survey I saw of different crypto funds and what they thought the expectations would be under different win scenarios. The consensus was a month after a Trump win,

the total crypto market cap would be 27% higher. If we just apply that to Bitcoin, that's about what we've seen now, about 90,000 from 70, whatever it was the day before, a couple of days before that. So that would say we've kind of priced that consensus move. I think there's still more room into year end, potentially. I mean, look, one thing I've seen over the years with crypto is that as the industry has become more institutionalized, as there's more

professional fund managers, you do see year-end profit-taking. People want to lock in their performance, their bonuses for the year or their carry. I could see some profit-taking into year-end. I think some people might try to run the election trade until we have more certainty on

what policies are going to be, who's going to be elected or even just into inauguration. Um, but you know, it's, it doesn't seem like a bad level to kind of consolidate, but I think it's, you know, Mark, I think it's, I think you're hard pressed to find sellers here is the other part of the market story. That's very important as well. Um, on, so we are at 97,000, right? Actually 90 K was my target. Um,

year end for Bitcoin and a Trump win. So we've run faster than I thought we would. That being said, actually, hindsight is clearly, clearly makes sense. I mean, and also this is something also we talked about in quite a few podcasts here is how the length of the range meant that once it breaks, we would run higher and higher.

And there is something with Bitcoin. Once it starts running, it just really goes. And people left, it's left scrambling to how to get on board, get a pullback and the pullback doesn't happen or is too shallow. I was like a few nights ago, I was writing a little analogy with 2020, the 2020 breakout. The 2020 breakout, basically, we moved up

for, what was it, 19 days straight, in a straight line up, on the 20th day, Bitcoin had its first real retracement, which was what I call a leverage flashout, because it was minus 20% from the high of the day before, pretty much in 24 hours.

And it was bought up very quickly. That's basically people running way too much leverage and getting flashed out. And then we continued higher for like four days later, Bitcoin was a full 2x from 20k, from the break of something like 41k. Only then we go into two or three weeks. I forgot exactly how long, two, three week pullback and a lot of noise. And then we continue breaking out when Elon died.

starts talking about Tesla buying Bitcoin, which was beautiful. If you guys remember how he basically hinted at it by changing his bio, which was fascinating because it happened actually like right before, like an hour before options expiry on a Friday at AM UTC.

So I think we continue going up. And this is the time where if you're running spot, you just let it ride. And eventually people may be concerned about their coins not going up while everything else goes up. I think that's fortunately for whoever is running, has that issue that they're going to be fine because we're in a market where I think you were talking about it, David, because the regulatory change, everything is meant to go up and everything is meant to reprice. Right.

Even Ethereum, although I do expect Ethereum to continue underperforming. Shall we talk about Solana and Ethereum? You have a Solana t-shirt, David.

Oh, yes, I do. Let's get into the sole ETH ratio. Do you guys, actually, before we even get into that, the ETH BTC ratio, sole ETH ratio, I see it all over. You guys are both liquid traders. Do you ever like, do you actually trade that? Like, do you actually go long ETH and short sole or long BTC and short ETH? Like, do you think about those as pair trades when you're trading or is it just kind of like something you're watching?

I mean, for our strategy, we're a long-biased fund, so we're not pair trading. There are crypto funds that will do that strategy, market neutral or pair trade strategies or something like that, long short. I mostly watch it from the perspective of if you own too much ETH,

Relative to Bitcoin, you're underperforming. And if your benchmark's Bitcoin, and most people probably want to think about it as that, you really need to focus on outperforming Bitcoin. So I think from that standpoint, it's probably been painful for a lot of funds this year who've owned too much ETH. We've owned very...

conservative amount of ETH this year. We just started inching it up here around these levels recently because, you know, look, it's kind of a widowmaker's trade this year. I think it's tough to pick the bottom, but the way I'm thinking about it, at least ETHBTC, is that I wouldn't be surprised if there was a calendar year rotation.

You see this in a lot of asset classes. You see it in macro. I've seen it in crypto many times where the worst performing is the best performing. Solana was a good example of that in 2022 or 2020. Yeah, 2020. 2022 after the FTX crash and going to 2023 is the best performing. I'm not saying that ETH is going to be the best performing, but I could see positioning being off sides there. And I think the thing that I'm actually watching to think about when more money is going to come into ETH

is I'm watching Blob Space, which is the call data, that upgrade they just had, which is what the roll-ups post their transaction metadata to. That's the reason, that upgrade is the reason ETH is not really printing any fees, or at least relative to what they used to print. But you're not the marginal band now for ETH. You're right at that marginal band of,

You have a certain amount, you get 50% full on that. Once you get above that, like any commodity, that marginal demand could exponentially make price spike. And I think if you get above that meaningfully,

for a consistent period of time, you can see ETH start to print fees again. And why do I think that's even important, right? TradFi, Boomer, PE ratio. If you think about the new money that's going to look at ETH right now, especially through the ETF lens, I think a lot of the traditional fundamental buy side guys are going to say, I want to see revenue on this asset accelerate. I want to see profit accelerate. That's when I'll start to be more excited about it as one

real cohort of potential buyers that I think needs right now. David, how do you track bluff space demand on any website? Any tool you use, public proprietary or paid, whatever?

Yeah, I think, you know, I think block works has a good dashboard that's behind a paywall, uh, doing analytics. There's some public ones. Uh, you can, you can go on doing, and you can Google, you know, or search each blob space. Um, I think there's some blob explorers, uh, that exists. I think grow the pie might have some, some interesting data on that as a website.

boss space. But yeah, I'm tracking blob space and how much is going to be, you know, because really it's like a commodity, right? It's like the ETH block gas limit. When you're below the block gas limit, if you're consecutively below it, it's like free. But once you're consecutively above it, it just starts to spike. I'm not saying we're there yet. We have a lot of DA coming online. But that's kind of one thing I'm watching to see, like, when could that money get excited?

I think this is very important, what you're talking about. And I would want to stress from the public to actually remember what Dave is talking about. Because this is something that is on my radar. I approach the market more from a, almost entirely from a macro perspective, not on-chain. But on-chain guys are looking and paying attention exactly at this. So definitely, I think it's

very likely if that changes, that could drive a very rapid change in ETH price action. On ETH, I wanted to add... Sorry, James, go ahead. No, I was just going to say that ETH-BTC ratio chart is just constantly down into the right. And part of me, I'm not a trader at all, but I'm just like, at some point, I would think this either has to

this has to rebound in some regard. And maybe I guess David just talked about a potential catalyst for it, but I just, I'm not exactly good at market timing, so I won't be doing it. But that chart is really painful for anybody who's an ETH maxi looking at what's going on in the market. I mean, even still, they're only at like 30, like I said, 3,200, and it's got to be painful for somebody who's

Holding a lot of ETH and watching Solana and Bitcoin and a lot of these other coins truly run when they're theoretically should be the sitting in the pole position for, you know, a DeFi ecosystem. And maybe they still are. So time will tell. You were talking about if we trade the pair, I do not trade ETH B2C. I do not trade Sol ETH.

Some traders do trade them. I pay attention to them as basically potential places where sentiment may pivot. Everybody's looking at them, so I look at them as just a matter of being on the same page. And I know smart money that actually tracks Sol ETH and actually trades risk based on the Sol ETH chart.

If you're trading or very focused on ETH and you look at the ETH BTC chart, it has an issue, which is it has no exhaustion as someone who pays a lot of attention to technicals. And I place a lot of emphasis on volume. It has no...

Real exhaustion there, you can see on the chart, which is basically a major flush where price plummets by an outlier amount. And you see volume spike up a lot. And looking at the chart, I'm looking sideways because I just opened it. If you're going to be trading that or if you're paying a lot of attention to ETH, if I were trading this, the time I would long ETH,

against BTCs either once it flashes down or once it goes up to somewhere around 0.04. Right now it's 0.034 based on technicals, based on how I interpret charts and bear traps and bull traps.

So I get the gist that you, like Joe McCann, our guest who is not here today, are more bullish Solana right now than you are Ethereum. Or is that, am I putting words in your mouth? Extremely so. Let's put it this way. The Ethereum experience is the same as it was in 2021. It's dismal. It's slow. Bridging is a pain in the ass.

It's just not a good experience. Solana is a fantastic experience. It's not perfect. It has a lot of problems. It has some infra problems that if you bring the right guys in, they're going to start fighting Solana because things are breaking behind the scenes. But that being said, the experience on Solana is great. The experience on ETH is just bad. It's low. You don't want to trade on it.

And all of this move towards L2s so far

has not been triggered by what David was saying before. It's not accruing value to ETH. So you have a bad experience and growth in the asset class in the chain that is not really accruing value to ETH. And on top of that, it completely lost mindshare and most users literally left to Solana. It's just a Solana story right now.

I would say 95% of everything that is being traded right now is on Solana. Anything to add there, David, on the Solana versus Ethereum? Look, I think Solana is still quite a bit smaller than ETH. I think there's still more room to go there. It definitely has the wins behind it right now. I think a lot of people are looking now at that fee story and saying Solana is printing a lot more fee revenue.

than Ethereum is these days and Solana just keeps printing new all-time highs. The market is very reflexive in that sense where higher activity for higher prices will create higher activity which will create better fundamentals which will create higher prices which will create higher activity which will create better fundamentals. And I think that there's probably still more room to go on the Solana front. You know, I...

For this cycle, I think ETH is somewhat challenged this cycle. I don't think ETH is dead. I think that our view on ETH is very much ETH is still going to exist. I think it's just a transition period for ETH. If you look down the road, there's a tech roadmap and there's things that I'm not getting into the one that they just announced, DevCon, but there is...

No comments on that stuff yet, but what I can say is stuff like based roll-ups, stuff like Eigenlayer, I think that based roll-ups, which is what lets the L1 validator sequence the L2 roll-ups so you can get faster execution and pre-confirmations. So that's to help with fragmentation of liquidity. Things like Eigenlayer should give you new middleware that can create a whole bunch of new apps. So one that we're excited about is Opacity.

And we think that's going to change the game for actual apps in Web3. And there's stuff like this that's going to be on Solana as well, too, and I'm happy to talk about that. But Opacity, for example, lets you put any Web2 data from any Web2 server

on-chain in a trust-minimized way. And this is different than an Oracle chain link. This is like the JP Morgan bank... JP Morgan server said my bank account balance is this. Spotify server said I like these songs. And you can't tamper with the data from the time it's produced to the time it's on-chain. And we think it's just going to open up a whole realm of Web3 apps that are actually useful.

And that's, of course, we have a lot of that's being built on ETH, but it's not mature yet. So maybe it's the next cycle story that it comes back. But I still think for now, Solana as a liquid trade is probably still the better one. But stuff to watch on the ETH side. Yeah, this is a good transition to the next topic that I wanted to bring up. I wrote this week about the Ethereum ETFs. As a group, they have been utterly demolished. I've talked about it on your podcast.

Pretty much every episode, maybe not every episode, but most episodes, there just has been no interest from investors. And that all changed on election day. So, I mean, at the peak, as a group, these US ETFs, including Grayscale's ET, they had net outflows of 690 million almost. But as of early November, around November 5th, they had 554 million in net outflows. So it was getting a little bit better.

But then the day after the election, money just started pouring in. It was an $800 million swing. And when we look at Bitcoin ETF flows, we're talking billions of dollars. So obviously this isn't necessarily the same level. But to your point, David, you talked about potential fees coming in here, people looking at price to earnings tax ratios, how much revenue is being generated by staking and things like that.

I think that could impact how TradFi type investors that are more likely to use an ETF wrapper are going to be looking at these ETFs. And obviously, that Trump election, while it did fire up the Bitcoin ETFs and Bitcoin in general, it basically caused Ethereum ETFs to rise from the ashes. We see a little bit of flow out, but we're still solidly into positive territory for essentially the first time since these things launched.

I don't know if you guys have any thoughts on TradFi's overlap with Ethereum and the Ethereum ETFs, but I'll stop there. I think Ethereum needs urgently and should get it. I'd like your thoughts on this, James. The ability to stake their AUM. And I think that would drive a massively increased demand for ETF. Any thoughts?

Yeah, I mean, undoubtedly, I think that's one of the biggest hindrances. One, we talk about all the reasons why I don't think there's a ton of interest. One, Ethereum is just more complicated.

David can sit here and talk about restaking and all this, the layer twos and the blobs. You're talking to these advisor networks and they're just trying to understand what a cryptocurrency is. It's just a whole other level of detail. So I think that's problem number one. Number two, I think Bitcoin is Bitcoin and Ethereum isn't really competing with it in the way that I think about it, but it is competing with Solana.

So there's issues there. Obviously, we talked about the layer two. But the number one reason aside from that is staking. Like you're just giving up yield because you can't stake in these ETFs. So Bitwise just actually acquired a staking firm, a staking company that specializes in Ethereum staking. So I think they're getting ready for the ability to stake Ethereum in ETFs in the US. They also acquired a European company.

So I think it's coming. Obviously, the Trump admin is much more likely to be amenable to allowing staking these things. I mean, also, we don't even have in-kind creation redemption, which means like a market maker and authorized participant that people actually create and redeem shares.

they have to hand over cash and go through this arbitrary process because the SEC didn't want people touching the underlying crypto. So I think at some point in the next year, maybe two, we will get to the point where you have in-kind. We'll also start to see staking. I mean, staking is allowed in Canada. It's allowed in ETFs in Europe. Bitwise just launched an Aptos staking ETF in Europe. There's Ethereum staking ETFs. There's a whole bunch of ETFs in other jurisdictions. It's just the US that doesn't allow it. And we...

After this, we can get into talking about what we think the regulatory outlook looks like with Republican control of the Senate, the House, and now the executive branch. But yeah, I think all of those things are going to be positive ultimately for the Ethereum ETS. I just don't know exactly how long it's going to take to get there. And yeah, time will tell. David? Yeah, I think all that's true. I think the thing I would add is that from a regulatory standpoint,

The election also changes the dynamics of everything built on top of ETH. And Solana as well, right? But all of DeFi is de-risked to a degree on the election. So you can have these economies that were somewhat languishing, these digital economies somewhat languishing from a regulatory chokehold that can, you know, the market should receive more activity, more dApps, more usage, you know, picking up on these networks. And I think that's probably partially what's getting priced in there.

Thoughts on EigenLayer? You specialize in staking and restaking, so I'm curious. I bet quite a few people in the audience would love to hear your thoughts on EigenLayer, which, by the way, is up right now. Finally, woke from the dead is up 11% today. Yeah, look, I mean, I think, you know, first thing, you know, I think shared security, we think shared security is going to exist on most of the main chains. Right now you have it on first EigenLayer on Ethereum.

But you also have Babylon on Bitcoin. It's going to enable staking at the base layer, non-custodial and trustless. And then you have Jito on Solana, which looks like Eigen layer. And then you have another one, Sol layer, which we invested in as well on Solana. So you have it across these ecosystems and what it does is, it does four things. It lets you bootstrap a network easily. You don't have to have a bunch of capital or stake

You can get this node network of validators that'll participate. I think the most important thing, if I just summarize it, let you create me middleware. Middleware being, you know, services that adapt decentralized application can use to have more utility. And, you know, Eigen layers is, you know, it's really like a decentralized cloud. It's, it's like an AWS or decentralized middleware for cloud services. And, you know,

I think that's what you're going to get from a lot of these shared security platforms across the different ecosystems. And we like JITO too. We own that. We're going to restake on Babylon. We're going to do that as well. We're restaking on Solair. So these are all things we're doing.

I'm pretty excited about that development, but I think the market doesn't understand it fully yet. They look at it as just kind of like a yield play. It's really not like a yield play. It's not a DeFi play as much as it is. These are going to be app economies. I think eventually people will look at Eigenlayers competing like an L2 with Ethereum. They'll value it like an L1 or an L2 in the sense that you have 100 AVSs, 200 AVSs being built on this network.

And, you know, I think that's how the market's going to look at it. Interesting. So, yeah, let's get a little bit more broadly into regulation, what we think is going to happen as our, I guess, our last topic. You kind of hinted at it there and the fact that these stuff built on top of Ethereum and these other DeFi type protocols. And we talked about the last episode and this episode before that, basically, like, honestly, they are probably better off.

with the changes that we've had in this administration, in this election, than Bitcoin specifically, right? The DeFi true protocols that had all this regulatory ambiguity out there, theoretically, if all things go the way that most people are thinking, they should have at least a little more clarity on

what they are allowed to do, what they can do, what they can't do, what have you. I guess, David, what are your thoughts on like, do you have a timeline and when we're going to get some of this clarity? Do you think this is going to be happening that happens in the lame duck session in the next few months? We'll see some clarity on different things. Stablecoins, Fit21. Do you have a view here on like when we're really going to know the rules of the road, if you will?

Yeah. I was at the SALT conference. Cynthia Lewis talked. She's talking there about potentially getting some stuff through with whether it's stablecoin or construction bill in the lame duck. I think that's not going to happen now that you have a Republican sweep. You're going to have Trump administration. They're going to want to put their

their policies in place. And I think that Congress is going to wait for the turnover of the session to do that. I think stuff with Congress is going to be much slower. As much talk as there is about crypto, I'm not sure that we're going to be a first priority in terms of passing legislation. I think it's probably a high probability that the stablecoin bill passes. I think there's a good chance you get, there's a chance you get fit

I think there's still a lot to learn and there's going to be a lot debated around the mortgage structure bill, which is probably the most important, at least for the altcoin sector, the most important legislation that's out there. But you might not need it. And there might be a lot more immediate things that can actually give you 80, 90% of what you want with FIT. Now, I don't want to say exactly immediate, but I think the agency stuff is what's key. So if you look at, and I think the one that most people care about,

is obviously the SEC chair. We did a survey with, I'm an advisor to a conference called Medici. It's one of the, you know, well-known institutional conference in crypto. We did a survey of allocators, fund managers, projects, and that's what the most impactful regulatory change would be, would be a new SEC chair. There's some debate, you know, we don't really know if Gensler is going to step down or not. I think there's some legal questions as to whether he can be forced out or whether he can just be demoted.

to a regular chair and then replaced. And then I don't think we really have a conversation yet about who's going to be. I haven't seen any, you know, there's been people floated. I don't see a poly market now. I think Dan Gallagher from Robinhood's maybe, you know, who's been floated as top of the list. He'd be very good. But there are other good people that have been floated that'd be positive for crypto. But to be specific, what are some of the things that could happen that could have a really immediate impact?

I think if I looked at it in time horizons, I think there's like short, medium and longer term. I think short term is, and I'll go into some specifics, but short term is just stop harmful regulation. Medium term is cut the red tape. And then longer term would be issue positive regulation. So like if I had to walk through those three buckets,

I think in the short-term bucket, it's SOB 121 is gone. That's pretty easy, which was the banks have to hold an equal amount of assets for the customer assets, their custody. I think that could be easily gone. That'll open up banks and flows for more institutional money to custody and hold digital assets. Then the other one is if you stop prosecuting companies, crypto companies,

I think you'll see more products on the market. And I think you'll see, for example, staking was going from cracking on the retail site. You'll see more exchange listings of tokens. Then in the medium term bucket, I think there's things like you'll see more crypto IPOs. So more capital formation. You'll see Circle go public. You'll see more Myers go public.

I think you'll see more activity there. I think that'll open up venture capital funding because now people who are stuck at later rounds who can't fundraise because the companies can't get acquired, there's dead money. I think that's good for that supply chain. I think there's going to be more crypto ETP products.

You've already seen some stuff like Bok launch ETPs. I think you'll see more ETFs. This is your specialty, James. I'm curious what you would think would be the most immediate, but I think GDLC, BiltWise, they've already converted. Maybe Ripple, Sol. Then maybe things like whatever has Coinbase futures. I don't know. I'd be curious what your perspective is on that, James. And then I'll talk about longer term in a second. Well, actually, I'll just go into longer term and I'll pick it back to you, James. I think the longer term stuff,

and this isn't stuff where you can accomplish the fit 21 stuff that's actually most important is if you can get um you know there's no regulated way to issue a token today because the tokens you can't issue with s1 with a token and meet all the standards that you require right it's like the oil and gas industry you need specific standards on these forms to allow you to be in compliance to actually do it like you can have you know different industries can have different

disclosure requirements. I think you can get some stuff like that for the token issuance. You can get more special purpose broker dealer licenses like the Prometheum stuff that have limited the ability for crypto asset securities to be

traded at a broker because you can't clear and settle them based on the current rules with holding private keys. And then if you get more cooperation with the SEC and the CFTC, like you have with Hinman, defining what's the security and what's the commodity, I think that's what really brings Stratify over. That's when you can see the banks become involved. That's when you get the real machine behind crypto. And that's where alts really do well. But I think that's a longer term story.

Yeah. I mean, my first thoughts are, one, all the reporting seems to be that Gensler's likely to step down. I mean, I expect him to be... You can make his life hell if you're Trump, if you really want him out. So I would expect him to step down personally. I mean...

What you were hinting at is kind of something we've been saying on the show, or at least I have been. I viewed even if Harris wins, like even if she won, it was likely to be slightly positive or at least neutral. It wasn't going to get any worse than it was under Biden, but I thought slightly positive just because, I mean, the one thing you didn't mention, which I can get into, but the first one is like the Wells notices, like just stop some of those. Like there's plenty of good actors in this space that receive Wells notices. I mean, just look at the biggest exchanges, Brian Armstrong's Coinbase, even the Kraken, like

immediate you come in, you can basically stop some of those actions, right? That's one of the first things you can do is stop going after good actors in space and focus on people that are doing really scammy stuff out there. It's like blatantly obvious of people that you can go after. And meanwhile, it's just better to go after bigger names because it looks better in press releases rather than saying you, you know, busted as something that was worth like $30 million. It's better to say I'm suing this multi-billion dollar company.

So I think one that would, I think some of that would have stopped or slowed at least under Harris, even if she had one. The other thing, which there was a really good podcast from Mark Andreessen and Ben Horowitz, where they talked about a lot of startups in this space, like they just couldn't get banked from Operation Chokepoint. So the fact that that's going to stop

Under under a new Trump administration, it's probably stopping now. I would have to assume like that should open things up greatly for the space. Just the fact that you're not under the thumb and like constantly trying to find banking to move money around in the space is going to be huge in the U.S.,

And then, I mean, there's a whole host of other things, right, that they can do. Just engaging in conversation between the SEC and the industry about rulemaking is something they haven't done. It's something that Hester Peirce and Mark Ueda have been calling for for years, and it just hasn't been done. It's been against the Biden admin's

policy and Gary Gensler, the Elizabeth Warrens of the world to even engage in this process. So even some semblance of conversation will be positive for the space. And then you asked, so yeah, Grayscale's GDLC, which is their large cap...

Crypto Fund is one of those trust products. They filed to convert it. Bitwise is BitW. They filed to convert it. Hashtex has an application out there to have a fund that will hold both Bitcoin and Ethereum. I think those things, it would make sense to approve them. That said, Bitwise is BitW owns 10 assets where GLC owns is basically almost all Bitcoin, Ethereum. And then I think there's a tiny bit. What's in there else, Dave?

David, is it Ripple and Litecoin or something like that? I'm not really... Solana, Ripple, something else, maybe. Yeah, we can look it up. But I think those could possibly get approved. Those have the 19B4s out there. The problem is, you can make the argument that something like Solana or Ripple or any of these other tokens... There's a filing for the Hedera Network, HBAR, to get an ETF from Canary Funds, which is run by Steve McClurg.

I don't know if those are going to get done anytime soon. We don't have 19 B4s for those, which are the ones that actually start the clock. We just have the prospectuses that are just like, you file those at the start and you go through the SEC that goes through a different division of the SEC than the one that would ultimately make the call. The problem is the precedent that's been set under this admin, and honestly, even under Clayton's admin, is you need a regulated futures market. You need a regulated market of significant size before they'll consider approving these ETFs.

Um, and yeah,

To be honest, there's no rule that says that needs to be there. So all of a sudden you get a new SEC that's run by a Republican that leans the way that Hester Person, Mark Ueda does, and you change the rules or at least you make it more clear about what is exactly needed rather than constantly denying and forcing issuers. I mean, you were at grayscale. It was just constant, oh, we have issue with this, this, and this. And they list 10 different things. You knock off seven or eight of them and then all of a sudden you file again and they add other issues that they wanted you to be concerned with.

And all of a sudden, if you had just had a conversation about like, this is really what we need to approve these ETFs, things would go a lot smoother. But I do think this new SEC admin would like to see a bunch of these spot products list. Maybe not until the end of 2025 at the absolute earliest is my view, but at some point during this new admin. That said...

Another precedent that's been set for years under the SEC is those 19 befores, they go through that process. It's that long 240, 260-day process where anyone who's paying attention to this has paid attention to the ETFs. It's like delay, delay, delay, and then deny or approve. Theoretically, there's nothing saying that the SEC has to keep delaying and then deny or delay and then approve at the final date.

So honestly, it could happen earlier. But my my understanding is that it's unlikely to happen. You got to remember when Gensler came in, he didn't he didn't get into his seat until like May or June. So it could be a long time before, you know, we get somebody running the SEC. I don't know if that's going to be the first thing on Trump's list to to get a new SEC commissioner in place.

And again, it also depends on whether or not Gensler is actually going to step down. I mean, I can't imagine him going from chairman to being demoted to a commissioner under Trump and then just sitting there and writing out his term. I just don't see him doing that. It would be the ultimate fuck you if he would do that. So in a way, it would be kind of funny in a bad way.

Yeah. I mean, he issued a statement saying he's proud of what he was able to do. They approved the ETFs. It was all this kind of stuff about these things. And I was like, I was kind of so disingenuous because it was like, you did everything to stop this from happening. Aside from maybe the Bitcoin ETFs. And you issued Wells notices. You've sued the hell out of everyone in this industry. Refused to admit that this 21st technology...

21st century technology might need newer rules and regulation than the 1940 Act, something that's almost 100 years old can regulate this stuff. I don't know. Common sense, in my view, just doesn't make sense to me. But here we are and-

Hopefully things are looking up. The other thing I would say, and I said this last episode, you're going to get new rules and regulations coming out of Congress. The SEC is going to come with new rules. The CFTC sounds like it's likely to get some control over regulating this market. The industry is not going to like some of the rules that come out of this, but there will be clarity. That's one take I will say. James, can I pick one to you on the ETF side? Yeah. Do you think there'll be...

spot or in-con creations for Bitcoin ETFs, or do you think that the cash creation rule is going to stay? Do you think that's meaningful? I don't know.

I think there will be in-kind creations and redemptions under this new SEC admin. I'm pretty confident I think that would happen. The reasoning behind not happening was basically Crenshaw was very against approving the ETFs at all. Crenshaw is a Democratic commissioner. This is kind of what I've been able to gather. If you read, she dissented on the approval of the ETFs.

And basically, from what I could gather, was the main reason that we don't have in-kind creation. I mean, back in December and late November, pretty much everyone, including Grayscale, BlackRock, was pushing really hard to allow for in-kind creation redemption. And that was just a line that the SEC wouldn't cross to allow. And from what I understand, that was mostly coming from the Democratic Commissioner, Crenshaw. And she's mostly going to be out of power soon.

in a lot of these things. She'll probably be writing a lot of dissents on the things that come about in crypto over the coming years. Look for issuers to throw a bunch of stuff at the wall. We didn't even talk about options, actually. So Bitcoin ETF options, the CFTC approved them last week. The OCC issued a letter today that basically saying they were going to be approved.

We could see options on iShares' iBit, the Bitcoin ETF, in the next day or two. And there's going to be a bunch of other ETFs that are going to have options. I don't know if it'll be on the same day, but that's coming down the pike. So not only are you going to see a bunch of potentially...

other altcoins get put into an ETF wrapper in the US. Look for a whole bunch of covered calls, structured outcome, structured product type ETFs and structured products in general from the banks. Once these ETFs list, there's going to be time where they're going to have to build up liquidity and open interest. But this is going to be a boon for liquidity of the Bitcoin ETF market as well. But

Yeah, to answer your question, I think we'll see in kind in the near future. And options are coming likely this week. They might even be trading by the time this episode drops. Guys, two topics before we go. I think it would be good to cover. One is, and we're over time, but these are important. One is, and we can be brief. One is direction of price in the next, say, quarter.

six months. The other one is what's happening in crypto in different categories. On price, I think the most likely scenario is we keep on running higher, as we were discussing before, into year end and running higher immediately. And eventually,

Within X amount of time, days or a couple of weeks, we get a retracement below the current level. That's quite normal. It's like people ramp up, there's a lot of FOMO and you get in and you get in the position and you start making money and you're happy. And then this is crypto, right? It's liquid and it flashes. And then you're in pain for a little time.

So what level do you think it goes down to? What do you think the support is? Like 75, 73? No, no, no. It's 80s. Like 84, at most 80, at really most. That's your all-in level. But again, it's first, it's up and down and up, right? Yeah.

And then I do believe in the super cycle. What does the super cycle mean? Super cycle means continued positive correlation with equities, which continue going higher through time. It's a structural bull market there. And at the same time, the dips on Bitcoin are more shallow. Now, as it already happened in this year, the

The shallow Bitcoin dip caused insane amount of pain in altcoins and altcoin holders because basically we, even though Bitcoin remained in a bull market, alts had drawdowns in the 80% to 95% range or 70% to 85% range. That was quite extreme and also extensive, right? That lasted eight months. So...

I can see, for example, we run a little bit up, then down below the current level, then continue higher into year end. We cool off, like say around Santa, like right after Santa rally that usually happens in equities events.

We cool off early January. We keep on running. We repeat the playbook of last year. We run into the end of February. Euphoria everywhere, positioning absolutely out of the books. That basically sets up the perfect scenario for another flash event.

that this time continues for a while, also paired with tax payments that in the US are April 14th. So that's basically March and April people are taking profits. So I think that we could see that. That being said, it's pretty certain we're going higher. Yeah.

what's your what's your what's your higher price target what number what number how high do we go at that i don't have february no i could make one up i can spin up spin up a model that is going to give you a different number but that's not how we make money i think it's usually the number the number usually falls short uh or is obscene right it's like yeah million dollars yeah the one thing i would say is like i'll believe the super cycle stuff maybe if uh

If we actually do see some sort of strategic Bitcoin reserve out of the US, if Lummis is successful in her bill and actually gets Trump on her side to do something like that, I think that would send things absolutely insane. I don't think that's that part of that actually happening. I don't know what the odds are of it happening, but yeah, that would just be mind blowing. David, what are your thoughts on short, medium and long term as far as Bitcoin goes and crypto goes?

Yeah. I mean, one point on the strategic reserve. The market has a 30% probability. I think that's too high. I think it's much less likely. And I think you can define strategic reserve in three ways. Are there states like Pennsylvania that have a strategic reserve? I don't know. We'll see. Does the treasury hold existing Bitcoin? Once you back out Bitfinex, which they don't really own, you got about $10 billion there. They could maybe transfer that and hold that with an executive order. We'll see.

Does Congress pass a reserve bill to buy Bitcoin? I think that's really, really unlikely. But, you know, could that narrative permeate through the market optimism to the inauguration and somewhat pass? Potentially. I, you know, on the price dynamics, I do not have as precise a forecast as Alex does.

We don't trade a lot. What we do is we try to have the right position. You get 90% long ahead of the election. We're 95% now. We're very much long right now into year end. See how we think about that in the coming weeks of the year and as we get closer to the inauguration.

Um, I, you know, do I believe in a crypto and digital assets are a long-term secular outperformance uptrend? Yes. But I call it a super cycle where we don't have, let's say 50% plus drawdown in Bitcoin. I think that's absolutely going to happen again. So I don't think a super cycle, that definition exists.

Nick, if I said you asked me over six months, if I'm bullish over six months, I start to think six months is tough for me that far out. I think some things that concern me that far out are, does inflation pick back up?

Does the Fed make a policy mistake and stay too high, too tight, or too long? Does China not ease where they need to because the dollar is too strong and they're trying to defend it? Does their economy completely deteriorate because they need to get IQT and they're doing fiscal, and that drags down global recession? Do some of these policy outcomes break the US into a recession? Or does this debt financing wall, the maturity wall in late 25 and 26, does that suck capital out of the financial markets and out of risk assets?

And those are things that I think could probably derail the cycle or, you know, give us a reset would be natural. And that's kind of the way I'm thinking about the market environment right now as I look out over the next six months.

You know, as I like to say, we can worry about that later. Exactly. For now? Yeah. So it's like we have at least till year end, you know, the Trump honeymoon. Trump honeymoon will end at some point. We don't know exactly when, but it's safe to assume that at least it lasts until inauguration, right? I would agree. I would agree. That is the thing about liquid markets, right? You don't have to care about it until you get a lot closer to it.

I listen to a lot of TradFi pundits and podcasts and stuff. And one of the sayings going around is, obviously what I said, take Trump seriously, but not literally. Another one is, buy the election, sell the inauguration, which kind of seems like what you guys are a little bit hinting at here in the crypto space. And the other thing, it's in the beginning of some podcasts. I don't know if it's...

Nick and Nick Carter and Matt Walsh's podcast on the brink or it might be Alex Thorne's Galaxy but it's just the opening is like if you're not long you're short and that just feels like kind of what

I get that gist from both of you talking about what's going on in the crypto markets right now. But yeah, overall, I think, I mean, honestly, if you'd come to me a couple of years ago or even like six months ago and told me what was happening right now, I would just be like, what timeline do you think we're living in? It's been almost too good to be true for anyone in the space. So we'll see how long that lasts.

Anybody have any final thoughts before we wrap up? Yeah, categories. So let's, I like to call it different categories. So we have basically, on one hand, we have a,

We have Solana, a category on its own, going up. The drivers there, on one hand, is insane trading activity happening in Solana, very large mind share. And then on top of that, you can add the possibility of an ETF becoming a reality in 2025.

We have Ethereum. Ethereum has not yet really participated in the match, but as we discussed, even if it continues underperforming, it should do well in absolute terms. Right now it's ramping up. It's having the first good day in relative terms in a while. It's up 4%. The story for Ethereum is, okay, one hand you have extreme negative sentiment, but

You have, as we discussed, the possibility of improving the ETFs to enable them to operate

stake, their AUM. And then the narrative of basically different DeFi protocols activating and turning their rev share switches on, revenue share. Same narrative that the latter applies to all of DeFi. So once Ethereum goes, DeFi should go. We have all the cheap layer ones, which are like, most of them are like debt. Like there's no activity whatsoever.

But there are still L1s, L2s, they're better to the market. When the market goes, they tend to run a lot. And quite a few of them haven't broken out.

So I see a lot of upside in all of those, like from, say, Nier to, say, there's quite a few of those. Aptos, the one running the most that takes all the mindshare right now on that category is Sui. And the reason Sui takes number one is because Sui

Sui has more money than anybody else. Let's put it that way. That's why they're doing so well. It's because they have an extraordinary treasury that allows them to buy a lot of support from everybody. So that's definitely a competitive advantage because to build a community, it's costly, right? You need to pay developers, founders,

In some cases, even influencers. So that's on the L1 part. We have the narrative of Bitcoin as reserve. I think you're right, David. It's likely going to disappoint, but at least it can keep us going for a while. It's not going to be... We won't have anybody come out and say it's not going to happen. On Bitcoin,

Together with that, we have the BTCFI category that right now is kind of very lackluster, but I think is going to catch up at a later stage, maybe in a month, maybe in a few weeks. But BTCFI is going to catch up, I think, on that. That's basically core stacks and the new guys coming, as David was saying, like Babylon. And there's quite a few others, right?

What else? We have meme coins going crazy. We have the large cap meme coins going crazy. That started with basically with Doge. As you know, we have the Doge department. So it's Doge caught up quite a bit. And that spilled over all these other large meme coins from Bonk with Dogecoin.

Pepe, and so on. I think, by the way, I think large cap meme coins are quite overextended. So if there is a flash, like risk reward, right? If there's a flash, meme coins would likely pull back much harder than L1s, right? And then we have the small cap meme coins, and that's where everybody's going crazy gambling on Chain.

And that is, yeah, all of Solana is, is totally dominated by Solana and it's mainly dominated right now by the, uh, AI meme coins, which are not really AI, but they're tied to it, to AI. We discussed the last, uh, podcast or two weeks, uh, four weeks ago when we talk about, uh, goat, uh, goat sea. Um, and, um,

There is a lot of, there's so much going on there. Most of the names out in the market, they are absolutely at stratospheric levels, but

So I think investors out there looking, I think it's not a fad. I think it's a narrative that is going to dominate and improve and get bigger and bigger and bigger. So good idea to pick some names and get positioned or try to specialize in this and research and find something.

names to get in early. I'm personally, I'm an advisor to a team that is basically building a platform for AI agents. I have pretty much quite a few AI developers on staff and that's how I'm positioning myself. More on this side, it's more as a builder than as a speculator.

You know, it's funny on the meme front, the night before the election, we put on a bunch of risk. And one way I did that was I surveyed 45 different funds and investors that I know. And I said, what's the best election trade? Behind Bitcoin, the overwhelming result was Doge. We put our big position in Doge for the election. And we actually still have it. It's gotten to be a large part of our book. I think

It's consolidating here. We'll see. I think these points probably have still a little more room if you think the market's higher into your end. But again, it's a game you've got to be smart about if you're going to be in. Bok as well, and I know Joe's big into that. I think on the fundamental side, you know,

We own and we really like Jito. We like stuff like that in our core thesis. I think that thesis is just getting going. They had their restaking caps open today. Some of those other different platforms. That's Solana's ecosystem's eigenlayer plus Flashbots plus Lido. That's what Jito is. We're in that as well. Their caps are getting filled up pretty quick. What else?

in terms of narratives and stuff. I think Solico's still humming along. SolDeFi's still humming along. We do own some stacks. I think, Alex, I mean, to your point on Bitcoin DeFi, you know, the thing that I actually track for Bitcoin DeFi or Bitcoin Fi, if you want to just call it,

is really like the 90-day Bitcoin return chart over whatever that pair is in Bitcoin. If 90-day returns are going up, then that correlation tends to be pretty strong, and this tends to be a catch-up trade. We'll see if it happens, but no future predictions here. I do think the current meta right now, within at least the more hot ball of money space, as you mentioned, Alex, is those AI meme coins.

We don't have any exposure there, but you know, it's, it's, it's not really core to our thesis. It's, you know, we could do something small, but it's, it's, uh, you know, I think, I think, you know, you need prices to keep going up in that space, but I think there's probably more attention added there. Awesome. I think that about wraps it up. You have any, uh, last second thoughts or rebuttals to, uh, David, Alex?

No, no. I think we're good. And it's also a very long podcast. Yeah, we're long, so we're good. It's late here. All right, guys. Thanks for joining us for this episode of Bits and Bips. We'll be back in two weeks to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone. And thanks, David, for joining us. Thank you, David. Cheers.