Finding Crypto's Next Big Trade | 1000x

The amount of effort I had to put into figuring out these fucking settings—Jesus Christ. We’re technical people, Avi. We try to move money around internet protocols. This is low stakes, I know, but honestly, it’s easier to use crypto than Twitch to livestream, and this is the biggest bull case ever for crypto.

I agree. Who’s building livestreaming on Twitch? This is a fucking disaster.

There is no bull or bear, although I did get a dog. His name is Baloo. I think it’s pronounced Baloo, from The Jungle Book. He’s got the Jungle Book wallpaper behind him, too. Hold on—come here. He wants to say hi to everyone.

Hello, Baloo. Hello, Baloo, Mr. Jungle Book. It’s B-A-L-O-O, Baloo. I just got him. He’s 3 months old.

By the way, if this were 6 months ago, Baloo would be a meme coin already. Should we kick off with whatever is going on with pump.fun?

What do you mean, whatever is going on with pump.fun?

I’ve seen a lot of stuff on crypto Twitter about how the pump.fun founders are earning a lot of money and something about how nobody who uses it makes any money. I’m not sure I agree with that, but it seems to be a bit of a scandal, which I think is inappropriate because, obviously, if you create a meme coin, you’re not creating a business. There’s no pretense around that.

Have you seen some of the hatred and loathing around meme coins and pump.fun recently?

The reality is that all of these things are just for the insiders. Using pump.fun, very few people actually make any money. It’s only the coin creators who make money. The people who buy are just trying to pump lottery tickets.

Murad has gone off the deep end a bit in terms of tweeting about meme coins, but he is a good trader. He has some really good points. It’s honestly safer to buy a meme coin that already has an established, crazy community than to try to gamble on something that’s sub-$1 million in market cap, because it’s really, really, really difficult for any of these things to meaningfully break through.

A lot of people have strategies to trade these things. During the last market, they would write programs to automatically scan every new contract that was put out, see if the contract was a rug risk, and see if a bunch of new coins were potentially going to be created. They would score them and assign a score to each new contract. Then they would make bets. If you don’t do it in an automated fashion, I think you’re basically in for a losing battle.

My experience with meme coins was that I never understood Dogecoin. When I was a professional crypto trader, I didn’t touch it because I didn’t think I could justify losing money on a dog coin to my backers.

PEPE came out during this nuclear bear market, when it was very hard to trade memes. If you’re investing $10–20 million of somebody’s prop-shop trading firm’s money in a frog coin and you lose half of it overnight, it’s pretty hard to justify those losses and keep your job. So I missed PEPE.

During this meme-coin frenzy, I was more of a solo, personal trader. I just opened Twitter one morning, saw Boden, started laughing my ass off, made a bunch of money on it, and got out 50 times higher than where I got in.

I don’t think that’s most people’s experience with meme coins. I think most people’s experience is getting shilled a bunch of garbage, trying to chase the next big winner, losing, and not having caught WIF, Boden, PEPE, Dogecoin, or SHIB in the early days. If you don’t catch one of these early, it’s just random noise. It’s very hard to trade a coin once it’s already a megacap. You have to catch it early, or you kind of have to stay away.

What do you think? Once it gets to megacap territory, like PEPE or WIF, how do you think about trading these?

I buy them as leverage during periods when I think Bitcoin can outperform. The most instructive thing you can do with a WIF, a PEPE, or any of these coins is look at the 4-hour chart going back—or even the 1-hour chart going back 3 or 4 days. If it started to bottom out on the BTC pair and you’re bullish on Bitcoin, you can actually short BTC and buy these coins.

That generally makes more sense if you’re trying to trade them. Instead of becoming an instrument of “Maybe it’ll 10x or 100x,” they become a very good leveraged beta play on BTC. That’s how I treat them once they get above $1 billion.

When Bitcoin traded at $50,000 or $52,000 and we were buying, it was like, “Okay, maybe buy some POPCAT or some things that seem like they’ve bottomed out against BTC as a leveraged beta play.” But I would never really hold these things for a 3x at this point. It’s just not the market environment for it.

The only time you’re going to see these crazy moves from memes that are over $1 billion is if Bitcoin is at $90,000. There’s just not enough money to push them up there. The idea of holding a meme above $1 billion right now, in this particular market environment, just doesn’t really make sense. You should be trading them and using them in the way they’re meant to be used, which is to trade.

There are a lot of really good pair trades in the market right now.

Wait. Before we get there, let me just try to understand this correctly. Let’s say I’m fairly convinced that the crypto market is going to take off to the upside in the next 1, 2, or 3 weeks, and Bitcoin is going to go to $100,000. You’re saying that instead of buying Bitcoin for a trade, I should buy POPCAT, WIF, or some established meme. I should buy PEPE or Dogecoin because it’s going to go up way more than 60%. It’s going to go up 5x, 3x, or 2x.

Is that the argument? When you’re bullish for a trade and really convicted, this is cheap leverage with limited downside. It’s like call optionality.

I’m never going to tell you that there’s limited downside to buying a memecoin. But at the same time, it makes sense to use them to trade when you’re bullish.

There’s a lot of asymmetry there. Something like WIF or POPCAT, on the initial move out of a bottom, if you’re trying to bottom-pick, can go up 40% or 50%. As was just pointed out, you can’t get liquidated if you don’t actually use leverage. If you have $100 and you buy it, you’re getting asymmetric leverage on BTC. That’s why people buy them.

If you haven’t been doing that, you should at least look at it.

It’s like a call option.

Exactly. It’s like a call option, but it’s a 3-day call option. It doesn’t have any theta, either. It’s just a better way to do it, and the liquidity is amazing. It’s not like you have to call up QCP and get ripped off to trade this call option. You can just buy Dogecoin and have a much more efficient expression of that nonlinear payout.

That’s what I use them for. When I get FOMO, it’s like, “Okay, let me buy some MEW, WIF, POPCAT,” all these random things. I don’t buy the small caps, and I would never even mention anything small because I don’t want to cause any trouble. The things I’m talking about are over $1 billion, for sure.

That makes sense. There was a moment when I went into Avi mode in my crypto trading career. There was a moment when it paid to get long low-market-cap meme coins, and that moment was when meme coins were having their arrival.

There was WIF, which had just hit, and a few other big ones. The entire world was investing. The money fire hose was pointed at this space. Everybody was lighting up a Phantom wallet and buying. That moment is done.

That doesn’t mean that memecoins are dead. It just means that the process for trading meme coins has to change. You have to update your process.

I really appreciate that because my process for trading memes felt like, “Okay, the fad is happening. Profit from the fad. All right, the fad is over. Get out.” But you’ve identified a new way to think about this stuff, which I think is super important.

You know what else is bullish? Baloo slobbering all over your white muscle shirt. He’s a very bullish dog.

What can I say? Even though his name literally means “bear” in Hindi, he’s a very bullish dog. He’s 3 months old, and I’m going to teach him how to trade crypto soon.

Did you get him with your girlfriend, who’s now your Twitter photo?

I did. That’s a new profile picture.

Wow. Amazing.

Do we have any broad views about crypto at the moment? I’ve felt pretty convinced that it’s going to break out for some time now, and I’ve been kind of wrong. It’s still locked in this earmuffs, Baloo, dogshit range.

I’m starting to lose faith that we’re just going to go vertical in the near term because there’s so much election overhang, which I really do believe is important for crypto. However, there are all these good tea leaves appearing in the market.

The first is that, despite what should be bearish news—Kamala leading, rumors that she’s going to appoint Gary Gensler as secretary of the Treasury, and all this horrible stuff—crypto is performing. You have price-action strength against weak news.

Also, NFTs aren’t rallying, even though people are saying NFTs are back. They’re not back yet; they’re just clearing. It’s kind of like what happened in 2008 during the housing crisis, when real estate was in free fall and nothing traded. Then suddenly, a lot of stuff was trading. That was the first thing you saw before a 15-year-long giga bull market in real estate.

Real estate is similarly illiquid to NFTs. Now CryptoPunks are clearing. You’re seeing 15, 20, or 30 of them trade per day. The floor is leaking upward. There are signs, but we’re still in this range.

Avi, are we about to break out to the upside, or is it still complicated?

You just said a lot of really interesting things. The first thing I’ll say is that I’ve been waiting for mid-to-late August for a very long time. It’s mid-to-late August, and nothing has changed except prices have gone lower, which is what I was waiting for.

The reason I was waiting for this is because I think Jackson Hole tends to be an event, especially over the summer. People want to de-risk. They don’t want to think about the market. They want to step away. If the Fed hikes a little bit extra, there’s probably going to be some nervousness in the market for about 3.5 seconds before the market moves on and starts to go up again.

People tend to step away during August. Come September and Q3, everyone comes back from vacation and says, “Okay, now it’s time to actually do the things we were thinking about over the summer. Let’s start allocating to BTC and ETH because there are these ETFs.”

I think a lot of people you would have expected to allocate to an ETH or BTC ETF simply haven’t, because you’re not going to do that in August. I do think there are genuine flows that are going to come in in September.

An additional point that I didn’t consider when I first said this—because I didn’t know Joe Biden was going to step down—is that Kamala has decided to step up and try to run for president. Kamala is having her “Obama moment,” right? She’s new, she’s different, she’s not Trump, she’s not Biden, and everybody’s talking about her. The media is pushing out this campaign.

The reality is that this woman is a terrible politician. She’s uncharismatic and unlikable. Once the public gets to know her more, I really think they’re going to get rid of her. They’re going to say, “There’s no way we’re voting for this woman.” She’s just not a good politician. She’s not very smart, either.

I’m not even super pro-Republican. I just can’t stand the idea of this woman becoming president. I know a lot of people—even Democrats—who feel this way. There’s no chance.

As Trump’s odds go up, as we pass Jackson Hole, and as we get closer to September, you start to get inflows into BTC. BTC has actually been lagging equities. Equities have retraced the entire sell-off, and BTC has not.

You have to ask why. It’s because there aren’t any real allocations right now. If you look at open interest and funding, it’s all come off. It’s all neutralized. People are starting to short, and everyone I talk to is sidelined. People have raised cash.

The moment this thing starts to go up and get away from them, I think all the shorts cover. I think all the cash comes in from the sidelines, and we’re back at $70,000 quickly. Then we probably have an October and November that we’re very happy about.

For the time being, I don’t know exactly when this is going to happen. It’s possible we trade down to $57,000 in the next week. I don’t know. All I know is that if I buy at $58,000, $58,500, or $59,000, I’m probably going to be pretty happy in a month.

In the meantime, to scratch that trading itch, there are a lot of really good trades in this market that I’m looking at. Tron has been talked about a lot. I didn’t realize that it generates the most fees of any L1 blockchain over the last 90 days.

They’re starting to lean into the meme-coin game. This probably lasts another 6 days, and then everybody gets out, but it’s a good trade for the time being. You can pair it against ETH if you want to hedge market downside.

I don’t like any L1 other than BTC, ETH, and Solana for a time horizon longer than 3 months. I could see how you could use Tron for a few days, but to me, Telegram—TON—is the most interesting megacap coin. It hasn’t budged since March. It’s unchanged.

If that thing isn’t rallying, I’m struggling to understand how any of these other L1s will rally. Telegram actually has applications being built on it that have product-market fit.

The one thing I was discussing today that’s interesting is that USDT on Tron is used pretty significantly across the board. If you want to rent a Ferrari in Dubai, you can pay for it with USDT, but it’s going to be on the Tron network.

Why not ERC-20?

I don’t know. I can’t tell you why. I just know that they prefer Tron.

I got a really interesting DM saying that there are a bunch of people from Iran who live in North America and use USDT on Tron to send money back and forth. I probably should report that to the FBI, but I just heard about it, so I haven’t had time to do that yet.

The other thing that’s true is Latin America. When I was in Colombia, you could pay for a bus. If you wanted to rent a car for 6 people—one of those Mercedes—you could do it in Tron.

It generates a lot of fees, and I think people are starting to wake up to this.

The one thing I’ll say is that, again, this is all hindsight. I didn’t have a position in Tron. I barely own any of it. I probably should buy more. But if you look at the chart since May of this year, it’s basically up only. Since December, it’s been up only.

Even against ETH, since the bottom on May 27, it’s up 20%. It really took off in the last couple of days.

Wow. That’s crazy. I haven’t paid any attention to Tron.

To me, Justin Sun’s peacocking and PR were like, “You’re just trying to be a protagonist. You’re basically the next SBF or Do Kwon.” I ignored it. It was a bit cringe and ridiculous.

At the same time, there is product-market fit. There are green shoots in crypto right now. Product-market fit seems to be blossoming everywhere, and I don’t want to sleep on it.

Polymarket has product-market fit. Coins have product-market fit. Tron apparently has product-market fit. NFTs have product-market fit. You had product-market fit in 2021, but they were priced wrong. Now you have product-market fit, and it’s priced attractively.

Something’s happening here. All these little corners of crypto are attracting usage in ways we haven’t seen before. I wonder if it’s going to lead to the disconnection from equities to the upside that you mentioned earlier.

As we’ve discussed on this podcast a thousand times, that’s the FOMO moment. That’s when institutional money and fresh retail money—not the same retail money that’s been here for 5 years—just piles in.

I agree with you wholeheartedly. That’s why I’m bullish longer term.

The way I section out my trading is that I have my fundamental core positions, which I’ve researched and really like and want to hold for a long period of time. I have my long-short book, where I put on things either for beta trades—for example, if Bitcoin sells off a ton, I might buy a ton of BTC, ETH, or SOL and then short something—or for shorts like Starknet, Worldcoin, and Sui, which I’ve discussed on a bunch of podcasts.

Then I have my real-money book, which is generally just catalyst trades or narrative trades. I always pair catalyst and narrative trades. The reason I pair them is that you inherently don’t want to take a market bias in those trades. You’re betting on a catalyst, an event, or a narrative.

Are you long one asset versus short another? Like long one and short Compound?

Something like that. That would have been a great trade. I didn’t do it, but just as an example, these are 2 massive assets, so I don’t feel bad talking about them.

CZ is getting released from jail in 40 days. I guarantee you that 2 weeks before he gets released, everyone will be talking about BNB. BNB probably goes up a ton, so I’m long BNB versus BTC because the chart looks good and because of that catalyst.

What I love about what you just said is that trade makes so much sense. If you discuss a trade idea like that in the commodities market, you get laughed out of the room because the underlying fundamentals don’t allow those things to happen.

But in crypto, you can literally say, “CZ is coming out of jail. No one’s talking about it. He’s probably going to do something. Maybe it’s BNB-related. At the very least, there’ll be a narrative. It should pump.” You’re right. Those sorts of trades work.

That’s what I love about crypto trading. There’s a lot of interesting blockchain technology going on, and there are interesting ways this technology can help move money and create the internet of value. But from a trading perspective, crypto has this beautiful thing where, for certain tokens at certain times, you can isolate just the psychological element of trading.

You can separate everything else—the broader market fundamentals—and just get long BNB because CZ is getting released from jail, and actually make money on that. It’s such a unique market in that respect. In every other market, those trades have basically been arbitraged out by machines. Not in crypto.

Somebody mentioned that the BNB-CZ trade is crowded. I disagree. It’s up 15% off a 5-month low against BTC. I don’t think that’s crowded. It hasn’t even reached the highs of this year against BTC.

Somebody in the chat has been making really good points. I’m sorry—I don’t know how to pronounce your name. We would have invited you on if we weren’t so terrible with the technology and I didn’t want to mess anything up. I really like your takes. We’ll have to do that next time.

We’ll have to figure out how to get people in here. I can see some friends of the pod and familiar faces in the chat. This is amazing.

I don’t quantitatively hedge the positions because it’s really difficult. Those ratios are inherently unstable, and we just don’t have enough price history for me to do it effectively.

The correlation between 2 assets might be 1 for 2 weeks and then go negative. It’s really tough in crypto. I’ve noticed a tremendous amount of instability in these ratios.

The best thing I try to do is calculate the beta to the asset and think about how the market environment would affect it. Then I come to a conclusion. I might do it 1-to-1, a little bit more, or a little bit less. But I don’t do things like say, “The position has gone up, so let’s rebalance and make sure it’s still beta-adjusted.”

I don’t do that because it’s very unstable.

You need a rebalancer to do those trades for you.

Exactly. It’s better not to do it yourself.

The other trade I kind of like right now is the AI trade. NVIDIA went up the entire way back. It’s up 30% in 5 days, and AI coins haven’t really done much. If Bitcoin gets above $60,000 and holds, you probably get a resurgence of that narrative.

The one thing I’ll say is that TeraWulf has done really well.

Wow. That’s crazy.

TeraWulf is doing really well. I think it’s still underpriced. I’ve held that position for months and have been accumulating it for a while. I really like it. I like the management team, the expansion plans, and the cost of electricity.

For people who aren’t versed in this, what is TeraWulf, and why do you like it? What’s the elevator pitch?

TeraWulf was a Bitcoin miner. They’re also signing contracts to build AI data centers. They basically have a plan to expand that’s very good, and they have a very low cost of electricity. They’re moving into providing high-performance computing for people who need it, and I think they’re going to do very well here.

Let me poke one hole in your thesis. A lot of miners are pivoting to AI. The mining space has ripped, and the price-to-earnings ratios are high. Why TeraWulf? Is it a pure narrative trade, or do you feel like it lagged and has a better plan?

I didn’t want to get too far into the details here, but they basically have a site called the Lake Mariner site. It’s an extremely valuable and underappreciated asset on their balance sheet. It’s going to take a while to convert it and actually provide these services, but I don’t think the Street has appreciated how much they’re going to be able to provide from that site.

It hasn’t really been discussed enough. That’s why ARK bought it and Soros bought it. I also think the management is really good. These guys have been in the electricity business for 30 years, and you can’t really say that about any of the other miners.

The management team is a lot more confident. That’s why it’s really the only miner that I own. It’s the only miner I hope to see in traditional finance markets as a kind of crypto proxy and AI proxy.

You mentioned electricity, which I’m glad you brought up because I have a take on this.

I think the way AI is going to scale—how it’s going to consume compute—is that, at first, the demands of AI search, which consumes something like 10x to 100x the energy of a regular search, can be met by centralized providers of compute.

Providers like TeraWulf, OpenAI, and Google will be able to keep up because they can source the GPUs and silicon they need to run our current level of humanity’s searching needs. But as the volume of queries that the world currently pipes through Google shifts from Google to AI engines that contextualize search and consume 10x to 100x as much energy per query, centralized operators will no longer be able to handle it cost-effectively.

My thesis is that electricity, not compute, is what drives AI into the world of decentralized computing—crypto, basically. The more homework I do on Bittensor, the more I think this is the platform that will provide compute in 1 or 2 years, when query volume goes exponential on AI.

Every person is paying for electricity in their apartment. They’re not going to notice if their GPU consumes a little bit more. I think the way AI queries need to scale is a horizontal problem.

Horizontal scaling means that every Joe out there is mining a little bit of TAO and trying to earn a little bit of this distributed computing revenue that’s going through the internet. It’s not necessarily a problem that can be solved with vertical scaling, where one operator buys all the GPUs and sources all the power.

I think the GPUs will be available in significant quantities to centralized operators, but electricity will not. It’s too complex. You need the electricity problem to be distributed.

I think it’s actually a commodities question that’s going to cause AI to go decentralized, and I think Bittensor will benefit—not necessarily because of the compute. The compute is there on Bittensor and in centralized modalities. It’s really the power that’s going to force AI into decentralized computing.

It’s a nuanced take, but to me it’s pretty crystal clear as a commodities guy.

That makes sense to me. I don’t really know how you draw the connection between the decentralization of electricity—or the decentralization of AI happening because of electricity—and how Bittensor necessarily benefits.

Basically, there’s going to be a baseline network of providers of powered compute for AI queries. That will be a network of centralized providers that we’ve already discussed.

When demand exceeds supply, you need some sort of marginal producer of powered compute to come online. That marginal producer is probably a random guy somewhere in the world.

That’s fair. Regardless of how this specific thing plays out, I’m fairly confident that over the next 3 weeks you’ll see a resurgence in people betting on AI because of how well NVIDIA did and the fact that people in the crypto markets haven’t really caught on to it.

Even today, AR is up a ton and doing very well relative to the rest of the market. You can run all these as pair trades.

But just to take a step back, I think the move toward decentralization is always going to be forced by costs. That’s why people do it.

In a globalized world, it makes sense to run things in a decentralized manner. As technology advances, every day a human can do more and more. The leverage you get from using a computer today is far greater than what you got from using pen and paper 200 years ago.

When you think about something like Helium, it was never possible before for an individual person to provide wireless services to somebody just by buying a piece of hardware. That technology didn’t exist.

Now that it does, you can provide lower-cost services through decentralization because it’s easier for one person to provide that service as technology grows. AI is doing the same thing. It allows one person to provide a service they couldn’t provide before, which makes sense for the marketplace to be decentralized.

Instead of having to aggregate a bunch of people in one area, you can get the same output from individuals all over the world. It just makes more sense.

That’s one of the reasons I’m super bullish on Helium.

Helium Mobile is adding something like 400 subscribers a day right now. It has added almost 880,000 new subscribers year to date, which is crazy. AT&T and Verizon have added about 550,000 new subscribers. Helium is already onboarding a little bit more than 133% of all the subscribers that those 2 companies are adding.

If that headline had hit the market in 2021, Helium would be up a bajillion percent. Now people are so jaded with crypto that they’re like, “Show me that Helium has disintermediated AT&T, and then maybe we’ll consider buying the token.”

It’s totally outperformed the market. It’s one of the things I’m most proud of holding because I actually think it’s solving a real problem in the world.

Somebody asked whether Wormhole and the other projects were going to zero. I agree. Bridges and L2s are basically going to zero. They’re infrastructure that nobody wants or needs.

There was an undersupply of block space and infrastructure for about 10 seconds 3 years ago. That era is over. Now there’s an oversupply of block space.

It’s nice that you can bridge from L1s to L2s. It’s nice that Across Protocol is there to help you get your assets onto Base cheaply from the mainnet. But in terms of cross-chain protocols, the reality is that nobody cares.

L2s are cannibalizing ETH, and I think we’re going to see activity congregate onto specific chains—Solana, TON, and maybe Ethereum.

Ethereum’s user experience is pretty bad.

Should I sell all my ETH and rotate it into TON?

My personal view is that there’s no reason to hold any of it. We’ve talked about this, and I don’t want to rehash it.

We’ve actually talked about the opposite. We’ve talked about how ETH is hated and is coming back. We’ve never said it’s over.

Every time I’ve made this argument, I’ve said that ETH is bullish in the short term because of flows. Over a long period of time, I’m very bearish on Ethereum. This has been a clear stance of mine from the beginning.

Yes, it can do well because of flows over a 6-month time frame. But over a 5-year time frame, I see no reason to hold it personally.

I see it losing badly because its user interface isn’t great. The lack of leadership is worrying. It’s a completely decentralized network, but if there’s nobody building on it, what gives it value?

Bitcoin doesn’t depend on builders as much, because what gives it value is that you buy it and hold it. I can tell people, “I bought this thing. You should buy it because it’s digital gold, because it will protect you in times of inflation, and because it will do all these amazing things for you. It will save you if you need to flee in the middle of the night because Jew hatred is getting too much.”

You just have to buy it. That gives it value.

Ethereum needs people to build on it for it to have value.

But they are building on it. They’re just building on L2s.

Kind of. Even L2s are underappreciated. Stablecoin market cap is at all-time highs. I don’t know what percentage of stablecoin transactions occur on Ethereum or Ethereum L2s, but I would guess it’s significant.

Polymarket is doing well. There’s plenty of activity on L2s.

L2s can take off and become interesting, but they’re going to cannibalize Ethereum. That’s what we’ve been saying for a very long time, along with a lot of other people. Everybody who was invested in L2s ignored us, but the reality is that L2s cannibalize activity on ETH and don’t provide enough fees to ETH to make it worthwhile.

L2s are uninvestable, too. Their tokens suck, and they make ETH less valuable.

L2s play spoiler. Their own tokens suck, and they make ETH less valuable. They’re like RFK or Ross Perot: they spoil it for the main guy and make him lose.

So basically, you’re saying I should keep my CryptoPunk and move all my other Ethereum assets?

I like NFTs. NFTs are great, but only the ones that have real history, real provenance, and cultural relevance. Your CryptoPunk has that. My EtherRock—Rock 83—has cultural relevance.

This Twitch setup headache was worth it. It’s fun. It took me so long to figure it out, but I figured it out.

The tech setup was an absolute nightmare. I don’t know what I’d rather do: have Kamala be president or go through that tech setup again.

We have someone here literally offering to be our new engineer.

I’m down.

To talk about the general market one more time, my view is that we’re going to have a great year.

People are worried about Jackson Hole and whether they might cut 50 basis points. It doesn’t matter. What matters is growth, the data, inflation, unemployment, and earnings. That’s what matters.

It’s an election year, and a lot of people are politically sensitive. I hate to keep beating the election drum, but crypto has become an episodic macro asset, just like many other things I’ve traded in my career. You have to pay attention, or you’re going to miss opportunities.

One of the biggest opportunities I’ve seen this entire year was something we shouted out on our emergency 1000x podcast. Crypto nuked as crypto and stocks nuked in the middle of a very sensitive time for Washington, and they telegraphed very dovish things very loudly.

It seemed like an obvious dip to buy across equities, crypto, and all risk assets. We shouted about it, and frankly, we were right. I think you have to buy these dips in this particular election year.

The room-temperature take is that the Fed is made up of smart people who know something we don’t, which is why they’re cutting 50 basis points.

The Fed isn’t necessarily made up of people who know something we don’t. They’ve proven they’re not. Real money doesn’t even follow that anymore. It’ll be a blip.

The only thing that would really change this is a deep recession. In my personal opinion, that’s not coming, based on the data.

What it would take for a big recession to come is policy error. You would need Kamala to get elected and institute price controls. You would need Trump to get elected and put 80% tariffs on auto imports or something crazy.

You would need policy error to cause a recession at this point, or a massive commodities supply shock, which I don’t think is going to happen. I think Iran wants détente. I think Russia and Ukraine are more likely to end the war next year than not and flood the world with hydrocarbons.

Honestly, I don’t see a recession. I’m a macro bull right now. I like all equities, especially on dips. Against the backdrop of rates going down, the macro tailwind for crypto looks insanely good.

But when I say crypto, I really mean Bitcoin.

What worries me when I look at my portfolio is the potentially toxic risk of my ETH allocation, which is substantial. Is it going to become a flaming pile of elephant shit, or is it going to skyrocket past Bitcoin and outperform like crazy on institutional adoption with a friendlier SEC?

It feels binary. I don’t know what’s right or wrong, and I’m getting a little uncomfortable with that part of my portfolio.

Some days I think, “Trump’s going to win, the SEC is going to get friendly, institutions are going to start settling, and ETH is going to the moon.” Other days I’m just like, “Why do I even own this thing? I want to get out of all of it and rotate into things I’m more excited about.”

Somebody asked why BTC is underperforming both the Nasdaq and gold if the Fed is going to cut 25 basis points, unless nonfarm payrolls are shockingly bad.

Bitcoin never really follows gold. It follows gold over very short periods, but if you look at month-to-month correlations, it doesn’t really follow gold. It mainly follows the Nasdaq.

There are fewer people looking at crypto and less allocation into crypto than there is into equities. A lot of people who sold crypto sold and are just waiting on the sidelines because most people don’t have a mandate to be allocated to crypto, whereas people do have a mandate to be allocated to equities.

Generally, when equity markets sell off and then bounce, it’s rare that Bitcoin outperforms. What usually happens is that when equities stabilize, Bitcoin starts to rip.

Krüger said 50 is needed now and that 25 would be an error.

No, that’s just wrong. Fifty isn’t needed now.

With stocks back at their highs, I think a 50-basis-point cut would have been more on the table a week and a half ago. The Fed is much more reactive to stock markets than it would like to admit.

Who are you texting?

My mother. I hear the click, click, click, so you’re like my mom, who has the sound on. I’m listening to you; I just have to respond to her before she gets upset. She texted me some wild stuff.

Is she in the chat?

No, she’s not in the chat.

Girlfriend? Who else is a girlfriend?

Your girlfriend?

I’m not a doctor now.

She asked me today if I was going to quit because she looked at Bitcoin and said, “Bitcoin’s under $60,000. Are you going to quit? What’s going on?”

No med school yet.

My wife asks, “How much do we have in crypto again?” I tell her the number, and she says, “What the fuck? What are you doing?” I get shouted at, basically. That’s just how aging goes.

They’re asking us personal questions. What did you go to college for?

I graduated with degrees in chemical engineering and computer science.

I did economics and operations research, but no one knows what operations research is, so I just say statistics. It’s basically that, but with a little bit of engineering on top.

Chemical engineering was the worst mistake of my life, to be honest.

The reason I studied chemical engineering—not that anyone cares—is that I was fascinated, super fascinated, with the way water moved. I wanted to figure out how to think about it.

You know how you take the drain off your bathtub and see the swirl and wonder why it does that? It turns out that the way you model the movement of water is with the Navier–Stokes equation, which is literally unsolved.

One way of solving it is Newton’s method, where you iterate through a bunch of numbers to try to figure out the actual answer. What I found out is that, for the whole reason I went into it, they were just like, “I have no idea. It just does.”

Then I fell in love with thermodynamics, so that was fun.

Thermodynamics is great.

I started in physics, too. I used to work at Lawrence Berkeley National Laboratory at the particle accelerator. It’s called the ALS, the Advanced Light Source.

One thing those subjects teach you is to do your own research, work really hard, and try to solve complex problems by sitting there and grinding them out. That’s valuable even in crypto.

The other thing those subjects teach you is how much stamina you need to sit through 60 years of researching a question whose answer you may never find.

A lot of people who study the hard sciences end up in trading because they want a shorter feedback loop. They want to know whether what they’re doing is working or not. In trading, you still get to use math, think about statistics, and solve complex problems. You just make a lot of money.

Or lose a lot of money.

And then you go back to engineering.

If anyone here is studying at university right now, getting an engineering degree was the best thing I ever did for myself. It taught me how to think.

I probably wouldn’t have chosen chemical engineering, because it’s really fucking hard, but engineering helps you learn how to think.

My girlfriend is calling me. Well, that’s the end of the episode. Not financial advice. Love you all. Do your own research. We don’t know anything. I know nothing. All right, coming. See you guys. Got to go some grass. See you later. First Twitch.