Trading Crypto's AI Moment In 2025 | 1000x

Hold on to your cycle bags. Don’t do anything stupid, don’t pay too much bid-offer, and don’t listen to us. This is not investment advice. That’s basically the summary.

This episode is brought to you by Definitive. You’ll hear more about them later in the show.

Happy New Year, everybody. Welcome back to another 1000x podcast. I’m calling in here from Florida on the last day of my quote-unquote vacation from the crypto markets. It’s been good, and it’s played out exactly the way that we discussed last episode: we bottomed. You know, I tweeted this out: pick your spots, buy your altcoins, but just make sure to be done by the New Year.

That has played out really nicely this year and last year, where December 31 was basically the bottom on a ton of different coins. Now we’re back up. Bitcoin rallied from $92,000 to $98,000, and alts have posted anywhere from 15% to 40% in aggregate. The one standout has obviously been the AI coins, which have done extremely well. I’ll take credit for that because ever since Jonah and I launched 1000x on Virtuals, it went from $2 to $4, and that has to be because of us. I don’t see any other reason why that would be.

Yeah, it’s clearly—we’re the only thing going on in crypto right now. It feels quiet, even though the market’s rallying like crazy. Every single daily candle this year has been green, so it definitely feels like somebody’s TWAPing into crypto. I’m not sure who.

I think both of us fully expect this to continue throughout Q1, especially after Inauguration Day, when you remove this massive drag on the space, which has been adverse regulation. Gary Gensler is expected to resign on January 20, Inauguration Day. Even if no pro-crypto bills get passed, to me it feels like the absence of that overhang is super bullish. I think the setup looks great.

In terms of the places where you gamble in a degenerate way, meme coins are out. AI coins are the new meme coins, and I like it. But I’m struggling to understand why some of these projects need a token. I can kind of understand the rationale for linking a token to your AI agent in some use cases.

For example, let’s say you wanted to use it as a marketing tool and commit some of your revenue from marketing activities to token buybacks. That’s a way to organically create an incentivized community around your marketing project. But I can’t tell whether there’s utility in the token or whether it’s just a meme coin like WIF or Popcat, but slightly sparklier.

I mean, that’s my take on it, too. In the future, people are going to figure out ways to link these things to more value. One of the ways that we’ve discussed potentially adding value to 1000x is: what if we take some of the podcast revenue and use it to buy THX? That’s the way I think about it.

These AI agents consistently have a token attached to them because they’re being started by things or people that don’t already have a token attached to whatever project they’re working on. They’re making a new project out of this AI agent. Obviously, existing projects can launch AI agents to help with their broader brands, but they’re already going to have a token or equity that exists.

A lot of these agents that are popping up have the token explicitly associated with the agent because it’s an entirely new thing. That’s kind of what we did. We didn’t have anything that people could interact with that was attached to the 1000x podcast other than listening to it, and now we do because of this agent.

You can’t really classify what these tokens are as a whole. The majority right now are definitely just memes, but in the future people are going to launch these agents because they’re good for their broader brands. Who knows? Maybe Coinbase will have an agent that tweets out one day just because it gets engagement.

That’s the future. Every single criticism of these AI agents doesn’t take into account how fast things are developing. Today, they’re not useful, but in a year these things are going to be exceptionally useful. Some of them are already useful. AIXBT is basically summarizing half of crypto Twitter and tweeting it out every few minutes. It’s insane.

It is. I agree that most of it’s useless, and in the future, when people figure this out, many of these things will be useful. That’s why the infrastructure layer of AI tokens has taken off, while some of the agents themselves are hit or miss.

By infrastructure layer, I mean Virtuals and ai16z, which are the 2 big platforms that allow you to launch agents. The tokenomics of Virtuals are pretty insane. You pay for compute if you run a Virtuals agent, so there’s constant buying of that token to pay for compute, because every time the agent tweets, it has to access an LLM and think a little bit.

To me, buying ai16z or Virtuals is like buying an L1. This take isn’t original; it’s been well publicized on Twitter. That seems like the safe place to go. I think we’re going to hit some point in this cycle, probably in the next 6 months and most likely in the next 3, where everything AI-related just 10x to 100x’s for no freaking reason.

I think that’s where the next mania is coming. As George Soros said, when you see a bubble, try to catch on to it somehow. That’s my personal bet. I’m not going in with massive size, but I definitely think it’s worth a chunk of your portfolio to bet on a 10x in some random AI infrastructure play. I wouldn’t bet on the agents, though. I have no idea which ones are going to rally and which ones are going to go to zero. To me, that feels like memecoining without any conviction.

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What’s really interesting is that even when the market was doing poorly, these coins were doing well. I think what that tells you is that there’s still tremendous appetite for novel products and anything that pushes the boundary a little bit. People are there to buy it.

That’s why I do think we don’t necessarily get a massive, broad-based alt season until Bitcoin gets to something like $110,000 or $120,000. If it were going to happen, it would have kind of happened by now. I think it’s going to be a little bit more targeted.

My bets are still on the agents, but also on Ethereum. I think I mentioned that I was very constructive on Ethereum heading into the New Year, and that still remains the case. Right now, we’re going to see a lot of new allocation into the space coming in after the New Year.

Yesterday, we had one of the largest inflows into BTC ETFs—$998 million—and that’s an indication of people who decided to buy but were waiting to buy until the New Year. Realistically, over the first 2 weeks in January, you’re going to start getting a lot of new allocation into the market.

We’ve been seeing consistent flows into the ETFs, and that’s going to be a big boon for ETH. All of those new allocations are going to look similar to what we’ve seen before, but in larger size, and ETH is going to benefit from this as well. I think we can see some pretty explosive price action heading into the inauguration.

One of the things that I used to think, and now no longer think—because in trading you always have to incorporate new information—is how the market looks when it heads into an event. 3 months ago, I predicted that we would top near the inauguration because I thought we would have a face-melting rally if Trump got elected, all the way through the inauguration. That turned out to be wrong, so I revised my opinion on the direction of the market.

Now I actually think that we start to rally into the inauguration and then continue to rally through the inauguration, because we’ve already washed off a lot of the excess. We went from $108,000 back down to $90,000 and nuked open interest on basically every altcoin you could possibly think of. The market reset itself, and now we’re seeing—or I think we’re going to see—new, steady inflows.

Through the inauguration, you’re going to get a pretty substantial move from the markets. Not only that, equities are now supportive again. The S&P and Nasdaq were up 1.2% and 1.6%, and what this tells me is that the fears of the Fed’s hawkishness have washed out of the system. It’s been ingested.

I said this on the last podcast: whenever you get a move like that in equities on a Fed announcement, it’s a complete and utter fade. The reason is that the move is pricing in everything that you need to know, unless it’s a genuine paradigm-shifting moment—unless it’s an inflection point, like going from not having cut rates in a really long time to starting to cut rates, or from not having raised rates in a really long time to starting to raise rates.

What they did is just say they’re going to slow down. That’s not a paradigm shift. I think equities are in a very good spot right now because of this.

There’s a lot to unpack in that statement. You talked about inflows and the macro backdrop, so let me respond to each one.

On inflows, I think they’re just going to continue. The BTC ETF inflows you just mentioned are the tip of the iceberg. I think we’re going to see multiple days like that in Q1. I don’t really see outflows occurring either, especially since CME basis isn’t that high right now.

I doubt a lot of that is against futures. I think it’s literally just fresh capital coming in, because that’s how allocations work: the year starts and new allocations come in. You’ll see ETF-related inflows. FTX dollars are going to hit the market sometime in Q1, and I think all of that is going to go toward buying crypto.

I know some hedge funds had claims and will probably cash out, but I haven’t checked the data. Even if it were just 50% of the $16 billion or whatever they’re going to pay out, which is still in retail hands, I think you see at least a few billion dollars of that come back into crypto.

Another form of inflow we could see this year is a Solana ETF. Polymarket is pricing a 75% chance of a Solana ETF being approved in 2025, and a 50% chance that it happens before July 31. I think a Solana ETF would launch with a lot more strength than the ETH ETF launched with last year.

There’s a group of people out there in the financial industry and in retail who would like to buy a Solana ETF but maybe can’t buy Solana right now because it’s either illegal for them to do so or they’re just not on crypto exchanges. They’re normies; they’re no-coiners.

Solana has enough of a brand that I think it could attract some new capital into crypto, especially after the Solana unlocks occur. I think it could be particularly bullish for that token. Inflows are coming from every direction this year, especially institutionally.

On the macro front, I’m reading macro blogs and paying attention, but I’m struggling to find a negative catalyst, and that worries me. The macro backdrop looks so primed for success—for another huge, amazing year on every level. GDP growth, equity-price appreciation, home-value appreciation—I think the economy’s looking good.

A lot of the Trump administration’s advertised policies are bullish for macro. The Fed isn’t going to do anything crazy, and there’s no inflationary shock on the table. I guess the only thing waiting in the wings is the proverbial black swan, so I’m a little nervous. It all looks a little too good.

You could have said that in any year between 2010 and 2020, held off on buying, and you would have been wrong. I think it’s time to just buy with both hands again. The macro looks so good that it’s kind of crazy.

It is. I’m honestly just thankful that we washed people out before the inauguration, because I really thought it—

What’s funny about crypto is that a lot of the peaks and bottoms are decided by emotion in a huge way. If we had a genuine sell-the-event like the inauguration, that could have actually taken a long time to recover from. Imagine that instead of going from $70,000 to $108,000 and back to $90,000, you went from $70,000 to $140,000 to $90,000. That’s actually a lot worse.

Oh, yeah. That would have been rough.

A move like that tends to lead to people being very scared to come in. This type of movement is constructive. Yes, we had a dip—you go down 15% or 20%—but it didn’t implode on itself, and it held pretty nicely.

That type of price action is psychologically affirming for people. It says, “Yes, remember, this is a volatile asset, but it’s not over. Come back in. The water is warm.” A lot of it has to do with psychology.

Then you have the inauguration. Instead of it being a sell-the-event, as I’ve been saying, it’s actually a buy-the-event. People are going to start buying for it. As you pointed out, there are so many things that are going to go crypto’s way this year.

One of the trades that I was really pissed about missing, Jonah, because I got the first 2 and missed the third, was—well, I nailed the GBTC trade and nailed the ETHE trade at the discount. There was a Bitwise 10 Crypto Index Fund that was the last traded thing. It was trading at a discount prior to the inauguration, around 20% to 25%, and now it’s flat and up because everything in it is up.

I was sitting there thinking, “Oh, man, I should have remembered that one. I should have loaded up on that one.” That would have been really nice. It has some XRP in it, which is why in 2022 it was so cursed, and I guess this year it performed.

Yeah, I hadn’t really looked at the Bitwise 10 Crypto Index Fund. That sucks, because we did a good job on those other ETFs. We crushed it.

Another one we missed was Sui. What the heck is going on with that one? Is it in the top 12 now? I don’t understand. There are so many trades that I’m missing left and right. Most of them don’t bother me, but a Bitwise 10 Crypto Index Fund is annoying because we literally did that same trade on 2 other ones successfully.

Sui, I can’t tell whether it’s the next Solana or whether this is just one of those head fakes like WIF. It doesn’t really make any sense, and you can’t blame yourself too much for missing it. I genuinely have no freaking idea.

However, what I will say is that this is very good for my Berachain bags, because it sets the ceiling for fake L1s so high. Sui is an interesting case, because the reality is that I don’t believe it’s a good platform. It’s not really competing as an L1 in any meaningful way.

What you have to remember is that sometimes L1s get niche communities. Cardano became massive off the back of just having a strong niche retail community. Fading things like this is very difficult.

Even if you faded Cardano—if you shorted Cardano—it was basically like shorting any other altcoin. You weren’t eking out extra juice from shorting Cardano compared with shorting basically anything when the market topped.

A lot of people ping me and say, “Sui has to be a short here. This is the easiest short I’ve ever seen in my entire life.” The reality is, no, it’s not, because the risk-reward is still pretty bad.

Sui will continue to do well as the market does well, or until something catastrophic happens, like the team deciding to sell everything all at once. If that’s your alpha, then track the wallets. But at this point, it’s captured mindshare in a pretty significant way.

The number-one predictor of whether a coin will continue to do well or whether it has reached its peak is: has CT started to buy it? Everyone on crypto Twitter hates this coin with a passion, Jonah. They talk about it all the time. They say, “This doesn’t make sense. This is dumb. This is stupid.” Then it keeps going up.

Once those people capitulate, maybe it’s time to be over. Until then, you just leave it alone. I don’t know how to buy it. I might trade it technically, because it actually respects its levels really nicely. It flips resistance to support very well, and it breaks out very nicely.

It’s actually a good trading asset. It’s not something that I would hold, but that tends to be true with these types of assets. They tend to be very good trading assets because there are no fundamentals attached to them, but they have so many people buying and selling at the same time—people who are all completely uninformed—that it makes for a very good trading asset.

You can eke out 5% or 10%.

You mean a technical trading asset, right? There are literally no fundamentals for this thing. It’s just charts—the stuff that TradFi people consider voodoo.

Consider it voodoo all you want; it works. The thing with Sui is that it’s actually better distributed than any meme coin.

That is true. Reasonably distributed coins tend to be more concentrated.

Here’s the thing: let’s say you really hate this thing and think it’s trash. I’m going to tell you how to trade it. I’ll tell you how to short it.

In almost every crypto asset that you see, when it goes up like this, it has a moving average that, for some reason, it respects. This is voodoo, and for Sui, that happens to be the 50-day moving average.

Since September 1, it’s broken above and retested that moving average 1, 2, 3, 4 times, and that has been the bottom. This is its established trend. What you want to do is wait for Sui to break below that moving average for 2 to 3 days. Then you want to wait for a bounce.

Break below the moving average, wait for a bounce, and then short the bounce. I’m telling you, this will work. Bookmark this—we’ll come back in a year. I’m telling you now, this is going to work. There’s an 85% chance that this happens. This is a very high-hit-rate trade.

I would be shocked—well, okay, never mind. Let me start over. I think this is a terrible market to short anything. We’re going into a white-hot mania phase sometime this year, so I wouldn’t want to be short anything, especially not some random altcoin that goes up every single week for no reason.

However, if you’re right, I will give you your flowers. I will capitulate.

I didn’t say short it now. I said short it when it gets below the 50-day moving average, stays below it for 2 to 3 days, and then has the next bounce. Wait for that bounce and short it, because at that point the thing is over.

People are buying this thing because it’s going up, and they don’t know whether, when it goes down, it’s a pullback or the end of the trend. The way that trends die is purely technical. It’s purely technical the whole way down.

Once it breaks below that moving average that has been support this whole time, people start to sell. There are always delusional, hopeful people who think that if it’s down too much from the highs, they’re going to buy it. That causes the bounce.

By that point, the trend is broken, and all of the people for whom it was too painful to sell on the way down—but who know that the trend is broken because that’s what they watch—start selling.

Yeah, I buy that. You’re basically saying to identify a metric or heuristic that tells you when the air is starting to come out of the balloon, and then get short before the balloon is fully deflated.

My TradFi brain struggles with technical analysis, because in assets with fundamentals, technical analysis is voodoo for the most part. It’ll help you gauge sentiment, and trends are real, but for the most part, if you’re trying to make money trading trends while ignoring fundamentals in markets like equities or commodities, you need to have your head examined.

Here, Sui is one of those things. It’s like XRP, too. They look like random-number generators to people who aren’t deeply involved, and there are so few people who are deeply involved that it makes the rest of us wonder what’s going on with these things.

I agree with you. This isn’t like Dogecoin or Bitcoin, where the community and CT just love the coin. This one will tank hard. I like your idea. I’m going to keep an eye on that 50-day moving average and watch. It would be a collective sigh of relief from the crypto community if vaporware L1s just disappeared.

Nothing against Sui. I’m sure there are good people working on it. But for the traders out there who are trying to make sense of the market, this is something that makes you question yourself and your process.

Totally. At the end of the day, a lot of these types of trades just boil down to the pure market psychology of the holders. It’s very important to understand when technical analysis works versus when it doesn’t.

If there’s an excess of uninformed market participants, technical analysis works, because technical analysis is simply psychology at the end of the day. A lot of people think technical analysis works because other people are doing technical analysis. That’s not really why it works.

It works because when there’s a mass of uninformed market participants, the concepts of support, resistance, and trends are ingrained in their minds without them even knowing any technical analysis.

I’ll give you a very simple example. When something breaks out above a previous high after a retracement, the psychology, in terms of technical analysis, is that it should keep going up. That’s not because people are charting it and looking at the breakout. It’s because the people who sold it at the previous high watched it go down, felt good about themselves, probably didn’t buy back in, and then watched it get back up to their previous price.

They start to panic and think, “Did I make a bad sale? Let me get back in.” They’re not really doing technical analysis, but in aggregate they’re reinforcing the idea of support and resistance because of these missed opportunities.

I mean, that makes sense. Another example is resistance. Let’s say Bitcoin goes to $100,000 and then sells off, and you didn’t sell. The next time it goes to $100,000, you’re thinking, “The last time it hit $100,000, I felt like an idiot for not selling. Let me sell again here, or let me sell this time.”

They’re not drawing a line, but in aggregate they’re reinforcing the idea of support and resistance.

In order for technical analysis to work really well, you need a mass of uninformed market participants. That’s why it doesn’t work as well in a bear market. It works really well in a bull market.

You have to understand the different tools and the ways certain types of technical analysis will work. CTA-style trend trading—“We’re below the moving averages, so be short”—works well in a bear market, kind of.

It’s very choppy. That’s the thing with a bear market. Bear markets are extremely choppy, and I’ve found that technical analysis tends to be disrespected a lot more.

If you go look at a 30-minute chart on a lot of coins, technical analysis works like magic in a market like this. In 2022, that wasn’t true at all. Something would go up 10%, then go back down 10%, then go down 5%, then go back up 10%. It was just very difficult to use technical analysis, even to judge the relief rallies.

It was also because a lot of it was event-driven. When Three Arrows collapsed, we nuked down to $888 on ETH and then rallied back up to $2,000 in the span of 2 or 3 weeks. No technical analysis could predict that. Technical analysis doesn’t predict it.

The biggest FOMO rally in the 2022 bear market was the March rally in Bitcoin up to $48,000. That head-faked literally most of the space into thinking that the 2021 bull run was still going, that we were just going to hit fresh highs, and then all it did from there was spiral straight into the abyss.

I take your point. I’ve always been skeptical of technical analysis because it just doesn’t work for assets with fundamentals. I don’t think it’s going to work particularly well for the AI coins we mentioned earlier, because those are less technical trades than catalyst trades.

People are expecting developments in the AI space, especially where it meets crypto. They’re expecting agents to do new, interesting, unexpected things. Bitcoin is probably not a technical-analysis asset as much as Sui might be, because people are expecting fundamental news to come out related to Bitcoin.

Sui may be the perfect one for technical analysis, because the participant base is extremely broad. It’s not some random niche of guys on Phantom wallets trading Popcat or Boden. It’s pretty well distributed and on all the major exchanges, but no one’s expecting a major product to come out on Sui. No one’s expecting Sui to solve payments.

In terms of differentiating between catalyst assets, technical assets, and random niche meme coins, there’s one interesting anecdote. Back in 2013, I was good friends with a lot of the Ripple people. One of the ways they kept their token pumping, back when it was worth less than $0.01, was by talking about it, pumping it up, and keeping people buying it.

They were trying to make it into a catalyst asset.

Exactly. Even though it was just kind of a meme coin before people knew what a meme coin was, they tried to make it into a catalyst asset. They would say, “We’re announcing a partnership with American Express,” or, “We’re launching this remittance corridor with Santander.”

They would create marketing materials and send them out to the world so people thought legitimate things were happening on Ripple. They basically made their token seem like something retail could invest in with an expectation of future adoption, on the basis of these announcements and partnerships.

Obviously, it was all vaporware, and no one actually used XRP for anything. But I’m sure Sui is going to try to do stuff like that. I don’t think anybody believes it. The market is too mature for that to work in 2025.

I think you’re right. Maybe this is literally just like Cardano: something you trade with charts, trend channels, support, and resistance. I hadn’t thought of it like that, but these podcasts teach me new things.

That’s fair enough. What else should we talk about? The market—we expect it to go up. We’re still ranging, even though we’ve just pumped from the bottom of the range. We talked about Sui, which is a big question mark, and we talked about these AI agents.

How’s the weather in Florida right now? What’s the temperature?

The weather in Florida is good. It actually got kind of cold. It’s a little bit cold here in France—53 degrees in the south of France right now.

Yeah, that is cool. For Florida, I think it hit 55 yesterday at night, which is nuts.

Yeah. If we’ve devolved to talking about the weather, that means the market’s pretty tame.

Hold on to your cycle bags. Don’t do anything stupid, don’t pay too much bid-offer, and don’t listen to us. This is not investment advice. That’s basically the summary.

Thank you for tuning in. I appreciate it. Good times. Until next week. Adios.