市场无法拿定主意

What qualities do the people at Goldman look for when they anoint the next class of Illuminati?

Yeah, it’s a very specific set of things.

I have a question, Avi. I missed it. I saw you in France, but then I ducked out before Jordi showed up. Can you quickly tease who he is? How did he start Selini Capital? It’s very difficult to start a trading powerhouse in 5 years or less. Who is that guy? What happened? How did that even occur? That conference was elite, by the way. It was super well done.

No, that conference was actually incredible. For those of you who don’t know, Selini Capital is a market-making firm and investment firm in crypto. I just love Jordi. Basically, what he started off as was a poker player. He got into trading crypto as just a normal, average market participant and slowly, I think, learned the ropes. Basically, from first principles, he figured out how to build a market-making firm, which at the time, I think, was a little bit easier, right?

It wasn’t, dude. I ran a market-making business in crypto at that time, and it’s hard. There were already deep incumbents like Cumberland and Wintermute.

I meant that starting a market-making firm in crypto is easier than starting a market-making firm in TradFi.

Oh, hell yeah.

You kind of just need to be intelligent, scrappy, and smart, and just better than other people, because there actually isn’t a ton of institutional blockage. In the traditional world, there are an infinite number of institutional firewalls and roadblocks. If you wanted to go start a market-making firm today, it would maybe be impossible to do that because you need to be co-located and have the infrastructure to do it. In crypto, you kind of—

You need like $100 million and the best COO in the world if you want to have a shot.

And I think in crypto, the beauty of it is that the barriers to entry are just so much lower, which is why people like me got into crypto straight out of college. The entire reason that I joined crypto in 2017 instead of taking a full-time job in finance is because it was easier: one, to make money, and two, to actually build a career.

Because in the traditional world, you have to slog. You have to start as an analyst, then get to an associate, then get to whatever the next step is—VP—and then get to MD. It actually kind of doesn’t matter how good you are unless you’re genuinely an exceptional, once-in-a-generation talent. You hear about these Goldman guys who make MD at 30—there’s like 1 every few years. In crypto, you kind of just needed to be good enough and you could do really well because the level of talent was quite low.

And I’m saying this about myself, not—you know, this is not a dig at anybody. This is the entire reason that I got in. Table selection is probably the most important thing that you can do: picking the right table to play at, picking the right game. You want to play an easy game. You don’t want to play a hard game. That’s my take.

So, the background—we got a little sidetracked here—is that Jordi started this market-making firm, started this investment firm, Selini Capital. It grew. He managed to weather a ton of different drawdowns: FTX, Luna collapsing, October 10th, and the entire bear market. He stuck around. I’ve always found him to be an extremely thoughtful and intelligent guy, not just about markets, but about life as well, and some of that comes through on the pod.

I mean, it’s funny: a lot of people went from poker to crypto, but most of those people didn’t build successful companies. Just speaking to Jordi’s accomplishment, having run what I would consider to be a top crypto market-making firm in that era when he was building Selini, it wasn’t as hard as starting a Jane Street, a Jump, or a Citadel Securities. I’ll give you that. But, man, it was hard.

There were already deep incumbents then. We almost forget how important Alameda Research was. Jane Street and Citadel were heavily involved in those days already, before the regulatory crackdown. It’s pretty tough to build something successful against that backdrop, and I know a lot of people have tried and failed. For example, the HBAR guys are trying to build a market-making firm. There are all these people trying to build market-making firms, but it’s just too little, too late.

I would say that when Jordi started in 2021 and 2022, it was already almost too late. He was fighting some real headwinds in terms of incumbents, with Wintermute being absolutely dominant. Amber and these incredible firms were around at that time. What he had to do was thread the needle of starting in a peak bull market and then not immolating on FTX, which is very difficult. So, props to him for having navigated it.

A lot of poker players that I know got in very early. They got into—I’m not going to name names—they got into DeFi, and they were early to CryptoPunks and Bored Apes. They ran it up hard, but they didn’t build institutions, and they’ve also ridden it down quite a lot. So, it’s very rare to see the individual-producer mentality cross that membrane into the entrepreneur mentality to build something that lasts.

It’s actually something that I’ve noticed in my career as well. It’s very difficult to go from an individual producer, retail trader, or line trader at a bank to somebody who builds something that sustainably generates cash. It’s super rare, which is one reason why I’m excited to see what you build at 1000x Media. You are going from individual producer to business builder. It’s not a normal transition. So, I respect people that do it. It is quite fun, I have to say.

Oh, I mean, that’s why once people go into startups, they don’t go back. It’s way more fun than being at probably GoldenTree, I bet. But just one quick note on table selection: I want to get your take on this. You said it pays to select the right table. I actually think that’s the most important thing.

There are exciting trades in different markets. The sector that’s hot is always going to rotate, but you can’t just follow that around. You have to pick a table and stick with it for a while. You can’t just jump from asset class to asset class. Some asset classes have tables that are full of sharps, and you can’t really compete.

1. Inside Goldman: How They Anoint The Illuminati

So, I noticed this when I went from Goldman to Vitol. At Goldman, you mentioned the 30-year-old MD. I knew a lot of those guys who were at Goldman. You can kind of see who the Illuminati are. They sort of anoint them in their mid-20s, and then they just sort of ride waves.

Usually, they have what’s known internally as a rabbi. They’ll have somebody above them who’s shepherding their career upward because there’s some degree of mutual benefit. I was not one of those people. It’s called a rabbi. On Wall Street—not just at Goldman—but I think Goldman probably started the term.

I’m kind of curious. This is maybe going to turn into me interviewing you about this, but what qualities do the rabbis look for? Let me rephrase that so that we can clip it. What qualities do the people at Goldman look for when they anoint the next class of Illuminati?

Yeah, it’s a very specific set of things. You find that the Illuminati whom the Goldman partners anoint to become the young MDs—the future partners, the people who will make the mega-millions inside that firm—the first thing that I noticed about them is that they’re all exceptionally well-spoken. Verbal articulation is, counterintuitively, something that I noticed to be the one unifying trait across all of these people.

They were basically Barack Obama-level orators, able to articulate ideas in a way that was just so smooth and cool, which I think Goldman wants for its external-facing image as well as its extremely ruthless internal politics. The next thing is that these people are all incredible politicians. They’re usually guys, but sometimes women.

Think of Goldman as being a brand like Chanel. Don’t think of it as an upstart market-making firm that’s going to win by being scrappy and having great tech. People shop at Goldman because they like to tell their stakeholders that they trade with Goldman or bank with Goldman. It’s a really elite brand, much like Chanel. People shop at Chanel not because the quality of the material is the best, but because they like that logo.

So, realistically, inside of a great brand, it’s less about producing new streams of revenue and more about shepherding existing ones and growing them.

And some of that is wishy-washy. Some of it is gaining attribution for something that was created by somebody who's retired, right? So internal politics is very important. These smooth talkers tend to be great politicians as well.

And then the final factor is they have to be hyper-commercial. What that comes down to—you look across a variety of different asset classes and things at Goldman. I was in securities trading. I was in FICC, which includes securities trading. I traded commodities, though, not securities.

In order to be a top-flight trader at Goldman, you have to be on the right book during a time when it's absolutely killing it, and you have to be demonstrably adding value somehow. You have to massage the value that you add to make it look like it was mostly you, even though a lot of it was just the brand. So, it’s a combination of commercial savvy, verbal articulation, politics, and misrepresentation of brand representation as personal trading acumen or personal investment or banking acumen that gets you there.

I know that's a bit of a tough answer to digest, but a lot of times it feels unfair to the people who don't get anointed, such as myself. I came pretty close and then kind of failed because I think I'm pretty bad at—

What do you think led you there? Why?

I was on the right book at the right time. Oil—I was there in commodities, which is the beating heart of the trading side of the firm, right? Lloyd, Harvey, all the main guys who are leading the firm, David Zinnyard—they all came from J.R., which got acquired by Goldman and became Goldman commodities trading.

I was in the right place. Oil was the sexiest book in the entire business. I was the up-and-coming 25-year-old star on that book. I was there during some huge years. I personally did the things that you need to do to gain attribution for it.

Where I screwed up—well, the first thing was not my fault. DRW, Infinium, Optiver, Jane Street, Jump, and Citadel started automating options trading. So, instead of seeing in the model that I built that an option was worth 2 cents, I would make it 1 bid at 25 because I knew the guy was a buyer. Who would ever sell a 2-cent option and get lifted?

It went from being 1 bid at 3 on screen and infinite size because of these quant firms. Our P&L shrank from $650 million a year to around $40 million, right? So, that crash negatively impacted my career. That was just bad luck. But I could have withstood that and still grown.

I made 2 critical errors. The first was not acquiescing to the company's requests that I move to London and start trading more different types of options. I really wanted to stay in my lane. I was very comfortable in crude oil and sort of drunk from a couple of years of success on just oil. I was afraid of expanding into unknown territories that had been historically unprofitable when I was asked to do so and asked to move to another country. I dragged my feet, so that hurt me.

And then the other big one was I played the politics wrong. Politics inside of Goldman involves a lot of backstabbing and a lot of—

What do you mean here? Just taking down your ops, or—

Yeah.

Getting cozy with the right people, taking them out to dinner?

That's right. So, getting cozy with people you don't like is something I struggled with. Getting cozy with partners who I found personally distasteful—you have to do it. I just didn't play the game.

More importantly, a lot of backstabbing is involved because you have to step on people in order to ascend within a century-plus-old institution like Goldman. It's not just a pure meritocracy. You have to step on people as well as capture opportunities.

2. Shot At The King And Missed

On the stepping-on-people side, sadly, I'll admit it, I was very actively backstabbing, which is what you have to do. So, that's only half the battle.

How do you backstab? I mean, what do you like—talking shit about people behind their backs? You're doing an analysis that has to be in a certain way.

Doing analysis on where people had fallen down and making the case that you can step in and make more money out of that particular line of revenue for the company is a big part of playing internal politics at Goldman. I played the game there. I was certainly a backstabber, which I regret.

However, I was a sloppy, inexperienced backstabber. I got caught out a couple of times trying to backstab. If you take a shot at the king, you better not miss, right? And I took some shots and missed.

So basically, I didn't get fired, but I went from being on the Illuminati track—a young, balding Jewish guy at a company run by bald Jews, with all the right rabbis in place—to—

Hey, you still got your hair.

That's because I got some replanted.

Basically, to wrap this up, none of this is fun, right? None of this is how you want to build a career, but it becomes like a drug. It becomes addictive when you're inside of a place like Goldman because of the allure of that title—that Goldman MD or Goldman partner.

So, I played the game. I played it kind of badly, and once I realized I was on the wrong track, I picked a different table to play poker at, which at the time was Vitol. I picked the right table. It wasn't clear that was going to be the Vitol table, but I was swimming upstream of those tech-trading, Silicon Valley-like firms of their time: DRW, Infinium, Optiver, Citadel, Jump, and Jane Street—the kind of mafia that ate options.

Options were just too competitive now. I was going to go to physical optionality inside Vitol, which at the time was a good decision. So basically, when you start losing at a table consistently, you have to pick a new table, and that's what I did.

I think that makes a ton of sense. I mean, it's kind of interesting to get the inside view of how it all works. It reminds me a little bit of my time—not as much at GoldenTree, because I think I just had a hedge fund. There's a lot less in terms of politics because you're not really fighting for deals in the same way. You're kind of just trying to make money.

But I think once a firm gets big enough, the problem is that there's a ton of excess profit to go around. That actually means that if you embed yourself in the system, you don't necessarily need to be as competent as you would at a small firm. You can just ride on your relationships, the fact that people like you, and the fact that you bring something else to the table other than your pure profit-taking.

That's just a natural progression of a company growing. Let's put it like that. The bigger the company gets, the easier it is to coast. That's not a profound statement. I think everybody knows that.

But it is something that I personally hated, which is why, basically, my entire career, I've tried to work within small groups at firms. Even if I'm at a larger firm, I try to get into the smallest group possible that has the most autonomy possible. And sometimes that is dangerous.

When I was at GoldenTree, I can't wait to tell this story. I'm going to have to have a few years pass before I really get into it. But we were obviously running the alternative-assets crypto division under the GoldenTree arm, and it just wasn't important enough to keep around once shit hit the fan with FTX.

Even though we had done extremely well, it sort of died for political reasons. It died because of a tennis match, in many ways, actually, but—

What does that mean? Sorry.

It died because of a tennis match in many ways. There was a personal issue that happened during a partner offsite. It's a long story that I probably shouldn't get—

Oh, so it wasn't an actual game of tennis where they were like, “I'll wager your—”

It was downstream of a dispute in a tennis match. That's the reason that the crypto division at GoldenTree got axed.

Oh, my God. Yeah, I want to hear that story.

By the end of 2023, we were up 172% that year. We were crushing it. We were doing really well. We were the best-performing fund in crypto.

We were also running more than $100 million. We turned $100 million into $200 million more. And we kind of got axed just for political reasons. Then I ended up going and managing money for Mike Novogratz for about a year before I stepped away to just manage my own capital because, thank God, I have the ability to do that now because of what I've done in my career.

Now I enjoy podcasting and live streaming to you guys. But, yeah, it was kind of crazy, actually. It was a nuts experience to go through that, and it made me realize just how important your reputation is. It's very important to have a good reputation, and I think a reputation for being reliable and mainly trustworthy is important.

It's one of these things that you don't really need to have as an individual trader, which is why I stepped away, because it kind of actually doesn't matter how trustworthy you are or the way that you act. It almost doesn't matter in many ways. It's: Can you manage other people and what they're going to say about you?

If you have somebody under you who's gunning for your position, they have every incentive to undermine you.

And so, can you build a relationship with that person where your personal relationship outweighs the incentive to stab you in the back? That's something that I'm not the best at because I'm a little bit too autistic to do that, to be honest.

Internal politics are tough. Luckily, the problem is that if you want to succeed inside of a large firm, which is frankly most people's path to achieving financial independence, right? With all this retail trading that we talk about, it's very rare that somebody's going to listen to the 1000x podcast, drop out of high school, and turn a couple thousand dollars into 10 million dollars. Usually, you have to have big income coming in from your day job in order to manage that.

It's very rare that you're a poker pro like Jordi who then turns it into a freaking market-making firm and then runs it up with institutional capital. Usually, you have to be in one of these systems to earn the money to deploy into markets in a way where you're not worried about putting food on the table. So, I guess it is relevant that at some point in the 100 episodes we've done, we talk about what it takes to survive and thrive inside of a big company. Maybe we should do a segment on that at some point.

That's something that you would be much better at than me just by virtue of your career, and mine's been a little bit more solo-focused.

But what's actually really important is to understand that this podcast is not just about the markets. It's about how you position yourself to succeed in this new world, right? With all of these opportunities that are presented to you, how can you actually come out the other side living life like Jonah lives life, with 3 kids, a beautiful life, and a beautiful house in an area that I won't disclose?

[laughter]

3. Ken Griffin Is Right: The Alpha Is In Megatrends

We've talked a lot about table selection and some of the tables that I see as very easy to sit in today. You're kind of seeing it now, which is actually tough for people like us because we've been active traders for a long time. Ken Griffin comes out and says, “We're actually seeing that a ton of the alpha in short-term trading has been squeezed. A ton of the alpha in market-making has been squeezed. This is becoming almost commoditized in a way.”

He's kind of looking for what's next—where is the next piece of the market that you can go take and really get a return from? It's what we've been talking about on this pod for quite a long time: the megatrends. If you can prognosticate and think 3 to 5 years out in the future, then weather the volatility, stay in the assets, eat the drawdowns, and just wait for your thesis to play out—and obviously be right. You have to be right.

That's actually a huge source of alpha, and this has historically been very hard for hedge funds because they have month-to-month marks. They have investors that will get mad at them if they're not making money year over year. If your bet is that in the next 3 years this asset class—insert asset class—grows, but you take a 25% drawdown in the meantime, you actually are facing an existential crisis. People could pull their capital. This is a common thing that happens in hedge funds, where people tend to pull their capital at the worst possible moments.

4. Nobody Left To Sell: The Bitcoin Flows Framework

While you might be an amazing investor, the people that are allocating to you operate a lot more on emotion. So, if you're, for example, investing in crypto, the most amount of outflows that you see in crypto are at the bottom, right? The bottom is—how do you define a bottom? The bottom is when there's nobody else left to sell, basically. Very rarely is a bottom when there's massive buying that outweighs the selling. The bottom happens when there's nobody left to sell.

People tend to panic and sell out. Then, once everybody exits, you can start to go up again. That's actually a little bit of what I think is happening in the crypto markets.

When I'm looking at the crypto market today, specifically Bitcoin and a lot of other assets now, the main thing that people were worried about for a very long time was Michael Saylor. People were worried that Michael Saylor was going to offload all of his Bitcoin and that was going to cause a spiral. Well, he's sold. He seems to be in a much better position today.

What I'm seeing in the market is that basically everyone that was going to sell at these specific prices has likely already sold. They've either sold because of the headlines, because of price action, or for a variety of different reasons. There's kind of nobody left to sell massively at these specific prices except Michael Saylor.

Yeah.

But that's the key here. And so then your one question is: who? Whenever you're trading, whenever you're investing, you have to think in terms of flows now because fundamentals mean nothing these days. Flows are kind of everything. You look at memory stocks: Intel at 140 was “cheap” according to fundamentals. It still went down 40%; it's trading at 100 today. It's even cheaper today. I mean, who knows if people are going to step in and buy it?

It's really about flows and profit-taking and where people will step in. In crypto, as Nonsense XXX says, crypto actually never had any real fundamentals. Nonsense is in our chat. Now, crypto never really had any real fundamentals, and so what that means is that it's always been based on flows.

So what do you do? What do you do in an asset that is solely based on flows? You need to create a mental model for yourself: who are the buyers, who are the sellers, and what are the criteria for them to buy and what are the criteria for them to sell?

When I think about the criteria of sellers, it's Michael Saylor and people that are willing to front-run Michael Saylor. I think the average cost of people's Bitcoin—there's not a ton of people now that are cashing out of Bitcoin to lock in profits. Bitcoin's off 50% from the highs, so there's not a lot of profit-takers left in the market.

The only people that are left to sell are short sellers, or people that are betting Bitcoin's going to go down, and people that hold Bitcoin long-term that think that they can trade it, right? So, again, also kind of a short seller. And Michael Saylor.

What I'm saying here is that Michael Saylor specifically seems to have shored up his balance sheet right now and doesn't need to sell at these prices right here, right now. He sold his stock, he sold his Bitcoin, and he's built reserves. He probably will at some point in the future again, but right now there's not a ton of selling at this 58 to 65 level.

So then your question is, what changes? How do you assess moving forward who the sellers might be? Price is obviously a big one. If Bitcoin goes up to 75, then you have a new set of people that are in profit. You have people that bought at 58 that might want to sell at 75 to take profit.

And so you have to think: where is the buying going to come from? Where is the selling going to come from? Okay, now let's talk about the buy side. So who buys Bitcoin? It's long-term allocators that I think are probably tapped out in many ways.

I think everyone that's a long-term allocator to Bitcoin that has a 5-to-10-year time horizon—it's like we've saturated that market. That used to not be true. 3 years ago, that wasn't true because that was pre-Trump, and people were still scared of Bitcoin. They were like, “Okay, well, I don't want to touch it.”

It's a very small subset of people that are newly generating these 5-to-10-year theses on Bitcoin. So then who's left to buy? It's people that are trying to hedge a part of their portfolio against inflation, or whatever Bitcoin's narrative is at the moment. And it's traders. And it's people that think that Bitcoin can go up. It's people that are trying to get a profit on it.

This obviously increases with price as well. So this is an offsetting dynamic. What do I mean by offsetting dynamic? I mean that the number of sellers also increases as price goes up, and the number of buyers also increases as price goes up in this particular dynamic.

Where are the traders going to come from? Where is the buy side going to come from? Two places. One, when people view a very favorable risk-reward setup, people will step in and buy Bitcoin. Right now, there is actually a reasonable risk-reward setup where you can buy Bitcoin here at 65, cut it below 60 if we get back down there, and aim for 80 to 82, like where we topped out last time. Basically, try to play a range. That's kind of a trade that you can take.

Or you can look at the market. Memory selling off a ton today. Maybe some of the people that are cashing out on memory will try to move over to Bitcoin. That probably only happens with momentum.

So now this comes to a head: how do you construct in your brain a model for how to buy Bitcoin, how to buy crypto, if the entire market goes up? Let's say that the Nasdaq starts going up and the memory stocks start going up and Bitcoin starts going up.

You know that there is a certain set of sellers that will appear when Bitcoin’s price goes up, and there’s a certain set of buyers that will appear. But those buyers, if the entire market is going up, are unlikely to allocate to Bitcoin. If the whole market’s going up, I’m probably not super bullish on Bitcoin.

But if memory stocks are going down and Bitcoin is going up, that’s a new set of buyers that can come into the Bitcoin market. It’s the people who are cashing out of memory and the people who are looking for somewhere to place their capital, and they might go to Bitcoin. That’s kind of what’s happening right now.

This is a long-winded way of explaining why my thought process has changed, why I was bearish before, and why I’m less bearish now. Memory’s coming in, the Nasdaq’s coming in, Bitcoin’s holding steady. That brings new buyers, in my personal opinion, into the Bitcoin and crypto market, especially if it keeps going up. Therefore, I think maybe we can hit $75,000 to $80,000. Are we going to go to all-time highs? I have no idea. But this particular trade setup looks okay to me.

So, do I think that Bitcoin is the best expression of that trade? No. I think that Hyperliquid is probably a better expression of the trade. I think that Robinhood is probably a better expression of the trade. I think that Ethereum is actually a great expression of the trade right now because of what’s happening with Robinhood Chain, Arbitrum, and all that, using Ethereum security as the bottom line.

Maybe Lighter is a really good expression of the trade. Zcash especially is a phenomenal expression of the trade because it’s performing really well already. It’s doing well, and so it has that momentum factor to it where people might come in.

You have to remember that these are traders. What I’m talking about is that the traders are coming. When I think about constructing a trade here, I just bought those assets yesterday, basically on the memory sell-off, when I realized that crypto wasn’t going down. Memory was coming off.

This entire framework comes together for me now, and I think it’s very likely that we get some sort of bounce in crypto. Does that make sense? I know I just went on a super-long tangent, but I think it’s extremely important for the listeners to understand my framework, as opposed to me just telling you, “Okay, I’m bullish on this. I’m bearish on this.”

Yeah, what I took away from what you just said—I’d say I picked up 80% to 90% of what you were putting down. There was a little bit I didn’t know that confused me, but what I take away from what you just said is not that it’s time to get bullish, which isn’t what you were saying. I’m not accusing you of that. I just think you’re painting a picture that’s a very mixed bag.

I think crypto is going to remain “meh” for a while. I look at it slightly differently than you. I’ll put my thoughts out there, and then we can debate them. Mine are probably a little more brief.

Basically, I think the Bitcoin-as-a-macro-theme trade is sort of off the table right now, especially with rates potentially going up rather than down. I think Bitcoin performs very badly in a rate-hike cycle, which would make it a good trade from the short side. It performs extremely well during a debasement cycle, like what we saw during COVID, when Captain Joe Biden was just printing trillions with reckless abandon, as were his counterparts in Europe and Asia. We’re sort of in between those 2 extremes, so Bitcoin’s “meh” from a macro perspective.

Then, from a flows perspective, I agree that the non-Saylors of the world—everybody who isn’t Michael Saylor—have sort of run out of reasons to sell Bitcoin. MVRV-Z, my favorite metric for determining how in or out of the money the holders are, is near all-time lows. Basically, selling has been exhausted, with the exception of 1 big question mark: Michael Saylor. You have a guy who could sell a lot more and an otherwise very bullish stock-to-flow picture. That is also very mixed, very “meh.”

Then let’s move on to just the broader retail interest in crypto. You mentioned Hyperliquid. You mentioned Zcash. I actually think the purest expression of froth, or lack thereof, in crypto right now is our buddy Ansem, friend of the pod, $ANSEM, the Black Bull token. You look at that.

I love Ansem, and he’s actually coming on the pod next week, on Friday. I don’t understand the meme token. I don’t get it. I’m kind of excited.

I mean, look, I get it. We all get it. I’m not going to criticize or say anything about why one would launch a token like we did. It happens. There’s a time in your life where you just want to launch a token. Maybe this is his.

But abstracting away the rationale for doing it, or what it means for crypto, let’s just look at the price action. It is, from a memecoin perspective, the most exciting launch since Trump, for sure. It launched on July 1, 15 days ago. It ripped up into the mid-9 figures market-cap-wise, and now it is 60% off the highs, literally a week later.

I look at these sorts of charts because technical analysis works for memecoins. There are no fundamentals. During the summer of 2024, when it was memecoin summer, these arcs lasted a lot longer. Fartcoin had a multi-month run, as did GOAT, ai16z, and all of this crap. They would rally for months, and then the grind lower would take months.

Now, the tolerance is much lower for this stuff. I think it’s literally a couple of weeks of up and down. To me, that doesn’t signal a lot of retail interest in hyper-gambling, which you may or may not need for crypto to go up. So let’s count out the hyper-gambling.

Is nobody left to hyper-gamble in crypto? That’s kind of the problem.

Yeah, look, I’m not debating that. I’m just saying—

No, I’m just kidding. I’m animated because somebody said that we’re boring, so we need to spice things up.

No, no, no, you, Avi. We’re just going through the layers.

Macro is fucked, you, Jonah.

You, Avi. Macro is “meh.” Micro is “meh.” The hyper-gambling—there’s not a lot of appetite for it. Stock-to-flow is “meh.”

What you’re in Bitcoin for, I think, is that if you accumulate slowly here, it’s probably a good idea. Maybe I should get off this call and go rebuy some of the crypto I sold at higher levels—crypto being Bitcoin. I’m still in Hyperliquid. I’ve got to figure out what to do with that.

Ultimately, there’s a megatrend over the long run of currency debasement. The political situation is not looking any less grave from the hyper-debasement thesis, right? So you’re going to want to own Bitcoin over the long, long run.

The question is where you enter. What’s your entry point? Do you try to buy here, or do you try to buy it down 50% from here? It all comes down to Saylor. Basically, my read is that nothing’s going to move until Saylor’s done, or you get a rate-cut cycle, or you get hyper-gambling coming back.

5. The Market Can't Make Up Its Mind

We probably won’t have a rate-cut cycle. Ansem tells you everything you need to know about the lack of froth, and it would probably be that way for years. It’s really just, is Saylor going to puke more or not? I’d say let’s call it a coin flip. That probably means you want to dribble-buy a little bit here, like dollar-cost average. Nothing aggressive. It’s just not a good trade right now. It’s a good long-term accumulation point. I don’t know. What do you think?

I don’t know. You heard me. I think it’s a phenomenal trade. I think that you should be buying Bitcoin here as a short-term kind of bounce.

Although the only thing I’m a little nervous about is that I kind of want to buy memory, too. Is it down? I think we might be able to have a little bit more of an unwind for memory. We could have—I mean, DRAM’s down 7% today. Intel’s down 5% today. The Nasdaq’s only down—

DRAM? What’s the index for DRAM?

No, the ETF. The Roundhill MEM—

I was going to say, right now is a good time to buy hardware that you can resell on eBay, right? Like—

Where the fuck am I going to put hardware, Jonah?

Your garage at your estate in Long Island, or wherever you are.

I don’t know where I’m—I'm quite literally in my 900-square-foot New York apartment.

What’s beautiful about physical hardware, unlike crude oil, where you need an Empire State Building-sized tanker to put millions of dollars of oil, is that I bet that room behind you could fit $50 million worth of MacBook Airs.

If you start flipping shit on eBay, Avi, don’t buy the physical chips. Nobody will buy chips from you unless you’re certified. But hardware, especially if you’re buying refurbished hardware, you can flip that shit.

Actually, I know—it’s funny. Quick shout-out to Josh Maurer, one of the early employees at Uber and my classmate at Columbia. He was the first GM of Uber New York. Obviously, he’s a very successful guy. Now he’s doing his own AI startup. He got his start flipping jeans—blue jeans—on eBay and other forms of clothing.

I know a lot of crazy physical-trader entrepreneur guys. You want to talk about an easy poker table with no sharps at it? That’s where it’s at right there.

How do we find them? How do we play poker against them?

Start an eBay store. I’m not even kidding.

If you believe that the price of DRAM is going to go up, go and stash refurbished hardware somewhere and resell it on eBay.

I actually still think that collectibles—I can't wait to interview AJ Scaramucci about this. He's raising for something called Treasure Trove, where he's buying these collectibles. Every time I talk to somebody, I get a new take on why there's far too much money in the top half of the K, and it's all being funneled into random shit that people like instead of actually being funneled into anything useful.

It's okay, I'll give you an example. My girlfriend bought a dresser a few years ago for $600. It's an old, '60s-design, space-age-type green dresser. It now sells for $6,000 because the designer is kind of well known. You're seeing this literally everywhere.

Scarce items are, yeah.

Dresser?

Yeah, a dresser, Jonah. Not an antique. It's a couple of decades old. It's actually crazy. That is an insane statement: this thing 10x'd over the last few years. And that's just going to keep happening.

It's stuff like that that makes me nervous about crypto. If people are able to gamble on physical items and furniture, and people are able to gamble on the long-term nature of crypto, it's in danger because it is gambling at the end of the day. That's what makes it valuable. Basically, everything outside that—everything that doesn't make money.

Now, that's an AI trade, by the way. Can I just interject real quick?

Yeah, for sure.

Thrive Capital's Josh Kushner just bought a sports team. Vinod Khosla just bought the Seattle Seahawks. All these big tech guys are basically taking bets that anything human that AI can't displace—anything nostalgia- or cultural-zeitgeist-related—will rip in the age of AI, where knowledge and basically software becomes commoditized.

You want to own the assets that can't be commoditized by that, like sports teams or collectibles, to your point. Actually, I would love to—here's a shameless plug. One of my buddies knows the number-one trader of Magic: The Gathering cards in the world. He's got his warehouse somewhere, and I think it's in Georgia. Anyway, I would love for you to interview him at some point, if you're willing to. Needless to say, I agree with you.

6. The Clarity Act & What Crypto Was Supposed To Be

One other quick thing: We promised our listeners that we would talk about the CLARITY Act. Should we do that at some point before we forget?

Yeah, we should do that now. What's happening with the CLARITY Act is that it's being held up by ethics issues. Elizabeth Warren, our favorite Indian, is trying to kill the CLARITY Act, and she's injecting all these ridiculous asks. Trump right now is planning to meet with the Senate to get this thing over the line. I think the deadline is August 7. I need to double-check on that. It's sometime in August.

What I think is going to happen here is that it's very unlikely that it passes. But that doesn't necessarily mean it's bad for the markets, because the markets are already pricing it, I think, at 1 in 4. There's a 1-in-4 chance that CLARITY is going to pass.

Now, Circle is kind of priced as if CLARITY passes. Circle is off a lot already. I think if CLARITY doesn't get passed, it probably goes down less than if CLARITY is passed, because if CLARITY is passed, it goes up, right?

I basically think that it's actually pretty unlikely that CLARITY gets passed, but it could set up for a good trade on Circle if you feel like you can generate—quote-unquote—edge. I haven't done this, but maybe some of the listeners will do it. Go through every senator and try to get your probability of whether they're going to vote yes or no on the CLARITY Act.

This is how edge is generated. Sometimes you ask us, “How do you generate edge in the markets?” Spend 4 hours going through each senator, assigning them a probability that it passes, and see if you can come up with a vastly different result than the market is pricing right now.

If the CLARITY Act passes, that's obviously going to be very, very, very bullish for stablecoins specifically, and it's going to be bullish for DeFi. If it doesn't, I also think that's not necessarily the worst thing in the world, because this tokenization stuff is moving forward no matter what.

The big institutions will find a way to issue stablecoins. They're going to find a way to issue products with or without Clarity. They're waiting on whether Clarity passes or not to figure out how to structure it, because it's kind of a waste of time to structure and push out a product if there are sort of 2 design choices: one if Clarity passes, and one if Clarity doesn't. They're waiting for Clarity to be over to pick which direction to go in.

I actually think that, no matter what, post-Clarity—whether it passes or doesn't—we're going to see an explosion in tokenization. We're going to see growth in stablecoins. We're going to see new products coming out.

The real question is just: Is it going to be good for crypto—the crypto assets specifically? Is it going to be good for DeFi specifically? The answer is obviously yes if it passes. It's going to be very good for the things that aren't tied directly to your Robinhoods of the world and aren't tied directly to your institutions of the world.

For example, Robinhood is going to move forward with some of this stuff regardless of Clarity or not. Uniswap is integrated with Robinhood, so post-Clarity, maybe Uniswap is supposed to go up because they're going to move forward on their plans anyway. That's my take on Clarity.

I think that's really smart. The last thing that you said there—about how we just need to get past it, rather than whether the outcome actually matters—

The rest of the stuff, regardless?

No, it was all—no, I like it. Basically, here's my take, and it's similar to yours. I think that if Clarity passes, it's very bullish for COIN and HOOD and companies like them. It's also bullish for a lot of companies like JPMorgan. It's bullish for their bottom line, as they can build RWA tokenization channels.

But basically, there aren't many ways for the retail user to profit from that other than just owning the highest-upside crypto-native tickers—Galaxy, HOOD, whatever—people who will be most levered to the construction of pipelines between economic activity on-chain and economic activity off-chain.

If Clarity doesn't pass, I think what we should expect is a period of limbo similar to what we saw before Donald Trump got elected. I think that will just create general malaise in the sector, similar to how it was during the final 2 years of the Biden administration, when Elizabeth Warren was running rampant against crypto companies.

Let's say that Robinhood pushes boldly ahead after Clarity gets rejected. Let's assume Clarity doesn't pass and Robinhood forges ahead with some efforts. That's okay, but I don't think you'd expect Robinhood stock to pop much against the backdrop of regulatory opacity and limbo.

I have a slightly more pessimistic take, basically. I wouldn't expect Uniswap to rip once Clarity gets voted down. I do think you'll get some rallies in both crypto assets and a few select altcoins, as well as the big—let's call them crypto harnesses—like HOOD and COIN. They're sort of harnesses for lots of different economic activity going on under the hood, including stablecoins, RWA tokenization, whatever.

Let's say that tokenization becomes a thing and Fidelity, Schwab, and JPMorgan are all doing it. You can't really benefit as a retail investor, and there are only a few harnesses that allow you to participate. Sadly, without Clarity, I don't think we're going to get those rallies.

I think you need a Cambrian explosion of opportunities to connect what's on-chain and what's off-chain in order for there to be an investment thesis. Those opportunities have to be crystal clear. I agree with you on the bullishness if it gets passed, but I would humbly push back on there being anything to do if it doesn't.

I think that kicks us through to the end of the Trump administration. There's going to be even more uncertainty in the future. I'm just a little sad about how the Trump administration has handled crypto in general. There's so much opportunity to do it right.

It's become toxic, right? For him?

Yeah.

Because he just memecoins. What was he thinking? Just do it the right way.

That's it. He had a good plan. Anyway, whatever. Right thing.

Actually, Trump launching his meme coin is one of the reasons that I started to get out of crypto. Once I saw that the president of the United States was able to effectively use crypto as a tool for enrichment for himself, I realized that there are a lot of bad downstream effects of this industry and that you need to be honest with yourself about it. It really soured me a lot because it felt like the final twist of a knife into an industry that I once loved.

And don't get me wrong, there's still a lot here that I'm obsessed with and that I think is going to change the world, but, man, was that tough to see. I guess we can probably wrap there, but—

What? Hold on. Let's wrap on one more thing. What do you want to see out of crypto? I have my ideas, but what did you want?

I want to see permissionless, non-sovereign digital currency take over the world and become part of everyone's everyday life. Bitcoin is no longer that. It's an investable asset, which is great. It's good. That's a good thing. But we sort of forgot that, actually, in the beginning, a lot of it was, like, “Let's create this cypherpunk currency.”

That's kind of why I love Zcash so much, because I think Zcash could be that. The only issue is that we have to drain the shielded pool to make sure that there's not an infinite amount of supply in there because of the bug. But once we do that, I think Zcash could easily hit 4 figures. I think we could see $5,000 Zcash in the next 10 years.

I want to see crypto rails be instituted everywhere. I want to be able to hold everything in a wallet. I want to actually own the assets—not in a brokerage account, but in a wallet that I can go take with me if I need to flee to Thailand or Cambodia.

I think Bitcoin does that for you.

Bitcoin does that. But Zcash, I think, is probably a better expression of the privacy aspect of it, obviously, because Bitcoin's privacy got de-anonymized a long time ago. A big part of what Bitcoin used to be is not only portability, but it was a Swiss bank account in your pocket.

And Zcash is the only thing that fills that now. Zcash is the Swiss bank account in your pocket, and there are actually kind of huge implications there. I just want to see the world of finance. I want to see the walls break down.

One of the beauties of crypto is that, because of the way that it's built, anybody can plug in and access underlying liquidity on a chain or on an app. That means that there's going to be a tremendous amount of competition, and that means our financial products are just going to get better and better and better way faster. If anybody can spin up a front end for trading and use an underlying liquidity pool, that means the front ends are just going to keep getting better and better and better, and they can be tailored to your specific use.

I think that's the beauty of crypto: it was a massive free market where innovation would occur. I feel like that is not the ethos right now. I love DeFi. I love the feeling of DeFi summer, where everyone's trying experiments. Now, a lot of those experiments are grifts, but some of them are real.

People seem to be experimenting less these days, which is ironic, Jonah, because it's actually easier than ever from a regulatory perspective to experiment. I mean, if you were building financial products in 2021, you were actually putting yourself at risk. Now you're not. Come on, where are the inventors? Where are the experimenters? Get after it. Do something.

Yeah, get after it. Honestly, it's not just from a regulatory perspective; from a technology perspective, it's the best time to build. Back in 2021, if you wanted to do anything, you needed to hire a team of Solidity developers. Now, you and Claude Code can build something really valuable. And right when it's the best time to build is when everybody's freaking capitulating.

Here's what I envision for crypto. I think with a little bit more clarity—pun intended this time—and with a little bit more regulatory clarity, you unlock what I think is crypto's greatest value-add, which is that crypto can move non-pegged and pegged, but mostly non-pegged, value—which is where the world has a big problem today—around faster and more seamlessly and more efficiently than anything else.

I hate gatekeepers. I hate the fact that middlemen control so much of the world's access to capital, liquidity, hedging, and market-based opportunity. To borrow my old boss Don Wilson's truism, markets solve problems, but people extracting rent from those problems in markets like the CME, ICE, and NYMEX are creating all these barriers to entry—all these informational, financial, and qualification barriers to entry—and they make things worse for everybody.

I think that the beauty of Aerodrome, Uniswap, or, you know, whatever you name your AMM, like Hyperliquid, is that they basically open the floodgates to new markets being created—new commodities markets. I want to see tokenization of commodities. I'm a commodities trader. I want there to be a market for rice where the Bolivian rice farmers trade with the Indonesian rice farmers.

If you run a small business and you're dependent on local weather—you run a local ice cream shop, you know, the old Climate Corp thesis—I want to see people hedging their weather derivatives on-chain because it's not a big enough market for a CME or an ICE to list it. And even if they did, the barriers to entry for the local insurers or restaurateurs to have access to it would be enormous.

Crypto can solve all of these problems. The issue is just a matter of regulatory clarity and capital access and products to be built along these brand-new rails. We're just—I don't know. It feels like we've been tantalizingly close for 5 years.

I don't want to throw in the towel or give up or be pessimistic, but it's just hard when the very same rails that allow these economic unlocks are also really good rails for facilitating grift and crime and extraction and $TRUMP. Hopefully, people don't abandon the asset class altogether because of the negative outcomes that we've seen in recent years.

I think that's a beautiful place to end it, Jonah. As always, this is a ton of fun. Love you.

Love you better. Talk again soon. We'll catch up soon. Adios.