比特币大选相关性的真相｜The Giver

After Elon Musk mentioned Doge for the first time, people bought Doge solely on the speculation that he might mention it in the future. It then outperformed for months, and I think that can happen again with Trump.

What I think memecoins do is produce uncorrelated returns with respect to being a store of value relative to everything else going on in crypto. If everything looks euphoric, you have to ask yourself not, “Is it euphoric, ergo be bullish?” That’s the wrong question. The question is, “Is it going to get more euphoric or less euphoric?”

All right, awesome. Looks like we’re live. We’ve got a very special guest for you guys today: The Giver, Lazy Vager on Twitter, who is known for some pretty amazing and in-depth posts, which is rare for the Twitter sphere, rare for CT, where normally it’s shitposts.

I’ve been following him for a while, and I’ve always appreciated the approach he takes to the market, which is extremely thoughtful and genuinely rare. We’re here to talk about how we can make the most amount of money possible by actually thinking about our problems. Thank you for joining us, Giver. Jonah, what’s with the John Deere hat?

While we’re waiting for The Giver to get his shit together, let me tell you about my John Deere hat, which is in stark contrast to your Harvard Business School hat.

Please note that it says “Harvard Business School Dad.”

Okay, so maybe you’ve got some man-child or biological-freak stuff you want to tell us about. Anyway, I got my John Deere hat at Man Camp, which, in the era of cancel culture, got renamed Human Camp.

Basically, Man Camp is an event that my buddy hosts every year. It starts at Lake Geneva in Wisconsin. You drink beers, go tubing, do America stuff, and then we drive pickup trucks out into the wilderness to my buddy’s father’s farm in northern Wisconsin.

We shoot guns, drive John Deere tractors around, cut down trees, build fences, and basically do what in the past would have been called “man stuff,” but now it’s just human stuff. I got this hat, and being kind of a West Coast liberal city kid, I feel cool when I wear it. I feel like a real American.

So you wear that around the mean streets of London?

The mean streets of London. What’s more red-blooded?

Hey, we can hear you okay. I closed out about 50 browsers. I think it was a technical difficulty; my bad.

Honestly, why would you look at porn when you can just pull up TradingView and look at the Bitcoin chart?

The Bitcoin chart is better than anything I could be watching. It’s a truly beautiful-looking chart.

Flows are looking good, altcoins are doing poorly, which is a great sign. I know I’m normally the resident bear, and I still advise you never to go ridiculously levered, but ever since we flipped $60,000, the market has been different.

You’re seeing real flows into the ETF. You’re seeing the narrative shift pretty tremendously in favor of Bitcoin and crypto because equities are punching all-time highs. People aren’t worried about data as much, and they aren’t paying attention to every tiny bit of information they can get about the economy because things seem to look good.

The way I always think about it is that when you’re in crypto and you trade crypto, there’s a specific flow of money. Bitcoin does well, and then that money goes to altcoins. That’s what happens on the macro level, too. Equity markets do well, people want to keep outperforming, they move down the risk curve, and they push money into Bitcoin.

I think that’s a little bit of what’s happening. It’s a combination of that and a one-to-one correlation with the odds of Trump getting elected. What you’re seeing right now is traditional finance— all of your funds out there—figuring out, “If we think Trump is going to win, where are we putting our money?” Bitcoin is the answer.

Look at the CME futures open interest. It’s at the highs, and the reason is that people are crowding into the trade.

Where’s basis right now?

It’s a good question. I don’t know. There is no better Trump trade than Bitcoin. I think Bitcoin is an easy 2-bagger, and you can deploy a lot of capital there.

If you’re a TradFi guy, just go buy IBIT. You brought up the ETF flows—they’re massive: $250 million on October 11, $550 million on October 14, $400 million on October 15, and $450 million on October 16. These are mega numbers.

Yeah, I didn’t have a long rant on this. I was more just thinking that if you’re sitting in a TradFi seat and you see Trump’s odds going up, you could put $50,000 to work on Polymarket, or $500,000, or you could put literally $50 million or $100 million to work in a Bitcoin ETF. I think that’s what’s going on here.

I mean, 100%. There’s actually one stock that I like to look at as a Trump proxy, and I think it trades pretty aggressively with Trump’s odds: GEO Group.

I’m not advocating for it; I’m just saying that it trades very closely with Trump’s odds. They basically run detention centers at the border, and they get a lot more government funding when somebody like Trump is in charge than when Kamala is.

That has also traded extremely well. It’s basically traded with BTC. What that tells me is that if all the Trump trades are trading like BTC, and BTC is trading like the Trump odds, that’s really what’s driving this move.

That’s the whole thing right now. People are allocating because of Trump.

Sorry, go ahead.

You’re back. We can hear you.

Hi. I’m on my phone, but it seems like I’m still lagging. I’m not sure if it’s the Wi-Fi or if StreamYard is just too high-resolution for me.

Your image is a little rough.

It’s an iPhone XR.

Honestly, I’ve been taking advice from somebody on the internet who uses an iPhone XR. You don’t have enough money to upgrade, and I’m supposed to be listening to you? What the shit is going on?

I’m a frugal guy. I’m a real guy.

The guy saves his CPU budget for mining whatever it is that you were mining, too.

I’m pretty sure even Warren Buffett has something better. What does he drive, a Toyota Camry? He has one sandwich a day from McDonald’s, but he probably has an iPhone 11 or better.

It’s an iPhone XR.

Let’s give some credit.

I had one of those.

No, this is great. We can hear you perfectly now, Giver. I appreciate you not falling for the Apple shill of every single upgrade cycle.

What I actually miss, phone-wise, is that I had a BlackBerry Pearl. That was my second-favorite phone. My favorite phone was when I was a kid. We had this thing that was like a landline, but it allowed you to roam away from the base station. You would extend the antenna way up and walk around the house. Those things were cool. I miss those.

I had a BlackBerry as a kid, and I loved the slide keyboard. I think I got an iPhone for my 18th birthday, and I’ve had two iPhones since. I usually get an iPhone every 5–7 years.

That’s pretty solid. I appreciate the frugality. You don’t see that very often in CT.

I never had a phone with a physical keyboard, so I don’t know what you guys are talking about. I went straight to the touchscreens. That’s why my brain is so fried. I’m built for this because, from the beginning, I’ve just been fed straight dopamine.

I played games. I’m a big gamer—or, at least, I was a big gamer when I was in school. I would always play on my 10-year-old laptop because it could run League of Legends fine. League of Legends is a very low-performance game, so I would never upgrade.

I could never play any of the games my friends were playing because I could never meet the CPU requirements.

How did you get into crypto? Tell us your crypto journey.

Sure. I’d say it was in 2020 or 2021—probably the middle of 2021—just by circumstance. It was through a colleague of mine who effectively told me, “There’s this group of guys where we talk about markets, finance, and crypto. I think you’d be a good fit.”

I said, “Okay, well, I don’t know anything about markets. I’m not very keen on markets. I just want to stick to what I know,” which at the time was still on the sell side.

I got in there, and at that point I didn’t know much. I just looked at CoinMarketCap or CoinGecko, whatever site I was using at the time, and I started dollar-cost averaging. The timing happened to be the summer of 2021, just by pure luck, when prices had largely crashed.

I distinctly remember buying Polkadot at $10. I wasn’t trading; I was just dollar-cost averaging and being a so-called long-term investor. I started getting really busy again around September or October, so I didn’t monitor the performance of my portfolio.

By the end of October or November 2021, I clicked over to my portfolio and I was up a ton of money. I remember Polkadot being around $60, and I had been dollar-cost averaging at $10. I thought, “What is going on? I don’t know what’s happening, but I’m up a lot.”

In the search for a better understanding of what was happening, I checked out Reddit and Twitter. Browsing Crypto Twitter, the first few people I followed happened to be guys like Satar and Darren Lau—not Three Arrows Lau.

I became very interested in what was happening with DeFi. I thought it was super cool, so I started writing about DeFi myself. I remember one day I learned about OHM tokens and treasury-backed tokens, and my mind immediately jumped to the possibility that there was some degree of intrinsic value based on the underlying reserves backing an OHM token.

I wrote about that on Twitter. It was my first post ever. There was some thought that went into my name or pseudonym, but I posted it, and overnight it got 1,000 likes. It happened a lot, and I gained around 2,000 followers in one evening.

From there, I started writing about things as a passion project on the side.

I respect people like you who are able to grab that much engagement and go from zero to 60. It took me a year of bragging about myself and my job title on LinkedIn and promoting myself from a large account to gain a foothold in people’s mindshare when it came to crypto.

It speaks to your writing and analytical abilities that you were able to hit the ground running like that. It’s extremely rare. What happened to your bags in 2022? Did you just get absolutely carted out, or did you dodge the bullet?

To some extent. On your point about branding, when I thought about branding, I think even today—and exceptionally more so this year—my Twitter account is somewhat of a challenge to myself. If I have what it takes, I’ll just put it that way.

On Telegram and other venues besides Twitter, I’ll sometimes purposely remain anonymous or at least not brand myself because I want to be evaluated on the merit of my thinking. People can be biased if they know who you are. Maybe they’ll be too happy to agree.

This entire journey, from 2021 onward, has been a way to express my thoughts and see whether they hold up in the market’s eye.

After writing about OHM tokens, I became enthused by what was going on around that time. I thought DeFi was the next big thing, and to some extent I still think so. When I learned about rehypothecation through an app like Abracadabra, Magic Internet Money, and a lot of the things Daniele was building, I was completely enthralled.

I thought this was completely accessible outside of this little cryptosphere on the web. I remember shorting Luna and making money all the way from $100 because I was very early to shorting it.

Because I didn’t know anything about risk management, sizing, or really anything else, I was putting on big leverage and shorting every spike. From $100, I shorted it to maybe $75, and then I took all the money off. When it went to $70, I thought, “Wow, this is going down more,” so I reloaded my position at $70.

Then it went to $50 or $45, and I took chips off. At $40, I jammed it all in again. I made around $250,000 in the span of a few hours.

I remember reading GCR’s tweet at the time. Around $30 or $40, he said, “I’m closing out my bet. There’s still more to go, but I don’t want to compete against these people once it becomes a crowded trade and gets choppy.”

I thought to myself, “This guy has been talking about how there’s so much more room to go.” So I kept jamming money in at $40, $30, and $20, and then I got crushed.

All the money I made that day completely zeroed out. I lost all my unrealized and realized gains. I lost around half my crypto net worth, which I had grown by that point.

Then, through the brutal reality of being in a down spiral while owning illiquid assets, some of the NFTs I owned went down in value too. I eventually found myself in a compromised position where I didn’t have enough liquidity to support some of the positions I had opened by naively trading these assets, and I got zeroed out.

I still had a little bit of money left. That money was effectively the principal I had started with in crypto, and it was still on FTX. Then, through FTX, it got zeroed out there too.

The entire saga ended with me having made no money during the 2020–2021 cycle.

That’s an amazing story, mainly because you clearly articulated how you learned the lessons. A lot of people end up learning lessons like that, but usually from the long side rather than the short side.

Very few people get burned in crypto first on the short side. It’s definitely an interesting story, and it says a lot about the irrationality of the market and understanding how to extract money from it. That can sometimes be divorced from long-term reality, and, in fact, it often is.

Whenever I read your posts, there’s a lot of thought and analysis that goes into them. Sometimes there’s a good amount of math involved, but when you produce content like that, you’re implicitly thinking longer term because short-term moves in crypto tend to be extremely noisy.

How do you balance that now? How have you learned from that experience to balance the fact that, when you think deeply, you’re implicitly thinking long term, while crypto obviously moves pretty violently in the short term?

That’s a great question. The first thing that helps answer it is that, over time, as I’ve become more senior in my career and pivoted to the buy side in traditional finance, I’ve developed some acumen there.

Something I’m very conscious of today is that there’s a very large divide between thinking about an asset or an instrument in a private market versus a public market. Crypto definitely fits into the latter.

One of my biggest lessons from the previous cycle—and perhaps even from earlier this year—is not novel: markets can remain irrational longer than you can remain solvent.

Especially in an asset class like crypto, where there’s an incredible amount of reflexivity and hype, I thought a stronger fundamental lens for approaching assets might work in the last cycle. I learned the hard way that it didn’t pan out the way I thought it would.

That was a clear indication that I hadn’t solved anything. I was still missing something, so I had to go back to the drawing board. I had been right at certain points, but I had also been very wrong at certain points, and it didn’t feel like I had an edge.

Similar to playing poker, which I did a lot of in my 20s, there’s no point in doing something if I don’t feel like I can express an edge over it.

I think earlier this year was the first time in my life when I thought public markets were really interesting. Up until that point—and I’d say this is true for most people in private equity or on the buy side—nine out of 10 people probably couldn’t tell you what the forward P/E for the S&P 500 is.

There’s a big chasm between evaluating something based on what it should be worth and what people are willing to pay for it, or what people have paid for it in the past, which typically becomes the precedent used.

Developing a mental model for the former, and then understanding the latter—which has more to do with capital concentration and economic theory—is the hard part to learn with public markets. That’s what I’ve tried to get better at this year.

I think this is why we love your tweets. In the crypto world, we’re so used to this mid-curve meme where it’s like, “Doing work is stupid. We don’t need to invest time in understanding valuations. Just hold on for dear life and everything works out. Yay.”

But it doesn’t. The market is getting more mature and more complex, and we need these frameworks.

I want to poke at this, and maybe Avi does too. Should we try to figure out what The Giver’s frameworks are for ETH, Bitcoin, and public markets?

I think that makes sense. I do want to touch on a point you made, which is core to this podcast and the discussions we have here.

Why is that mentality so prevalent in crypto? Why is the mentality that you don’t have to do the work—you just have to allocate—so common?

It’s prevalent because crypto is a growing asset class, and the reality is that the vast majority of people can’t think clearly or effectively. It’s actually very difficult to do that.

What would your advice be to somebody in a different asset class? Don’t trade. If you’re not good at trading, don’t trade.

Crypto is different because it’s a rising tide that lifts all boats. If you’ve decided to allocate your time to an asset class that you inherently think will grow year over year, you can make a ton of mistakes and get bailed out.

As long as you’re playing the game and don’t blow up, you might actually make more money trading. If you’re early to one thing once, you can make 10x your money, and that can cover a lot of losses.

I think that’s why the mentality is prevalent. But the reality is that crypto, like every market, goes through a period when it’s easy, and then it gets much harder as smart people come in.

The question is: As you go through this transitionary period—which, in my opinion, we’re doing right now—how do you maintain your edge? How do you shift from betting on a growing asset class to generating an edge because there’s still a lot of inefficiency, the smartest people in the game aren’t playing it, and you can generate alpha with a smooth P&L curve?

How do you actually get there? It’s through this type of conversation and process. You think, “If I should be long or short Bitcoin, these are the 10 things I need to look at and think about.” Then you place them in context and make your bets.

Maybe we can start with something concrete: Bitcoin. When you’re evaluating Bitcoin, you sometimes post long, short, left, and right. What are you actually looking at? How do you start to form a thesis on where Bitcoin is going?

That’s a good question. I don’t even know if I’ve consciously thought about this before, so this will be my first attempt at explaining it.

At the core of all these assets is a natural supply-and-demand curve. Price meets supply and demand at the point where equilibrium is set. Certain movements, like the standard movements from an introductory microeconomics class, can shift either curve right or left, changing where price meets equilibrium.

Over the last 4–6 months, as I’ve tried to think more classically about markets, I’ve realized that I don’t really look at a lot of the things other people look at when I begin my thought process.

For example, with Bitcoin, when I was thinking about China, the 50-basis-point rate cut, or even this past week and how it would feed into the election, I started with a hypothesis about where consensus was and how positioning was being aggregated around it.

Then I asked myself whether there was enough volume, flows, or capital to support that consensus without new money coming in.

If I think the answer is no, I’ll do some work and look at volume and open interest. I was asked a similar question on the What’s My Edge podcast about how much I trade off macro.

The weight I assign to macro is the inverse of how other people are looking at it. If the rhetoric is that a certain event, such as FOMC, CPI, or jobs data, is very important, I’ll probably flatten risk into it or take a contrarian view that it isn’t influential and start a position there.

What I love about crypto markets, more than other public instruments and especially compared with private equity, is that markets are very snappy. You can ascertain quite quickly whether you’re directionally right.

Sometimes it takes a little more time, but compared with the life cycle of a bet in the private realm—which can be artificially extended through bankruptcies, restructurings, and so on—in crypto, you’ll pretty much know within 1–2 weeks, or at most a month, whether the bet you’re making is correct.

If that’s your edge, is your 2-week window where you feel most comfortable?

Yes.

On this podcast, we talk all the time about how the news itself doesn’t matter; it’s the second derivative of the news.

If everything looks euphoric, you have to ask yourself not, “Is it euphoric, ergo be bullish?” That’s the wrong question. The question is, “Is it going to get more euphoric or less euphoric?”

Right now, things have really started looking up for crypto. Crypto is a Trump trade, Trump’s odds are rising, and everybody is getting excited and piling in.

You mentioned FOMC and rate cuts, and how you wanted to fade that sentiment, which speaks to the second-derivative conversation. Are you looking at this and saying, “It’s going to be pretty tough for inflows to confirm the current level of euphoria, so I’m selling into this pop”?

Or are you saying, “This is the real thing; it’s time to get even longer”? How are you positioning yourself with your edge and your time horizon?

The quick answer is that I am that short. I formed the position exactly 2 days ago, and I haven’t discussed it publicly. I’ve mostly discussed it with 2 or 3 friends.

Last week, when price was still circling the low $60,000s, there were possibly a lot of reasons why price could chop in the $60,000s, which is the range we’ve been bound in for God knows how long.

I didn’t really have a viewpoint. I was short to start the month, then I got long around Golden Week because I thought you could scalp a nice domestic Chinese-market opening that might tie easing effects in people’s minds to buying Bitcoin as a risk proxy.

Then I flattened out. I’ve been secularly short some altcoins for quite some time, and I’m still holding those positions, but beyond that I was very light. It was probably the lightest I’d been in my book for 3–4 months.

I didn’t have a view because I had a lot of personal uncertainty around what the Trump run-up could look like and how it would manifest.

When we went below $60,000 to $59,000, I started shorting very lightly—very, very lightly—Ethereum and Solana. From a purely mechanical perspective, I thought there might be a little more downside to scalp.

Then we moved quickly to $62,000. I was still monitoring the market and wasn’t really sure what was going on. Over the weekend, we moved very quickly from $61,000–$62,000 to around $64,000 or $65,000. I remember I was working out at around 1 or 2 a.m.

When that happened on Sunday, everything followed. ETH and Solana followed too, and again, I was still a little puzzled. I wasn't adding any additional exposure because I wasn't really sure what was going on.

It took a few days. I looked at more data points, and somehow there was a lightbulb moment for me where I think I just put 2 and 2 together. I think what is happening today is that we are in a chicken-or-the-egg situation with respect to Bitcoin and crypto assets.

What I mean by that is, I think the very popular rhetoric that you see echoed is that Bitcoin is a trade that has divergent outcomes based on the outcome of the election. I think that's somewhat lazy analysis, in the sense that we're just putting some numbers out there: if Trump wins, we're going to $100,000; if Kamala wins, we're going to $40,000.

I agree with half of that. I don't think we're going to $40,000 if Kamala wins, but it would be interesting to hear your take. Go on.

Sure. I think that is the sentiment, right? It's a sentiment that is at least shared, and my view is that it is somewhat the reverse. The money that is flowing into Bitcoin is executing in an unscrupulous way, and it's come very erratically.

At first, you had majors follow, with alts and perps trending. But on Monday, when I realized that other assets had started eroding in terms of their ratio against Bitcoin, I looked at the Trump Media & Technology Group and realized that it had grown from $10 to $30 in the span of 2 weeks despite no new guidance.

I looked at a few other things, and I came to the conclusion that Bitcoin is simply being used as a hedge—a liquid hedge or a risk proxy—to manage election risk going into the election. Therefore, it is a chicken-or-the-egg situation where, independent of whoever wins, I think this mercenary flow, driven by a new class of buyer that we haven't seen that much this year, is going to take off. That capital is going to take off regardless.

Can you clarify who you think of as the new class of buyer?

Sure. I think of digital assets today as having 4 sets of buyers. The first set is the very common one: the speculator. It's the class of participant that has historically been dominant. I would say even last cycle, maybe 75% or more of the base was this player, and they are typically responsible for very deep troughs and very high peaks. Of course, they are very present today.

I think the second bidder is a new bidder, and they are the passive capital allocators. They are the ETF buyers and, to some extent, Saylor. I think it's worth distinguishing them because these guys are generally price-agnostic, with a healthy time horizon.

This is an assumption I'm making, of course; it isn't proven. The assumption I'm making is that these bidders are looking for diverse exposure. They have been conditioned by financial advisers over the last 20 to 50 years that when you invest in something like the S&P or equities—or, obviously, something much more volatile like crypto assets—you should have a longer time horizon to be able to realize that 6% to 8% annualized gain on equities.

To an extent, for something like Bitcoin, the same logic applies. I think that is very visible because these ETF buyers have been very supportive of price in the $50,000s and $60,000s, independent of where the chart looks. Whenever we've had a long-liquidation event, these guys have come in and largely stepped up.

The third category is the carry vehicles. This is where I would qualify someone like Millennium. Their presence is likely someone who is also similarly price-agnostic but very rate-sensitive, such that they are probably doing something where they might be buying IBIT but shorting CME futures. They're effectively doing the basis trade in real life.

These 3 bidders so far, I would say, don't move the needle. They're not moving the needle this month. The ones who are moving the needle are the event-driven buyers. This is the type of participant that I think was responsible for the Grayscale ETHE discount closing in 1 day from 19% before the announcement in July. It's the same bidder that put on a lot of open interest when there was an initial rumor—initial rumor-milling—around the strategic reserve asset from Trump.

The event-driven buyers of crypto assets and crypto-linked assets.

Correct, exactly. These guys aren't sticky. They're here to monetize either a naked view on how Bitcoin will do into the rally, or they're using it to hedge.

For example, if you are a public-markets manager and you have liquid positions in industries that are going to benefit from a Harris win, and you're looking for a Trump proxy, is it easier to invest in something like Bitcoin, which has a lot of deep liquidity and is highly liquid, so you could sell out of the position whenever you want? Or do you invest in an industry or a company that you just don't have enough time to get up to speed on, like coal or energy—something that is maybe very unfamiliar and not possible to buy within your mandate?

I think, therefore, these event-driven bidders—the fourth category—are not sticky. That capital will unravel. Most importantly, this is the most important part of the thesis: this is not capital that recycles into the ecosystem. It is static. It stays in IBIT, it stays in CME, it stays in Bitcoin, and it doesn't recycle elsewhere.

That is my explanation for why you have erosion in alts, ETH, and SOL against Bitcoin. If this was truly, let's say, a risk-on buyer—someone who's here to speculate on the election outcome and is going to be there afterward, or someone who simply got reawakened into Bitcoin and wants exposure—then you would see more diverse buying, especially in something like ETH. Look at the BTC inflows that have occurred. That makes sense.

I follow the logic of your argument. I do want to offer 2 pieces of pushback, just to see how you respond to it.

The first is that, yes, we've seen a lot of mercenary capital before. We've seen a lot of pre-positioning for things like the Trump conference and the Bitcoin ETFs. A lot of these moves were driven by a massive increase in CME open interest, and that's generally TradFi coming in, pushing up prices and speculating.

The question is why. Are they doing this solely because they want to bet on Trump winning, and on the day that Trump wins, the entire thesis has played out? Or are they betting that Bitcoin is actually going to flourish under a Trump regime? If it's the latter, they probably actually hold their positions, and they could hold them for a multitude of reasons.

One of the things that I was talking about before is that, if Trump does get elected, you have this DOGE-like quality that attaches itself to Bitcoin. What do I mean by this? After Elon Musk mentioned DOGE for the first time, people bought DOGE solely on the speculation that he might mention it in the future, and then it outperformed for months.

That, I think, can happen again with Trump. It'll fade over time, as it did with DOGE, and it'll come back down as the speculators wash out. But at least for the month post-Trump presidency—maybe even until inauguration—there's going to be rampant speculation that he may say something about Bitcoin. You don't want to sell out because there's this ever-present black swan.

At some point, that diminishes, as it did with Elon. I do think that there's a big right tail for Bitcoin, and with that right tail comes interest. If we take this scenario for granted—that they don't immediately exit their positions after a Trump presidency, and Bitcoin sustains itself above $70,000, above all-time highs—that tends to be when new people come into the market.

One of the reasons that we haven't had a massive bull run across the board is because Bitcoin hasn't sustained a price past its all-time high for a long enough period of time. It just hasn't. Every time it makes a new all-time high, it comes straight back down.

Right now, we're close enough that if there's sustained price action past an all-time high, and we stay there for more than a month, then new people come in because they see the headlines: Bitcoin making new all-time highs.

This is a little bit of a weakly held argument. I'm more in your camp than what I just said, but this is the counterargument that I'm making to myself, and I haven't actually come to a conclusion. One of the things I read once in a trading book somewhere, which I love, is that exploring alternative hypotheses is the bedrock of good thinking. I like to do this, but I'm curious what your take is on that.

I think it's a reasonable pushback, and I think that is why I am long Bitcoin and short everything rather than just being naked. I do think there is a degree of echo-chamber effect that can manifest in Bitcoin.

As you mentioned, price begets narrative, in that sense that price is a signal in and of itself, and I agree with that. However, I think an alternate approach is just looking at the total amount of money that is here to actually support all these assets compared to 2021.

I think the peak crypto total market capitalization was somewhere around $2.7 trillion, and that was an era where we had significantly more leverage, COVID stimulus checks, and 0% interest rates. I was also on the back end of the real easing that was happening with COVID-induced policies.

Why this matters is that if you have someone who has $100,000, they can very easily take out many forms of debt, which have seemingly no opportunity cost. They can buy Bitcoin or Ethereum, releverage that capital at 90% LTV, take out $90,000 or $85,000, buy an NFT or something else, recycle that inward, and then the price is growing. You're creating a larger buffer against your loan, and you're able to get 2 or 3 times your starting capital as an ultimate destination.

Price can be very reflexive in an arena like that. However, in this year and this era, which has been much more choppy, there has been very limited new capital coming in since January, February, and March.

For that capital to come in, the conditions in which that needs to manifest don't, in my view, reside simply in Trump becoming president. I think it requires probably more stabilized financial conditions and equities. I think that capital is coming out. I would measure the cost basis of this capital as being anywhere between $61,000 and $63,500.

If Bitcoin hits $70,000, that is a 10% gain on a 3-week trade. That money is coming out.

Let me ask you a question. How many of your TradFi people are hedging equity positions with Bitcoin because of Bitcoin's link to an election outcome? Have you spoken to anyone who's actually doing this?

To me, it sounds a bit crazy. I'm not discounting your thesis; I'd just be stunned if somebody were long some random industrial stock that would get nuked on a Kamala win—or, sorry, some random industrial stock that would get nuked on a Trump win because of tariffs—and were long IBIT as a hedge. Do you talk to people who are doing stuff like that?

I would say there's a yes-or-no answer. People are acutely aware of the election and what benefits from a win. Whether or not they are taking that position themselves, either at a professional level or from a personal perspective, I haven't asked.

But I think you can use something like the Trump Media & Technology Group as a very clean proxy for this. That is effectively the meme coin in the real world to proxy a win for Trump. Or Polymarket is a way to generate interest. I think the gap has widened—it could be incorrect, but I think there's about a 20% difference now between the 2.

Betting markets are very viral today. There's a lot of life behind them and all these different avenues in which you can bet on a Trump win, or potentially de-risk into. For example, let's say Bitcoin hit $70,000 or $71,000 and you made 10%. Why roll the dice now when you're up what seems to be a very reasonable return in a TradFi setting on potentially a lot of liquidity?

I agree with you. Anybody who just flipped a quick 10% return at scale on one of their hedges is likely to take it off.

Where I would humbly disagree with you is the idea that this sort of election-hedging community that you bring up—which probably exists; I hadn't really thought of it before, so it's interesting—is going to matter if Trump wins.

If Trump wins, there's going to be an overwhelming tsunami of buy-side flow from new communities of people who are just interested in having exposure to the space on the basis of a perceived friendly regulatory environment and perceived reflexive inflows.

Anybody who's long as a hedge and is pitching out of their hedge on a win like that—that flow is going to be a spit in the ocean compared to the new investors who are going to come in, the new long-term holders.

I think the difference is that it just takes time. Going back to the original discussion that we had when we were on stage in Utah, I think on a Trump election you get a move up very fast, and then it gets sold into because I think it takes time for people to come in.

Are you going to have the balls to fade a Trump rally if he wins on election night? It's just rallied 30%, but it's going to sell off as people take profits, so I'm going to take profit too.

I wouldn't have the cojones to do that.

Look, from October 10 to October 16, Jonah, there's been $3.5 billion added in CME open interest.

Some of that's coming out.

Yes, and that's basically your signal. When CME open interest starts to drop, get out of the way.

Look, every time anyone in the crypto market has always been on one side of something, I don't think there's a single person in crypto who says that 24 hours after the Trump election we're going to be down. That has to be a warning sign for you, right?

It's not, though, because for every crypto person that we know, there's literally 1,000 non-crypto people out there who are going to be like, “Oh, Trump won. Maybe I should buy some Bitcoin now because it's safe to do so.” We're not talking to that community. They're flat; they have no coins.

I tend to believe that this pool of capital is always overestimated. That's just my belief.

I also think that the short-alt trade is really tough, because I think a lot of alts should do extremely well under a Trump regime. There are definitely certain alts—you can probably still short Worldcoin to zero, and I think that's fine—but I do think that things like Solana probably get a bid post-Trump victory.

What's interesting, though, is that if that is the case, those bets should be manifesting in line with the widening odds of Trump winning. I did a study using July, August, and June as a time frame, and I regressed the change in Trump's odds on Polymarket against Bitcoin price action. There was a very weak linear case.

To the extent that you believe there is reflexive behavior that centers around a Trump victory—and let's say that perhaps you can't look at that over a long period of time, but maybe you can make the argument that over a very short period of time it can manifest—then we should be seeing that resonate with the alts that should do well.

Stuff like the DeFi bucket and Solana should be risk-on proxies, as second-order derivatives for Trump. In the situation we're in today, there are 2 outcomes based on the lack of appetite to support those flows.

The first is that they are wildly underpriced, and that they are good longs to make at this point in time. The second outcome is that the money that came in is not willing to bet on other markets, and there is a lack of crypto-native capital at this point to put on that bet under a Trump win.

I think it is the latter. The way that I get more comfortable with the latter is that, when you look at all these long liquidations that have happened—and there have been an abundant amount this year—every single time that we try to take $70,000, there's been a lot in the last 2 or 3 months.

There was Germany. There was the ETH ETF unwind and the displacement of ETH money. Shorts even got eviscerated in terms of the move from $175 to $250 that I wrote about in August. Then, very recently, there was what I call the cross-asset panic-bid unwind.

Jonah, you actually talked about this. Your thread is what gave me a little bit of creativity from that. You were long oil and short Bitcoin around the Iran-Israel war.

I nailed that one. That was a fade. I'll give myself credit on that one.

A lot of people have gotten totally chopped on this whole summer of up, down, up, down—and early fall too. Confidence is low.

I take your point about Polymarket having a low correlation with Bitcoin. That's interesting. But I think both you and I can agree that correlations can change, and maybe Polymarket is going to be pretty correlated with Bitcoin going forward.

To your point about hedgers, and to our general 1000x viewpoint on “Trump means Bitcoin number go up, Kamala means number go down,” at least for a while, let's not get too much deeper into this election stuff, which we've talked about ad nauseam.

Let's give the people what they want to hear. Everybody wants to talk about the GOAT—the dollar-sign GOAT. In case you've been living under a rock, there's an AI memecoin now, which is a confluence of everything that people are looking to FOMO into. Marc Andreessen gave $50,000 to a robot, and the robot made a memecoin. Now the memecoin is worth 100 times what it was worth 5 days ago, and everybody's getting excited.

Do we see a white-hot GOAT? Let's get an opinion on GOAT between now and the election, and an opinion on memecoins, Solana, and this stuff in a Trump-win scenario versus a Kamala scenario. Giver, Avi, do you want to go first?

Yeah. It's a great question, Jonah. Thank you for asking me about GOAT.

Sometimes you have these things that just capture the moment, capture the zeitgeist. Do I think that GOAT exists in a meaningful way in a year? Very unlikely. Do I think it can get to $2 billion in a short period of time? Potentially.

I'll be honest with you: the way that I view memes is very much, “What is the actual popular appeal of this thing?” An AI-created memecoin—I just don't think it has mass appeal in the same way that a cute dog in a hat does. Just shoot me, but it's a very clearly crypto-oriented tech meme.

I agree with you, but I think this meme is exactly like BODEN. I would have bought it if I hadn't moved all of my Solana onto a centralized exchange to do all the active trading that I've been doing recently. I have none on-chain to go and buy GOAT, and I should have.

I view GOAT as the same thing as BODEN. We're going to get this wild arc up to some stupidly large number, and then it will collapse back down to zero for exactly the same reasons that you just mentioned.

I think the BODEN chart and the GOAT chart are going to look very similar. There's an “Oh, my God” moment for both of them, but literally no cultural staying power.

That doesn't mean you can't make a ton of money on it, and it doesn't mean it can't go to $1 billion.

I do think that, in general, memecoins are very clearly here to stay. Hedge funds are allocating to memecoins now, which is kind of nuts. It's just the best gambling ever.

The only 2 memecoins I personally own—I'm not going to mention them because I don't like mentioning small caps—but I do think that, regardless of where Bitcoin trades, as long as it trades above $60,000, you're going to have some weeks where memecoins rip.

That's my answer.

Over the last 24 hours, I compiled a series of thoughts outlining the conditions in which memecoins do well and their usefulness. Effectively, what I think memecoins do is produce uncorrelated returns with respect to being a store of value relative to everything else that goes on in crypto.

If you regress, for example, Solana's price against Bitcoin—which I did since 2021—the R-squared is something like 0.6. That captures Solana's price all the way from $1 to $200 and then back to around $150 this year.

That's a good point, actually. I never thought about memecoins as being uncorrelated with the market.

What's important is that the correlation grows with size. If you look at Solana's correlation this year, year to date, the correlation with Bitcoin is around 0.8.

But if you look at Solana in 2023 against Bitcoin, when Solana was smaller and was around $20, the correlation was 0.7. When you look at it from 2021, it was 0.6.

That indicates that, as the size of Solana has grown larger, its correlation to Bitcoin has grown deeper. I tested this with some of the memecoins that went from quite literally zero to being very big—effectively, $1 billion.

I looked at MOG, Popcat, WIF, and PEPE, and I came to 2 novel conclusions. The first is that the statistical covariance was lowest for Popcat, and Popcat has taken the longest time to develop. It spent the most amount of time this year in a smaller window of size—sub-$500 million, sub-$200 million. I don't know what the exact inflection point is.

But I also realized, through looking at these charts, that each one of these seemingly incredible memecoins that came from nowhere, once they reached their all-time high or a high, had never been able to surpass it again.

These memecoins reached their largest valuations in critical periods of macro uncertainty. WIF had its run from $0 to $2 billion or $2.5 billion from December to March, when there was skepticism around whether or not the BTC ETF would keep capital abundant—whether or not these passive bidders were there for real.

During Bitcoin's incredible run-up from $49,000 to $73,000, WIF did very well. Ever since then, WIF has never touched that point again.

Then PEPE came in and hit $6 billion, going from $3 billion to $6 billion during April and May, around the insurgency and the Israel-Hamas war. MOG and MEW were able to double their valuations around the uncertainty around the ETH ETF in July and August.

Popcat ran to $1.5 billion, eclipsing $1 billion for the first time in September, when there was uncertainty about the rate cuts.

Granted, this is a very small sample size, but to the extent that we can find a replicable process with memecoin selection and identification, we're in a very critical period today. There's a lot of uncertainty around the Trump election.

Well articulated. When it comes to market sizing, I think only time will tell—and time is what we don't have left, unfortunately.

Giver, I really appreciate you coming on the pod. This was really fun.

Thank you for having me. I appreciate it, and sorry for the technical difficulties.

No worries. I've had plenty of those myself. None of this is financial advice. We're all idiots; we just know each other from Twitter. Don't listen to us anyway.