粘性通胀 + 能源价格：涨势终结还是暂歇？

We need a blow-up to go up. That's the new tagline.

Yeah. Michael Saylor's behavior is concerning because I don't think I've ever seen an example of this type of financial-engineering accumulation reach this scale without some sort of horrendous unwind. Also, he looks unhinged in every podcast.

We should get him on here and grill him. We should do an adversarial podcast with Michael Saylor.

I wonder if he'd come on. I think he's unhinged, right? Here's some rage bait: I think Michael Saylor has lost the plot. There is no bid for his size.

Well, you saw what he said with stretch, right? He said, "I have to sell a little bit to inoculate the market against me selling." You see that, and you have to get nervous about Bitcoin.

It makes me nervous about the whole crypto market to see Bitcoin underperforming so massively against Hyperliquid and Zcash. This tells you there's no such thing as crypto anymore.

What do you mean?

The crypto market as a whole has not gone up in aggregate together in a very long time. There's no crypto asset class where everything rips together anymore. These are individual things with individual flows that rip individually.

1. End of the Rally or Pause?

And we're live. Look at us, we're live. How's it going, Jonah? How we doing, J-boy?

We're good. Yeah, we're good. Just another beautiful, sunny, perfect day in Los Angeles. Feeling happy and grateful. How about yourself?

We ran into a small technical issue right there. I had an open tab of the 1000x podcast, so I heard myself recursively, ad infinitum. That was kind of trippy.

I hear you recursively, ad infinitum, in my dreams, Avi. This is what my world—

You just hear me yapping at you all day.

I would kill myself if that were the case. I hear you literally top-ticking the market last week, at the highs, after it had ripped for goodness knows how many months in a row—or weeks in a row—and then you just said, "Yeah, I'm cautious on the highs." Now we pulled back. Pretty exciting.

I'm not going to take a massive lap on that one, just because Intel ripped and is now back to basically where I sold it. I think I sold it at an average price of around 116, it went down to 105, and now it's back. The Nasdaq is ripping today.

But I do think, as a trader, you always have to understand that the most dangerous thing about a market is when it has no bear case. The lack of a bear case is the bear case, in many ways. The reason traders and investors get psychologically trapped a lot of the time is because they don't realize that when it feels safest to invest in a market, it's actually the most dangerous.

2. The 1000x Terminal

You need to avoid that feeling of safety if you're going to make big bucks, if you're going to make a ton of money trading. I guarantee you, 95% of the trades you put on will involve slight discomfort. If you have literally zero discomfort about your trade, and everybody around you is telling you how smart that trade is, that means it's not as good a trade as you think.

So, when you put on the memory trade at the bottom of the market during the Iran war, when everyone's telling you that Iran's going to win the war, that the U.S. is going to lose, and that it's the end of American hegemony, that's a good sign that maybe you're on the right track. When you're balls-long and Intel is trading at 120 and SK Hynix is at the highs—I mean, at least that's off a lot, 11% or so—HOOD, when everything is ripping, that's when you have to be a little bit nervous.

When everything in this world is ripping, that's when you have to be nervous. People are no longer saying, "I'm not involved in this rally. I don't understand why it's ripping." What a lot of people started saying was, "All right, fuck it. I didn't believe this rally during the Iran war, but I'm going to come back into the market. I'm going to buy the bubble, and I'm going to ride this thing higher." That is a very dangerous place to be as a trader.

Generally, my take is that I'm more of a contrarian when it comes to market psychology. When everyone is on the same side of a trade, I tend to get out. Now, there are times when that trade obviously works out, and here's when it works out: when everyone around you seems to be on one side of a trade, you can't always say, "This isn't going to work out." You have to understand the reasons it might fall apart.

At the end of the day, the only thing that matters is the marginal dollar invested in an asset. You have to ask yourself: Is the marginal dollar already invested in AI? When Bitcoin is in a bubble, is the marginal dollar already invested in Bitcoin?

Jonah, you seem like you're shaking your head. We can talk about this, but what I'm trying to articulate is that you can be surrounded by people who are very bullish on an asset. For example, in 2020, you're surrounded by crypto people. Every single person turns out to be correct—Bitcoin 10x's—but the reason is that the new money coming in is not the money that's already been allocated. There's an external source of capital coming into the market that wasn't in the market before, and that props it up.

AI was kind of the same thing. A lot of people were positioned for it, but a tremendous amount of retail wasn't actually in these assets. Retail wasn't in Intel in a big way. In fact, there were a lot of major hedge funds that weren't in Intel in a big way.

Among memory circles and AI people, Intel, AMD, Nvidia, and all these things seemed like they had maximum allocation. But there was this huge pool of external capital—retail and some slower-moving hedge funds that weren't using agents yet. Those guys all came into the market.

So, even though you were surrounded by people who were super bullish on AI and super bullish on agents, you still had that external source of capital coming in. I'll give you another great example: the general stock market. Everyone is bullish on the stock market long-term all the time. But where's that external source of capital that's going to continue to prop it up? The consumer continues to spend, and that continues to drive revenues toward these companies. That's an external source of capital coming into these companies.

Second, you have all the pension funds in the world. Every single 401(k) in the world allocates to these markets every single week. So, what I want to leave you with at the end of my 6-minute rant to start the 1000x podcast is this: You need to always identify the external source of capital. Where is the marginal dollar going to come from? If you can't find it, you better get the fuck out of your positions.

I love ranting at you guys. It's so much fun because I have a captive audience and you can't do anything about it.

I love that. By the way, when I was shaking my head, I wasn't shaking it in the sense of, "No, you're wrong." You were asking, "Has everybody who's going to invest in AI invested in AI?" I was shaking my head like, "No way. There's so much more investment left for this particular boom."

Unlike crypto booms, which were money running ahead of potentially useful cases, coding alone seems to be a use case that's as big as the entire white-collar labor market combined. So I think the answer is no: not all marginal dollars have been invested into this particular AI rally.

We should roll. There's so much in what you just said in that 6-minute or 7-minute rant. I think one of the things that appealed to me the most was the idea that the concept of discomfort when you're entering a trade—or the lack thereof—can be dangerous.

It's kind of like a horror movie. As soon as all the teenagers get comfortable, somebody gets slashed, right?

What is it? Is this like Final Destination?

It's an '80s slasher-movie or '90s slasher-movie reference. You wouldn't know; you weren't alive yet. This was before your time. Horror movies used to be about slashers.

Anyway, you don't really see horror movies that much anymore.

No, it's the most popular category in terms of Hollywood investment. It's the highest-ROI category by a long shot. Some horror movie that just cost $750,000 to make is printing 8 figures now.

You know what? That's the last time I ever comment on movies, because every time I comment on a movie, I'm just wrong. I do know that, for somebody trying to build a media empire, I know nothing about Hollywood.

3. Sticky Inflation + Energy Prices

Anyway, my point about comfort or discomfort when you're entering a trade is that so many times I've felt super comfortable buying or selling oil, and then the thing that I just—these are short-term trades, some of my worst ones—it runs another 3% and then goes straight in my face. I'm like, "Well, at least I wasn't the absolute top tick or bottom tick before I got mulched. At least it ran another 3% in my direction before I got mulched."

Anyway, to that point, you were saying the most dangerous situation for the stock market is when there is no bear case.

I think there is a pretty big bear case looming, which relates to that chart I posted last week about operational tank bottoms for crude oil globally. You cannot hit operational tank bottoms. People will not stop driving or flying. Demand is very inelastic with respect to supply in a commodity as critical as oil. So I think that if we got anywhere close to operational tank bottoms—not just commercial historical tank minimums, but operational tank bottoms, which were projected to hit by September—oil goes to $200, the entire global economy shuts down, and the stock market's down 25%. It would be a real disaster. It'd be way, way, way worse than the Ukraine war.

And Trump isn't holding all the cards. In the beginning, I thought that this was a situation he could completely control. What I'm starting to realize—you know, just facts on the ground, as a trader, you have to adapt to what you see—is that it is not possible to control the strait and keep it open even with 3 aircraft carrier strike groups just sitting there, which is not what I would have expected. I would have thought with a million tons of diplomacy floating in this few-miles-wide strait that you could probably prevent the dinghies and the land mines or the sea mines or whatever from getting laid, and you could—the United States could just use the U.S. Treasury to insure cargo and maritime traffic going through that strait. I'm kind of shocked that that isn't happening.

I'm not, obviously, an admiral. I don't know what it takes to physically control the kinetics of the Strait of Hormuz, but it just seems like common sense that all of that military might should be able to do so. So, what does that mean? That means Trump isn't holding all the cards, that he can't guarantee safe passage through that strait. And what does that mean? That there is a non-zero chance that Iran decides to just ransom the world over their dissatisfaction with this particular conflict. And what does that mean? There's a chance that by September, crude oil hits operational tank bottoms and the entire economy shuts down.

So, if you're long stocks, you're short that put. I obviously am betting against it with a lot of money. I will be getting carted out on a stretcher if we hit operational tank bottoms and oil goes to $200. I'm a trader; I take risk. You have to underwrite certain things in order to just not be afraid of the world happening to you. That's how you make it. You got to risk it to get the biscuit. So, I don't think that's going to happen, but the possibility of it is so clear and present that it's not just this universal bull case for stocks.

Now, the fact that the stock market last week hit all-time highs and is now close to all-time highs with that clear and present danger so obvious, I think it tells you that there's complacency in the markets, which, you know, call me complacent. I'm invested. I'm not 10 out of 10 invested anymore. I'm closer to like 8.5, 9 out of 10 invested. I think people are sort of expecting—what's priced in is that the war will get resolved before the global economy gets turned upside down.

Even during the Xi-Trump summit, they both agreed that the strait needs to stay open, and that speaks to my point on many previous podcasts about how oil has a way of twisting people's arms. Enemies will sing Kumbaya and embrace each other to keep it open.

Yeah, it's literally the only asset in the world where 90% of people—and probably 95% of the world's population—want that price lower, not higher, right? There's a very, very, very small subset of the world that wants that price high.

And the unique thing about this is that that small subset of the world that wants that price higher is—well, it should be the entire population of oil-producing nations. But because so many of those nations are kleptocracies, it's really just the governments of those nations that pocket the money, not the Nigerian people or the Russian people.

Realistically, you have—and a lot of that constituency, a lot of that ruling constituency that normally wants oil to go to $200, can't sell their fucking oil right now because it goes through the Strait of Hormuz. So even they would partner up with China and America to reopen it because they can't profit from this.

Ultimately, let's say that the price of oil doubles. Saudi Arabia is still below breakeven because they can't get any more than half their oil through that East-West pipeline to the Red Sea instead of the Gulf. So even Saudi Arabia wants this thing open, wants stability here.

Also, these countries lose customers when there's insecurity of supply. The Japanese refining system that exclusively buys Middle Eastern oil—or almost exclusively buys it—is going to look to diversify to American oil, Indonesian oil, all sorts of other types of oil.

Well, I mean, this is a really good thing for the U.S., by the way, because the U.S. is a huge natural exporter of oil now. And so, if they can capture some of these markets, I mean, consider what happened in Europe, right? Consider what happened: the U.S. went from something like 5% to 10% of the overall supply of European oil to now more than 30% following the Russian invasion of Ukraine. I mean, could we see a similar thing happen in a post-Iran world, potentially?

Now, what I'm mostly worried about is all of these numbers, and this is what I talked about in the previous podcast. What I'm mostly worried about is persistent oil staying high. Maybe we stay above $100 for the foreseeable future. Trump doesn't TACO. And this is a key point: Trump is kind of trying to slow-play the decision-making here. He's trying to figure out, how can I still be at war with Iran but not have the markets think I'm at war? Or, basically, in other words, how do I have a shadow war? That's what's happening right now.

Trump is saying, “I want to continue this conflict. I want to continue to block the Strait of Hormuz, but I don't want people to bother me about it.” And that is a very dangerous place to be. Because what it means is that oil probably stays high. There's no walking back because he's pulled this off really well.

In a world where he hasn't pulled this off, in a world where the shadow war is called out by the majority of people, what you get is a true full TACO, which means you probably get fees for ships going through the Strait of Hormuz, you get the blockade removed, but it seems to be working. And what that tells me is that we will have 8 million barrels less oil in the world for the foreseeable future because he's not getting much pushback on this.

No way, that's unsustainable. If the world is missing 8 million barrels a day, there's basically a—if you ramp all spare capacity, which you can't because of the blockage, you're so short that oil goes to $200. It's impossible. You cannot have an 8-million-barrel-a-day shortage for the foreseeable future. You can have it for—

4. Fed Regime Change: Powell vs Warsh

Maybe for the next 2 months. But then what do you do? What do you as the investor do in the scenario that we're now outlining?

So, I'm happy to say that last week I de-risked a little bit. Obviously, today is looking good in the markets, but what I'm worried about now is those inflation numbers staying up. I'm worried about the fact there's now a 50% chance of a rate hike by the end of December. It's pretty high.

So the market is telling you, “Hey, we're very nervous that Powell is going to come in. He's going to be faced with the highest inflation numbers in 4 or 5 years, and he's going to have to do something about it because he doesn't want to go down in history as a Fed chair that messed it up.”

I mean, we're coming off one of the greatest performances by a Fed chair of all time. Of all time, Jonah. And yes, you can say that Volcker did well, and yes, you can say that Greenspan did well, but Powell effectively managed a soft landing, bailed out by AI, yes, but he effectively managed a soft landing even though he was slow to raise rates. Once he got in that sticky situation, he managed his way out of it. And I think Powell is a kind of a once-in-a-generation type talent.

Disagree. I don't think Powell is a once-in-a-generation type talent. Powell messed it up so badly.

You think if he had raised rates sooner, we would have been in a better spot?

Yeah, it's like, okay, he achieved a soft landing with the help of trillions of compute spend and the deflationary impact on businesses. We were so bailed out. Yes, so bailed out by AI. And I think the crisis that he was facing, that you're giving him credit for landing—the storm into which he landed—is kind of a storm of his own making.

Do you remember how slow he was to hike? He was very slow. He kept calling it transient inflation. I remember that.

No, no, no, no. Slow your roll. The price of a fucking onion is $3 right now because of Jerome Powell, and obviously some other things, too.

How do you know what the price of an onion is? I don't. It's probably not $3. I have no idea what the price of an onion is.

That's the most out-of-touch thing in the world. There's no way that an onion is worth $3. Anyway, I'm blaming consumer, you know, grocery store prices.

Let's look this up. I don't remember the last time I've been to a grocery store.

Because you have a wife.

Yeah, exactly. The point I’m trying to make here is that inflation was more severe than it should have been during the Biden era, in no small part due to Jerome Powell’s incompetence.

I can agree with that. I could definitely agree with that.

One thing Kevin Warsh is considering, which I think is cool, is instead of just surveying 8,000 people to get CPI, using more real-time telemetry, AI, and other modern technology to get a real sense of what inflation is on the ground. Do you think it’s going to be 3%?

No, I think it’s going to look a lot higher than the official CPI, sort of massaged figure, is. Yeah, that’s something that actually worries me a bit. I mean, there’s a reason that we do things in a certain way, right? There’s a reason that we don’t randomly just update the CPI, and it’s because if we randomly update the CPI, then you can actually cause inflation through consumer behavior.

If you randomly decide one day to say, “We’re going to update the CPI basket to be more reflective of the world,” and then suddenly you publish CPI numbers that are 2x what the actual CPI number is, you’re going to get panic. I mean, people are going to panic. Part of managing inflation is actually managing consumer behavior, and so I understand why they haven’t done it.

So it kind of makes me nervous, actually, because you’re breaking down what is kind of like an unspoken social rule. We probably shouldn’t even be saying this on the podcast, but there’s a little bit of an unspoken social rule that even if you know something is wrong, if changing it would cause panic, you kind of just go along with the lie because the majority—the people that actually know what’s happening—can come to their own conclusions, and the people that don’t know what’s happening, it doesn’t affect them anyway.

What you’re trying to do in the role of a Fed chair is not only—you know, in the phrase of our second-favorite podcast in existence, Forward Guidance—you’re supposed to provide forward guidance. You’re supposed to actually land the ship by managing consumer behavior, by managing company spend, by basically plotting out where you think you’re going to take the ship.

The way to do that effectively is to be a trustworthy leader, not to drop a bomb and say, “Actually, by the way, inflation’s up. Instead of 3%, inflation’s actually been up 6% because we haven’t been calculating it the right way.” I don’t know. This doesn’t seem like the right thing to do to me.

Let’s call a spade a spade: Kevin Warsh was put in as a political pick, right?

Was he?

I think so. I mean, you’re just so bearish on him. I know that he was your advisor at GoldenTree. Did the guy get drunk and pee in the back of a taxi at some point? Why do you think he’s so incompetent? He’s one of the most tenured Fed names around. Give us the scoop, Avi.

No, I don’t think he’s incompetent. I think he was just put in, you know, and I don’t want to talk too badly about him because maybe we’ll get him on the podcast one day. This is kind of what we did with Anatoly.

Do you remember that?

Yes. He went viral throwing shade to the point where the person getting the shade thrown at them was like, “All right, I’ll defend myself.” When they get angry and they’re like, “Stop talking shit about me,” and then they come on the podcast.

This is what we did, by the way, for those of you who don’t know. We did that with Anatoly. Jonah used to be incredible at rage-baiting people. He doesn’t rage-bait as much anymore, which I wish he would bring back. I wish he would bring that back, Jonah. It’s so easy. I can just become a crypto anti-influencer.

I have mixed thoughts on Kevin Warsh, though. I think, on the one hand, you’re right: he’s a political pick, and Trump wants rates going to negative 10% so that his real estate portfolio gets juiced. So basically, on the one hand, I’m like, “Wow, this is so bullish.”

On the other hand, Kevin Warsh is telegraphing—just zooming out for a second—if you set a target inflation rate of 2% and then you tolerate 4% or 6%, that’s, over the decades, a form of stimulus in the trillions or tens of trillions of dollars. It’s shadow stimulus. It’s shadow QE. It’s like you said: the tacit, unspoken thing about allowing more dollars to circulate through the system than you’re officially recognizing. Basically saying rates are lower than they should be because we’re miscalculating inflation—wink, wink, nudge, nudge.

Now, if Kevin Warsh comes in and introduces a new CPI metric, there’s going to be too much popular pressure to bring it back down to 2%, so ultimately he’s going to have to hike, right? So it’s kind of binary. Oil going to tank is one extremely bearish scenario for the S&P 500. Interest rates being—the kimono getting opened, the tide going out, and you see who’s not wearing any clothes, whatever analogy you want to use—if Kevin Warsh brings that about, there’s a tremendous amount of shadow stimulus that’s going to disappear.

That’s terrible for markets. While I am still bullish on Bitcoin over the long term—I think it’s going to a million-dollar token—that would be savage for crypto. That’s savage for equities, but more savage for crypto, which is basically a hyperinflation trade, or a debasement trade. At this point, I don’t know what to make of this Kevin Warsh guy.

In terms of your point about forward guidance, Jerome Powell was the king of way too much forward guidance: “Oh, we’re going to review this raging inflation. It looks transitory, but we’re going to keep reviewing it for months and months before we hike.” He gave you all the runway you needed to take off.

This guy, I don’t know. So that could be—literally just recalculating CPI, rebasing it—could be the most bearish thing we’ve seen since 2022. So yeah, there’s some bearish stuff in there. Again, I think these are 10-delta, 15-delta outcomes, but it’s worthwhile taking these into account.

We’re entering into a period of time where there are bearish catalysts on the horizon, but the vast majority of people are not willing to accept them as bearish catalysts. We’ll take a look today after the bell. We’re actually going to get, I believe, NVIDIA earnings. We’re going to see what the revenue is.

If you get a big sell-off in these names, you probably want to start nibbling again because they’ve been hit over the last few days. But I’m still of the opinion that you want to be careful deploying your cash.

5. BTC Struggling, ZEC Roaring

There are certain pockets of the market that are continuing to do well that I’m looking at and saying, “Hey, maybe some allocation is really happening here. Maybe there’s some long-term megatrend allocation happening, and maybe this is a good time to nibble.”

What’s funny is I’m actually seeing it in crypto. You’re seeing Zcash, for example, totally rip. You’re seeing VVV continue on an obscene rally, and obviously you’re seeing Hyperliquid do very well, which has been amazing. PERP’s almost at $9 now. We’re actually finally seeing allocation into crypto again. It just isn’t Bitcoin that’s seeing it, unfortunately.

Yeah, I’ve got some PERP. I’m pretty happy about that. We called that one on the show in the 30s, so for all you haters out there, boo-yah.

Anyway, back to it. Let’s dig into it a little bit. Why is Hyperliquid outperforming Bitcoin? Why is Zcash outperforming Bitcoin?

I think—wait, I remember. I don’t want to bother people too much, but I remember at the beginning of the year, Jonah, you saying privacy was going to outperform meme coins.

And everyone gave you shit. They were like, “No, no, no. Look, Pepe went up 30% in a day.” Well, shut up. Where’s Pepe now? Where’s your frog?

Honestly, I think part of the issue with meme coins and just the general sort of crypto counterculture in general is that throwing up a middle finger to the man, to the system, to the banks, is less effective and profitable when you’re hoping the banks buy your bags.

The Zcash thing is interesting. I think a lot of it is just a way to get long crime, honestly. It’s basically just a mixer to move money around illegitimately or outside the purview of the United States’ regulatory purview.

I wouldn’t be surprised if Iran and North Korea are making heavy use of Zcash right now, given what’s going on in the world. North Korea just stole another $400 million from mom-and-pop investors. Iran is basically getting bombed into the Stone Age.

6. Saylor's Bitcoin Problem

They’re probably having a hard time accessing traditional banking systems right now. So, there’s a bit of that. Hyperliquid, though, I think is a really interesting story because it is unlike any other application that’s come out of crypto—the only one that is basically better than any TradFi or centralized equivalent.

Now, we can sit here and debate whether Hyperliquid is decentralized or not till the cows come home, but it’s the best exchange in the world right now. And there’s no KYC, which is really valuable to a lot of people. So, it’s a better mousetrap. For the first time, crypto has produced literally an application that is a better mousetrap than anything else out there.

It does buybacks. It shares more revenue with the stakeholders than anybody else. I agree with Flut [?]. That thing should be worth triple or quadruple what it’s worth right now over the long run.

The CME is trying to create regulatory capture. I think they’re going after Hyperliquid because their moat is getting destroyed. So, what do you think of that? Are they going to succeed? I’m not a regulation expert, but that’s a concern. What do you think?

What is the total market cap of the CME? How big is the CME? CME makes $6 billion a year. Its market cap valuation is $108 billion. Now, if you go to Hyperliquid—let’s go to Hyperliquid. Let’s see how big this thing is today. What do we have? We have a $12 billion market cap and a $50 billion fully diluted valuation. Now, here’s my issue: $50 billion, right?

Not a lot of room for error, right? I love Hyperliquid. Don’t get me wrong. I think Hyperliquid’s going to continue to go up. I think Hyperliquid is a phenomenal product. And for all the HYPE holders out there who are listening to this podcast, I love you. Don’t kill me.

However, it is a large asset. It is not a trivial asset. The CME literally makes $6 billion a year. Hyperliquid, I think, eventually can scale past the CME, right? Because the CME is obviously derivatives-based. On Hyperliquid, you’re not trading private companies on the CME, right? Hyperliquid’s found a way for you to trade private companies on there. They’ve found a way for you to trade spot and tokenized equities. I mean, they can eat a tremendous amount of value.

They can take market share from Nasdaq, right? They could take direct market share from Nasdaq, from the matching engines that these exchanges trade on, right? But how big can they really get? What’s your upside? What are you playing for? Are you playing for $200 billion? Are you playing for twice the size of the CME? Now we’re getting into some fantastical territory, Jonah.

And so, to me, while I really like Hyperliquid, I liked it a lot more when it wasn’t so big. And now that it’s huge, maybe you can get an—I think you can get a very easy 2x out of Hyperliquid. But it’s not going to retire you now at this point. It’s far too big.

And I think that’s what is happening right now: once people realize that, everyone’s in Hyperliquid right now. Everyone’s buying Hyperliquid. There’s a really great framework that Ansem tweeted, where all big crypto runs have started: one major asset runs, and then one meme coin asset runs.

Something similar is happening here right now, where Hyperliquid is doing very well, and so is Zcash. Zcash is kind of the meme asset. But Zcash actually is genuinely getting new buyers in right now, and I think that—I’ve always been a fan of Zcash. I think we said at the beginning of this year Zcash is one of our favorite positions.

It is a fully diluted valuation of $10 billion. Fully diluted is a bit of a misnomer because, obviously, it’s still producing Zcash per block, but the current market cap of Zcash is $10 billion, and that, I think, could also get to $1 billion over the next, call it, 2 to 3 years. I think it can start to compete with Bitcoin on that level.

And so now you’re looking at a 10x, which I think is a little bit more attractive than the 2 to 4x you’re looking at with Hyperliquid, because Hyperliquid is never going to be money, right? Hyperliquid is a company. It’s a genuine company, and I think that, obviously, the cap-out for Zcash is much higher if it does become money.

One issue that I’m having right now, Jonah, is Michael Saylor is just too big in Bitcoin, right? You have 1 buyer that’s just buying and, you know, ready to take on 95% of the activity of BTC, and to me this is a very bad thing, right? What you want is a distributed currency.

And so I’m now of the mindset that Michael needs to stop buying if Bitcoin wants to go up. I don’t think he has the sauce anymore. We need a blowup to go up is the new tagline.

Yeah, Saylor’s behavior is concerning because I don’t think I’ve ever seen an example of this type of financial engineering accumulation reach this scale without some sort of horrendous unwind. Also, he looks unhinged in every podcast. It’s pretty clear to me that he’s got—

We should get him on here and grill him. We should do an adversarial podcast with Michael Saylor. I wonder if he’d come on.

I would. You know, I think he’s unhinged, right? Here’s some rage bait: I think Michael Saylor has lost the plot. I think he’s out of his mind. I think that the only way out of this predicament for him is through. He just has to keep buying Bitcoin and then hope that there’s some kind of crazy dollar debasement and he gets bailed out.

There is no bid for his size. He is too much of the market. Or maybe there’s a scenario where this gets really bullish for all of us. He pulls a John McAfee. He moves to Belize, does a bunch of—or continues to do a bunch of—drugs, which probably is going on right now. Otherwise, why would you do this?

And then maybe he just dies, and his Bitcoin wallet gets lost in some sort of swampy jungle and eaten by an alligator. Then the whole ecosystem just deflates by whatever he owes—3%. I think he’s already promised that he’s not going to pass along his Bitcoin to anybody else.

Basically, what we’re entering is Cuckoo Land, Crazy Town. This is clown shoes.

Now, I saw this a bit at the beginning of my career when I was on the credit trading floor at Lehman Brothers. These subprime asset-backed structures, CDO tranches, CDO-squared tranches, things like that, were all just getting so big and so problematic that an unwind was kind of imminent.

Here, at least, there’s an off-ramp, which is that he just disappears with the Bitcoin and it just goes away. But I think there is—I think he is—

What does it all look like in practice? I mean, what do you mean, disappear with the Bitcoin and then run away?

Basically, the question is: will Saylor ever sell? Because he’s too big to sell now. He can’t. If he goes and tries to liquidate his stack, the price of Bitcoin is going down to $30,000.

You saw what he said with stretch, right? He said, “I’ve got to sell a little bit to inoculate the market against me selling.”

7. 1000x Goes Macro

And I mean, you see that and you’ve got to get nervous about BTC. It makes me nervous about the whole crypto market to see Bitcoin underperforming so massively against Hyperliquid and ZEC. And this just tells you there’s no such thing as crypto anymore.

What do you mean? The crypto market as a whole has not gone up in aggregate together in a very long time.

Mhm. Like 2 years since 2024, you know? Yeah, there’s—it’s like there’s no crypto as an asset class.

Crypto isn’t an asset class where everything rips together anymore. It’s just—

Individual things that have individual flows that rip individually. Individual blockchain use cases or applications. Bitcoin is a store of value and a debasement hedge. Zcash is the crime coin. Hyperliquid is the perps DEX.

Mhm.

Or CEX, whatever you want to call it. What else will there be? I don’t know. I’m sort of losing interest in the sector as a whole precisely because—I wish I had worded it as well as you. It isn’t a sector anymore.

It’s like blockchain is becoming commoditized fintech rails, trading infrastructure. And all these assets, they don’t move together anymore because it’s abundantly clear that the retail space that has capital to invest in random nonsense is tapped out.

The random nonsense which had potential in 2017 and possibly again in 2021 is now just perceived to be random nonsense. It’s been around too long. No one has any optimism about the future of the nonsense use cases. It’s really just projects. The rest of it is just total garbage that you should remain short.

There’s opportunity, but it just doesn’t feel like the future. When you look at AI, AI has mugged crypto. AI is basically the same as what crypto was. There’s an awesome post that could have been written about crypto in 2021, but it was written about the likely VCs in San Francisco in 2026.

AI is producing wealth for people, but actually, the product is useful this time. So, why obsessively focus on the 99% of crypto that offers no value to society when there’s wealth generation occurring in a sector that does? I don’t know.

I'm a little disenchanted with crypto.

No, I think that's fair. I mean, that's why the 1000x podcast is now a global macro podcast. We are no longer a crypto podcast. Sorry, boys. But we will obviously talk about crypto, because how can I not pay attention?

We're addicted to it.

We're addicted to it at the end of the day. It does move, and every now and then you get a chance to punt on it and watch it go up 40% in 30–38 seconds. It'll always be a great tail.

That's always fun.

It's a great retail trading platform, but at the end of the day, it's not necessarily the right place for young people to go spend their time. This is what I've been talking about for a while. If you're a young person and you're asking, “Do I want to work in crypto?” my advice to you would be: don't. My advice to you would be to find something else and get a real job.

Unfortunately—sorry—unless you're already established. Then you can sort of parlay your career into other things, like we're doing with the financial media empire that we're about to build.

By the way, Jonah, I don't know if you know this, but I sent out a tweet that basically detailed what I thought you needed in order to have a good financial media empire, because I think there are a couple of people trying to build media empires right now. So let me offer some help to the people who are struggling. You've got to bring the energy, tell good stories, and be hot—which is why we fail so much.

You've got to be a 7. I'm not saying you've got to be a 10. It's better if you're a 10. It's much better if you're a 10. If you want to get into media, you should be a 10. It's why Jonah and I aren't really going anywhere here, because we're solid 7s.

But it's through sheer force of our intellect and articulation that we've gotten as far as we've gotten. Really, you should just be staffing with attractive people. Crypto learned this a long time ago. If you go to any conferences and look at the booth babes, you see it. That's how you sell.

How did we get on this topic? Basically, the reason we're successful, despite having invested way less effort than we should have in the past, is because we're hot. We're like the Latina weather girl who walks around and points at the map. You know, the Greek one. Have you seen the Greek one?

Yes.

Just the raw physical beauty, I think, is part of why people tune in to us on audio platforms like Spotify and Apple.

It comes through in the voice, right?

It does.

No, in all seriousness, to the point about a media career, I think practitioners talking shop is the secret sauce. You're going to be hearing a lot more of that on the 1000x podcast. I think leaning into actual lived experience stands out in the era of slop that we're rapidly entering. That slop is everywhere, and it's terrible.

8. Compounding Skill Sets

And then the final point that I would make is, if you're trying to make it as a trader, you don't care about being a media person, which most of us don't. I posted something about this, but I think it's worth a little bit of commentary. It also dovetails nicely with crypto as an asset class kind of dying and individual crypto projects thriving against that backdrop.

You have to constantly reinvent yourself. I started my career as a high-grade corporate bond trader. Then I traded high-grade CDS, then crossover credit, then G10 FX options, then oil options, then all oil derivatives, then physical oil, then crypto, then precious metals. Now, in my personal life, I trade other things. I moved beyond crypto into other stuff.

What's very hard about doing that is that I know a lot of people who I started with at Lehman Brothers who are now at Lehman's successor entity, Barclays Capital, doing the exact same thing they did before I started college and long after I left credit. These guys were just high-grade corporate bond traders. They've been in it for 30–35 years. They sit in New York at a bank, they live in New Jersey, they commute, and it's their life.

I've outperformed all of those people because I've reinvented myself, but there were many times when, in the process of reinventing myself, I was getting laughed at by those people. A career in trading is a constant explore–exploit trade-off. When you're constantly in exploit mode and the cycle is in your favor, you crush it.

I chose not to be constantly in exploit mode, both for intellectual stimulation—because I consider myself curious and intelligent, and I would go crazy spending my whole life trading high-grade corporate bonds—but also because, when you're exploring something new, some new asset class, inevitably some of the bandwidth you could be allocating to the things you're most studied at and best at isn't there, because you're exploring. It's a trade-off. You only have 100% of your bandwidth. You don't have more.

When I was exploring, I was definitely missing opportunities in the previous asset classes where I was talented. Over my 20-year career, I now have a pretty nice, well-diversified portfolio. The problem with spending 100% of your career in exploit mode is that you're undiversified and entirely beholden to the cycles in your asset class.

If you're crypto-only, you're feeling pretty smart in 2021, but in 2026 you don't have an adjacent market to go reap rewards for yourself. You don't have other forms of expertise. It's rough. You can't sit here and chop it up with us about stocks or commodities or Micron or DRAM because you've been so steeped in Pepe and whatever Ansem's tweeting that you just can't comprehend it.

You haven't put in the work. I'm not accusing anybody of anything. I'm just trying to say that, if you want a well-diversified, amazing, well-rounded life as a trader, it makes sense to go through cycles of learning and cycles of exploiting what you learned.

Some people explore too much and they're all over the place, and they make no money. Other people exploit all the time and just go crazy. I think finding that balance is really key.

That's—I think we need to clip that and push it out to every single person, and we need to put it on every Bloomberg terminal. If you listen to this podcast, I can't even say anything to top that. You should explore and exploit. I love that framework. Honestly, I love that framework.

I think it makes sense because the reality is that the people who really compound, I think, are the people who understand that they're building in one direction in terms of their skill sets, but have the bandwidth to explore all the different opportunities that they can touch with those skill sets, right?

And that's, I think, what kind of—if you were to go from being a trader to a movie developer to a landscaping firm, obviously, you could, but that's too much exploring. That's going all over the place, but you also don't want to be stuck in your lane. I'm going to regurgitate what you said. I think it was beautifully done, and I'll leave it at this.