熬过加密市场的夏季震荡 | 1000x

Take July off. Just look for alpha. Stop worrying about trying to pick the bottom unless we trade $55,000, maybe $52,000. Don’t worry about going all in, and don’t worry about levered long on BTC. Depending on where we are in mid-August, this thing is going higher. Make your shopping list of coins now, and I’ll see you at $100,000 at the end of the year.

This episode is brought to you by Perennial Finance, the on-chain DeFi primitive redesigning derivatives for the DeFi native. You’ll hear more about Perennial later in the show.

Welcome back to another episode of 1000x. We’re actually going to be talking about markets. I know you guys missed us last week; we went deep on Arweave. But enough has happened in the markets that I think it’s worthwhile talking about.

We sold off pretty aggressively, tagged that $58,500 level, bounced really hard, and now we’re sort of meandering around. I actually think that the market was reasonably easy to trade up until the last week, or up until that sell-off. I don’t know about you, Jonah, but I bid a lot on that day that we collapsed and then bounced, and I wasn’t really sure if that was the full bottom or not.

I ended up taking off a lot of profit on that initial bounce. Then we ended up hitting $62,000 and having a hard time getting through it, but I made a bet around $61,500 that we were going higher. I ended up buying a lot of length and lifting all these Solana meme coins. I grew a rally stash, hoping that we’d get to $64,000.

Then the U.S. government started moving BTC. We sold off, got down to that $58,000 level, and I thought, “Did I make a mistake adding a ton of length?” I ended up cutting all my positions, getting flat, and selling BTC against some of the alts. I got out of all the SOL, WIF, and BONK.

Then I woke up today, and an hour later we got this crazy Solana ETF news. Everything that I sold was up 20%. That’s just the life of a trader, Jonah. You’re never always going to be perfect. We can pat ourselves on the back for missing the drawdown, but the reality is that this has been a tough market.

I think it’s hard for a lot of people to maintain conviction because the camps are so divided right now. One camp says we’re at the bottom of the range, we defended it, and now we go to the top of the range. The other says the real rally starts when bad news isn’t sending us lower.

The reality is that we’re still not getting a ton of ETF inflows. Bitcoin is still trading a bit weak, and it’s having a hard time getting through significant levels. But alts are down 80% across the board, some dispersion has come back into the market, and that’s really good to see. ETH and SOL have been trading really well.

We’re in this weird spot where I think Bitcoin has become the weak asset and everything else is trading a lot better. The question is: How do you trade that market environment? One of the scary things is that whenever you get this dispersion in the market—alts are doing well and Bitcoin isn’t—if Bitcoin pukes down to $55,000, these alts are probably down 30% or 40% on you. Then you’re in the hole.

It’s a weird dynamic where it’s very easy to get chopped up, make mistakes, and lose conviction. When you’re in this type of market environment, what do you do?

First of all, I appreciate you being a little bit vulnerable on the podcast and saying, “I added length, sold it a bit lower, and then watched the coins that I sold rally while I wasn’t participating.” I really admire that you’re willing to do that.

Even when I talk about my positions, I’m inclined to talk about my wins and pretend I never lose. I think it’s important for everybody to be honest with themselves. It’s nice to hear that even crypto traders who have made it in a major institutional way, like you, can still have the same feelings that beginners have.

I’ve traded a lot this month. I’ve put on probably more than $100 million worth of volume through trades this month alone, and I’m flat because I avoided the drawdown. I’m still basically flat on the month, even with all this effort that I put in. Sometimes that’s just how trading works. I give myself a little pat on the back just because I didn’t take a loss.

If you’re trading that much volume, transaction costs are negative and guaranteed. If you’re trading that much volume in and out, your process basically made money and you bled it back on transaction costs. It’s hard to trade that much volume and not lose money. That’s a lot of volume to be in and out of.

I appreciate that you’re telling the truth and being honest, because it gives all of us license to be honest too. What I do in these markets is nothing. I look at the chart and see something that’s been ranging since February, since late February.

The more I zoom out, the more I see this flat line. Realized volatility in Bitcoin over 60 days is obviously 35%. This asset looks like a TradFi asset in terms of how little it’s doing.

It’s very easy to get hyper-involved when it’s rallying and then hyper-bearish when it’s selling off. I try to remind myself that this thing is going sideways, that it’s boring, and not to touch the screen. I have a yellow sticky note on my monitor that says, “Don’t overtrade.” That’s basically how I deal with these types of ranging, sideways markets.

I’m a momentum trader by persuasion. I love momentum trading. In commodities, and especially in the refined-product space, you find mean-reversion traders who love selling highs and buying lows. If you’re a mean-reversion trader, this is a great market. Every time it goes up to $68,000, you sell; every time it goes down to $63,000, you buy. You would have had a really awesome few months.

But how many of those traders exist in crypto? People who tried to fade moves in crypto all died at $50,000 in Bitcoin. They got fired, stopped out, or rage-quit because they lost so much money. What you’re left with is this group of momentum traders like you and me, and we struggle during these times when the market is ranging.

The only way to make money in a market that’s ranging this tightly is to have a process—something you can cling to when the market is going down and a framework you can use to decide whether you should be adding or selling on rallies. If you don’t have a process and the market sells off, you start to doubt yourself because you’re obviously long.

Then something happens, like the U.S. moving tokens to Coinbase, and you can panic and sell. That’s the right thing to do: You get out of the way of flows. But when deciding whether or not to rebuy, that’s where your process kicks in.

You’re scared because you’ve just avoided a steamroller and don’t know what to do next. You have to have some framework. I don’t really have a good systematic framework. The systematic frameworks that I learned at Cumberland are all mid-frequency things, with an outlook of minutes or hours, that I can’t really replicate in my personal account because I don’t care enough and I don’t have the time.

For longer-frequency trades with a horizon of days or weeks, I have nothing systematic. The only framework I cling to right now is the idea that I’m ludicrously bullish for Q4. I think that by then we’ll be really rallying.

That’s the only thing that allows me to psychologically hang on. If we go down to $55,000, I’ll probably buy more. In the meantime, all I’m doing is messing around at the meme-coin casino, which I don’t really consider an investment. It’s more something to have fun with while I’m bored with the benchmarks.

This episode is brought to you by Perennial Finance. Perennial is quickly becoming one of the go-to derivatives platforms and liquidity layers for all of DeFi, so let me tell you a little bit about them. There are kind of three things you need when you’re thinking about a place and a platform to trade on: first, great trade execution; second, low fees; and third, of course, an on-chain permissionless platform. Perennial nails all three of those buckets.

With the launch of Perennial V2, they’ve made all of that possible by introducing a ton of new features, such as faster oracles, which reduce trade execution to seconds; lower fees, competing with major centralized exchanges and minimizing fees for both takers and makers; fully modular markets, which allow the protocol to support any price feed out there; and, fourth, cash-settled: the trades are cash-settled in USD, not in crypto.

Perennial allows you, the trader, to gain access to deeper liquidity with only a fraction of the TVL. How it works is that Perennial enables a two-sided market made up of both traders and liquidity providers. Traders deposit the assets to get leveraged exposure, while liquidity providers provide these pools of capital to earn fees for taking the other side of the trader position.

Perennial allows you to trade crypto perps, FX, and, coming soon, NFTs and more. Backed by some of the best investors in the industry, Perennial is a must-check-out platform if you’re a crypto trader. Go check them out by clicking the link in the description. Give 1000x credit. Go check out Perennial—you’re going to love it.

I think that’s a very key point: Don’t overtrade and don’t try to do too much in this market environment. Focus on the alpha. Focus on what actually matters directionally.

Punting directionally is tough. You can have your core allocation if you know you’re bullish on crypto, but with your trading, instead of saying, “I’m going to buy a ton here because I think Bitcoin is going up,” it’s easy to get shaken out. Speaking from experience, it doesn’t make sense in this particular environment to be very aggressive.

What do I mean by alpha? It’s things that you genuinely have an edge on—things that you think are going to work regardless of whether Bitcoin is at $65,000 or $55,000. A lot of this is pair trading.

One trade that I’ve had on for a while is shorting all these coins that have massive unlocks coming and are super-high FDV. You hold that against ETH, Bitcoin, and SOL. Maybe you have $5 million of that long and $5 million of those coins short. Over the next month or two, you can be pretty confident that it outperforms.

You obviously have to be worried about squeezes, but most of these things actually have positive funding, which is wild because I think there’s so much spot selling involved.

I think that’s wild too. I still can’t believe it.

Who’s paying the funding? Actually, I know exactly who’s doing that. It’s the people who, every time the market starts to rally, get their gambling addiction tickled. Then they go on Bybit and OKX and get long with leverage on these altcoins or shitcoins, depending on the token.

As soon as the market sells off, they all get liquidated. During that big puke down to $58,500, we had the biggest long liquidations since April. Clearly, there are still people out there who can’t resist getting levered long.

If you’re out there getting levered long altcoins right now, paying funding every day, bleeding, and hoping to catch the next up move in a range, the market can stay rangy longer than you can stay solvent. If it goes down—which is basically a coin toss in a ranging market—you get liquidated.

Don’t do it. Please stop with the leverage. It makes no sense. It’s insane to me that people still do that.

Taking a step back and looking at the market, where do we think things are going to go? What do we think is going to happen? My personal view is in line with yours, but maybe a little bit earlier. I think Q3 can be very good.

Over the summer, you don’t have a lot of decision-makers in the market making big decisions. Everybody allocating real capital is probably off in Europe somewhere, in the Hamptons, or God knows where. All the institutions and retail participants who are buying BTC are less engaged during the summer.

What tends to happen is that, come September, these people come back into the market. Now that we have the ETF vehicles that are going to be live, I’m 80% or 90% sure that the ETH ETF will be live by September 1. After Labor Day, these people are going to come back and start buying.

They’ve made their decisions, and they’re going to come back into the market. What does this mean for us? July is probably going to be tough, but you’re probably going to see some front-running from mid-August into Labor Day. Then we can really start to get that up move.

It’s possible that we trade to $52,000 at some point in July because there’s a lack of inflows and a lack of interest. That’s why I’m nervous, and that’s why I’m trying to take a step back. Don’t overtrade and don’t get chopped up.

When it comes to trading directionally in crypto, you kind of only want to trade at the extremes, when something nuts has happened. You also have to trade when you need to get out of the way of something, like a big U.S. Marshals sale or an FTX-like event. Sometimes you have to pull your chips off the table before the table immolates itself.

That’s exactly what went through my mind when I cut all my positions after the U.S. government started moving its coins. I couldn’t have known that VanEck was going to come out with this fake ETF list thing and this fake ETF product. I say fake because I don’t think it’s going to get approved. There are no CME futures on this thing.

I think VanEck is running a marketing campaign off it. If BlackRock files, that’s a very different story. But I don’t believe that VanEck even believes internally that it’s going to get approved. I think they’re just doing it to generate some hype.

It would be very different if Biden were reelected—then there’s zero chance. If Trump is reelected, which Nate Silver says has a 65% chance, then I think there’s maybe a 20% or 30% chance that, at some point during his administration, the Solana ETF gets approved.

As it stands today, I think it’s very unlikely that happens. That doesn’t mean I’m short SOL. It just means I wouldn’t put all my chips on the table. I’m not giga-long. It would have been hard for me to know ahead of time that selling WIF at $1.95, where I stopped out, would have been a bad idea.

You did the right thing. You got out of the way of the steamroller, which our listeners should always do. If you hear something that’s marginally bearish, you’re not supposed to take all your chips off the table. But if there’s a massive amount of government flow about to hit the market in nine- or ten-figure size imminently, which is what happens when tokens get sent to a major exchange, you get out of the way.

Something I’m horrendous at in my oil-trading career is what happens afterward. I’m very good at getting out of the way of those things, or getting in just before they happen and profiting. But then I’m terrible at taking my position off afterward or, if I’ve taken it off, re-entering it.

I’ve lost many millions of dollars in my oil career over the years doing that. For example, I got long for all the right reasons ahead of a very bullish summer in 2018. But when Trump wavered on Iran sanctions and oil started to puke, I was in denial. I’d gotten in for the right reasons, but I didn’t realize that the world had changed.

In this example, you get out of the way of a big selling flow. You and I both know that selling flow doesn’t last for months or years. If it does, it doesn’t necessarily have a lasting impact on the market. You have to get back in quickly, and I’m terrible at that.

I actually have a psychological trick for you because I was horrendous at this too. I’ve gotten a lot better by doing this. Let’s say you start with $100. You’re long $100, you get news of a government sale, and you get out by selling.

Then the market bounces back and nothing happens. Because you sold and it didn’t work, your brain gets anchored to the idea that it’s bearish. You start looking for reasons why the market is bearish, convince yourself that it’s bearish, and never get back in. If it rips in your face, you’re screwed.

Sometimes that’s the right thing to do. Sometimes the news actually is bearish. But in that moment, you’re not looking at it clearly. So what do you do? How do you reset your brain?

You buy $5 worth. You buy tiny size and get back into your original position a little bit—not a huge amount, and not the amount you had before. Your brain starts to say, “Maybe if Bitcoin is up, I’m up too.” You start looking for the bullish reasons, and that actually resets your brain a little bit.

You’re not risking a ton and you’re not getting chopped up by a huge amount, but you have skin in the game again. It helps you think more clearly. It’s amazing how difficult it is to understand a market without skin in the game.

You have a very solid point. It’s tempting to stay on the sidelines after something has just happened, anchored to that thing even after it’s gone and dissipated. But you should have skin in the game because then you feel the market a little bit more, without the 100% risk you were running previously.

That’s really smart. I’ve done that inadvertently a couple of times without realizing I was doing it. Now that I reflect on it, it was a successful way to maneuver myself back into positions. I should write that down in my trading journal and do it more often. Thank you, Avi. That’s really helpful.

I’m happy you found some value in it. It’s amazing how many things about trading are psychological. Even if you’re extremely data-driven, as I know we both are, if you’re a discretionary trader, at the end of the day you still have to make a decision.

In these moments, you introduce inertia. When you get on the sidelines and the decision to get there doesn’t seem to be playing out, your instinct as a human is to stay there because you don’t want to deal with the idea that you were wrong.

Buying a tiny bit helps you accept that you might have been wrong. Then you look at the market clearly and make a decision.

This is so smart. What’s beautiful about this idea is that it dovetails perfectly with our earlier conversation. You said all the big hitters are off somewhere for the summer. I don’t know—St. Moritz? That’s in the winter. Maybe Mykonos. The point is, the hitters are at the beach club.

But you know who else isn’t playing right now? All the people who just got burned on this chop. All the momentum traders in crypto who have been momentum-trading for years, who are now in a range, have gotten chopped up. They’re pissed off, they’ve taken their chips off the table, and they’re not putting even 5% of their chips back on. They’re just out.

What happens in those markets—in oil too, especially during the summer—is that if everybody is super dialed in, like during the summer of the Ukraine invasion, the market behaves differently. But this summer, people are going to dial out. The crowd that got chopped up and lost a bunch of money is out.

Who’s providing liquidity? Moves get gappy in these environments. Sell-offs go lower than they otherwise would have if a bunch of people were aggressively clicking and buying. Rallies tend to get extended to the upside, and you end up with random, noisy, high-amplitude markets that are hard to analyze.

Not overtrading is key. Things can get violent. A lot of people—from institutional players to day-to-day traders—are sidelined right now for the reasons we just discussed. All that liquidity is out.

Who’s left? It feels like the initial burst of institutions coming in to get structurally long through the ETF has died off. But the ETF inflows and outflows are massive, Jonah. There was a streak of roughly $1.2 billion worth of outflows that just got broken this week.

I think there are institutions playing basis, so not all of it is directional flow. It’s just people getting in and out of the ETF against CME futures. But that also drives sentiment. People see ETF outflows and freak out and sell.

Ultimately, what you’re left with is CTA-style momentum players in a ranging market. It’s a real recipe for losses. I’m long, but I’m not trying to trade this range. I’m long with a plan to add if it really tanks because, like you, I think we’re going to be in for quite a rally later this year.

Every halving in the past has preceded one, and I don’t think this time is any different. Maybe it’s as simple as selling short-dated vol and buying long-dated vol, just trying to find places where the view you express is something you actually have high conviction in.

If you decide to buy a ton of alts, go long BTC, or go long ETH, what’s your actual conviction level? For example, you’re super bullish on ETH and think ETH is going up, but if ETH trades to $3,300, you stop out of the position. How convicted are you actually?

What is the actual trade that you’re putting on? It’s important to recognize this so you can stop yourself from getting chopped up. You can think about it this way: You buy here, wake up tomorrow, and Bitcoin is at $60,000. What are you doing? Do you have more money to buy, or are you stopping out of your position? If you’re stopping out, you’re probably not supposed to be buying.

You get in thinking you’re an 8 out of 10 in conviction, and then you get out two days later at a 2 out of 10. You’re not understanding your own psychology.

One way to play this really well is with options. I do this in oil all the time in ranging markets because commodities range. When the price goes too high, people stop buying it and the price goes back down. It’s not quite like Bitcoin, where there’s an everyday physical-consumption component to it.

When we’re in a ranging market and I’m in low-conviction mode, but I have a structural, long-term position that I think will matter in 2 to 8 months, I don’t know exactly when it will matter. If the market rallies a little bit, I’ll sell some calls. If the market suddenly proves me right much earlier than expected, I’m still happy.

Then, when the market inevitably pukes back down, I’ll sell some puts at a strike where I’m happy to add to my position if the market pukes through it. Those are strikes where I’m willing to get longer.

The Bitcoin equivalent would be: We just traded up to $68,000, I’m holding, and I’m bullish on Bitcoin for a decade, so I’m happy to sell some short-dated $73,000 calls. Then we trade back down to $62,000, and I sell some $60,000 puts. If it trades through my level, I just got longer at $60,000. Great—I’m happy.

Then it goes back up, and I sell more calls. You leg into a strangle that way by selling live calls in either direction, in sizes you can tolerate. To the downside, you get longer; to the upside, you get taken out of your position.

I think that’s an elegant way to sell vol, as opposed to trying to trade or hedge strangles and delta-hedge them. To me, it’s simpler to sell the options as the market ranges.

I really like that. In this particular scenario, because I’m very bullish on ETH versus BTC, I’d express the upside with ETH and the downside with BTC.

One way to do that is to sell BTC calls to buy ETH calls. Even though the vol on ETH is elevated, I think the spread is still underpriced based on the way people are pricing in this ETF.

On every one of our markets podcasts, I’ve been super-bearish on ETH. Now that we’ve sold off a lot, my view is that much of the ETF outcome is being priced as though nothing is going to happen. It might even be negative at this point.

Now that we’re at the lows of the range, you could sell ETH puts. Then, when we go back to the highs of the range, you sell Bitcoin calls.

Correct. That’s effectively what I’m thinking about right now. I think that the ETF is probably fairly priced. If ETH trades to $3,100, you’re probably supposed to be buying as much ETH as you can get your hands on.

At $3,100, ETH has the same feel in this environment as sub-$1,000 ETH did in 2022. You’re just thinking, “I know things aren’t the greatest they could be, but this is the time. You’ve got to get in.”

Yes, I 100% agree with that.

What’s been interesting to me is that even as Bitcoin has sold off, alts have done okay. Ever since Bitcoin was at $64,000, when alts obviously had a massive drawdown, I think they washed out a lot of the sellers.

What I see is that even if Bitcoin goes sideways, there might be opportunities for alts to outperform. If Bitcoin trades lower, that’s probably an opportunity for you to buy alts.

One thing I’ve learned is to sell the weak asset. You want to sell whatever is actually weak at the time. I’ve made this mistake and will probably continue to make it. I see a lot of people make it too.

Bitcoin has a lot of movement from the government, Germany, or whoever—a lot of supply of Bitcoin hitting the market. People say, “If I short Bitcoin, maybe it only goes down 5%, but I can short a bunch of alts and, if Bitcoin is down 5%, the alts will be down 15% or 20%.”

That’s only true if there’s no catalyst for Bitcoin going down, or if there’s exuberance in the alt market relative to BTC. If the reason the market is going down is Bitcoin supply, sell Bitcoin.

If you tried to short AVAX, you’d be down. If you tried to short ETH, you’d be down. If you shorted Bitcoin, you’d basically be flat from when that news came out. Sell the asset that’s actually being impacted by the news.

There’s a lot of beta-chasing in crypto. People say, “If ETH gets an ETF, I’m going to buy all of the ETH beta.” I generally think that’s a losing trade. It’s almost always better to buy the thing that’s actually getting the flows. Everything else is just being bid by traders, which means you need to get in and get out and be better than everyone else trading that asset.

I have a slightly different view. I agree with some of what you said, but not all of it. You’re right that, for the past week, alts have been rallying versus Bitcoin. It hasn’t been a small rally where they stopped selling off and moved up a little bit; it’s been sharp.

But if you zoom out and look at the broader altcoin charts versus Bitcoin, it’s been down-only for the entire year. Only in the last week have they perked up meaningfully. I don’t know whether this altcoin strength is part of the downtrend—a rally within a much bigger downtrend—or whether it’s a turn.

I’m much more bearish on altcoins than you are. I think this time is different. In a proper Bitcoin and ETH rally, I don’t think the altcoin space as a whole will rally with it. There will always be certain alts that go much higher, and you know how to find those—you do your research and pick them—but I think the altcoin space as a whole is going to underperform a rally this time.

The reason is that retail has been too burned on alts. After 2 cycles, 2017 and 2021, of everybody, their grandmother, and their dentists talking about Tezos or some random altcoin, crypto is now mature enough that the participant base has dissociated itself from the idea that an altcoin associated with an interesting computational product, but with no underlying value-transfer mechanism, is going to moon.

I think Luna was the end of that perception. This will be a very institutional-led rally this year. Especially if Trump wins, the market is not pricing the 10-out-of-10 bearish to 8-out-of-10 bullish flip that the SEC will make after he installs his people there.

You’ll see that translate to Bitcoin first. Then you’ll get an altcoin rally later, when there’s a securities framework for those things to pass genuine economic activity through to token holders.

Until then, if you’re buying something like Ondo, what are you hoping for? That people will bid governance tokens? I think the retail community is done getting burned on those things. Maybe that’s a mid-curve take, but I don’t know.

I think that’s a mid-curve take for one reason: If these things aren’t going up, everybody is still bidding meme coins. Meme coins are the best performers off the bottom. People are still bidding WIF and BONK.

I’m not talking about memes. When I say alts, I’m referring to tokens associated with projects that are actually trying to do something.

I agree on governance tokens in general—the Lidos of the world that don’t pass back cash. I will say that Maker and Aave have been doing very well over the last week. Unfortunately, Maker going up is normally a sign of impending doom. Maybe it’s different this time.

But I do generally agree that this sector of the market will underperform until there’s a framework to pass cash back to holders.

The era of “Let me buy the CRV token because Curve is a cool product” is over.

There are 2 reasons. First, retail genuinely feels less sophisticated this time. The market participants coming in this cycle seem stupider and less sophisticated than those who came in in 2021. I know that sounds crazy, but you can see it by where they put their money, what they talk about, and what they do.

If you remember Crypto Twitter in 2021, everybody was talking about crazy new DeFi primitives and new products—different ways of structuring things. There were all these long threads explaining how bribes and vote escrow worked, how to redirect yield to certain pools, and how to play the game of DeFi. People debated how Balancer was better for this or that than Curve. It was more sophisticated.

Today, all you have are people saying, “For the next 10 days, I’m going to tweet out the 10 meme coins that I’m going to buy.”

Let me debate you on this. I don’t think crypto participants are less sophisticated than they were last time. I think none of that sophistication made anybody any money. Everybody bought all the sophisticated stuff, and it went down 99%.

When I was at Goldman Sachs as an oil trader, my business was market-making. I was screaming all day, with 2 phones standing up. I was the loudest guy on the fifth floor of Goldman Sachs because oil was so busy.

At that time, I was in my mid-20s, making money, and there was a little testosterone and ego associated with it. I thought fundamentals didn’t matter. I thought fundamentals didn’t drive the price of oil, and I was arrogant about that.

I thought, “Fundamentals don’t matter. What matters are the flows,” because that’s how I made my money. Every time I tried to learn about West African differentials or some storage tank in Rotterdam and it didn’t impact my P&L, I ignored it. The money came from people trading with me.

I think the same thing is happening in crypto. People are saying, “No matter how deeply I dive into the microeconomics of NEAR’s AI ecosystem, none of it creates value that passes through to token holders.” All they’re getting is a governance token that’s adjacent to, but not connected to, the actual technology they’re trying to analyze.

Much like me thinking fundamentals didn’t matter, the current market accepts that fundamentals aren’t what’s driving the size of the wad in my wallet. What’s driving the size of my wallet is whether other people—whether greater fools—are going to lift my BONK at a higher price than I paid for it.

I think that’s economically rational behavior. When securities legislation arises such that we can connect the complex technology and fundamentals to the token price, I think all that sophistication will make people money and come right back onto the timeline.

So what I’m hearing from you is that you agree with me 100%. All that sophistication didn’t make anybody money. It took more brainpower and effort, and at the end of the day you got returns similar to meme coins, both on the upside and downside.

The fundamentals behind these things didn’t matter anyway. Why would you spend time trying to figure out the fundamentals of an asset if they don’t matter?

I’ll say that we’re closer to securities regulation than people think. If Trump gets elected, then we’re there. I’m going to make a bet that if we get to October and it looks like Trump is about to win, you probably want to buy a lot of Maker and a lot of the fundamental assets, because I think it will be a much better regulatory environment.

You’re front-running the projects that will rally when the eventual regulatory pass-through happens.

Exactly. You lift all the Ondo and Pendle tokens if it looks like that’s going to be the case, because there could be a return to fundamentals.

The way you described it, you talked a lot about retail. You’re right: Retail isn’t buying those things because it doesn’t matter. But institutions aren’t buying them either, because when they look at them, there’s no real reason to buy them.

The things that tend to perform best are general narrative plays. AI will probably have another echo bubble at some point, so you probably want some exposure there. If things start to sell off, you want to lift AI.

I’m definitely going to be lifting RWA because I’m making that bet as a Trump bet. If Trump wins, I think that’s going to do well.

In the meantime, the only great trade I see is shorting high-FDV alts against the majors. It’s been a great trade, and I think it will continue to be one. Worldcoin has $19 million a day of supply on the horizon. I don’t know who’s buying that.

AltLayer has an unlock of $123 million against a market cap of $2 billion, which is nuts. That’s alpha. Directionally punting BTC and ETH is not as attractive.

Talking to you for the last 40 minutes, what’s interesting is that we have a lot of ideas that are far out and a lot of ideas for how to make money in 3 months, but not many ideas for right now.

Selling alts versus the majors is an idea we’ve talked about on this podcast for months. With the exception of the last week, it’s been a smooth trend. Maybe this little pop is a chance to get into that trade or add to it.

I’ll clarify: It’s not just selling alts. It’s selling the things that are bad—high-FDV alts with unlocks and no roadmap.

Exactly. There are pockets that are showing strength. For some reason, AVAX refuses to sell off. I don’t know what’s going on there, but it’s an interesting one.

Another one that’s been amazing, and is a core holding of mine, is TON. I think people are sleeping on it, especially in the West. It has 800 million users. The games on TON—if you’ve played Hamster—are going nuts.

It’s getting real usage, and I genuinely think that in a year or 2, this will be one of the major blockchains people use. If you look at Solana—Solana is great, and I love Solana—but TON has the users. TON has all the users.

Which is why Bitcoin is down 10% and TON is up. People are starting to catch on. A lot of people are repositioning because they’re thinking, “This thing could easily trade at a $100 billion valuation in the right market environment.”

Let me quickly check the market cap. TON is in the top 10. It’s the ninth-largest coin, between Dogecoin at number 10 and XRP at number 8. I’m actually pretty confident that it goes to $100 at some point.

If you want to own it for the next year, I like that trade. It’s never had an ecosystem before, but over the last 3 to 6 months, there’s been a lot of building on TON. There are a lot of new projects coming out and actual DeFi being built.

It’s going to take some time to mature, but the reality is that it’s being used and will continue to be used. Unless Telegram dies as an application, I think that, over time, people will keep using it.

This is how people are going to onboard onto crypto. TON could easily become the Venmo or PayPal of crypto. You’re just sending USDT on TON.

They’re going to make their wallets opt-out instead of opt-in, unless you’re in the U.S.

It’s a good trade. What is this Hamster game? Describe it. Is it fun? Is it a super-high-fidelity game like Halo? Do you turn your phone sideways for it?

No. It’s a game within the Telegram app. It’s click-to-play.

So it’s a shitty game.

It’s a game. It’s a game within the Telegram app.

This fits perfectly with my thesis. Everybody said that Web3 gaming—the AAA games—was going to save crypto in 2022. They talked about games like Axie Infinity with Call of Duty-level fun and graphics, and that was supposed to save crypto.

What’s funny is that they were right: Gaming did kind of save crypto. The game was a meme-coin casino on Solana, where you buy MOTHER and WIF and anon puts them on the Sphere.

It’s a very different kind of game, more like the games people as old as I am would have played in MS-DOS rather than something you’d play on a PS5. That may be the weird, gambling-addict-type crypto game that attracts users.

I’m not surprised it’s happening on Telegram. Those guys are doing everything they can to bridge Web2 users into Web3. They also have the slickest user experience of any app on my phone. Telegram is awesome.

I love the little dopamine kick you get when you put an emoji on a message and little things fly around. Telegram might actually be the channel that onboards more users.

You literally just click the hamster. It’s not that complicated.

Somebody should make a meme of this. Everything I just said about Telegram is the mid-curve take. The 60-IQ take is, “Just click the hamster.” The 150-IQ take is also, “Just click the hamster.”

Just click the hamster. Stop with all this analysis.

It’s a shitty game. Yes, it’s Hamster Kombat. But the bottom line is that there’s this thing on Telegram that you can play. “Play” is a generous word, but it’s the beginning of something.

Just because it’s dumb doesn’t mean it won’t turn into billions of dollars of FDV. My 13-year-old cousin became real-life Pac-Man when Pokémon Go came out. He spent his days chasing weird little apparitions around abandoned lots.

People spend their time on low-fidelity games as well as high-fidelity games. Why not Hamster Kombat? Why not the meme-coin casino?

I think you’re right that you have to dismiss some of these governance tokens and altcoins, like Lido and Aave. But you want to own Ondo until Trump is about to put people in the SEC who will link these tokens through to the real businesses underneath. Then they’ll literally gallop upward.

I’m here for it, Jonah.

To recap: Take July off. Just look for alpha. Stop worrying about trying to pick the bottom unless we trade to $55,000, maybe $52,000. Don’t worry about going all in, and don’t worry about getting levered long on BTC.

Look for alpha, take a bit of a break, and then, depending on where we are in mid-August, this thing is going higher. Make your shopping list of coins now—all the alts we’ve talked about and all the things we’ve gone back and forth on.

Write down some of the lessons you’ve learned about how to psychologically prepare yourself to trade this type of market. I’ll see you at $100,000 at the end of the year.

None of this is financial advice. We don’t know anything, especially me. I couldn’t even read the fully diluted valuation of Telegram’s token off CoinGecko.

Don’t listen to anything we say. Just click the hamster and work on your process, like Avi said. Just click the hamster.

You keep racking up Hamster coins. Look at that guy go. Every time you click, it goes up by 1.

I need to employ somebody to click this for me. My hand is getting tired.

I think it’s useful activity. You could be spending that time doing something useless, like reading the news or studying crypto. Instead, you’re getting Hamster coins by clicking. You’re actually getting value out of it.

I literally couldn’t imagine reading the news when I could be clicking a hamster.

The crazy thing is that it doesn’t even have a coin, so I’m not really sure what the point is. There’s kind of nothing to do with it other than click the hamster.

While Avi’s clicking the hamster, one thing I wanted to say is that there’s a lot of crazy, complex technology out there in crypto, and I don’t want to be dismissive of it.

I just think that conversations about MEV extraction and the benefits of this CLOB versus that DEX have moved off Crypto Twitter and into private circles. My boys at Ergodic and some of the on-chain trading shops are busy making money off Jupiter and all these other on-chain exchanges.

There’s money there, and the technical stuff does translate into value for some people. But it’s a very quantitative, dark world. It’s not going to be consumable by most retail users on Crypto Twitter anymore.

Most retail users on Crypto Twitter—I agree with you. The sophisticated ones are watching and waiting, but most of the money right now is made by clicking the hamster, not by spinning up bots.

You have to be really good to make money on MEV at this point. You have to be really, really good.

I would wager that, with all those threads about MEV, nobody actually did it except for 0.1% of the people, because it’s hard. But those people crushed it, and they’ve made a lot of money.

There’s latency arbitrage between on-chain activity and centralized exchanges that you can scoop up. There are pennies there to vacuum.

I’ll let you vacuum the pennies. I’m not smart enough. If anybody out there on the 1000x podcast is smart enough, give me a shout.

I’ll be with you, Avi, trying to spend some time away from the screen and waiting to buy a dip. If it doesn’t happen, happy days.

Well, enjoy the summer, everybody. We’ll catch you on the next 1000x. Great talking to you, Avi.

Thanks a lot, as always, Jonah. It was a good one.

Crushed it.