如何交易这一轮周期｜1000x

As the old Turkish saying goes, “No matter how far you've walked down the wrong road, turn back.” And that's what Jaguar should do, and that's what all of you should do if you put on a terrible trade. No matter how much money you've lost on it, no matter how badly your Jaguar rebrand has gone, you are susceptible to the same mind virus that infected the dude in charge of this Jaguar rebrand. So, yeah.

A lot of bad, temptingly bad ideas are out there that you have to avoid these days. This episode is brought to you by Definitiv. You'll hear more about them later in the show.

Okay. Good stuff. First off, what do you think of the new Jaguar?

What? It looks like it—sorry. I'm just thinking: How do I say this without totally getting us in trouble? It basically looks like someone made a worse version of the Cybertruck, and it's going to flop.

It looks horrible.

It's so stupid.

It's just terrible. Who wants to buy something that looks like that from Jaguar, of all places?

When I was a kid—and again, I'm dating myself here—I used to really look up to the Jaguar brand, the look of it. I had a picture of one on my wall in my room: the XK8. They used to be incredible cars. Now it looks like they've basically tried to go halfway toward a Rolls-Royce-type look, but with a giant radiator on the back, and they did the “go woke, go broke” thing. What are they doing? It doesn't make any sense. What is that?

Yeah. I don't get it. I personally hate it. And you know me, I'm a car guy.

Yeah.

I've always loved Jaguar. It's classic, elegant, British. It's the finest British engineering besides Aston Martin. When you look at the Jaguar E-Type, it just conjures up James Bond-ish feelings, and they completely butchered their brand in one fell swoop. They got rid of all the stuff that they had accumulated over 100 years of having this brand, and then they just threw it all out the window. It's insanity.

It wasn't even a mistake you can recover from. They literally took it, threw it into a bonfire, laughed in everybody's face, and then pissed on it. It was crazy.

It's kind of hilarious. It feels like one person's pet project. It's like there's one guy at the company who likes this and pushed it forward, and he doesn't actually care about the company or anything like that. It's a little bit of what it feels like: some random, probably liberal guy working at Jaguar.

So here's my question about that. We've obviously seen this happen a few times. There are some god-awful movies out there. There's this Jaguar rebrand. There are things where you would ask yourself, “Shouldn't there have been somebody who could've stopped this during the million opportunities before they put this out?”

This has clearly been in the works for a while, and here comes the world's greatest transition into crypto trading. I think you're right. I think it is just one guy who's in an echo chamber. He's in his own head. He's in groupthink land with his inner circle, and nobody tapped him on the shoulder and said, “Hey, maybe you shouldn't take this iconic British car and turn it into a lemon-watermelon-flavored vape for a 21-year-old.” I don't understand—

Yeah.

So, back to crypto.

The people that would like this are exclusively the people that don't have the money to buy it.

Yeah.

What's really funny to me is I think this happens across the board, as you were hitting at. It happens in a lot of different organizations. It happens in companies, it happens in nonprofits, it happens basically anytime humans get together.

Once somebody comes up with an idea, and it's presented from the top by someone who's in charge, it takes a pretty strong person to say, “Hey, no, that doesn't make any sense. Let's stop this.” And every day that goes by, as investment pours into the system—

Yeah.

—it gets even harder, right? Imagine you think that this is the stupidest idea in the world, but you've spent $10 billion working on it already. How can you say, “Let's just throw that all away and start new”? But you know who did do that?

Who?

Satoshi Nakamoto.

Yeah. Another great transition. As the old Turkish saying goes, “No matter how far you've walked down the wrong road, turn back.” And that's what Jaguar should do, and that's what all of you should do if you put on a terrible trade. No matter how much money you've lost on it, no matter how badly your Jaguar rebrand has gone, every single one of us out there is the Warren Buffett CEO of our own little portfolio or large portfolio, depending on who you are, and you are susceptible to the same mind virus that infected the dude in charge of this Jaguar rebrand. So, yeah.

A lot of bad, temptingly bad ideas are out there that you have to avoid these days.

1. Stop Chasing Losing Trades

That's 100% accurate. Honestly, speaking about bad trades, P&L is one of the most harmful things in the entire world. That green or red number just messes with people's minds so much. I don't look at P&L. I actively block it out of my head.

The only time I'd say you shouldn't do that is if you've made truly life-changing money. Then you look at your P&L and go, “Okay, if I take off this trade, then my life changes.”

Mm.

Then, okay, sure, go ahead and take it off. But the trade's the trade. If you're down and you look at that number, you're going to be impacted psychologically by that number. It's like, “Okay, I'm down, but I want to make money back on this token.”

One thing that I've seen, which is really common and completely irrational, is that if you lose money or make money on a specific token or trade, you tend to go back to that token or trade to try to make or lose money again. If you lose money on a specific coin—I'll pick a random coin like Tezos or something—you start looking at that coin again. It's like, “Okay, how do I make back my money? When do I go re-long this thing or re-short this thing?”

You can get fixated on specific assets instead of just scanning the entire universe. “At this moment in time, what's the best opportunity to make or lose money?” I would say—

One thing I would say on that, though, quickly, just to interject: If you figure out a way to make money in a certain token or asset or corporate bond or whatever, I think it's good to return to that because it means you may have found an edge in one little niche.

It's when you lose money in something and keep trying to make it back in that thing, and you're never really seeing the ball that clearly, that I think it often makes sense to put a little yellow sticky note on your monitor that says, “Don't trade XYZ ever again.” That's the only time I want to—

2. Trade The Range Carefully

Yeah. Actually, I agree with you. I'll amend my statement. It's not if you make money on it—that's different. If you lose money on it and you're revenge trading, which I think is probably going to happen to a lot of people over the next few weeks—

Mm-hmm.

Right now, the market itself—

This market—

—is in a really fun spot. Why I say it's in a really fun spot is because I like range trading, and I think that's what we're heading into. We're heading into 89 to 91 at the bottom and 97 to 99 at the top, and basically your job is not to take too much directional risk—

Yeah.

—unless you're at one of those extremes. If you want to short the market, don't short the market here. Short the market at 97 to 99. If you want to go super long the market, don't go super long right here in the mid-range. We're at 95 right now. Go super long at 89 to 91.

In the meantime, I think pairs trading is phenomenal right now. The way that I'm scanning the market is really threefold. First, it's what hasn't run yet. The market is flooded with people who are interested in punting and trading, and a lot of people have made a lot of money. So rank assets by their distance from their moving averages to figure out what hasn't run yet.

Second, it's what's the flavor of the day or the past 2 days. Is it dino coins that are running? Is it AI coins that are running? Try to find a coin that's broken out and is a leader in a specific sector, and then see if there are any follow-ons, or just buy the leader, because these things tend to have 2 to 3 days of outperformance.

Third, it's figuring out where exactly you're supposed to be buying these things, which tends to be right as they're breaking out—not before, not after, but right as they're breaking. LTC is a great example of this. It broke out above 100 and went straight to 130. Chainlink's another great example. It got above 20 and went straight to 24. It's these types of trades.

They’re quick, they’re in and out, you’re being selective, but they add up over time. And you can be patient with it.

3. Dino Coins Lead The Mania

Okay, so a couple of things to pick apart in what you just said. First of all, dino coins. In case you’re living under a rock, a dino coin is something that got birthed before the big 2020–21 cycle. If you sort CoinGecko by what’s up the most over the last 7 days, HBAR, IOTA, Algorand, XRP, Chainlink, Litecoin—these things are up 50% to 150% in the last week. This is mania. This is just crazy price action.

The next thing that you said that I want to pick apart is how this is a good trading market. On Crypto Twitter, I see a lot of frustration, saying the opposite: “This market sucks. Nothing makes sense.” I think the reason why you’re having fun, and why a lot of people out there are miserable, FOMOing, having a terrible time, not really knowing what to buy, or just chasing things after they’ve already ripped 200%, is because it sounds like you have a framework.

Maybe what you just described on the podcast, like a Z-score versus a standard moving average, isn’t quantum-physics-level complicated, but it’s a framework nonetheless. If you have a framework, then some of these moves can go from looking like utter nonsense to being actually pretty sensible. “Okay, I’m buying breakouts this week. That seems to have worked for the first 15 dino coins. Let me buy the next one that breaks out.”

If you don’t have a framework like that, a lot of this stuff, a lot of this price action, looks meaningless, and if you trade it, you’re probably just going to lose money. And here’s why: no matter how much money people on Twitter claim to be making, no matter how much these coins that came out of nowhere or haven’t really been anywhere for half a decade have been ripping, if you don’t have an objective framework or process that you can cling to that tells you when to buy and when to sell, regardless of the emotions and crazy things that may be going through your mind or the chat rooms that you follow, you’re just up shit creek with no paddle.

I’m trying to think of other analogies. You’re like wandering through a minefield with a blindfold on. There’s literally a million ways to describe what it’s like to try and trade a market when you have nothing to cling to, no idea what you’re doing, and coins are just ripping with insane volatility. You might make money because, obviously, the direction in crypto is up only right now. So if you’re long and not short, fine.

But I personally, over the last week and a half, just for personal reasons, haven’t had a lot of time to really lock in. So I’m a bit confused, but I don’t mind. I know why I’m not locked in, and so I’m just clinging to the positions that I believe in for a timeframe longer than a week or two and not FOMOing. But if you’re going to lock in and trade, you better be doing something like what you’re saying, Avi. Otherwise, you’re just totally fucked.

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100%. And I think you also need to understand why things are happening the way they’re happening. Everybody’s freaking out over dino coins, but the reality is, Jonah, what have we said on this podcast? We’ve been doing this podcast for a while—almost more than a year, I think, at this point. A year and a half, maybe.

We did our first one 2 years ago, but then we went dark for a while.

I think every single podcast that we did, we mentioned that retail wasn’t in the market.

Yeah.

We said, “Nobody’s looking at this. Nobody cares. No one outside of the people who are already invested in crypto is looking at crypto.” And finally, over the last 2 months, that’s changed. If that’s been true for 2 years, then obviously, when people come back to the market, they’re going to buy the things that were popular 2 to 3 years ago because that’s the last time they were in the market.

Yeah.

These people don’t do research. The first wave of people who come back to this market and start rebuying after 2 to 3 years are going to be buying the stuff that they already know.

We did call XRP before the election. We said, “If a favorable SEC comes in, buy the coins that are getting sued.”

You said XRP was going to be amazing. I did not in a million years think it was going to do that.

No, me neither.

I thought that was going to be a slam dunk. You buy it on the headline, you wait 2 weeks, you sell up, right? Kind of trade.

And if you missed the XRP trade, don’t worry. The only reason it’s ripping this hard is because literally almost everyone missed the XRP trade except the XRP Foundation.

No, the XRP Foundation—

Which is fair.

Yeah, the XRP Foundation held the trade for a long time, and the equity is now worth a lot of money on Ripple. But the thing about Ripple is that it was the darling of 2017.

And 2013.

2013, 2017. It didn’t really do that well in 2021, and I think a lot of that is because the foundation sold into bids. The other reason is that there was this focus in ’21 on reality. Obviously, ’21 outpaced reality tremendously, but there was a facade, right? Everyone wanted to buy DeFi because maybe DeFi was the future.

Memes, yeah.

What’s happened since ’21 is that this idea of reality driving price action has completely eroded, courtesy of our meme coins. And so, obviously, if meme coins are going to do really well, why won’t XRP go up in a straight line? Why wouldn’t Dash go up?

One of the things that’s insane to me is IOTA. IOTA’s pulled a 100% move in a few days, and the reason for that is: why not? It has a good history. It’s got a good chart. Actually, from the bottom to now, IOTA went up 5X. That’s nuts. That’s insane for something that is a complete and utter scam.

Yeah.

And the reason is, one, it was pretty heavily shorted. Two, it’s, “Why not?” That’s sort of the mentality.

This is what the market missed.

What I’m trying to point out is that because—because why not—the things that look good on the chart are just going to go up because people are cycling, and it’s your job to figure out what looks good and what looks bad and put on some trades to try to capture that. This is a really great trading market. There’s a ton of dispersion. The one thing that I wouldn’t necessarily suggest is shorting alts that haven’t gone up in a straight line.

And even if they’ve gone up in a straight line like XRP, it’s still a little bit dangerous to short alts, but you can hedge a little bit. Maybe sell some Bitcoin. Buy your Cardanos, your Iotas, your 1inch, your Apes of the world. I actually really like Ape. It just has a chart.

This is the phase of the cycle where everything that’s… The most hated rally was supposed to be ETH, but it turns out that it was XRP. Everybody loathed that rally. And yeah, ApeCoin is a pretty disgusting, detestable asset that would piss everyone off.

ApeCoin’s horrible. But guess what? It’s also an SEC-related asset. So it’s probably going to go up a ton, and it hasn’t yet. It’s gone up in line with the market, right?

But Apes—the floor tripled, didn’t it? Just in the last week or so.

All of these disgusting, absolute douchebag assets are just mooning. It’s crazy.

And they look good, man. This stuff looks good across the board. Go chart all of this against BTC. It’s starting to look pretty damn good.

And why can’t ICP go hit $20? It’s gone up—

I hate that one too.

—in line with the market, but these things are hated. That’s sort of the beauty of it. Now, timing is everything. These assets are extremely volatile. It’s basically impossible to avoid being down 5% to 10% on these trades at some point. These assets are insanely volatile.

Maybe you start buying them when you get some liquidations, like this morning around 9:30, off the South Korea news. Another thing that I’ve noticed is that the market has tended to trade really well over the weekend. There’s a lot of money coming in on the weekend, right? So—

Such a bullish long-term signal. What that means, basically, is that people are finishing their weekly day jobs and then sitting around on Saturday night, gambling at home, right? That’s what that means. That means retail is back, basically.

Right.

Yeah.

And it’s good. It’s good for us. So I’ll say: buy these things not when they’re necessarily going up, but when you can get some sort of liquidation run, preferably a retest of a breakout level. Then preferably you’re looking for the weekend for these things to do well, right?

There are all sorts of different ways that you can structure these trades, but that’s how I’ve been approaching it, and it’s been going reasonably well. During a period of chop, I made some good money. So—

So let me ask you a question here. Are you buying the coins—the dino coins that have already roofed—or are you looking at my personal least favorite asset of all time, Polkadot, which is a dino coin that’s still festering near the lows? Same with, you know—

I don’t know. DOT’s gone up 2x, so I don’t know if it’s really—

That’s nothing in this market from the lows—

—since the bottom. But yeah, look—actually, you know what? I didn’t really look at the chart too closely. It’s actually a pretty good trade.

Yeah, I’m just looking at that. For anyone listening, or even for me, it’s like: yes, dino coins are going up. Yes, you’re supposed to buy strength in dino coins. Are you supposed to look at the ones like XRP that are basically up 4x or 5x from the lows, or are you supposed to look at the ones that have just started to pick up a little bit?

The other trade, by the way, that I like is buying these assets that have a good chance of a Coinbase listing. I mean, they listed Moo Deng.

Yeah, so there’s—

And so just go look at the top memes in terms of volume, like PNUT, GOAT, NEIRO, and POPCAT.

Yeah.

Those are probably reasonably good bets to get a listing at some point. If you’re really nervous, I don’t necessarily suggest this, but you could short WIF or BONK against it because they already have those Coinbase listings. Now, you might eat some pain in the meantime, but basically what you’re looking for on those listings is a 50% run. It’s very unlikely that PNUT is flat and WIF is up 50%. That’s reasonably unlikely.

Yeah. I mean, you know what trade I hate, which I’ve seen a lot of people recommending? The “XRP is up, so try to make money on XRP memes and XRP DeFi, and get involved in that ecosystem” kind of trade. I hate that. I think that’s very—

Oh, really?

—2021. I think that we’re in meme land. I think that you’re supposed to just trade things like the valueless memes that they are, and not try to start convincing yourself that the paradigm we’re in is, to quote you from earlier in the podcast, the sheen of a real-world paradigm that we were in, let’s say, 4 years ago, where if something was popping, it was because there was this venture-capital mentality: “Hey, this could be valuable to the masses one day.”

Just to hop in there, one thing that I think you’re missing is that most of the stuff is a meme on XRP, like the XRP Army.

Yeah, no, the Army, okay, fine. Maybe you do that for a trade. But don’t start investing in ecosystem plays, you know? I think this is about pump and dump. How do I get into some meme before everybody else does, and then get out before everybody else does?

I’m taking a look at— I do think that what’s happening right now is going to lead to a wealth effect. My bet is that at some point during the next month, in December, we’ll have that dynamic play out. You look at AVAX, for example. AVAX has gone up in a straight line. People who bought AVAX are probably going to try to move their money to buy the memes on AVAX and the on-chain stuff. I mean, it’s probably going to be like a week.

But it’s worthwhile. I think the issue is that, in this type of market, there’s so much opportunity, right? There are a lot of people who have done very well trading the trenches. And I think that—

What do you mean by that? I’ve never heard that term, “trading the trenches.”

Effectively, I know people who have made multiple millions of dollars by getting into memes that are $1 million to $5 million in market cap, and then just consistently flipping them at 50.

Yeah, I see what you mean.

Right. You’re not making big money, but you’re making consistent money because these guys tend to have some sort of edge. They know some of the influencers who are going to be part of the project, or they’ve done their research. They look at Twitter followers. It’s actually oddly sophisticated for—

Yeah, it’s just a different set of fundamentals, right? In the past, the fundamentals that you were looking at would be TVL, developer wallets, or something, or the number of wallets, or developer SDK downloads. Honestly, this time, I think, like you said, we’re in meme land and it’s all about influencers, followers, KOLs, whatever. I hear you on that. But it’s still fundamentals.

Yeah, actually, look—

That’s what’s driving the market, and you’ve got to respect it.

For example, looking at Coq Inu, I don’t know. It looks pretty good to me.

Me too. I was just like—

I own—

We’re sitting here debating this, talking markets. I would buy that coin, you know?

I mean, are TRON coins going to start ripping because TRON ripped? Maybe.

TRON is a really interesting one because that is actually something where there’s a real exogenous use case that keeps pumping money into that ecosystem. That exogenous use case is that, for whatever reason, Tether is just popular in certain emerging markets. Tether on TRON is a thing, and hell, that pumps value into the ecosystem, so it’ll keep the party going a little bit longer.

Yeah, it’s pretty amazing. The one question that I think a lot of people have is: when does this end? Or when does this all come crashing horribly down in everyone’s face?

Yeah, let’s marinate on that. Let’s come up with some scenarios.

And how do you avoid that, right?

I mean, we should come up with some scenarios. I’ll start. Let’s start with the scenario where it’s something completely out of left field, like a South Korean civil war. I think this is unlikely, for the record, but watching the news today, we can never be too complacent about the idea of some random geopolitical event causing a big sell-off that triggers a bunch of leveraged wipeout liquidations.

Bitcoin probably doesn’t get hit that hard. It’s probably down to $80K or $85K at worst. But I think the “let’s borrow money from Mom and Dad to buy fucking HBAR” trade is over, and those coins come down 90%.

Yeah. My understanding of this market is effectively that we still have tremendous demand for BTC, but that money has started flowing out to alts. What’s happening is that a lot of crypto natives have made good money on Bitcoin. I think over the last 6 months, especially heading into the election, crypto natives were more denominated in Bitcoin than they probably have been at any other time in the past.

Such an easy trade.

I think a lot of that wealth is diversifying out, and you also obviously have the retail that’s come in and started bidding the market up tremendously.

Now, in order for the alt complex to remain high, there needs to be either a consistent inflow of retail, which requires consistently high prices, or there needs to be wealth from Bitcoin that continuously flows in, which requires Bitcoin to go higher. Generally, what tends to happen in these environments is that Bitcoin will range for some period of time, whether it's a week, 2 weeks, or 3 weeks—normally, 3 to 4 weeks—and then you get a mass deleveraging and mass sell-off.

What's happened is that altcoins during the range have gone up a ton, and then people start to take profit. Bitcoin is not getting any new allocation or is being met with sellers, so the wealth from Bitcoin slows down because, at some point, you reach a limit. Everyone's sold out of all the Bitcoin that they want that's going to rotate into other alts as opposed to just cash.

And so the complex comes down. The alt world needs Bitcoin to continue to go up in order for it to continue to go up in a straight line. I understand that that's a little funny because time is a crucial element. Bitcoin ranging is really good for alts over a short period of time, but if Bitcoin ranges for too long, then that's really bad for alts.

And if Bitcoin sells off, that's worse for alts.

Yeah. Well, if we do consolidate here, you tend not to consolidate at the highs. You tend to sell off, right? Very rarely, when Bitcoin reaches new highs for the first time, does it consolidate, go sideways, and then continue up. Normally, it's a sharp sell-off followed by a sharp buyback.

The way that I'm looking at this is kind of similar to March of this year, where you got up to the highs, you sold off, you ranged for a bit, and then Bitcoin ended up selling off. Same thing with February 2021. It ranged for a bunch of weeks. It was a big range, but you range for a bunch of weeks once you hit the highs, and then you sell off, and then you make a new one.

That's actually a really good point.

That's my best guess: This pause here is a pause for a range. The market doesn't die. Things like alts continue to do well in this market environment. That tricks people into thinking that Bitcoin's going to go up, and then Bitcoin actually sells off.

That goes for any commodity. Bitcoin's a commodity. You never just break fresh all-time highs in the midst of a supercycle amid tremendous amounts of demand and then suddenly plateau at fresh highs. Usually, there's too much volatility and interest at those levels to sustain that price level, and then you plateau a bit lower before it goes higher again.

4. The Strategic Bitcoin Reserve

I'm continuing to add to crypto at this point. I've decided that my portfolio needs more crypto.

How is that even possible, Jonah?

The fundamentals have shifted bullish in a way that exceeded even my already incredibly bullish expectations. I don't think the market understands just how ludicrously bullish this particular setup is fundamentally for Bitcoin. It's ridiculous.

In the past, it was just sort of like, okay, this technology is better than existing payment rails. Bitcoin keeps central banks honest. It's always going to have a role as digital gold. There's going to be a slow and steady march toward adoption over time. I'm max-convicted in this.

My second-biggest conviction, asset-class-wise, is SPY, U.S. equities. I'm going to have my biggest allocation to Bitcoin, my second-biggest allocation to SPY, and so on and so forth.

Now, what I'm thinking is that I don't think the market understands how important a strategic Bitcoin reserve will be for 2 reasons. I think it's happening, so I'm taking it as a given. Whatever delta the market is assigning it is too low. I think it's 100%.

I think that the incoming administration understands the importance of an alternative global reserve currency that anyone can transact in because the dollar has been irreversibly weaponized to a point where it's past the point of no return, and it's just damaged, right? You see Trump threatening people, threatening BRICS not to use their own currency. These are all stopgap measures. This isn't going to stop the tide that has ultimately turned.

So once this Bitcoin reserve happens, first of all, it's important because it's seminal. It basically establishes Bitcoin as literally the global alternative reserve currency of choice for anybody, and that alone, I think, makes it worth $1,000,000 a token.

But the second effect, even if I'm wrong about number 1, is that if the United States acts and does that, there will be other countries front-running them and other countries FOMOing in after the fact, doing the same thing. Zero central banks own Bitcoin right now. I guarantee you, Avi, that number will not be 1 forever, right? If the U.S. decides to do this, the number of central banks that own Bitcoin will be dozens, and so that's a lot of buying.

One question is, how much of this price action is baking in some probability of that happening?

None of it. Well, okay, some of it, right?

I don't think it's none of it. That's why I think we probably get a sell-off at the end of the month, heading into the inauguration.

I think we get a dip too. I'm looking to buy it, but my point is that this is like the ETF. There just isn't enough capital in crypto right now to front-run something that's sized like that.

The probability of it happening, I think, is pretty low. That's the only issue. If you actually think, okay, is Trump going to introduce a strategic Bitcoin reserve, the probability's pretty darn low. It's not zero, and I've talked about this before, but it's the hope factor that keeps Bitcoin up higher.

Until he says that's absolutely not happening, people are going to speculate that it might happen at some point. But the longer that it goes on without happening, the more people are going to chip out of that trade.

So Polymarket says, “Will Trump create a national Bitcoin reserve in the first 100 days?” Where would you say yes is, Avi?

8%.

24%. So my contrarian view is that that's more like 50% to 70%.

That's scary to me.

Yeah.

I know. That's pretty darn scary. I'll say it because 24%, I think, is a huge overestimation in the first 100 days.

But in the first 400 days, I think it's pretty close to 100%. I really think it's going to happen, but maybe I'm crazy.

What's your reasoning?

My reasoning is that the people who are being put in charge of all of these different agencies that matter, like Scott Bessent, have spoken about Bitcoin. Trump himself is doing DeFi projects, and his wallet is buying Ethereum right now. These people are aware of the fact that they've taken a very Russian view on this.

Just for a bit of history, Russia banned crypto a few years ago, and then it U-turned and said, “You know what? This thing is real. It's happened. We're not going to fight it anymore. We're going to legalize it—not make it legal tender in Russia, but acknowledge it and create a regulatory framework around it.” China's done the same thing. The U.S. is kind of 2 years behind all of that, so basically they're U-turning right now.

The reason why they're going to embrace it is because they're going to be forced to. It's bigger than the dollar. It's bigger than the U.S. economy. It's basically something that's indisputably going to hold its value and be treated as a means of exchange.

Even in countries that the U.S. wants to sanction and suffocate, they may as well have some skin in the game, right? Basically, Trump's administration is a bunch of economic realists, at least at the Treasury level and the economic level. They're not going to try and bury their heads in the sand and pretend this thing doesn't exist.

They're all acknowledging it and getting ready to adopt it because, as you and I agree, it's kind of a good hedge, right? It's a good hedge for both a sovereign like the U.S.—the Treasury Department—and for you and me.

Also, these people know they're going to be spending their asses off and cutting taxes. Maybe the Department of Government Efficiency will cut some costs, but we're going into a dollar debasement environment. They would be foolish not to be accumulating some Bitcoin against the backdrop of what they know they're about to do.

The incoming Treasury secretary is a macro hedge fund manager. To me, it all just feels obvious, but maybe I'm wrong.

I don't think necessarily that you're wrong. I think that it just takes longer than people expect it to, right? I actually do think that there's sort of a distinction here. One, Trump has already said that he's not going to sell the current Bitcoin that we have on our balance sheet, which could theoretically be construed as having a strategic Bitcoin reserve from day one.

But the core of the question is: Is Trump going to authorize purchases of Bitcoin?

Ultimately, I think that there's a different sort of economic warfare that's going to take place over the course of the next 4 years. I think that economic warfare is going to take the form of countries like BRICS threatening to de-dollarize their global trade, and kind of starting to do it. For the most part, the U.S. can fight back with sanctions, which creates even thicker barriers that need to be perforated in order for global trade to flow.

Maybe that'll work, maybe not. But the ultimate downside for the United States is that global trade de-dollarizes entirely, and in that scenario, I think you want to be able to participate in whatever's next. It's certainly not going to be some rinky-dink BRICS coin, right? So that's sort of what is being discussed.

And again, going back to Bessent, he was Soros' number two. When he broke off on his own, he bought a bunch of Bitcoin. He gets it, right? So, kind of reading the tea leaves here.

Yeah. I mean, look, I agree with you on the benefits, and I think the U.S. should do it. The question is, what's the path for them to actually accomplish that, and will they be able to accomplish it? My take historically has been that it's going to be harder than we think for them to actually pull this off.

Because they're going to face a lot of pushback, right, kind of across the board. The easiest attack is, “Oh, you're going to do this to enrich yourself.”

I did some research on what it would take to establish a strategic Bitcoin reserve. There are a few different ways. You could do it through budget reconciliation, which doesn't require a supermajority congressional vote in the House and the Senate. You could do it the kosher way, which is to get everybody on board, pass a bill, and bless it with the full weight of Congress plus the president, which is slightly less likely.

But then there's sort of an easier way, which is that you could just take the Silk Road Bitcoins, which are sitting with the federal marshals, and instead of doing what the Biden administration is currently doing, if you follow the whale bot accounts on Twitter, the U.S. is still sending 10 figures' worth of Bitcoin to Coinbase to sell from time to time.

Yes.

They did some yesterday, which I think is interesting, right? You could literally just take that from the U.S. Marshals and move it to the U.S. Treasury or the Fed—just move it from one government balance sheet to another, I think by executive order. That wouldn't be a big deal, and then it's there.

Once the genie's out of the bottle, you can't really put it back in. So I think one way you could see it done is the Silk Road Bitcoins just get established as the SBR, and then once it's there, buying more is probably the decision of an appointed Cabinet member rather than—That's how oil gets bought for the SPR, right? They just put out a tender, and then local producers and PADD 2 and PADD 3 will submit barrels into the tender, and the government will buy the cheapest barrels.

The same could happen for Bitcoin. You could just create a strategic Bitcoin reserve out of what's already there. But even—I mean, that's obviously easy to do—but I think crypto's enough of a bipartisan thing at this point that you could probably get a strategic Bitcoin reserve approved with a bill if you wanted to. Brian Armstrong put out a tweet about this. I forget the exact number, but it's a ludicrous number of Congress members who are pro-crypto now. Crypto fucking lobbied their asses off this time, and it worked.

Yeah, I know that basically everything we put money up for, we won, which is pretty amazing. So maybe I'm wrong here. Maybe the probability is a lot higher than I initially thought, and maybe we don't get a sell-off. But look, if that happened, that would be the most insane thing in the world.

Bitcoin would just go up in a straight line because every central bank in the world, you're right, would have to go ahead and buy this thing. So one thing worth thinking about then is: What's the easiest way to track whether this thing is actually going to get through or not? How do you even begin to assign a probability to this thing, right?

Polymarket, maybe? You just refresh—

Yeah.

That page. If somebody has insider information about that—and somebody will once the administration gets going—these conversations are going to happen behind closed doors, and somebody is going to start bidding that market.

Yeah. Maybe.

The thing is, with this much information in the market, one thing that I've been thinking about is that it's becoming an insider market. It always has been, but it's really becoming an insider market because specific actions by this administration are pretty clearly known beforehand. One example of this is Reserve Rights. I don't know if you saw this today, but the potential pick for the SEC, this Paul guy, Paul Atkins, is an adviser to this token called RSR. I think it was 16 hours before any public announcement of him being nominated to be the SEC chair, the thing went up 100%. It's very clearly information leakage.

Yeah. And that's commodities 101. This is not—

Yeah.

—like the equities market where AOL and Time Warner are going to merge and there's a quiet period and no one's allowed to say anything, and if you do something on that, it's insider trading.

The way commodities works is OPEC will talk about doing some collusive cartel behavior. They'll ask their 10 favorite market participants what they think the price action will be if they do XYZ behavior, and reward those 10 participants by giving them the heads-up 24 hours before they go and do it, right?

The reason why it's different in commodities, and it's not technically insider trading and it's not illegal, is because if OPEC does XYZ, that doesn't guarantee that the price of oil is going to do ABC. It just makes it likelier, but it doesn't guarantee it. Whereas AOL and Time Warner merging at some fixed price, there's a guarantee there.

So this is why there's no insider-trading rule in commodities.

Yeah.

And there's no insider-trading rule in crypto either.

I'd wager that it's pretty obvious that Bitcoin's going up with 100% certainty if this thing gets through. So I don't know. Until then, I'll just be playing alt roulette—

Alt roulette is—

Long altcoin.

I love your framework for it. It's like we're range-bound in Bitcoin. Ranges in Bitcoin are good for alts until they're not, so you have to be very attentive to when the music stops in alts. I'm looking to buy with both hands if Bitcoin dips down to 90K.

Unlike you, I will not be looking to short Bitcoin if it trades up to 100K. I'd be too scared to do that. I think it's on track there.

No, I'm not shorting Bitcoin up there. I said if you want to short Bitcoin.

Ah. Imagine.

Even something like SOL/ETH, right? SOL/ETH, the ratio looks really good. Even if the market goes down, if it goes halfway back up to the highs, it's a 13% move that you can size a lot of money on. It's a reasonably high hit-rate trade.

You think buying SOL/ETH looks good, right?

Yeah. Yeah.

Yeah, I agree with you. I completely agree with you.

Buying SOL/ETH looks really good.

Ethereum looks overvalued to me versus Sol. We've gone into this ad nauseam, but I think SOL/ETH is a great trade. Have you noticed that NFTs are picking up a little bit?

Yeah, I have. I was just looking at that. Pudgy Penguins—there's a rumor that they're going to be launching a token.

Cool.

That's one of the reasons for that. But even in general—

Some of the crypto wealth is spreading into CryptoPunks again. People are making some money on Bitcoin and—

Yeah, but look at—Okay, I'm just going down NFT Price Floor: 7% to 8% change in floor. In dollar terms—or ETH terms, sorry—plus 20% for CryptoPunks, plus 62% for Bored Ape Yacht Club, plus 30% for Pudgy Penguins, plus 33% for Autoglyphs, plus 12% for Milady, plus 35% for Chromie Squiggle, plus 102% for Fidenza, and plus 21% for Azuki.

I mean, this is in ETH terms. Against dollar terms, it’s higher, right? Because ETH has gone up over the last 7 days.

Yeah.

So, things are looking really good. I think I’ll be able to sell my rock for 8 figures at some point.

I think so, although I don’t really see you doing that. Your rock is your identity, Avi.

I could never sell it. I love that thing way too much.

I almost rage-quit my punk on the lows, and then I was like, “My emotions are telling me that this is the lows. I’m not going to do it.”

Anytime you’re close to rage-quitting, that’s basically the lows. Oh, look, SOL/ETH is going up just as I said that. Is somebody listening to our podcast, or are you buying?

No, I’m not buying. I’m just watching it tick up too. I’m like, “Huh?” This is crazy.

Right as I said that, it goes up a percent.

Speaking of our podcast, in the Niger Delta Ventures Telegram chat room, some people were asking us to talk about some things. Did we cover it all?

I think we did.

5. MicroStrategy's Bitcoin Risk

They wanted to know about crypto equities and whether—oh, let’s just touch briefly on MicroStrategy and whether it’s a systemic risk for crypto. I don’t think it is.

No.

I think it’s just negative gamma. The higher Bitcoin goes, the more MicroStrategy buys. The lower crypto goes, maybe they’re not selling Bitcoin, but they’re certainly not buying any when it’s puking. I think it’s basically like negative gamma to the upside. The world is short a call to Michael Saylor, and that’s how it works.

Yeah. I think that’s a fair characterization of it. MicroStrategy itself could implode, and the Bitcoin price wouldn’t really go anywhere other than pricing in the fact that Saylor’s probably not buying any more soon. But the only time when it gets really hairy is later, in 2026 or 2027, when there’s a payment coming due, right? If his stock price is so low or trashed that he can’t pay it back, then we’re in big trouble.

Yeah. Then he’s got to sell some Bitcoin.

Very, very, very unlikely to happen.

I’d say the—I haven’t done the financial analysis myself, but what I’ve read is that all of those payments, his debt payments, are covered by MicroStrategy’s traditional software revenue or profits. So, if that’s true, he never has to sell Bitcoin and we’re good to go. If it’s not true, there’s a lot of Bitcoin to be sold.

I think the most bullish thing in the world would be if Saylor loses the keys to his multisig wallet and all that stuff is just a stranded asset. Imagine. I can’t believe one dude—

Could you—

—is controlling that much Bitcoin.

Could you imagine if he has to pay his debt and then just sends that, just for fun?

Sorry, don’t know where it went.

That would be hilarious.

Oh, my God.

Man’s gonna go down in history as one of the greatest traders of all time.

We’ll see. I think he probably will. He’s certainly, at this particular P&L point, in the conversation. You can’t deny it.

Let me be honest with you. There’s no way he loses personally. His financial engineering was so good and so tight. He himself has made billions of dollars from selling MicroStrategy stock. I’m sure of it.

Yeah.

This guy’s a financial engineering genius.

And it’s not even that complicated. The average person can understand it. It’s like you buy a business that generates trad revenue. You borrow against it to buy Bitcoin, cover the debt with the trad revenue, and then you just have a bunch of Bitcoin. The higher Bitcoin goes, the better your borrowing terms become and the more money you can borrow.

It’s genuinely—

It’s insane.

It’s incredible. This guy’s so good. Anyway, Jonah, I gotta hop.

Me too.

But this was awesome. Let’s get this episode out ASAP.

Yeah, definitely.

This was really—

Great chatting with you, dude. See you soon.