为什么加密货币正在暴跌？｜1000x Live

It’s very difficult to hold altcoins for an extended period of time outside of just trading them. You can trade Aave, you can trade UNI, you can trade L1s, but I do think in general Bitcoin is the only thing that feels okay to hold in this environment. So I do think that there’s a pretty good trade here to just be long Bitcoin dominance, and that probably will pay dividends.

I couldn’t agree more. It’s not a moment to just sell all of your crypto and forget about the asset class. If we do get a Trump outcome, which is looking increasingly likely on November 5, there’s going to be some pretty crazy upward price action—some of the most parabolic, bull-euphoria-type candles that the market has seen since 2021—and you don’t want to miss out on that.

Meanwhile, this is definitely a good time to start consolidating line items, getting out of crappy tokens, and getting out of whatever you can. You can see the market starting to get illiquid. It’s starting to get panicky. We’ve got a long road until the election, and I don’t think there’s going to be any substantial bidding or new entrants between now and then.

And we're live. All right. Hey, everybody. Welcome back to another How's the Next live stream. This stream will not be brought to you by Helium or bad Wi-Fi. Cross your fingers, Jonah. Let's see if I can make it the whole time.

I think you can. We can do this.

That's what I figured. I love your background, by the way.

1. The Election Overhang

Thank you. It’s kind of how I’m feeling right now. It’s one of those markets where I do believe that we’re in a mega-trend upwards. I do think that Bitcoin is headed north of $150,000—not financial advice—at some point before we enter the next nuclear bear winter.

But what’s freaking me out, and what I would be doing if I didn’t have a framework to cling to right now, is panic selling. The reason why I’m a little freaked out and panicky but containing myself and doing nothing is because crypto is so election-dependent right now. And I’m not talking about Bitcoin. I think Bitcoin’s going to perform no matter what, but all of the other tokens out there that aren’t BTC are really hinging upon this sort of binary outcome.

On the one hand, you have a guy literally running on America’s very first pump-your-bags platform, right? Donald Trump is issuing NFTs and starting DeFi projects with his son—Trump cards. It’s ridiculous. He’s showing up at the Bitcoin Conference. On the other hand, you have what feels like a continuation of the Gensler-era stranglehold on crypto.

I don’t think crypto is going to be too happy about another 4 years of just getting abused and beaten down with the regulatory hammer, fighting a government that has infinite resources. This overhang—the prospect of another 4 years of what we’ve currently, what we’ve just experienced—isn’t going away for 3 months. Trump’s odds could be 80%, and we still wouldn’t price to perfection. The threat of that is just too big.

So I’m struggling to see how the market performs in the next 3 months, until Election Day, and I’m kind of wondering, what am I doing? Why shouldn’t I just be shorting a bunch of perps right now against my bags and buying them back after we bleed out a little further in this sort of downward-sloping trend channel? What do you think?

Honestly, I’m 100% on board with that. The issue really is that we’ve just lost interest in crypto. People have lost interest in buying it. People have lost interest in trading it. It’s gone from being a hot topic of conversation to something that people have genuinely stepped back from and said, “Well, I don’t really know.”

I don’t know what to make of this thing. Obviously, Kamala has made statements about being more supportive of crypto than Biden was, but the issue is that the 2 paths are so massively divergent. In the world of Trump, the probability that Bitcoin becomes a reserve asset of the U.S. government goes from negative 50% to positive 5%, right? And that’s huge.

You live through the next 4 years of the Donald Trump presidency 100 times, and it’s very unlikely that it happens, but there’s a world in which it does. So that is obviously extremely good. The thing that we know is going to happen if Trump gets in charge is that there’s going to be a concerted effort to introduce better regulation for DeFi assets and for tokens—to make tokens more like a security, more like an equity—where it’ll be easier for things like Aave and Uniswap, all these projects, to actually pass out cash flows to the token holders and register under perhaps a less strict guideline relative to running a company.

In the world of Kamala, alts probably go to zero. So the markets—as traders, what do markets hate the most? Markets hate uncertainty. Taking all of this talk and turning it into a more actionable take, it’s very difficult to hold altcoins for an extended period of time outside of just trading them, right?

I think you can trade Aave, you can trade UNI, you can trade L1s. But I do think, in general, Bitcoin is the only thing that feels okay to hold in this environment. The reason I say that is because, regardless of the election outcome, obviously it’s better if Trump gets elected for Bitcoin, but it’s not bad for Bitcoin if Kamala gets elected. It’s not a death knell like it is for alts.

So I do think that there’s a pretty good trade here to just be long Bitcoin dominance, and over the next 2 months, I think that probably will pay dividends.

Obviously, there will be one-offs, like Aave doing well on the back of Donald Trump’s son, I think Don Jr., announcing that he’s going to use it to build.

Yeah, I couldn’t agree more. I think that it’s not a moment to just sell all of your crypto and forget about the asset class, because if we do get a Trump outcome, which is looking increasingly likely on November 5, there’s going to be some pretty crazy upward price action.

I think we could enter some of the most parabolic, bull-euphoria-type candles that the market has seen since 2021, and you don’t want to miss out on that. You don’t want to dance between the raindrops and miss out on all the money when you could’ve just hung on.

Meanwhile, this is definitely a good time to start consolidating line items, getting out of crappy tokens, and getting out of whatever you can. You can see the market starting to get illiquid. It’s starting to get panicky. Sure, it’s not Election Day, but we’ve got a long road until the election, and I don’t think there’s going to be any substantial bidding or new entrants between now and then.

Maybe one strategy is options, right? My old favorite thing to trade. Deribit’s listing expiries on election night, which is kind of cool. You can sort of gamble on that. Maybe what you’re supposed to do is take the October ETH $3,000 calls or the $2,800 calls and just sell them to finance buying some November Election Day calls.

Or just sell the October-expiring ETH calls against your long to sort of collect a little bit of yield if you don’t want to trade perps or do any of that stuff.

2. Liquidity Is Disappearing

I think that’s a reasonable trade. I just want to point out one thing that you said, which is the way that Bitcoin has been trading with ridiculously low liquidity. Normally, what you see is Bitcoin moving a dollar at a time, and if you’re staring at the charts like I do way too much, you’re noticing that Bitcoin is now moving $5 to $10 at a time, which tells you that there’s very, very little liquidity in this market.

The way that Bitcoin has been trading is effectively as though one person is dictating price action. You kind of saw that yesterday, right? Bitcoin held up in the face of a 3% equity sell-off during the actual session. But then afterward, when Asia came on, I think it was basically just a few major sellers who came in and completely nuked the price.

It was a very weird sell-off where there weren’t that many liquidations in the grand scheme of things, and they weren’t orderly liquidations. It was more just gaps, right? You would hit a stop, and then Bitcoin would gap lower by $200. That’s a very bad market environment for up.

Yeah.

That’s normally a market environment where things go down. The other thing that stood out to me is that the last 5 days—we’ll see what happens today—we’ve seen outflows from the ETFs.

My entire bull thesis for September that I talked about for a while was predicated on the fact that we would see new inflows into the ETF and into crypto, specifically because people weren’t going to make decisions over the summer. When I saw that outflow on that Tuesday—or yesterday—that made me very, very nervous.

Some of those ETF flows—we need to be careful, though. Some of those ETF flows are just basis unwinds. People were probably long CME and perp basis and just unwinding it as the market came off and those bases collapsed.

Long ETF, short perp, or short future on the CME. Some of those outflows are just, “Oh, the basis arbitrage is gone. Let me unwind the trade.” So it’s not actual risk exiting the market. Some of it is, though.

That’s fine and all, but I was expecting to see inflows.

Yeah, fair.

And we didn’t. When you’re faced with your expectation and reality doesn’t meet it, you have to adjust your thesis. Right now, Bitcoin’s at 57,900, and the way I’m viewing this is that I’m definitely not positioning very long. If anything, I think you can probably short the market with a stop above—well, actually, I won’t tell you where the stop is.

I do think you’re probably looking at some short-term downside before we get up. I’m definitely a buyer at 52K or 53K. But right now, there’s no real momentum in the market, and I think the up move from today was really just 1 large buyer stepping into the market. I don’t really trust it.

Yeah, I mean, the market’s trading like ass.

Gun to my head, you’re probably supposed to be, if you’re short-term trading, looking for places to sell, not looking for places to buy.

I agree. You have a point, right? When things get illiquid and gappy, and the market just starts to trade like some forgotten, illiquid commodity on the last day of the future before it expires into physical, you’re supposed to be super careful.

I look at the Bitcoin chart, and it doesn’t feel volatile because, if you zoom out, we’re still chopping around in this super-choppy 55K bid at 65K range. But it goes from 59K down to 55K, back up to 58.5K, in 12 hours, right?

Mm-hmm. Jonah? Did we lose Jonah this time?

I just clicked the back button. That’s ridiculous.

Okay.

I thought you disconnected. It was like, “Oh no, I guess it’s Jonah’s turn to disconnect.”

No, I literally hit the back button. I’m sorry, everyone. I’m sorry, Avi. You trade from 59K down to 54K, back up to 59K, and it’s just like, what is this? Is this a milk future, or is this the world’s most important digital currency that’s supposed to be hyperliquid and trade tens of billions of dollars per day? It’s not looking good.

I’m normally not the kind of person to trade actively, and I am extremely bullish medium- to long-term. I do think—and this is not a political statement—it’s just that the poker player in me thinks that Trump is going to win, and we’re going directly into Banana Zone trading, 2021-style, during his administration. I don’t want to sell and then miss that.

At the same time, I’m kind of getting ready to break my rule, get out the old cold wallet, send a bunch of coins to an exchange, sell a bunch of coin-margined futures against them, and just play for this. The market’s just heavy because of this overhang that we know isn’t going away, right?

This isn’t 1 of those markets where the price goes too low and then, all of a sudden, fundamental demand kicks in. That’s kind of how crude oil works. You have this entirely new, exogenous group of buyers coming in and buying it to put in their airplanes and cars and whatever else. It doesn’t work like that. This isn’t a commodity.

Avi, actually, you recommended the George Soros book. I recently cracked it open, and this market is just so reflexive that moves like this, especially with a huge headwind like election uncertainty, get super-reflexive.

3. The Costanza Range Trade

Let me just ask you this, though: Is you getting out your cold wallet a bottom signal? Maybe you’re a little bit slow to move. Maybe everyone else has gotten out their cold wallet already, and that’s why we’re going down, and now there’s nobody left to sell.

The thing I struggle with is that you can definitely be short, or you can reduce exposure. But I view the maximum downside here as 50K, right? Is that worth risking the up move? With that in mind, I also view the maximum upside as 65K.

I think we’re just not going to start trending until we get clarity on the election, right? The idea here is that if you’re an active trader, you use what I call the Costanza rule. Anytime anything’s crazy—when you get a large up move, you sell, and anytime you get a large down move, you buy.

That’s called a range trade. Why is that the George Costanza trade?

Because you do the opposite of what your instinct is.

Right.

For example, when Bitcoin went up to 60K–65K, I think a lot of people piled in thinking that we were about to start trending up again. Then it went straight back down. More recently, we sold off to 55.8K, and a lot of people, including myself, thought that we were going to go down a lot more.

When we reverted, I think a lot of shorts got stuck in, which I think is 1 of the reasons for this move from 56.4K to 58K, 58.5K. It’s just a lot of people short-covering, and now we’re sort of done with that.

Yeah.

Whatever your instincts are—“Oh man, it’s really going to die and break down here”—maybe you should start buying. Or, “Oh man, it’s really going to break up higher”—just probably start selling.

It’s a good point.

You know, we get a catalyst in the market.

We’re on the lows of the range. I’d probably be stupid to sell here. Whenever I want to sell, I’m not thinking about a price target. I’m just irrationally thinking, “Oh my God, this thing looks so bad.”

I’m very disciplined. I normally don’t overtrade. If anything, I tend to avoid the pitfalls of overtrading, which is the worst thing you could possibly do to yourself in a market like this. But even now, every time I look at the screen, I get this itch to sell stuff, and it’s bad.

I think you’re right. Maybe the trade is to get out the cold wallet when Bitcoin’s trading at 65K or 66K on a Trump Polymarket spike, and then buy it back around here.

The 1 thing I’ll say is that I don’t think we’re necessarily at the bottom of the range. I think we’re kind of in the middle.

That’s why my personal view is that, in this type of market, you really only want to trade on the extremes. That’s when you want to get in. The other thing is that you don’t necessarily want to trade price; you want to trade price action.

That’s not congruent with what you just said, though. I agree you only want to trade on the extremes: A, because we’re ranging; B, because overtrading is literally death in this market, so you need to bake in the maximum margin for error that you can.

But momentum—price action—is most prevalent in the middle of the range. At the extremes, it’s reversing. How do you trade that? Explain.

Price action is most prevalent at the extremes of the range.

Sorry, what I meant was momentum. When you’re moving from the bottom to the top, you’re going to feel the most momentum in the middle of the range. At the top, the momentum is going to die, and at the bottom, the momentum is going to die and it’s going to reverse.

Maybe you could clarify for the listeners what you mean by “trade price action.” Maybe I’ve just misinterpreted what you meant.

When I say “trade price action,” what I mean is, let’s say you’re short from 60K. You sold at 60K, and you want to close that short at some point.

The way that you close the short, and the way that you think about closing the short in this particular market environment—or, really, in any market environment, personally, unless you have an overall thesis of, “Okay, this is going down for a long time”—is that you say to yourself, “I’m going to close when something extreme in the market happens. I’m going to close when there’s a big liquidation event.”

That’s what’s been happening in this particular market. When you get a large liquidation event or a dislocation in the market, that has tended to be the bottom, and so then you want to close.

What I’m trying to articulate here is that if you’re short at 60K and you say, “I’m looking for 54K,” and then you trade at 55.5K, but you trade it in a way that is very clearly a dislocation where a lot of people just got stopped out and there are liquidations, because this isn’t a trending market, you can probably just cover.

4. Altcoins Enter A Bear Market

I see what you mean. Okay, so you're basically saying that within the range, you identify your little mini pockets of euphoria and despair, and trade there. Now I'm with you. I understand.

Well, speaking of a little mini pocket of despair, the altcoin space looks dire. Aave has performed, and there are a couple of other ones. We could talk about some of the more buzzy projects, like Grass, later in the podcast. But 9 out of 10 alts are looking like they're getting mulched right now. That might be the smooth downtrend into Election Day, frankly.

I think people are panicking. There's a lot of nouveau crypto-rich people out there who have either founded protocols, invested early, or have unlocks, and they're basically trying to take some profit before the Polymarket 47% outcome that everything just goes straight to zero. They're trying to—

Yeah.

…lock in expected value.

I think a big problem is also just the bag holders. One thing that's insane to me: if you're listening and you feel bad because you didn't perform that well this year, I want you to remember that there are a lot of people out there who get paid money to manage crypto, quote-unquote, “professionally.” Most funds are down a lot this year. And that's insane because Bitcoin's up 40%, but most funds are down.

The reason that most funds are down despite the move in BTC is that on the move from $30K up to $72K, those funds held a lot of altcoins. Or, sorry, they weren't exposed to Bitcoin. Maybe they were 50% long because everyone had PTSD from FTX, and then once you got up to $72K, they realized, “Oh my God, we're really, really underperforming Bitcoin.”

Hmm.

And then they all moved to alts, and then Bitcoin went down 20% and alts went down 80%. I think a lot of people are actually still stuck in this performance anxiety. One way of saying it is that they're really worried Bitcoin's going to get away from them and their underperformance is going to look even worse, so it's really hard for them to get out of the quote-unquote “high-beta” positions because that's kind of the only way they're going to outperform.

But I think it's slowly starting to happen now because the trade is clearly not working, right?

Yeah, it's not. And the other thing is, it's so hard to be a professional linear crypto trader at an institution right now because the expectation is that you outperform Bitcoin, right? But if Bitcoin goes down, you're not getting paid either. So your incentive structure is to just get long leveraged Bitcoin in the form of picking the right alts.

Mm-hmm.

And then when you go into an altcoin bear market—which I would say is what we're in right now, frankly, to call a spade a spade—Bitcoin dominance is on the rise. Altcoins are not looking good. Our boy Pavel Durov is on house arrest. It's not quite 2022, but the alt space is looking pretty shaky, right?

When you're in that situation and your job literally incentivizes you to hold altcoins and you're down money, then you start to approach your drawdown. And at this point, it doesn't matter whether you're trading crude oil, interest rates, or crypto. Once you start to approach your drawdown, you have to cut risk to avoid getting fired, and then it becomes harder to dig yourself out of the hole.

You can't short alts at this point because they're already on the lows, and a lot of the perp funding has gone negative at this point—

Mm-hmm.

…so you just have to pay to do that. It's like this weird nuclear death spiral. I experienced it, and so have a lot of other crypto money managers.

Another problem with crypto money managers is that when I had 16 years of professional trading experience and a pretty stellar track record, I first started trading crypto institutionally. I traded at PA before that successfully. Trading it institutionally, a lot of these guys are true believers, and they just like to be long. They don't know how to be short.

It takes a guy like you, Avi, who's been through multiple cycles and seen what happens during these types of moves, to have the maturity to get short. A lot of the first-time managers out there are, from what I've heard, struggling because of the “Oh, we're in a bull market, I have to be long to outperform Bitcoin” type of bias, and they don't know how to really get short and trade around these things. It's frigging tough. It's a tough—

Yeah.

…it's a tough job. And the other thing that's happening—

I also do think a bit of it is just—I mean, the incentives aren't there. The incentives are obviously to be long.

Yeah.

So it just doesn't really make sense to be short because, again, if you're in crypto and people have invested their money in you to make money on crypto, and then crypto doubles and you lose money, it's kind of tough. That actually happened to a fund, very sad, back post-COVID crash. They shorted $4K, $5K, $6K, $7K, and then they blew up. It was a pretty sad story because they were doing really well before that.

Hmm.

I won't name names. But, yeah, look, the opportunities in the market are there. They do exist. If you're in the trenches and you're sort of a small-cap guy, and you don't need to trade tens of millions of dollars to make money, there are still probably opportunities.

The way that I think about it is that at least once or twice a month, something interesting or new will come out in crypto, or there will be a quote-unquote “obvious trade.” You can't make a lot of money on them, but if you're trading a million bucks, you can make some money. I don't know if you saw, for example, VISTA, that just came out.

No, I didn't.

I don't own any. None of the funds that I manage own any. We can't really touch it, but it's at least moderately interesting. It's a Pump.fun equivalent on Ethereum.

Hmm. Yeah, that does seem pretty obvious now that you mention it. But you really have to cherry-pick those because the broader risk-asset and macro picture right now is mostly heading south, right? There's some—

Mm.

…some noise about NVIDIA we could talk about. Commodities near and dear to my heart are getting nuked for a variety of reasons. The stock market's kind of on the highs, looking a little bit shaky and starting to come off.

So crypto will correlate with these broader macro assets and trade down in sympathy. Crypto money managers are expected to outperform Bitcoin when Bitcoin is trading in lockstep with broader macro, but they can't touch anything outside of the cryptosphere. It's a very, very tall order to outperform in that market.

So I guess we could talk a little bit about what's going on with the broader macro picture—

5. Macro Turns Risk Off

Yeah, I mean, it's been a tough market for macro managers as well, right? NASDAQ is off a ton. You had the JOLTS today that—I mean, what I've noticed, just from my own personal experience anecdotally, is that whenever data comes out, the first impulse of the market is almost always faded. It's so interesting.

Hmm.

NASDAQ went down, hit, I think, -70 bps, and then went straight back up. But I think what's clear to me is that we're in a dangerous environment, both technically and fundamentally, for equities. And it's not just equities. Commodities have been getting hit. Oil's been getting hit. Gold, over the last few days, has been getting hit. It's tough out there.

I don't know. What's your take?

Yeah, I mean, the one thing I do actively trade is energy products: crude oil—

Mm-hmm.

…gasoline, fuel oil, diesel, propane, all that good stuff. And what you're seeing in those markets is a confluence of factors. The number 1 factor driving the weakness is the fact that the Chinese economy is slowing down. And so, okay—

Hmm.

…little commodities corner for a minute. I'm just going to go on my rant here. Hopefully, it's relevant to all you guys who trade crypto, because they're both trading down in tandem with each other right now.

China's weakening, and over the course of my nearly 20 years trading, I've heard pretty much every 2 to 3 years that there's a China scare. A bunch of people get short China and China-linked things, and they get blown out, right? China's just this massive growth engine. They've lifted 1 billion people out of poverty in the last 2 decades. It grows at 8% to 10% a year like clockwork. You do not fade China.

There was the Global Financial Crisis, the 2015 Shanghai Composite collapse, the non-performing loans, 3 different real estate crises, the COVID mismanagement, all this stuff.

Everybody gets short China, and then they get their faces ripped off. Well, what’s going on this time? Why is this different? Maybe.

For the last 3 decades, China was basically the world of Deng Xiaoping’s liberal reforms and the introduction of a little shot in the arm of capitalism after all the tens of millions of people had died during Mao. Capitalism proliferated. All these people got lifted out of poverty. It was great.

Now we have Xi Jinping pivoting back toward communism. That happened 2 or 3 years ago, when he decided he was going to be a dictator for life. My not-so-informed take—I’m not a China macro expert—is that they’ve pivoted back to communism, and I don’t think we can expect, under the current regime, continued growth at the rates we’ve been seeing for the last few decades.

So it’s not going to be catastrophic. There’s still going to be an amazing economic engine; there’s just not going to be an 8% to 15% a year type of economy anymore in terms of GDP growth. Things are slowing down.

Now, one thing I am an expert on is monitoring the outputs of that. For example, physical diesel coming out of China—you can monitor the price of that in commodity markets. When that price tanks, you know there are very few ports that export that particular refined product.

When China’s booming, they don’t really export much of it, and the price at those ports is super high because they’re consuming most of it domestically. When the economy gets weak like that, the price tanks because there are very few orifices through which you can push that product out onto the water, and a lot of that product is getting pushed to the rest of the world right now.

When you watch those prices, those sorts of physical commodity prices at Chinese ports, tank, you know that they’re not consuming commodities that well. In commodity markets, we can see this slowdown. We can see it happening in real time.

And then there’s just too much oil floating around. This summer was a dud in terms of driving season and flying season. It was all a bit of an underperforming environment. Now we’re going into winter, into uncertainty mode with a bunch of elections, and commodities look oversupplied across everything.

And also, when you mentioned gold, that’s not really a CapEx or an OpEx commodity. Oil’s an OpEx commodity; you need it to operate the world. CapEx commodities are base metals like steel and copper; you need those to build the world. Gold is kind of neither. It’s a precious metal, more like Bitcoin.

Central banks buy gold during boom cycles; they don’t usually tend to load up when they’re struggling to keep people from doing civil unrest–type shit. The physical underlying demand indicators in the commodities market are all flashing bearish right now. Crypto and equities are probably going to trade a bit with those markets until we get a new catalyst. I don’t see a new catalyst until November. That’s the end of my rant.

6. Rate Cuts Meet Bitcoin

That was a great rant. It makes sense, and I do understand the distinction with gold there. I also think that, generally, people in crypto don’t necessarily pay attention to markets outside of just the U.S. equities markets.

What’s kind of interesting is that there hasn’t been that much correlation between crypto and this boom. One thing we were debating on the desk today is: If things are slowing down, if China isn’t growing as fast, if U.S. growth starts to slow down, unemployment starts to go up, and the Fed starts cutting, doesn’t that make nonproductive assets more interesting?

Everyone’s aware that right now the Fed is very likely going into a cutting cycle. One reason I think we sold off a bit in the morning is that, after JOLTS came out, the probability of an additional rate cut went up. Then you had the whole market sort of sell off. But now it’s back to where it was before, so there’s actually been no major change.

Bitcoin didn’t really do anything until after that rate-cut probability went back up, and then we got a nice move higher. So I guess one question is: If we get a shrinking economy, if we do enter a recession but get a lot of rate cuts, is that still somewhat good for Bitcoin as a nonproductive asset?

Yeah. Bad news is good news right now, and good news is bad news. If the economy falls out of bed and the jobs numbers look weak, that increases the probability of faster rate cuts and increases the probability of Mr. Pump Your Bags winning the presidency, right? Which is also bullish.

Meanwhile, if things start looking spiffy—if Israel and the Ayatollahs and Benjamin Netanyahu are shedding tears and crying and signing peace and trade agreements, Russia and Ukraine have détente, and the economy starts booming all of a sudden between now and November—I think we’re going to see more of the same, frankly, in crypto. This happens to you as an oil trader a lot. You’re sort of like—

Mm-hmm.

You find yourself quietly, secretly rooting for chaos and disorder in the world. I don’t know if Bitcoin is anarchic like that. What do you think? Is that kind of how you think about it too?

No. Bitcoin—interestingly, like I was saying earlier, there’s been some decoupling, at least on a day-to-day basis, from general risks. As chaos increases, I think you’re going to see Nasdaq and S&P go down, and Bitcoin probably goes down with them, but I think it goes down less.

Yeah.

Right? And the reason I think it goes down less is because in times of genuine chaos, as we’ve seen in the past, Bitcoin actually correlates with gold a little bit more, and I think gold goes up in those scenarios. But I do think it requires a flush-out event from BTC first.

It’s not going to be that things start to break, the world starts to go nuts, and Bitcoin immediately goes up. It’s that Bitcoin in those markets tends to bottom first.

Mm.

Then it starts to go up because it finds buyers much more quickly than Apple would in that particular scenario. How many people are buying an iPhone if—

That is a fan—

World War II or World War III is breaking out?

That is a fantastic point that you just made. That is really smart. Let’s dig into it a little bit and prod it. The same thing happened—what you just said happened in 2020, right? Everything nuked. Bitcoin got absolutely creamed. Before the world really started to rally, Bitcoin just began its unstoppable upward march to $69,000 a token.

If I’m trying to assign meaning to that type of price action, Bitcoin is a debasement hedge. If things get crazy, Bitcoin’s the first thing to get nuked, then the debasement happens, and Bitcoin’s the first thing to protect you after that, right?

It’s not going to perform on inflation. It may perform in a decorrelated fashion if we get regulatory clarity and suddenly blockchain starts racking up a bunch of wins and bringing in a bunch of new users. But absent that, Bitcoin will protect you, even in a Kamala administration, if they start debasing the dollar because of some crisis, right? Which is almost guaranteed to happen.

Yeah. What’s funny is that I actually think spending and debasement accelerate under either administration, which is why I’m bullish no matter what, at least on BTC.

Yeah.

Once we get past the election, it’s one of those things that you just have to survive. I think that’s a key component of existing in this market, because it’s so volatile: just survive. Try not to get blown out, and pick your spots to make aggressive bets.

At least for me, if Bitcoin goes back down to $52,000 or $53,000, I feel very good about buying there and holding through the election.

Yeah. Being flat in crypto is the most dangerous position of them all, right? If you get stopped out and you can’t trade or take risk for a little while and you miss a huge rally, 90% of the gains occur in very short periods of time. So if you miss one of those, you might have to wait years to make that kind of dough again, if ever.

That’s why I’m so frigging terrified of selling perps, even though Mr. Nervous Emoji behind me is how I feel and I want to—

Being flat is just terrifying in this market.

Yeah, it is. I say that right now as I'm leaning short, but it's because—don't try this at home.

I'm paying attention to the market 24/7.

Yeah.

You're plugged in; you're basically wired into the Matrix, and you'll buy it back the second you hit your stop. I think a lot of people aren't—myself included—aren't that dialed in, so it's riskier to be flat for the rest of us. You're not really flat. You're just monitoring it. It's something else, what you're doing.

Yeah, because I'm looking for spots to get back in. The 1 thing that I'm probably not going to sell for a while is Helium. That thing's just been doing so insanely well. I think they're talking with the chairman of AT&T soon, on a stage somewhere. So that's going to be interesting.

I am locked in. I don't know if you can see my eyes; I just keep looking at price. It's a horrible addiction.

Yeah.

Especially on days like today, Jonah, I don't know if you missed it, but I can't even look away. And the thing is, you learn—

I have Bitcoin on my screen all day.

You learn a lot.

Yeah.

You actually learn a lot from watching price move. It tells you a lot about how Bitcoin moves in general and how markets tend to move in general. Some autistic part of me, whenever I see the same pattern occur, is like, “Oh, I remember that from 3 months ago. This is the exact same thing that happened.”

That's why taking notes is so important. Then you just remember, and then you act it out. Honestly, there's nothing that will ever replace the tens of thousands of hours that I've spent staring at this thing. Kind of fun.

That's what peak performance looks like. You just have to be dialed in. If you're not, somebody else will take that money. I think ultimately, for the rest of us who have other jobs, I certainly felt that little kick in oil today.

But I watch Bitcoin all day, every day, because it is such a fascinating global market. For the rest of us who aren't dialed into Bitcoin and trading it as actively as Avi, you can earn money doing other stuff and then just buy dips, right? Or not buy when you're bearish, and then buy when you feel like it's bottomed out.

You can play this market from 1 direction because we all have the same long-term thesis as us, which is that this thing is going to take over vast swaths of the global fiat economy at some point in the next 10 to 20 years. If you have that North Star, you don't have to sell, right? You can pick when you buy, and you can be like, “Well, all right, I missed this little rally, but I'm earning money doing something else.”

During the next big firestorm sell-off, that's when I'll start investing my next clip. That's kind of how I've played it the last couple of years, and it worked out really well, frankly. It was a good time to do it.

Yeah, I think it's great to have a separate income stream that you can just funnel into this because, over time, I think that wins. A lot of trading is obviously emotional and mental, unfortunately, if you're not trading 100% quantitatively. Having a sense of security and safety while you trade is really important.

Yeah.

Which is why it's either a separate income stream, or it's not trading the full amount of your stack and just trying to generate P&L and then pushing it toward the things that you like long term. Having that stability really helps you in this market.

Speaking of stability, Bitcoin has not moved this entire podcast.

It's listening.

Yeah. Thank you. I appreciate it, Bitcoin. Thank you for listening to our podcast.

It's there. Its name is Seawolf, and it just typed, “True bromance.” Bitcoin stopped trading for a second just to comment on our bromance.

Speaking of our bromance—world's greatest transition—I think 1 thing that I enjoy about these dialogues is that you can have 2 different styles of trading, 2 very different styles, and they can both win. Even if I'm lifting Bitcoin from you at 55K, we could both be right because you're probably just going to buy it back at 52K, and I'm going to hang on. Then we'll be high-fiving at 60K.

You'll have made a little bit more money than me, but neither of us really compares or cares.

Yeah, it's kind of like having a friend that has a different taste in women, right?

Yeah. Wingman.

Exactly. You never have to compete over the same girl. It's like, “Oh, that's what you like? Go have fun, buddy. I'll wingman you.”

You can see there's literally nothing happening in this market right now.

Yeah, we just have to watch it. So, okay, we've gone through this downward-sloping trend channel/range.

Yeah.

We've gone through the altcoin nuking. We've gone through commodities. Are there any green shoots in this market? Should we be talking about Grass, about CryptoPunks, about Permissionless? I don't know. What should we talk through here? Should we just go to the grid?

7. The Community Questions

Why don't we go to the comments? Literally ask us anything that you could possibly want to hear, and we'll just do a live Q&A, because I've already given you my take on the market.

All right, so let's see here. Darknessateme writes, “Honestly, once you see the government printing, it's hard to unsee it everywhere.”

On that note, I'm just going to interpret a question out of that. Every time rates get cut, I don't know how many tens or hundreds of billions of dollars need to come out of T-bills and go into risk assets. Are we just underestimating this massive inflow of capital into things like Bitcoin, stocks, and other correlated assets?

It's not quite printing, but it's monetary easing, right? Are we just sitting here mid-curving this as the world's biggest tsunami of capital lifts our space to new highs?

Or are rate cuts not a big deal?

There's an interesting discussion about this where somebody said, “Rate cuts tend to lead to the market actually going down because it signals that the Fed is nervous about the economy.” Then we looked at what happens when the Fed actually starts cutting rates, and the answer is, we have no idea. It's 50/50 what the market does because it depends on whether there's actually a recession coming or not.

When the Fed starts cutting, nobody actually knows—not even the Fed. It's 1 of those things that I don't necessarily think you can trade super actively. The best way, in my personal opinion, to trade these data—what the Fed is doing and whatnot—is to trade it on the day or over 3 days.

Oftentimes, you'll see Bitcoin or equities move in a way where it reacts directly to how the data has come out that day, but it won't actually influence the direction. The only thing that really influences the direction is a large paradigm shift.

If it's so abundantly clear that we're entering a recession and the recession is bad, then obviously you can sort of reposition. The greatest example of this is post-COVID, November 2021, where there was just a paradigm shift when the Fed started to raise rates. That's a change in the market.

What I always say is that you have to understand why you made the money you did. If you buy Bitcoin and it goes up because there's a huge injection of liquidity into the market, and then that liquidity starts to be taken away, then you have to get out. It's about knowing what made you your money.

Once again, this year I think what made us money was the Bitcoin ETF. That made you all of your money, and the fact of the matter is that the last 5 days have seen outflows. So how can I be super bullish until something changes?

Because 5 days of outflows doesn't mean that there will be another 5 days of outflows, but I take your broader point, right?

Yeah.

It goes up and it goes down. In and out, I guess. Okay, no, that's a really good take. My 2 cents on it: I published a tweet about this that seemed popular with people.

There are two kinds of rate-cutting cycles. One is when there's been a crisis, like a deflationary shock, and rates get cut very quickly to address that and try to buffer the economy. The other type of rate-cutting cycle is when inflation just tapers off slowly, so the rate cuts come off slowly as a result. We shouldn't mix up correlation and causation here. In the former, there's a crisis going on.

Mm-hmm.

Things are looking pretty bad, and prices are going down. It has kind of nothing to do with the rate-cut cycle. The second one, in a gradual rate-cut cycle, because inflation is coming off, that's a stabilizing-to-stabilized-type environment where you can start to get comfortable with owning risk assets.

Also, we've never seen this level of investment in short-term interest-rate securities like T-bills in history. So there is a lot of capital sloshing around waiting to come back into risk assets. Fund managers are bullish on the broader risk-asset, stock-market-type picture. So I think we're in the latter type of easing cycle, and I think we've got some bullish days ahead, but we have to clear the election overhang. Like you said, Avi, markets hate uncertainty. That's my take on that.

Next one. I want to ask you this as well. If you're invested in Helium, I think Helium's one of the coolest projects out there, but I don't understand what happened with HNT, IOT, and MOBILE. Their token ecosystem seems weird. Farming doesn't really make you that much coin at this point. Why Helium? Just narrative? Is it actually catching on as a network?

I'm going to tell you guys a secret. This is a general secret about life and markets and how they move: a lot of it has to do with fundamentals, but a lot of it doesn't. What do I mean by that? I really like Helium. Helium's great. It's the only product in crypto that's actually being used widely.

It has partnerships coming for it. I mean, I don't know anything nonpublic, but just looking at Twitter, it looks like partnerships are coming with AT&T. There's a lot to like about it. The token—and it makes revenue. Not to justify the valuation, but it makes revenue.

Now, if you look at the rest of the crypto space, there's basically nothing except for Aave that actually is used and makes money. I mean, you can say Uniswap, but Uniswap is just used to speculate on things. I think at some point in the future it'll be used for trading real assets.

So what's my point of all of this if I'm telling you that Helium can't be valued correctly based on the chart reviews? My point is that there's a lot of capital that needs to be allocated to crypto. There's a lot of capital that needs to be invested, and there are a lot of people who need to feel smart.

Helium makes people feel smart. You can go to your investors and pitch it to them, and you can own it, and as long as it's going up, that's really nice. So I like it. I like it in the short term. I like it for a trade. Do I think that it's going to take over the world? Honestly, potentially. It's a great product. It's really nice. But that doesn't necessarily mean the token price will go up. They have to figure out how to actually deliver value back to the token price.

Well, regulation could make that—

Right?

Regulation could make that possible.

This happens over and over and over, not just in crypto, but in the traditional markets. There are certain things that people have to allocate to. Structure means a lot in this world, and if you can figure out what people are going to do based on what they have to do, then you can make money. Because the reality is that you're very likely a minnow in the market. You don't have to move billions of dollars.

So if you can figure out how the people who do move billions of dollars have to move their money around, then you can actually make money. You can clip what I call your fee.

Hmm.

Right on this.

Another example of this is when something gets added to an index, right?

Yeah.

It tends to do better because people need to allocate to indexes. They weren't buying it before, and they buy it—marginally buy it more now—because it's in the index of things you have to buy.

That's why you'll see a lot of the technical analysts, or the flow analysts, in the TradFi world talk about what people have to buy at the close. You could do stuff with that information as long as you're not trading too much. So I think incentives rule the world, and that's something to understand not only about trading crypto, but trading the traditional markets and also just life in general: show me the incentive and I'll show you the outcome.

Totally.

Very important.

Speaking of incentives and indices, back in the Goldman days, before things were a little more tightly regulated, I remember a salesperson would stand up and purposefully scream at the top of his or her voice, “Hey”—insert enormous asset manager—“so-and-so needs to buy a gazillion dollars' worth of the Goldman Sachs Commodity Index (GSCI) in 15 minutes.” And you would just hear everybody clicking away, right?

This has got to be pre-2008.

It was a while ago. Let's just put it that way. So yes, I agree.

I'm pretty sure there are regulations on that.

Indices and incentives are very near and dear to my heart.

Next question: How do you see the NVIDIA subpoena impacting AI coins in the medium term? I'll just answer that one right now. It'll take 10 years for the government to even—

Well, hold on. I thought I saw a Bloomberg headline saying they didn't actually get subpoenaed.

Okay.

So—

We'll just remove that and pretend that we knew that and that I didn't click on it.

What about you? We keep talking about Aave on this podcast. Should we quickly touch on why Aave's gassing higher? It's like the only thing in Ethereum land that's ripping.

Well, it's also the only thing that makes real money, and it's the only project in crypto that's being talked about by the former president of the United States of America, and potentially our future president as well.

Yeah.

If all goes well. So I think it's just getting allocations right now.

Their new front end is so sexy and usable. Even I started degenning on it. I borrowed some ETH on it. The APY is sub-3%. I Uniswapped my ETH into some wrapped TAO because I wanted to be long TAO and didn't want to deal with centralized exchanges.

It's all super easy to lever up on Aave. I like Aave. Stani's a G. I've met him twice, actually, and he's in it for the long haul. I understand why that token is pumping now, though, because I missed that Trump was specifically calling out Aave. I didn't realize that.

What we don't know about the project yet is how much Aave will actually benefit from it.

Yeah.

If it's a fork, then it's probably a pretty good sale of this asset. If it's not a fork, or it pays fealty to Aave, that's pretty good.

Yeah.

The other thing that I'll say is that you always have to be careful with this. I really like using Velo Data for this personally, but you have to check how many people are already in the trade, right?

Yeah.

When I look at Velo, I can see that about 500,000 coins have been added to open interest since $95, and that's a sizable amount. That's $67.5 million in dollar terms. So if it turns out that it's not getting paid fees or it doesn't generate real money from this Trump partnership, then a lot of that probably unwinds and you're probably stuck.

Yeah.

So again, this is what I've been trying to explain to people: it's really difficult to buy and hold anything other than BTC because there's so much that hinges on a specific event, a catalyst, a market structure, or whatever else it is.

Aave being at $137 is a function of Trump and a function of a lot of people being in the trade. So it's just really dangerous to hold out unless you're paying attention 24/7, because in the flash of an eye you could have $70 million hit the market.

Yeah.

Which is why, again, if you want to own crypto and not worry about these things, there are really only 2 things that you can do, in my personal opinion. One is to own Bitcoin, or 2 is to wait for something not to happen—buy crypto when Bitcoin is down 50%.

Yeah. By crypto you mean right, alts.

Yeah, right. Like, when things are down a ton.

Yeah.

Right now they're still not down a ton, in my personal opinion.

8. Solana Outruns Ethereum

Well, let's talk about this. Amir Aftab writes, “Solana?” Let me—

Thank you, Amir Aftab, for the brilliant question.

Yeah, great question, Amir. So I'm massively overweight Bitcoin because I don't want to worry right now. I want to chill out, and I feel super comfortable and safe, and also greedy, in Bitcoin. I still expect that one to perform like crazy no matter what happens.

Between my ETH and Solana, I'm a little nervous about my ETH. All this FUD, all this terrible price action, is finally wearing on me, and what I'm kind of coming around to is the idea that Solana's fully diluted valuation is, what, roughly 10% of ETH?

Mm-hmm.

A tenth of the—it's worth a tenth as much as ETH.

Mm-hmm.

ETH has so much further to fall under another 4 years of Gensler-like characters strangling every major project, most of which are on ETH. And then if we get banana-zone mode under Trump, all the new, big, hot, complex, important projects seem to be getting built on Solana. So Solana has more upside and ETH has more downside.

They both have a ton of downside if Kamala wins, but ETH has more. And if Trump wins, Solana has more upside. Should I just be rolling most of my ETH into Solana right now? Would that be a smart trade to manage the segment of my portfolio that's riskier?

Yes.

Yeah.

Obviously.

I think so, too.

I think it's a pretty obvious statement. I view the risk-reward for Solana as just much better than ETH in general. ETH can go down 50% as easily as Solana can go down 50%.

The only thing that I'll say is that, again, it's tough. If you really want to be judicious about it, there are people who bought a lot of Solana at lower prices, and it's locked, and they're going to want to lock in profits. So I think there's a little bit more reflexivity to Solana on the downside as people rush to hedge positions.

When does that unlock?

I don't know, actually, off the top of my head.

I was worried about FTX being the big unlock, but that seemed to just get swallowed up really quickly.

Yeah. I mean, it's the people who bought from the estate.

Yeah.

What's the next good question?

There's somebody asking about Base, which I think is interesting. Here are 2 predictions. Prediction number 1: Polymarket migrates to Base within the next 6 months. Prediction number 2: The Aerodrome ecosystem is going to grow like crazy.

I'm really studying that project because I was looking at the biggest TVL and biggest DEXs by volume on Base. Aerodrome, out of nowhere, is way bigger than Uniswap, way bigger than any of the others. I don't understand why that would be. I know the founder of Aerodrome personally, and so that's why I started studying it, and I'm blown away.

I think it's the fifth-fastest-growing protocol of all time in terms of how quickly it reached $100 million in revenue generated for liquidity farmers. So basically, I think Pump.fun's number 1 and Aerodrome's number 5. It's on Base, and people are trading a ton on Base through Aerodrome.

I'm not fully up to speed on this ecosystem yet, but since you asked, Zach Zahariev, I'm studying ways to farm liquidity on Aerodrome. Something's going on there.

Mm-hmm.

That's totally fair. One other side note: Jon Galt, one of our Twitter friends, says Solana's FDV is a quarter of ETH's FDV. So he caught me out talking out of my ass. Thank you for that correction, Jon.

Speaking of corrections, I want to speak on stream about our TON bullishness. On one of the podcasts, we were pretty bullish on TON. We did not expect Pavel Durov to be arrested. That was a bit of a blow to the thesis, candidly. We'll see what happens.

I still do think that TON's game to lose in terms of onboarding people onto their chain. But the unfortunate reality is that there are a lot of people who bought TON a lot lower, and there are a lot of people who were invested at $1 or $2 who are just starting to unlock right now, and this gives them a lot of reason to sell.

At some point, I think TON is an amazing screaming buy—you close your eyes and just pile a substantial portion of your portfolio into this thing. But that's probably at $2, if we get to $2.

Interesting. Well, luckily, none of this is investment advice, so nobody listened to you or did anything when you were bullish on TON and it went down.

I've said on multiple podcasts that it's really important to know that if you listen to me, you will lose all of your money. You'll lose your house, you'll lose your girlfriend, you'll lose everything.

What about your dog? Do you still have a dog?

I do still have a dog. He's not in here right now.

Ah.

Unfortunately.

You lost your dog, too. He just walked right out.

Yeah, the dog ran out.

As soon as you started talking about Telegram, Baloo was just like, “Get me the fuck out of this place.”

I'll tell you a secret. I don't know—I mean, you have kids, and I have a dog. I don't have kids. But I'll tell you a secret about having a dog. I also have a wonderful, amazing girlfriend.

Aww.

The dog loves her way more than it loves me because she's very sweet and kind. I tell the dog to sit and try to teach it how to lie down, but it's more like, “No, don't do that. Stop chewing the couch.” She's so much nicer than I am. He's not here right now. He's with her.

I wonder what produces more poop, your dog or my 2-year-old.

I feel like if we've asked that question, it's probably time to wrap the stream, Jonah.

Yeah. We're probably going to have to edit that one out for the recorded version. But anyway, dude, it's great talking to you. I always learn so much. I think one of the reasons why I appreciate these podcasts is because these are the—

Mm-hmm.

—the trader calls where you chop it up and figure out what you're going to do. I don't know, maybe I'm just going to start buying a bunch of SOL/ETH at the highs because I'm late to the trade, but better late than never.

You're better late than never. I 100% agree with that.

Luckily, I've got them both. Maybe it's time to invest fresh capital in Solana and just rebalance. At any rate, Avi, it has been excellent talking to you. None of this is investment advice. Um, thanks everybody for listening on the live stream. Looks like we hit 2,719 unique listeners a second ago. That is dope. I think we peaked out higher, like closer to 3K. This is amazing. Love you all. Thank you for the engagement.

Adios. See you guys.

Adios.