The AI Trade Got Margin Called! Crypto Didn’t Blink

Transcript

Welcome back to the station to the weekly rollup. It is the fifth Friday of July and we have all of Korea getting liquidated two trillion dollars erased. That's 1.2 million accounts getting margin called. The the Kopsi k o p s y this is the Korean stock market down 40% imagine your stock market Ryan being down 40% in the month of July. Well, that's that's what Korea's Korea's got going for it. Uh and we also have breaking as of this morning highly related highly correlated the poster child of the AI trade is now a forest seller cuz he took on a little too much leverage while your first cycle bro.

It's a learning lesson learning [laughter] learning lesson had to unwind his entire public book book. We'll talk about who the buyer is and why that might be the bottom cuz that is maybe why stocks are very very green this morning after a pretty terrible month. But Ryan in all of that after all of that mess the AI trade unwinding maybe bottoming who knows the the stock market coming off yields going up all of this bearish stuff crypto did not blink. Crypto is up this week.

showing unique strength >> That that's crazy. That I is you're you're saying on this week it was actually a good thing to own crypto rather than AI. >> Yes if you were if you owned crypto not actually not all crypto but if you owned Bitcoin or ETH crypto blue chips specifically >> Okay. >> You are you are a happy person this week. >> We'll talk about that. That that might be winds changing. Like this month winds changing? >> Is AI deflating and crypto's just being a hard asset class that's great. >> Uh also I want to get into the Warsh. So Kevin Warsh as the Fed chair his first FOMC meeting there was a vote. What did they decide to do? What's he going to do as Fed chair? We'll talk about that.

Also, Clarity Act feels like it's stalling once again, but Paul Atkins, the chair of the SEC, came in and said he is ready, willing, and able to do it for you guys. He'll just make regulation instead. >> He'll just do it himself. >> I'll take care of clarity. Anyway, we'll talk about that. And also, we got to celebrate Ethereum's 11th birthday. But first, let's get to the main story, which is the COPSI, as you said. So, c o p s i, I should say. And I was just laughing not at people getting liquidated, but said all of South Korea, all of Korea was getting liquidated.

Which feels like a lot, but that's not too far off, because there was a lot of retail involved in these recent market moves. And you said they lost about 40%, but that is because they were also up by about what? Like double or something like this over the past 6 months. Talk about this story. >> If you're if you were in the Korean stock market, the Korean industry, before like 2 months ago, you're actually doing just fine. So, it was up like something like 2 or 300% and then and then it fell down 45%. You know, what goes up so fast must come down. I think anyone in the crypto industry is probably pretty familiar with a chart that looks exactly like that. But what is unique here is just the level of liquidations that happened to retail

investors. We don't really know, so kind of in the same vein as crypto wallets aren't really one-to-one mapped with humans. Accounts are not one-to-one mapped with humans, more so than crypto wallets. But there was an estimated 320 to 360,000 accounts were fully liquidated, zeroed out. >> Wow. >> Which if you if you do map that one-to-one, that is 3.4% of South Korea's adult population got margin called. >> To zero in July. >> To zero. To zero.

>> To zero, yeah. >> Wow. >> For yeah, of over 500,000 accounts. And and the that that 320 to 360 estimate, that was from last week, not even not even this week. So, potentially like over half a million accounts fully liquidated because it went down 40% in 40 days. A very very important part of this story was that the South Korean stock market recently introduced leveraged single stock ETFs. So, like pay Micron or pay like memory stonk that you got there. And and also, by the way, ways South Korea has like an unprecedented level of exposure to memory stocks >> market. That that's why

>> in in their market, yeah. >> markets have been moving on the memory stock trade downstream of the AI trade and all of that. A lot of that is located in South Korea. >> Yeah, SK Hynix and Samsung being the two memory stocks that have outperformed massively and combined at the top, those two companies represented more than 50% of the stock market. And so, you put like the epicenter of all markets, which is memory stocks in the last like month or two, you add single stock leveraged ETFs, and then you know, well, you didn't you didn't really go to crypto conferences, Ryan, but like you would go and how how go to a crypto conference, hop in an Uber, and then your Uber driver would be talking to you about like XRP or like Cardano.

>> Oh, yeah. >> Apparently, that's what it's been like over there in South Korea is is like their leveraged single stock memory stock ETFs. >> Yeah. >> Uh and so, it's just like an absolute bloodbath in Korea over there. >> Uh so, $2 wiped off the books uh as a result of this. A lot of, I'm sure, margin being called in big trading desks as well. So, a lot of people feeling this. I guess with the leveraged ETFs, what, you know, people were like, "Uh I I rather than 5x, I could have 10x if I buy the thing that goes up, and I'm just going to buy the thing that goes up." And >> buy the leveraged ETFs in my margin account on margin.

>> Oh my [laughter] god. All right. Well, this does look like a crypto chart. So and it sounds very much like a a crypto story. Um is there a broader take on AI though here? So like could this be the beginning of the AI I'm going to use the B word bubble. I know it's a charged term, but let's say the AI trade the AI bubble unwinding. >> Unwinding I think kind of implies that it's going backwards. I don't necessarily know if that's true, but like I think it is a pretty strong point in the argument that it is the AI trade ceasing to be so dominant in the market.

Like maybe the great AI repricing is is starting to like be kind of over because prices is determined at the margins. I think you would kind of expect to see micro bubbles inflate and then get popped along the way. It could be inside of a larger bubble, but ultimately I I I think you would would kind of expect something like this to happen regardless. The timing however is interesting to talk about a few other things that are also happening in the market. Now this is my personal speculation. I haven't like read anything about this, but I do think that Kim I K3 is illustrative or indicative of the reshuffling of where the market is perceiving value to be captured in the

AI stack in the AI like vertical. And Noah our one of our favorite writers Noah opinion wrote an article about this actually like back in December of last year. And the title is of the article is the AI bust that no one sees seeing coming very easy title. He gives like three scenarios to like the future of the AI industry. One is the virtual reality scenario where kind of like VR we all know VR is a thing, but it's just not getting adopted. It's just kind of a bust of an industry, maybe it'll come in the future, but just not really working out. And like Noah just kind of quickly moves on from this scenario. It's like it's worth thinking about, but not really worth

discussing because like we know that people on a recurring basis come back to AI over and over and over again, unlike their dusty Apple VR helmet that they have left in their closet. So that's the first scenario. The second scenario is the railroad scenario. And railroads were super economically useful. There was a huge financial boom associated with the the railroads. Nonetheless, even though railroads were created an economic boom downstream of them, and they were massively profitable for instance investors, there was still a huge bust in 1873 railroad had to like pay their pay their debt. And so there was financial over speculation on top of something

fundamental. And I kind of you can kind of see what's going on in the South Korean stock market. It's like over financialization, over speculation on top of something fundamental. And so I think there's plenty of evidence to say that that's definitely something that's also going on. But what could also be happening in addition to that is what the third scenario that Noah gives, which is the airline scenario, which I think is where Kim Kardashian comes into the story. So that's the idea that AI succeeds massively as a technology, but the companies that make the AI models, OpenAI and Anthropic, just don't capture the value.

Kind of in the same way that like farming, massively critical, or airlines, you know, critical to the modern economy. >> There's like no profit. It's commoditized. >> scrape for margins. There's just no profit. >> Yeah. >> Uh and right now that if that if if the airline scenario is anywhere true, you would see and be very worried about OpenAI and Anthropic taking on a ton of debt, selling a ton of stock, but then in this scenario, that stock is not valuable, and how are they ever going to repay their debt? And so, it's just a reshuffling of the economics of like the AI investment cycle. And even if we are inside of a larger bubble, the South Korea memory stock bubble just

popped. Still memory prices are up, you know, still the AI trade might be on, but we just need to kind of reorient value in the chain. >> priced a lot of success into AI, right? And so, the AI CapEx that's going through now is about you it would require AI income revenues per year of about 2.5 trillion to match the CapEx that we're spending. What we're doing right now with all of those Frontier labs you talked about, Claude and ChatGPT capturing the bulk of this is about 150 billion per year. We got to be 2.5 billion to cover the CapEx, we're at 150 billion. So, there's a delta here.

And it felt like very much last year, we had sort of the the chat revolution on AI, and that was kind of the the run-up for all of 2025. The beginning of this year, it's felt like the run-up has been much more on the Claude code side of things, co-work side of things, the hygienic narrative. That's like two rabbits out of the hat. Is there a third? Is there a third rabbit [laughter] in the hat? I think it's part of the question. And also, a story this week that is breaking as we talked about, you mentioned it, Leo Ash Brenner. He's been called the AI wunderkind because he has created a hedge fund and front run all of the AI supply opportunities over the past 3

years. Saw it coming before anybody and run his fund up to like 20 billion dollars from like under a billion, right? >> and allocated correctly. >> Yes. Um, but there's word now that he is being forced, has been forced to sell all his stock positions. I think the story is still developing. This is a headline CNBC. This is also reported in the Financial Times. AI investor Leopold Aschenbrenner forced to unwind all public stock positions after steep losses. We know he likes a little bit of margin. So, he does short some assets. He does long some assets as well.

And now there's word of other investors stepping in to buy some of his damaged assets. What's the latest on this at the time of recording? >> Well, we I think we're still waiting for precise numbers. There are people speculating that he was on some margin. There were some other people saying that he was 4X leveraged. And that that's from Ahmet Investing. >> Some of those Korean leveraged ETFs, huh? >> Yeah, exactly exactly. And like Leopold, how old is Leopold? >> He's 24. He's in his early 20s. >> It's a it's an appropriate age to get >> [laughter] >> over leveraged.

>> You got to learn. You got to take your lumps. >> remember being over leveraged at 24, dude. Like [laughter] That's the That's the thing to do in your 20s. The The big news coming out of this is that Citadel, Ken Griffin, bought the public book. And >> Wow. >> And so that that's a big deal. The So, classic story of this guy I think flying a little bit too close to the sun was he got over >> He got all the calls right, but then he got all the calls right. >> Dialed into the margin a little too much, it seems like. >> Yeah, I mean it's also very Three Arrows Capital-y in that you got a lot of things right early and then that and then what did you do? You got super confident and then you just hit the leverage button at the top and honestly

kind of created the top. I think this is one of the reasons why like if you go to the indices and if you go and look at the memory stocks right now this morning today Thursday, July 30th, they're very very green because he had such a big book that he was the forced seller that marketed that called the bottom. The fact that Citadel, Ken Griffin, bought the book >> It's bullish. >> It's It's a drawing a bunch of speculation. >> Yeah. >> A little bit of conspiracy theory that Citadel called for and Ken Griffin called for a surprise rate hike earlier this year or earlier this week and then basically tried to spook the market into doing exactly this so that they could

intentionally intentionally buy Leopold's book. So now Ken Griffin and Citadel are exposed to a lot of the same stocks that Leopold had but at way more favorable prices because of like the conspiracy of Ken Griffin like working the market which like Ken Griffin and Citadel they're sharks. That's kind of like what they do. If that's real we don't really know but like it's kind of fun to like speculate about. >> And we don't really know. We also don't know how big the damage was. I mean you compare this to 3 hours capital who you know went completely defunct. I mean >> exactly went negative yeah.

>> have to mean that at all. This could be more of a flesh wound that Leo Leo Leo can just recover from this. I mean this is part of the risk reward that his LPs his investors have signed up for right? Is just like if you're going to accept incredible gains sometimes it's going to counter trade. So I wouldn't count him out yeah. >> and now they're only up 400%. Sorry guys. >> But this has been part of the story. So the S&P is down about 3 and 1/2% over the last 15 days or so. June has been July I should say has been quite the month. Nasdaq is down 10% from from its highs and crypto though on the week and on the month

holding steady? What's our crypto prices on the week? >> So even in the middle of the of this bloodbath Bitcoin held flat this week. ETH is up this week. On the month the numbers are even better. Bitcoin in 30 days up 11%. ETH in 30 days up 22%. So if you were invested in AI you are licking your wounds right now. If you were invested in crypto blue chips you're doing great. You're happy. >> When has that ever happened since the inception of like chat GPT in 2023? >> Not that I can remember. I can barely remember those days.

>> Yeah, if July of 2026 was a victory for crypto and a loss for the AI trade. >> Well, keep wanting to to use the word bottom on the week. Has crypto bottomed? I don't know that if we have enough data to make that call. We've talked about it a lot, but let's talk in particular about the Ethereum ecosystem. So, you put a chart in here, which is the the UNI token. This is a DeFi Ethereum protocol catching a bid lately. It is up 36% 37% on three months.

>> Up the highest that it's been in like a year. >> Really? Okay. >> Like year yearly highs. Something in a in a very long time. And like UNI UNI's relationship with Ethereum and ETH specifically, I would say is very very >> correlated. >> correlated, yeah. Because like Uniswap is the exchange of Ethereum. Maybe this is because of activity on the Robinhood chain, but I don't know. I think it's kind of all one basket of correlation. And so like when ETH price does well, I associate that with health of the Ethereum economy. >> When you see when UNI token does well, you mean? Or when ETH price >> Excuse me, yes. When you when yes, when UNI price does well, I associate that with Ethereum economy health. And you can also kind of see that in the ETH ETH dollar price. What What did I just say?

ETH was up 2x versus Bitcoin >> Yeah. >> in this month. Bitcoin was up 11% versus dollars and ETH was up 2x versus Bitcoin. And there are some charters. And I've been looking at this as well. The ETH BTC ratio has been on a four-year downtrend. A four-year of terrible vibes. Look at this chart. This is a whole This is a terrible chart. This is the world's most depressing chart. There's so many bad vibes contained in this chart. But if you zoom in, you can see it. You can see it as a breaking of the trend line. >> ETH BTC is poking through this like four-year downtrend. And so, it's just kind of significant to There's just this four years of bullying, of battering for any ETH holders, which I felt you are

[laughter] still still feeling, Ryan. At some point, I was like, I just don't want to feel this anymore. Uh but like, you're it's poking out. It's poking out. And so, then then the next question is like, okay, if it's going to stop going down versus Bitcoin, the next question is like, where does it go to next? >> Yeah. >> And I think you can you can see it like sentiment shift in the ETH like traders otherwise and different traders are piling into ETH. You can kind of see it on the um You can just see that see that on in the block explorers and just like I knew that I could catch this, but just like the sentiment around ETH is kind of positive right now.

>> That that poke on the ratio is kind of small for me. I would like to see that poke get a lot larger. >> It's very early. >> But what are your feelings? Like, you know, some people have said, "Hey, David sentiment was the bottom." And the reason is because you you're you're kind of like an ETH bull, have been for a very long time. So, if David is selling, well, that is the last capitulation of seller exhaustion before this whole thing reverses. And maybe we're starting to see a bit of that reversal. May- maybe David starts to look at ETH again.

He's like, "Ah, I remember. I remember the love, the excitement that uh kindled in me when I I bought my first ETH." Um is it is that anything like that sparking in you? Are you still waiting for this to become a bit more durable? >> Um I definitely see that. People are people are like poking me. It's like, "Haha, David sold the bottom. David sold the bottom." I'd like to remind people that I sold at 2300. >> Yeah. >> [laughter] >> Hold on. Hold on. I got it. But but like I directionally I understand what they're saying. It's like in the grand scheme of things, it will look and feel like a bottom sell.

Um Fundamentally, the economics of ETH and the fundamentals of Ethereum, I don't feel are answered or solved. I would also hold plenty of space for the fact that like ETH can go up regardless of just that. It doesn't matter, actually. Like the fundamentals of ETH can continue to be unresolved or unsatisfied to my concerns about value capture in ETH, and ETH can go up anyways despite that. And that's kind of like what I am thinking about when I am looking at the breakout of the ETH/BTC ratio is like may maybe I'm like technically correct on like the value capture, but like incorrect on the the actual price trajectory. That is totally

possible. >> Yeah, and I think a good summary of the month was this chart from Ansem, actually, which we're looking at some crypto assets. We're comparing that to the memory stocks, Micron and and SanDisk. The SanDisk down 50% for the month of July, whereas ETH up 20% as we said, Bitcoin at 10% pump fun up 32%. So, crypto assets outperforming for the month of July. Let's lock it in. >> On chain on chain took a big dub this month, especially towards the end of the month.

>> We got more to discuss, actually. I want to get into the best article I read this week. It was from Michael Howell, outside the industry, talking about cryptocurrency. Also, we got to talk about Kevin Warsh and the FOMC meeting. This is the first time he's done one of these. What did he say about rates? What about inflation? What does this portend for the future of the crypto industry, David? A big subject to cover. We'll talk about all that and more, but before we do, we got to get to the sponsors that made this possible. >> I've been trading crypto assets for almost a decade, and I've used so many wallets, exchanges, [music] aggregators, front ends, and I'm kind of always looking for the same thing. One interface with deep liquidity across a bunch of chains and assets, [music] and the ability to act in private, and I

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smarter. Start trading today through the link in the show notes. This is not investment advice. This is the new chair of the Fed, Kevin Warsh. He's talking about his first family fight in the context of the FOMC meeting. >> So, you're right. I asked for a good family fight, and I got one. That's the purpose. That's the design feature. I come into the this meeting, even this press conference, heartened by what I've experienced the last 2 days. >> There you go. He is heartened by what he experienced the last 2 days, the FOMC meeting, the first family fight. What's he talking about a family fight? Is a FOMC committee, are they just like one big family and they just, you know, fight at the dinner table?

>> A family of 12 white dudes behind closed [laughter] doors. >> So hard working. >> Uh you so it was a it was a split 9-3 vote. So nine voted to hold, three voted to uh raise, I think. Yes, raise. Yeah. Uh so ended up holding rate steady at 3.5% to 3.75%. >> I think the big question going to this meeting was like, you know, there's a 33% or so odds that actually the the Fed would raise um because of inflation, basically. So not the majority of the market, but a substantial portion, minority of the market, like thought that this was the case. So what what is Warsh's perspective on inflation? So if he's not raising rates,

then does he think inflation is defeated? Here's a direct quote. "Let me reiterate," he said, "there is no soft inflation target. There is no soft implicit target, not on this committee's watch. There's only a target, and it's 2%." The inflation target for this Fed chair, David, is 2%, which is kind of curious cuz we're at like what? 3.6%? We're in the we're in the high 3s, maybe heading towards 4%. A follow-up question asked him, "Well, what about the rates? Like could you see adjusting those upwards to fight inflation?" He said this, "If inflation continues to be elevated through the forecast period, interest rates could well be part of the solution." So he's keeping interest rate hikes

uh on the table in order to fight inflation into the future. Indeed, like I I talked to you um uh Michael Nato on the week, the TDR. He still thinks there's two rate hikes that could be in store for this year because of the inflation issue. He doesn't think it's going away. There's another meeting in September, there's another in December. He would place the odds as as pretty high that both of those have rate hikes. So it's not over yet, but the first meeting uh uh Walsh and the committee decided to keep rates as they were, which is just kind of Does it feel like he's talking about in through both sides of his mouth? Like, inflation's a problem, we're going to get it back to 2%, it's overly high right now, and yet he's not increasing the Fed funds rate

to manage that, right? Like, what's going on here? >> So, so reading through the Fed tea leaves, this is my interpretation is an interpretation that I that I found that I really, really liked is that the Fed is going to manage inflation through balance sheet reduction rather than through rate hikes. And both of these two things change the yield curve. Uh rate hikes impact the real yield curve on the short term. That's like what the market needs to pay for for borrowing right now. And then balance sheet reduction is more towards the long-term structural end of the yield curve through like actual monetary destruction, like calling back money back into uh back into the Fed. And so,

instead of just increasing rates, what they're going to do is they're just going to allow bonds to expire and not buy any new ones. And instead, who are who are going to who's going to have to buy the new ones? The private market. The private market is going to have to buy the bonds rather than, you know, slapping down the money printer and doing it inside of the Fed who's in price insensitive, we're allowing the private market to buy the auctions. And the private market is way more price sensitive, and they are demanding more returns on their yields than the Federal Reserve is. And at the same time that FOMC happened this week, we are seeing 10-year yields threatening to break through to into new highs. It's at 4.7%.

That is the highest it has been in a long time, and the 30-year Treasury yield is at 5.2%. So, and that is the highest yield on the 30 year Ryan in nearly 19 years the highest since 2008 and so this is a contraction of the money supply because instead of the Fed buying the Treasury's bonds the private market is buying the Treasury's bonds and instead of the private market taking that capital and pushing it down the risk spectrum because the Fed is buying all the safe stuff the private market has to buy all the safe safe stuff since so that is pulling money out of the system instead of the Fed kind of just like doing

buying buying bonds and so that is effectively quantitative tightening and so the answer to your question is how are we managing inflation if we're not hiking rates it's QT we're doing QT >> I think that's a good theory reading between the lines of like what he's saying what he's doing however there is a problem there which is these rates I mean 30 year Treasury just hit the highest in 19 years as you said how high can it go before something in the economy actually breaks I think that's a big question we've got like federal deficit spending right now there's you know Trump has requested 44% in increased military budget that all goes into kind of the debt and the US government's debt repayment increases

every time the 10 year and 30 year goes up and so how high can it go up before something breaks and he's actually going to have to reverse some of these decisions that I guess the the good thing about this though is he's letting the market kind of push him into a solution and they're kind of leading the way and then maybe he's just going to follow it but at the end of the day this this has to result in some level of monetary inflation and debasement you know however he wants to run things I think he's going to be a forced by the market into that type of a position it just might take some time. So, but yeah, like I got to say on on reflection, like

hearing Warsh speak is very different than Powell in tone, in uh like timbre, in the way he communicates things. So, there's still a lot that we just like don't know about how he intends to run things. And I'll give you another explanation for where he might be thinking about uh inflation, which is he's talked before earlier this year a lot about the deflationary power of AI. He actually might be a believer in that, David, which is like AI productivity boom, the next industrial revolution. That could be secular deflation into the US economy. And maybe he's trying to cash some of those checks, too, and hope that that begins

to happen. So, it could be that he's basing at least some of this policy on the AI trade, as well. I don't like that at all. I don't like that [laughter] one bit. >> Because because as the Fed governor, aren't you supposed to wait for just hard data to come in? And what hard data do we have about AI? >> We don't. And very, very little. Look, that's some speculation on my part. Maybe that's just kind of a hopeful thing he's got in his back pocket. Maybe the main way he intends to impact inflation is through quantitative tightening, as as you say, but you know, I don't know. It's a Look, this role is balancing a lot of different like factors and um yeah, you got to thread thread the needle here very carefully.

>> For for some reason, this watching this FOMC and kind of just seeing the rhetoric come out of the Fed. And like now we we kind of started are starting to have a decent amount of data about the Fed. I am kind of reminded of the structural change of the Fed's stance that happened in 2022, where we went from ZIRP to very high interest rates very, very quickly. and what happened in 2022 was there was just a complete sea change investors were not positioned for it the interest rates went way higher way faster than anyone kind of expected and there was and we all kind of learned investors in that moment kind of learned what really you know interest rates are because they had been surging for so

long. I'm not saying that that's happening but it does feel like there is a structural change at the Fed yeah. >> And Warsh is just looking inflation staring it down and being like I'm going to eliminate you and I don't care what breaks and as a as a there's some parts of this I'm not a Fed governor I will never be a Fed governor. >> No. >> But like some [laughter] parts some parts of this I do appreciate Warsh is like allowing the market to come to real rates the market is determining rates that's feels normal I don't like conceptually we don't like top-down determined rates because the only thing that can determine what the fair rate of interest is is the market and it seems like Warsh

is doing that and in some sense that's good. As a risk investor who's exposed to tech and crypto assets I'm scared. Because because he's he's like oh yeah I don't care something is going to break and that's like I'm we're good with that and we're doing the hard thing of having responsible monetary policy which means austerity which means like lower capital into the stock market it's just all of the hard stuff we're doing the hard money thing and I tech and risk is is not into that. >> I don't know that he's going to be a hard money like I I think that that could be possible you're saying another explanation for all of this is he's just like he's talking BS a little bit right it's like he's not he says 2% but it's

actually never going to be 2% right like we just don't know enough in order to understand you know what his signals actually means to the market I will give some hope to you for crypto assets. And this comes from a fantastic article I read from Michael Howell. You know Michael, he is the global liquidity index guy, all right? And he put What What I appreciate about Howell is he's outside of crypto. All right? So, he's coming at crypto from a completely different vantage point. It's It's sobriety. It's from the perspective of macro and looking at crypto as an asset class and saying, "What does this do for me?" And he's very um he's >> kind of the author of the global

liquidity index, so he studies global liquidity, has done so for like many, many decades. And here's the bottom line take from his article this week. Uh again, it's probably the best thing I read. Um a 1% move up in global liquidity, that's how he measures monetary inflation and debasement, is global liquidity. A 1% move up yields an 11% up move in crypto. Okay? So, that's historically That's like 15 years. He goes through a basket of mainly Bitcoin, but then Ether and Solana and some other assets, and he measures this correlation. 1% up in global liquidity equals 11%. So, crypto

is a fantastic hedge against monetary inflation, monetary debasement. So, if you believe monetary inflation is destiny, maybe not now, but like in the long arc, right? Because right now global liquidity has actually been on a downtrend. This is what Michael Howell is is reporting. But if you believe there's more monetary debasement ahead, then crypto is an asset class that should appreciate 11% for every 1% in global liquidity that we get. And by the way, I should say this.

That is 4x the performance of gold. Okay? So, as a monetary debasement trade, it's about 4x. And he goes through the charts, he correlates to this about 30% of all crypto move either up or down is related to global liquidity. So this whole story here, the whole thing, like all of the you know, the the weekly coverage we do and all of the stuff on crypto Twitter, the whole thing is sort of it's just the simple message of if monetary debasement then crypto appreciates in value. And the reason it's gone down is global liquidity is down right now as part of the cycle and it will return when global

liquidity enters the up cycle once again. >> Isn't what's happening right now with yields going up 30 year 10 year yields going up and the Fed is like yeah, that's we want the market to tell us that we're cool with that. We're you know, contracting the monetary supply. All right, if you're saying that like you are bullish because of global liquidity, doesn't that mean that worse and the Fed has to do whatever they're doing right now and then they have to capitulate and then there will be more monetary expansion because because we're like priming, we're loading up the engine, we're putting fuel you know, in the gas tank and that's actually hard, that's bad for risk, bad for tech while

that's happening. But then something breaks and then it all all hell breaks like breaks loose. Is that what you're saying? >> That's definitely a way this whole scenario could play out. It's not the only way this scenario could play out, but that is definitely definitely a way this scenario could play out. And that's kind of the scenario and base case that Michael NATO went through this week. That's basically how he thinks it's going to happen. It doesn't have to, but the only destiny is just like do you think there's going to be more debasement in the future? Of you know, like fiat or not.

>> It's a it's a certainty. Yeah. It's just not it's just a matter of not getting rattled out of the market between now and then. Granted, if you're a believer in 4-year cycles, you have a whole like quarter and a month or two ahead before the theoretical bottom. Yeah, so like I think Ben Cowen is like is October. Bottom in Bottom in October. So, maybe maybe Wash just like beats us around trying to get down to 2% and then like capitulates in October. >> Yeah, we'll have to see how this all plays out. Um David, let's talk about Clarity. So, that is I think the Clarity Act seems like it's stalled on the week, right? So, they were going to have a vote in the Senate uh cloture vote? Is that what this is called? Where they

kind of vote on whether they bring it to the house? Um cloture vote, excuse me. It's a cloture vote on the Clarity Act. The potential for this to happen this week has faded. Polymarket of whether this gets signed into law, the Clarity Act on the week down to 26%. Last week we had some hope, it was up to 40%. Now it's down to 26%. This prompted some of this, I think, prompted SEC Chair Paul Atkins to come out and basically say, "Well, if Congress doesn't do it, I could do it. I could do some of this through regulation." Let me play a clip.

>> We are ready, willing, and able to come out with uh rules um you know, that that address the same issues uh in clarity and and other aspects of the crypto market. Ultimately, we need the certainty of a statute. >> I suppose what he's saying is that anything and everything under the SEC's purview that's in clarity, we can just do manually. And the point of clarity is to like lock it into law, but we can still do it. And then but it's just like under threat of like Democrat un un winding if if if if they ever choose to, which they might not or they might.

>> Yeah. Yeah, I I It doesn't feel great. It's not great, but it's it's a nice consolation prize, I guess. >> yes, it is a consolation prize. It is something. It is something. All right, coming up next, Ethereum turns 11 and we have a new individual joining the board of the Ethereum Foundation. That is something different than the executive director position. That is a position that elects the executive director. It's actually a pretty pretty big development in terms of a Ethereum governance. And then also, Ryan, I want to tell you about shenanigans. I would like to raise a slight alarm bell about shenanigans happening in New York City and I want to get your reaction to what's going on in in my neck of the woods.

So, we're going to get to all of that and more, but first we're going to talk to some of these fantastic sponsors that make the show possible. >> Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nadeau. He runs the DeFi Report. This is the guy that sent me a sell alert before the 10 10 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording [music] weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, [music] they're short, they're punchy. I think

this crypto cycle is harder to navigate than most, so let's do it together. Go subscribe to this podcast. Search The DeFi Report wherever you get your podcast YouTube Apple Spotify or find a link in the show notes. There's a new episode waiting for you now. >> Hey Bankless Nation, it's David. >> If you're hearing this, you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor both at Bankless Ventures and also just in my own personal portfolio, too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll

get about 20 hours of your life back every year because you choose to support Bankless directly. So, if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium. And there is a link in the show notes to get started. Cheers to a good 2026. We're recording on July 30th. It's the 11th birthday of Ethereum. This is a tweet. It's hard to believe it's already been 11 years. On July 30th, 2015, we launched Ethereum from a small scrappy office in Berlin. So much has changed since then. Ethereum is the world computer. This is the original crew that launched the Ethereum chain. We are 11 years into this experiment. Gone from a

price of what for ETH? >> Like 33 cents or so? >> Yeah, zero. >> 33 cents, yeah, to to where it is now is just shy of $2,000. >> Yeah. And so, it's been a a rough 5 years for ETH, but it's been a pretty good 11 years if you if you zoom out for ETH. >> 11 years, yeah. >> Also, some uh you mentioned it, but a new EF board member was elected, and this was someone new. Uh the name is uh Pasquale Cav uh Caverzaschio, I believe. Is this it?

>> This is a pseudo-anonymous name. So, >> Very on brand. >> if I get the pronunciation wrong, it's probably no big deal because this is a a pseudonym. This is not a uh a real name. Privacy and security maximalist, he is called. That is from the Ethereum Foundation. This is Aya Miyaguchi, who's also a member of the board. What he brings isn't just security and privacy expertise. He's a living example of what 100% crops alignment looks like in practice. Crops, of course, censorship resistance, open source, privacy, and security. So, notably, Pasquale is part of Seal 911. That is uh crypto's emergency security hotline if you get hacked, something really bad happens.

This is the group that comes and helps you and saves you. Uh they are doing fantastic work. So, what's your take on this? This is This would be, I guess, um the third person on the board? So, it's Vitalik? >> person Yeah, it's Aya Vitalik, this individual, and then there's a a Swedish lawyer, uh Patrick Storm Biggar, but like I I think he that's more just like admin and bureaucracy stuff. The The significance is that it's the first new person in addition to Aya and Vitalik. And so, like th- this person has an equivalent amount of governance over the Ethereum Foundation as Vitalik.

>> On paper. On Yeah, on paper. >> As like Aya and Vitalik. Vi- Vitalik Vitalik, I think, was occupying two board seats, and I think maybe this is now one of them. And so, he's giving up one of his two board seats to this individual. >> Yeah. >> So, it just in terms of just like EF lore, like it's kind of a big deal. >> You think this is uh Vitalik's alt account? >> See you in a Pascal. He's uh >> [laughter] >> Probably not. >> Sybil attacking at the EF governance? No. >> But I do think this is another like-minded individual, for sure. Um so, we'll we'll see if that manifests in any big decisions.

>> Can I tell you this is not on the agenda? Can I tell you a fun fact, Ryan? >> Yeah. >> Uh does the name John Perry Barlow ring any bells to you? >> No. It's a great name, though. It sounds like a like a founding father or something. Who's Who's this? >> Uh okay. Who or who or what is my favorite band ever? >> Oh, the um the Sheep Dogs, right? >> Oh, yeah, actually that's a pretty good close. I was looking for the Grateful Dead. >> Yeah, okay. >> the Grateful the Grateful Dead would be my second pick. J- John Perry Perry Barlow is a lyricist for the Grateful Dead.

>> Okay. >> He also wrote the Declaration of Independence for Cyberspace. >> What? >> Yeah. Yeah, you know that document? >> Yeah, the Grateful a Grateful Dead band member wrote that? >> The the lyricist. He didn't play He didn't play any of the music, but he wrote the lyrics for a lot of Grateful Dead songs. And he wrote I didn't know this until this week. And I'm a huge fan of the Grateful Dead, and I'm also a huge fan of the Declaration of the Independence of Cyberspace, and it's the same guy. >> Was that and they published that in the early '90s or was that the '80s or something? When did that come out?

>> That was '96. >> Okay. Yeah. So, true like Cypherpunk lore. >> Yeah. And it's the Grateful Dead like lyricist. I thought that was crazy. >> Yeah, it is crazy. Tell me about Robinhood earnings. [laughter] >> Robinhood earnings. Okay, so Robinhood reported quarterly earnings, and so I pulled out some of the what I thought was useful. Revenue $1.3 billion in revenue up 32% year-over-year, which was a slight beat. Event contracts is $156 million of that.

>> That's been a good one. >> That has been a very good one. Yeah, I think now I think we have four quarters of event contract data. So, it's up 10x year-over-year, but like at the quarter one it was like starting at zero. Crypto revenue $100 million of crypto revenue down 38% year-over-year, and that is the third straight quarter of decline. And so, crypto is down to just 7.6% of total revenue for Robinhood. >> Yeah, that's from 16% a year ago. But I mean, that's the story of a bear market. In a bear market, exchanges make less money, right? One would expect that.

Lower volumes, lower lower fees, lower revenue. >> Yeah, you're right. You're right. Still, it's not exciting to see. Robinhood revenue chain, however, I don't think that made it into this quarterly earnings report cuz it's just 1 month old, but yeah, made $3.1 million of chain fees for Robinhood in the in the last 1 month. >> That's really good. >> Not bad. >> So, you scale that out and we're at like, you know, 25, 30 million or so, and that starts to, you know, move some of that revenue on chain rather than on the exchange.

>> Yeah. Yeah, so still early days on in the Robinhood chain, but there's still a ton of activity going on there. >> I did see the big question is whether tokenized assets will actually take off on Robinhood and I did did see the DEX volume at least on the week for tokenized real-world assets surpass Solana. So, maybe that is a sign of things [clears throat] to come. It would make sense for Robinhood chain to have the world's largest volume for real-world assets considering that's Robinhood's bread and butter. We'll see if they can build on that momentum. Are you about to throw some cold water on that idea though?

>> No, no, no, no. Do you Do you want to know what's going on at the frontier of innovation of both meme coins and tokenized stocks? >> Oh, do I ever? >> Okay, so in in an AMM, Ryan, and you want to buy a meme coin, what is that meme coin typically paired with? >> Um well, it depends on the chain, doesn't it? I mean, USDC, um I guess ETH in some cases. >> Usually ETH, right? So, it's always paired with something. The pinnacle of innovation in meme coins is that you can pair a meme coin with a stock.

A stock token. [laughter] And so, people are trading like meme coins, but like the base pair is like Nvidia or or like I don't know, some some stock token. >> That's new. We haven't been able to do [laughter] that in in TradFi. You can't do that in TradFi. >> But I think that's actually one of the reasons why Robinhood chain stock volume is up so big is cuz meme coin traders are using them as like base pair. So, you can have a under underlying exposure to stocks while your meme coin runs up or down.

>> Well, I guess there's a hopeful view on that is that's just how we bootstrap things right? >> [laughter] >> I mean, there's a more cynical view, too. We don't have to get into that. Steven, I saw this on the week and you titled this under what is happening in New York City? This is Hayden Adams saying this is the worst mass doxing I've ever seen just personally search several high-end apartment buildings that include people I personally know their primary Reverend residence. Not only were their units listed, but nearly every unit in the entire building was listed f absolutely everyone involved in this.

This is incredibly dangerous. That is Hayden Adams founder of uniswap talking about something that just hit New York, which is they published the names and addresses in a searchable public database of all properties people with properties over a million dollars or more. I think a the average or something like property in New York City is like 800,000. So it's a lot of people, right? It's like >> Yeah, it's like it's it's your the majority not the majority, but just like a fat chunk of people. Yeah. >> This is almost a million properties in ownership reference publicly doxed. And so that's why Hayden is calling this the worst mass doxing I've ever seen. Of course, this touches on something in

crypto, right? Which is like we believe in privacy and there have been wrench attacks in our industry and they they have happened in some ways in countries that have publicly listed asset ownership and public address information. It's just like not a good thing to see this trend to see the the New York State sorry, New York City publish this type of material cuz it can lead to people getting hurt. >> Yeah. Yeah, we if you tell me like there was a mass doxing that happened like my first reaction is like oh some tech company got hacked and they had their data stolen from them. This is the city of New York voluntarily just publishing

people's at names and addresses of above a certain wealth amount for people that have a second home in New York. They're [clears throat] just publishing it. And that's just [ __ ] wild, dude. >> [laughter] >> It's a bad idea. It's crazy that we're doing that. Like, don't do that. >> Yeah, their stated reason was state law. So, there's a statute on the books, apparently, creating a surcharge requiring the DOF to publish property role for public inspection, so owners can check the status. So, they said they were just following state law here. I mean, if they were if they weren't, this is a bad state law. Let's just say that.

>> either way. Yeah. Yeah. And then like on top of that, did you see the the five incoming New York City-run grocery stores that are going to like charge 30% under retail prices on like essential like food? >> I did. Yes. >> The fact that this gets under your skin, David. This gets under my skin. The fact that this is happening all at once. We have state city-run grocery stores intentionally undercutting the like private market prices. And then also we're doxing rich people in New York. It's just like it's all happening at once. And I think that that we should just note that it's sus.

>> [laughter] >> David is not enjoyer of the things going on in New York. >> going on in New York. >> there though? Or are you going to flee? You going to stay here? >> Uh people, uh not me, are indeed actually fleeing. Uh there are people going to Miami either for like tax reasons or uh oppression reasons. Um I'm have no intention on leaving, but I mean I I rent, so I can I can get up I can get up and go whenever I want. >> Yeah, I've always been following that. Kind of like the the right to exit. Like the exemplar of the right to exit for me is like Balaji Srinivasan, who I don't know if you saw his post this week, but um he there was a I don't know, some kerfuffle, a journalist uh hit piece about him, and he responded to this. But

anyway, he's now a Singaporean citizen. Do you know that? So, right to exit. He exited his US citizenship and is now >> abandoned his US citizenship? >> Yes. Uh which of course he paid a big step. >> so much in taxes to do that? >> Well, for context on that, for someone like Balaji, right? It's um when you exit the US, not only do they publish your name to a list, by the way, uh Senate-maintained list, uh and there's about like 4,000 5,000 people that do this every year, but they also It's not quite an exit tax, but you may as well call it that, which is they take the um uh the the realized uh value at the current price of all your unrealized assets and then do the capital gains tax

on that. So, it's like 25% for someone like Balaji who's got like angel investments, VC type stuff, you have to market value all of that and then pay taxes things we don't have cash. Like it's not insignificant. >> Yeah, it's very painful. Yeah, it's a very I mean it it's very on brand for Balaji to do this. >> [laughter] >> Yes. >> But it's in terms of just like the level of bureaucratic and financial like pain and cost, that's like huge. >> Yeah. So, I mean a a different way is you just like kind of move around in in the country that you have and in the US of course there's all sorts of what 50 different experiments happening at any one time [clears throat] including all the cities in those experiments. So, you got a lot of options, David, if you uh

if you don't like the grocery stores, but I think you should go shopping one first before you make a judgment. >> I I just don't want to I just don't want to stand in line for >> Buy them, tokenize them, and then arb arb opportunity, [laughter] my friend. That's what you can do. >> All right, Ben and David, that is it for this week. Fifth week of July, one of the few months that have five weeks in them. We'll be back and it's going to be the first week of August next week. Uh crypto is risky, but that's why we're here. The institutions have landed, so we are leaving and going even more west. This is a frontier. It's not for everyone, but we are glad you're with us on the Bankless journey. Thanks a lot.