Animal Spirits in Crypto and Equities Roar Back - Bits + Bips

Transcript

[Music] we haven't seen this short interest in the last 5 years we're at the 98th percent 99th percentile of short interest everyone hedged and then kept hedging and then right when they're not supposed to hedge they just hedged some more and what you saw in markets today uh at Monday morning strong gap up openings mstr gap up and running i have a basket I called Twitter momentum stocks they're all up strongly so the headline is animal spirits are back and crypto and Bitcoin are part of animal spirits hi everyone welcome to Bits and Bibs exploring how crypto and macro collide one basis point at a time i'm your host Noel

Aerson and keeper of the crypto is macronow newsletter here with Alex Krueger Krueger macro of House Asgard protector of the realm and Ram Alawalia Meister of wealth leader of Lumida hi guys how's it going hi everyone today we are joined by Felix Joven the golden voice of the Forward Guidance podcast hi Felix thanks so much for joining us today hey everybody super excited to be here um I'm a big fan of this show and so it's it's it felt wildly overdue to be on the show and be with you guys so yeah super excited to dig in we're so glad you're here and I'm sure that many of our listeners are also fans of your show and if not they should definitely check it out

now we're here to discuss the latest stories in the worlds of crypto and macro just remember that nothing we say here is investment advice dude please check unchainedcrypto.com bit/bitsands andbits for more disclosures crypto moves fast it's why Bitwise launched the weekly CIO memo a jargon-free summary of what's moving crypto markets written by one of the best in the business CIO Matt Hogan get up to speed in 5 minutes or less check it out at bitwiseinvestments.com/ciio memo carefully consider the extreme risks associated with crypto before investing now with that um let's dive in there's so much to get through and things are

changing at breakneck speed we have to open with the macro story of the week and we're recording this on Monday so things are in flux but the word of the week is tariffs now Trump has been referring to April 2nd as liberation day the day the US gets to apply reciprocal tariffs to any nation who has dared to apply tariffs on US goods now there has been little detail the forthcoming on what that means the idea of matching tariff for tariff around the world sounds like an administrative nightmare but the uncertainty and the potential magnitude of the move has been enough to get investors nervous trump has also said April the 2nd was the day sectoral

tariffs on automobiles pharmaceuticals and semiconductors and probably some other sectors would also kick in adding further confusion of nobody knows would these be added on to the reciprocal tariffs or would they be incorporated no one seems to have had an answer however to add to the confusion yesterday reports emerged that Trump is changing his mind again and that sectoral tariffs will come later the day he repeated that a couple of times he said that automobile tariffs would be coming and he said very shortly his words and that new pharmaceutical tariffs would be coming at some point in the not tooistant future again his words and said we're recording this on Monday

wednesday might by the when by the time this comes out might be a totally different story but the markets are liking the relief which shows just how worried the market was because reciprocal alone is sounds pretty bad now stocks are up crypto is up but this seems like the confusion has ratcheted up and confusion is never good for markets who wants to jump in on this first we'll see this Bloomberg article that went around Twitter thi this is this is what really stoked markets today right says uh the wave of tariffs is poised to be more targeted than the barrage he has occasionally threatened i love the use of the word barrage that that Bloomberg writer put in there

interesting word choice like probably not a big fan of tariffs but this is it this is what this is what lifted markets right tariffs uh started the correction from elevated vulnerable conditions and then tariffs also are ending the correction yeah do you think this is the tariffs the the pivot in the mood that is ending the correction or might there be something else at work here felix what's your take yeah so the way I think about tariffs is in two ways so one one angle or one side of the blade of this whole tariff thing is that they want to lower tax rates they want to lower spending and one of the ways that they want to

bridge that gap is to bring forth tariff revenue which is you know a form of a tax really it's just you know taxing a different base really but you know for them to go about doing their fiscal goals without blowing out the deficit some version or another of increased tariff revenue has to fill that gap unless they want to run wider deficits etc so there's that side of things which is you know more so what I feel like Scott Basson talks about in in many interviews where you know there's this idea of this replacement then on the other side of things there's this discussion of tariffs as used as a negotiation tactic for two major goals to you know onnet you know we've seen a a major shift towards you know

reciprocal tariffs as opposed to just outright you know tin for tat so with that idea in mind perhaps there's this goal to use it as a negotiation tactic to get to a point where there's actually less onnet tariffs than when we started this whole mess but the issue with that is that if we end up with actually less tariffs let alone more tariffs that goes against this premise that I first mentioned which is filling that that gap for fiscal revenues so it's really difficult to square those two things and I think you know putting those two things at the end of like just the distribution of outcomes is why I think volatility remains so high right now markets alex do your thoughts on that i mean I I agree with that with what Felix is saying that's what how to put it

that's the way the Trump admin looks at things right now in in the meantime um these measures and especially the way they have been communicated which has been like insanely all over the place with a very constant back and forth across items and across countries uh this brought as we all know volatility to some absurd levels that we see rarely on market crashes with big SLA hitting 30 briefly uh which is a lot right um um something interesting I think that we we were seeing is that on the uh we have two crowds we have the trading crowd the markets guys you know the traders sales guys the guys sitting on the trading

floor um what we call the front office and we have the research guys economists and the fundamentalists and the guys who focus on valuations for example uh and there there is some sort of disconnect there um um the the the the the view on the economy um derived from what Trump and his administration have been pushing is extremely negative and everybody has already put uh their uh their uh estimates on earnest growth and the economy sharply lower yeah I just put up on the screen a chart that I saw in Bloomberg the other day about the number of times tariffs is being mentioned in earnings calls and

investor presentations and we've got Q1 earnings reports coming up soon so we're bound to hear it even more yeah so the um the my point there is that uh economists are extremely pessimist uh however this is already the way I think about it is this is already in the price um everybody has already lowered their their forecast on the economy from like 2.8% um uh for uh this year to somewhere between 2.2 to 1.8% this is already in the price so I think traders who are actually looking for bad hard data to drive the market they're going to be surprised because what really moves the market is not really the data being

lower it's basically how the data comes in versus the forecast and the forecast already been dramatically lower sorry for being repetitive uh something very interesting that I'm not sure many people caught is that the forecasts from the Fed that the Fed uh published on its last FOMC last Wednesday that they're very bad they include worst case scenario our explicitly said that the forecast that the Fed published they are basically they include max retaliation from their trading partners so that's a silver lining that basically it takes very little for

things to turn around like we just saw uh in the last uh 24 hours we had a good headline on on noon on Friday from Trump then we had uh those comments from uh u white hat advisor the Hasset uh there was a um I think it's the same W Bloomberg article you're talking about um yeah that's the one it came out on uh came out on on uh uh on Sunday uh around noon as well and uh and that's what's driving the market um exactly what's going to happen on tires uh we don't really know i don't know on trying to figure out and trying to see what's priced in uh what I do know is that the the the street is literally all over the

place with some people calling for like doomsday uh and some people not um and uh very aggressive tariffs are priced teen like let's put it this way is is uh and with this I pass it on i don't want to talk too long it's it's like the the base case scenario um it's basically tariffs going up to to basically 10 10% uh on imports um on on the second on April 2nd uh that would be very aggressive that's in the price supposedly that's that's what I'm gathering right now is like to be more precise i I I'm not there yet um yeah nodding my head and kind of fully agree with all the comments here look at GM gm is up 3% today hasn't been this high

since January 28th which is before the tariff talk so tariffs are priced in i agree and on the economic data the soft data has been weak the hard data has been strong the soft data are the the surveys but the hard data non-farm payrolls is fine initial claims were fine we talked about this last Monday like there is no recession we don't see any evidence of that earnings are fine they're going to beat they're going to do really well in April because to your point Alex the expectations have been lowered uh and it's we're back to risk on correction is done more than done you can put a fork hopefully hopefully what did you guys What did you guys think of the FOMC meeting last week and Powell's

dodging around the idea of tariffs yeah I think it's an it's an interesting circumstance like this is why you know I'm not going to go as far as saying that this is a stagflationary situation i think there's stagflationary vibes which is that there's there's a downside risk to the growth outlook and upside risk to core PC which is basically the main takeaway I had from their SCP data uh you know they see growth risk but they also see PC remaining high and what does that net out to is you know a m a maintenance of where they're at in terms of cuts priced in so you know one to two cuts maybe I think that creates a quite a difficult situation for risk assets i agree the correction is is largely done

i am I I totally agree that you know the economic data is bad enough to be worried about a recession but that leaves a difficult spot for both the Fed and then therefore Trump investment to be in now where it's like okay well if we threw a 10% equity correction and all we got was you know 50 bips off the 10-year bond yield that's that's a that's a pretty expensive trade-off you know and so if they're focused on trying to get the 10ear lower like we've seen bonds sell off pretty significantly today as equities rallied as that continues what What does that do to the reaction function of Trump and Besson and and based on that reaction function what does the Fed do the Fed probably does nothing um so you know when you look at the outlook I think I think risk assets are are somewhat dead money but

at the same time I don't see much more downside deterioration especially when you bring forth the economic data that we've seen which is mostly fine mostly mostly fine is the key though we got the PMIs the preliminary PMIs today which show that the prices paid index is up at its highest in 2 years so this is going to feed through to Fed decisions as well i am parentally optimistic i mean my friends always laugh at me about how optimistic I am so I find myself in the usual situation of actually being the most pessimistic in this group when it comes to is the correction over i'm afraid that we I have a feeling we do have more we do have more because the valuations have been unrealistic for such a long time that to justify them

we're going to need earnings to grow a lot over the next year and I just don't see that happening i seriously hope I'm wrong i can tell you my team and I look at a lot of data we do a lot of studies you know funny thing last week we saw all the studies were saying the comparable changes and the variables we look at is similar to COVID and yet we're not in CO this is one two I'm not trying to make the case corrections done i think is definitively behind us that doesn't mean that this Tuesday we don't get a natural kind of pullback and then rally from here but I think Felix's questions right on the mark which is what do you do if you're bested in Trump you were maybe hoping for a tenure to go lower to reinvigorate the mortgage market now it's not happening and it

didn't respond in the way that it did in September when you had a deeper growth scare now because you got competing assets like European bonds i think it's a real question now the other helix one approach to that answer might be if you're a Bessant and you lean into capital markets and lending right Bessant wants banks to lend if you've got trillions in low fiveyear low interest rate fiveyear money debt to refinance then let capital markets soar let banks back to lending which doesn't help the US government refinance debt but it can certainly support tax revenue and growth so that that actually is the other approach and it makes a lot of sense right if there if concerned about commercial real estate debt and balance sheet let companies refinance through capital markets and bank lending rather

than try to lower the tenure in a way that's might help the US government but hurt the private sector and if the private sector would weaken that actually would increase the deficit if you actually had economic weakness you know I want to say something quickly just just just quick comment but pass it on to you after it's on the on the correction being over i don't know if maybe that came across as that I think that way i I don't think that way uh for me is uh unfortunately is I don't know and uh I will know on I hope to know on the second uh if that was it or we see another leg aren't they aren't we going to front run the second aren't markets going to anticipate markets are front running off the Bloomberg well yeah but

we can't anticipate the West is we can't anticipate Trump he's been flip-flopping uh very aggressively like today is is quickly here is it's very easy and actually it's hard to stop being bullish it's hard to fight this bullish uh uh sentiment especially when one is long um uh and has a long bias after such a massive rally you know uh but the rally was driven by headlines and uh things could easily flop on the second and and and the last thing here is I do think that if is if if we hit worst case scenario uh and unfortunately things go bad and we end up having 15% uh tariffs uh uh in aggregate in the in the US

rather than 10 which is the base case supposedly this is like a two week correction is fast and furious and and in two weeks that's that's your that's your bottom worst case scenario I think um good case scenario basic scenario bottom is already in and we did get the good news from QT being pretty much over last week um yeah I was just going to say I have a slightly different outlook on how tariffs get digested by risk assets I think if we get certainty on what the tariffs will actually be risk markets can digest it move forward the issue is that we don't have that certainty and it keeps changing so I think you know yes there's an air pocket where right now we're pricing in

marginally good news in terms of tariff outcomes on April 2nd and if we start to see more headlines in the leadup that are negative yes that could lead to some some lower equity prices but I think if we get to April 2nd and we understand a tangible framework for you know the specific subsections that they're going to tariff I think the equity market can move forward from that vault can come off and just from V coming off we can see that marginal return to bid um I totally hear you where you're saying about you know valuations are expensive and you know I I do take a bit more of a flowsbased approach where you know you've seen a lot of money like totally 180 into rest of world assets recently over the last few weeks like Europe etc um at the same time that people have

just been dumping their mag seven the same time that people have been you know going you know they've had some like target date funds have been doing pretty well in terms of their long bond side of their trade and now they need to rebalance and and and get more into equity and sell some bonds and so I see that happening right now at the month end and it feels like some of these flows can offset it but I think the biggest thing is if we can just get some sort of certainty kill on what's going to happen risk assets can can start to at least digest that and maybe that means a few percentage points lower but I don't think it means like another I would agree with that i would say by the way the correction actually ended like on March 13th it doesn't feel like that

but if you look at leaders in the various sectors you know they they've bottomed some time ago look at the data center theme stock like Paulo look at Google look at Nvidia they've already bottom look at even Micro Strategy broke out today so the correction already bottom it's already in the rear view the other part is tariffs can be avoided trump is going to get a deal done with Mexico he needs a strong neighbor in Mexico to stop illegal immigration to stop fentanil and to ensure that drug cartels don't run the country that's all that's really the only analysis that needs to be done if that's the case then you can avoid terrorists by shifting production to Mexico and I I so I think that's likely going to happen and there's the potential u boost from a

ceasefire agreement in Ukraine which Trump has said he wants in place by April 20th which would make Easter certainly something to celebrate but it's also looking ambitious since Putin doesn't seem to be in any hurry however you know that's a very complex issue but imagine if they do get something like that positive news like that and to your point on the Fed the Fed put us back the Fed capitulated in their dot plot they said "We expect lower growth higher inflation and we're going to cut rates anyway." Yeah 100% but they need the certainty from Trump and Besset to act on it so if if that takes too long that can create an air pocket where they're slow to react and then suddenly those those two cuts could become forward but they could be bearish cuts that's that's the left tail

risk I'm worried about what do you think uh the market is expecting around the relationship between Trump and Powell today Trump was say today Trump was saying should have cut interest rates whereas the last FOMC Trump was actually supporting the decision so does the market care about this i originally thought that Powell and Besson you know there's this it's become well known that you know the the Treasury Secretary and the chair of the FOMC meet every week for lunch and you know discuss different policies and I I noticed a few different crossurrens that got me really interested um suddenly out of nowhere in the last two months we've seen a lot of talk from both sides about this SLR

exemption uh being exempted in the next couple months and that's a complete 180 from where bank you know Basel 3 endgame regulation was headed over the last couple years so it's really interesting to see that would that sort of you know perked my ears up a little bit to think but okay well perhaps best and power actually a lot more aligned than what a lot of people think i think the wrench is what you refer to which is Trump you know randomly tweeting hey you know Powell should have cut rates but I think you know that's the issue with Trump is sometimes he will just say something that is off what everybody else agree with and then there has to be this catch-up game but I think overall there is this agreement that you know when you think about what Palace had to deal with

for the last 3 or four years why has inflation not returned to 2% i think because of high stock prices and fiscal deficits has has created that bid so if they're focused on marginally bringing lower equity prices to get a long bond rally um at the same time they're trying to cut down deficits that ticks a lot of boxes for Powell achieving his 2% goal so I do think there's more alignment than what it's expected but at the same time there can be these off the cuff tweets uh looking for that must be one hell of a breakfast they get every Monday who served the food waffles what's your I hear I hear they have waffles the waffles sugar carbs i don't want I want them on a high protein low sugar diet with a double espresso

yeah kennedy on the case right yeah no cream yeah no when So basically getting inflation down then to carry on with your thread for less would be slowing down economic growth basically through lower fiscal spending or any other means it would check the boxes and that would of course add to uncertainty because we have part of the administration such as Bessant and Trump saying yes there is going to be short-term pain and then we have other parts of the administration such as I flew up on the screen earlier the likely head of the um the economic adviserss for Trump saying no we don't see any economic pain from tariffs should just be you know blink nothing else so there's even confusion it seems

within the administration partly because this is new territory um Lutnik is talking about launching next week the external revenue service so that obviously does position tariffs not just as strategic but also as a revenue driver and should we get that economic slowdown I don't know if any of you saw the interview with Black Rockck's um head of digital assets who is talking about a recession being good for Bitcoin robbie Mitchnik was uh saying that a recession could actually end up being a catalyst let me get this up on the screen i won't talking about tokenizing Ethereum if I recall as well right i mean if a recession is for Bitcoin I'm I'm Jane Fonda you know i don't know i

mean maybe on the other side of things after it's down another% it would be good because QE comes back or whatever you know rates are back at zero but yeah there's a lot of pain in the interim that's a 3D chess answer right after it goes down it will go up where I think where I think he's coming from is Black Rockck has always positioned Bitcoin as a store of value they're the digital gold camp 100% and they've actually been out there saying "No it is not a risk asset." Which I found very annoying because it's not up to them if the market's seed risk asset it's a risk asset however they're pushing the digital gold narrative and that's maybe what he's talking about when things get hairy you go for your digital gold and your real gold or whatever perhaps i mean I think in that same vein it's it's

only on the other side of the leg because if we actually get a recession like if if you just look at every you know gross scare/recession since 2006 like the velocity keeps increasing and the velocity keeps increasing because we have more leverage we have more margin calls we have we have quicker you know VA degrossing so you know every every growth scare even gold gets sold like everything other than tea bills and cash gets sold so I I I don't I'm not a big believer of that of that narrative yeah I totally agree now we don't have James here to give talk us through the latest in the ETFs but one growth driver that I was talking to someone about earlier today is the potential flurry of approvals that we will get when the SEC

chair is confirmed and his confirmation hearing is on Thursday it's not expected to be controversial so do we think ETF approvals will be a driver for any or do we think there's really not that much institutional demand for a Soul ETF for instance do you have a view on Solana i think I think Soul is a is an exception is the only exception actually i'm I'm also hoping that is the case to be honest um uh all the other ones uh they seem to be more of like a marketing stand to get people to tweet about it and and and get price action to price to react yeah I'm not it's it's ETFs are becoming commoditized um unfortunately too many of them that's my

view yeah I mean I totally agree like it doesn't c James I'm sure would you know explain this further but you know there's not much cost for them to just like throw ETFs against the wall and then you know if they if they don't perform 3 months 6 months later they can they can just delist the same way that like centralized exchanges will list a token when it's hot and then 3 months later they'll delist it like I've seen a few meme coins start to get delisted and nobody really talk they all talk about the listing but nobody really talks about the D-listing that much so yeah I think it's just throwing things at the wall and and getting attention um you know I think the biggest driver for ETFs has still been fast money you know pod shops and stuff running basis trades there's been a little bit of of small

allocators there's been you know obviously a lot of people that were holding Bitcoin on chain or something for that and and wanted to rotate it into a tax sheltered account i think that's been a big driver but yeah overall I I don't see anything too exciting other than maybe Salana like Alex said I'd agree there could be some interesting adoption there two years numbers like not on operating an ETF so um cost of operating an ETF is around 200k a year um so if you have uh 25 pips uh on uh on fees that you're charging your uh your your your buyers your your holders um you need uh 80 million AUM to break even

uh now um Shitcoin with all due respect Shitcoin ETFs I'm pretty sure they have higher uh fees management fees so their break even would be lower but it's still not that easy to get to let's say 30 million in AUM for like like marginal like fringe coins like we we saw like the Penguf just announced it's like sorry who cares about Bongus and Tratfi you know yeah and what you'd need to pay the market makers to actually make a market for you in something as illquid as that they would they would charge for taking on that risk hey everyone Matt Hogan here the chief investment officer for Bitwise Asset Management in this week's CIO memo

I tackle the great d-risking of Bitcoin and why I think this is the single best time in history to buy Bitcoin on a riskadjusted basis find out why at bitwiseinvestments.com/cio memo that's bitwiseinvestments.com/cio memo and thanks carefully consider the extreme risks associated with crypto before investing i want to show you this tweet by Michael Vanderpapa and get your views on what he says i thought it was one of the more interesting ones I've seen on the recent market mood shift especially as it comes to crypto michael Vanderpapa says "I think that there's a significantly higher chance that we'll be trending upwards on Bitcoin and Ethereum than

downwards panic is gone surrounding tariffs." So as we were just saying Japan didn't hike we haven't talked about that massive downwards move on the dollar the environment changes and price usually moves in opposite of sentiment thoughts like this is a interesting thing is like the focus on Japan um like Japan doesn't matter right now let's put it that way it's it's people in crypto are are are overly focused on Japan this is a this is a this is uh and I I it's kind of sucks to be harsh on people that I don't know but uh if you're talking about Japan in 2025 it's basically you have a carry trade PTSD from August 2024 and it happened to a lot of people and I get a lot of questions on every BOJ

meeting is like what's the BOJ going to do and the answer is it doesn't matter because the carry trade mostly unwound and it doesn't matter anymore so the world is already complex enough let's let's try to focus on the few things that do matter um so that that's what I think um and I I think I hope he's right on on Bitcoin and ETH uh uh it looks that way it's it's I'm I'm being repetitive um maybe Okay let me change it quickly here for you guys what happens what do you think would happen with the S&P if uh Chinese tariffs if Trump delivers what he promised in the election in during the elections uh which was basically 60% tariffs for China what if Trump basically rolls back

on that and and Mexico and Canada end up with uh 25 tariffs across the board so Alex you're right it'd be riskoff significantly but it's not probable it's not probable that can happen so let I'll share the screen with you here which shows the short interest in markets which reflects a lot of the bearish sentiment we haven't seen this short interest in the last 5 years we're at the 98th percent 99th percentile of short interest everyone hedged and then kept hedging and then right when they're not supposed to hedge they just hedge some more and what you saw in markets today uh at Monday morning strong gap up openings MSTR gap up and running i have

a basket I call Twitter momentum stocks they're all up strongly so the headline is animal spirits are back and crypto and bitcoin are part of animal spirits the IPO ETF unprofitable tech companies part of animal spirits so they you know they are back i wouldn't be surprised to see some backing and filling tomorrow just like we had last week friday strong Monday strong Tuesday back filled and then then rally from there but you know we are we are now back on risk look at Palunteer i mean these are bubble stocks palunteer doesn't matter though palunteer up 6% right so not long Palunteer so it doesn't matter yeah that's also the

defense story in play though it's more than Palunteer look at him i could I could I could send you many many tickers uh in my I'll I'll share my screen here to show what I mean as Twitter momentum but this is you know I think as important as like the beta factor it's it's it's the animal spirits like Tesla Tesla up 11% 12% in a day right it was getting thrashed down 50% robin Hood I think this is I think this is the pot shop monkeys piling back in again short covering also so Pod Shop Monkeys Animal Spirits uh Reddit K look at everything up in Animal Spirits up 5.4% after getting destroyed you know it was down 17% now

it's down 12% once you add back today's gain right but so you know I I think that's it animal spirits are back now would you would you deploy today Ram like let's say you have you have a like today but today like like right now this morning was my last deployment at the open right at the open but at the close of today I bought SQQQ so the little tactical little t because So I do think you get backing in filling actually this is this is why we always get given so much crap about being called flip-floppy is because we're we're trading different time horizons you're allocating but you're also Yeah you're also shorting a tactical right at the close 3:55 p.m i did the same thing Monday of last week

yeah and it worked out and it's just a tactical it's perfect it's perfectly perfect if I understand but just Yeah it's like the audiences we know is they get they get upset about flip us flip-flopping and Yeah we flip-flop you know it's that's that's the idea 24 to 48 hours though yeah um the way I think about like tariffs being priced into currencies so I'll just try to share my screen here but just looking at like the US Canadian dollar and Mexican peso you know so there you can see the tariff headlines on this chart right it's just like you know we've been in this this range where you know some version of it is priced in and then oh no tariffs and and we we see the relief and then the opposite when we get the

tariff headlines so you know it's interesting that that the US Canadian USD CAD remains rangebound but we do see that Mexican peso rolling over a little bit so perhaps to your point there is you know marginal pricing in of a better resolution for for Mexico right now but I think overall there is a decent point that there is I think still some complacency in terms of what's present to tariffs but in the same vein you know when I see the back and forth where it just feels like constantly as soon as we get to the X date the next one being April 2nd we start to see a lot more positive news coming out of it so I do feel like this pricing is quite rational but it does create that that left tail risk i I do it what other markets What

do you guys think uh question for you guys what do you think of the following this is a view of some people in the market is basically uh long equity short crypto you know beta adjusted right but it's it's Oh man I'm doing I'm doing the opposite yeah yeah and three months that's a good idea timing that's wrong this is risk on this is global risk on so I think it's like the wrong concept what I would do is short Brazil EWZ on a stronger dollar i think the timing on shorting Brazil now is actually fairly good we're short Brazil uh as of this morning and I think you're going to see money rotate back in from China Europe to United States which is happening now already um Alex that's such an interesting idea

because I've been playing around with the opposite of of short QQQ long BTC and this is why if you look at what's going on in the rest of the world fiscal I call it fiscal unshackling is happening you have you have Europe that's looking to go pretty large in size you know 500 billion dollars investment taking off the debt break you have China starting to finally move on the fiscal side of things so the way I think about it is if I think that US equities are are still you know even though I think like again the pot monkey bounce trade is is in play right now I do feel like it's somewhat limited in upside so if I'm if I'm like like you say beta adjusted or ballad adjusted short cues long BTC if I believe that BTC is a global asset that's still you

know obviously it's it's largely driven by US macro liquidity but if I think it's powerful enough in the rest of the world at the same time that on the US side of things they're attempting some version of austerity I think that's basically it it's like a money printer trade you know it's like it's like long rest of the world money printer short fiscal austerity in the US so I I'm on the I'm on the opposite side long BTC short bonds the move like we all the economic data came in strong hard economic data came in strong inflation is still higher and stickier than people expected you're going to have good earnings next month i'm not saying I should go on short bonds but I'm just saying that in terms of what a lag I would say it's

bonds yeah I think you're right it just comes down to like how it sits within your portfolio like I own some bonds but you know it's 70% of the size that I had a month ago and it's just as a hedge so yeah it just it's contextual but that is another good way to express it Alex what's the justification for the short crypto position at this stage the the long stock short crypto what reasoning are you hearing just it's just people are bearish it's uh it's the the usual I mean I presume that the answer was not not not I mean we're we're self- selecting here right uh but uh the view is that uh there's no demand for onchain activity and that uh institutional demand for crypto uh for basically

putting real world assets on chain doesn't really acrue value to the blockchains like what what actually drives to to the blockchain assets right the souls of the world the ETH of the world uh and that those are mostly retail driven speculative assets um that basically is monkey on monkey off But uh I mean some people are fundamentally pessimistic on on on most uh crypto assets and to be honest it's like I I feel the same way but I would never short crypto for more than like a few days because because I think it's suicidal uh it's just just not how I operate

yeah and unlimited unlimited downside and also as Felix was saying in the macro macroeconomic and geopolitical shifts I mean longer term it's just you know they're global assets and they're not going to be buffeted by economic concerns risk concerns but not economic concerns but segueing into what's going on between Bitcoin and ETH we talked about that many times on the show before eth is unloved eth is overlooked but I'm sensing amongst all of you a shift in expectations of ETH a bit more hope that it could rally from here quickly for me i think I mean it's probabilistically speaking it's it's either so best case scenario it rallies a lot best case scenario it I think it rallies worst case scenario it starts

rallying in like say midappril or like you know third week of April so from a from a directional perspective I think it's a good time the question for ETH is not if it's rallies or doesn't rally is how does it trade against other crypto assets that's that's the problem that's what everybody's so upset about and uh yeah what do you guys think yeah it's still hard for me to leave and decide to leave Bitcoin and go anywhere else right now for the most part um I think it's an important point it's yeah ETH can rally but it's just yeah relatively speaking I think the only real upside tailwinds I can see for Ethereum right now is one that in most like delta neutral trades

when you talk to like low code funds and stuff a lot of them they're their short leg is Ethereum and then they'll long something else so perhaps if they get squeezed on that short position for one reason or another that can be I think that is mostly why you know you always see at the end of these rotational shifts that the last phase of it is is e uh doing really well relatively speaking and then we fall down lower and I think it's because a lot of those those funding legs of the shorts are are closing um so that's one and then I think the other potential tailwind is just uh as you know I was at the digital asset summit last week and just talking to a lot of institutions and that sort of capital a lot of them are talking about wanting to to allocate and I think

it's a lot safer for these bigger institutions to allocate to Ethereum you know even even if you might say that you know the technology is is more innovative or whatever on salon or whatever other chain uh it just doesn't have the same time tracker and that's really important for institutions is you just you know it's the same way why they everybody will be excited about a new hedge fund that launches but nobody's going to invest until they have at least a couple years of track record so that really matters in that world so you could see this and we have seen this um you know I think I saw a headline this week about Fidelity launching something on Ethereum so I do think they will they will simply allocate because of the track record that Ethereum has yeah Fidelity are going to be tokenizing so

go ahead Alex uh let me flip flop again um so a silver lining for for ETH um is it compared to Soul the key man risk is considerably lower uh Soul has two two very very powerful uh founders in the sense that they they drive the chain eth doesn't have that which has been I think one of the reasons uh one of the many reasons for its underperformance but you turn it upside down and it's actually also something positive it's like you could think that you yeah you eliminate the keyman risk as simple as that i'm going to read out um speaking of the institutions at DS um Black Rockck's head of digital assets Robert Bench is

back and he was saying this at the conference about Ethereum quoting here the negativity around Ethereum is very overdone there is a lot to be optimistic about there was no question that the blockchain we would start our tokenization on would be Ethereum and that's just that's not just a Black Rockck thing that's the natural default answer that's really important clients have clearly made the choice that they really do value decentralization credibility and security and that is a great advantage that Ethereum continues to have i continue eth is a bet on blockchain adoption and innovation pretty your point Alex and continuing finally ETH is a bet on tokenization stablecoin adoption and decentralized

finance end quote e is a natural tailored of decentralized exchange and it's got the community and yeah as you were pointing out Felix Fidelity are going to be tokenizing a money market fund and issuing a new class of shares which will be on Ethereum which is actually interesting it's not harnessing the full efficiencies cuz regulations still they will be maintaining the um ownership ledger and traditional style but it's a start baby step did they contribute still though that's so cool like it's it's amazing to see them actually like you know the idea of tokenized treasuries and stable coins that whole interplay with Trafi that's the thing I'm just like by far excited

about the policy should be very constructive for Ethereum right and the new SEC chair regulates securities not commodities like Bitcoin so Ethereum's got a lot of the policy upside potential you know we know Solana and the Bitcoin community gave generously to the Trump campaign what about the Ethereum crowd though did they did they do enough i don't know but uh I agree with your point Felix as well it's the funding leg you know it's Ethereum is up uh something like 20% in the last two weeks uh it's kind of a no man's land where we stand right now but we'll see it's difficult i I I agree with your point too like you know stick with the leaders is a is a pretty reasonable strategy like Bitcoin at this point

and there's just so much that isn't priced in yet stable in terms of regulation i mean stable coin regulation is going to be first out first out at the stable and that's no pun intended and that's going to be soon I mean possibly within the next 3 months or so and then right after that they've already got several drafts of an updated FIT proposal which is going to be classifying the assets and that is going to also incorporate what I'm hearing some uh clarification on what kind of DeFi services are allowed and once we have regulation around DeFi then we're going to have Tradfi institutions playing with DeFi apps and many of them are going to if not be built on Ethereum they're going to be connected to Ethereum somehow because that is for now where the market is and you also have the interoperability services which will

bring Salana apps into the fold as well that Salana with Alex on this very much depends what happens to the memecoins which brings us to the final segue into I know we're tired of talking about memecoins because they go up they come down but Trump memecoin is doing well because of the power of a tweet from the sitting president of the United States of America it's destructive any thoughts on when any thoughts on when we will finally see the end of the memecoin pumps and dumps if that's not I think a version of it is I think a version of it is is over but I don't think it can ever kill speculation in crypto it's just reinvents itself in another version you know 2021 was NFDS

this cycle has been meme coins i do think that you know there's been a lot of uh grave dancing on meme coins which I do think you know if we do get another um altcoin rally could send those pretty significantly and and piss a lot of people off but I think ide ideologically and the idea of you know just long pump fun and and that idea I do think it's over i think now it's just mostly these rotational trades and you know after enough people think that shorting meme coins is a free trade then we squeeze them all um but I do think the idea of it is is long dead that's refreshing that would be very refreshing however um one final question I have for all of you and then we can

start to wrap up memecoin uh rally or memecoin enthusiasm uh a lot of that has been attributed to the lack of interesting movements elsewhere in crypto in other words if crypto is not moving let's pile into something i'm not saying I believe this is what I'm hearing let's pile into something that does move so the the speculative money has been concentrated in a relatively small corner of the market when that changes when we do enter the next leg of the bull run and altcoins start to move do meme coins uh get speculative again or does the speculative money flow into altcoins i think fool me once shame on you fool me twice shame on me when it comes to meme coins people are burned they're going to be reluctant to come back but

you know to the extent that there is a pump there it'll be in the leaders yeah i just don't think there's a lot of great options for retail right now like all coins are just a mess like if you want to long those things you need to get in front of four-year unlocks just nonstop you know so I think I saw something going into 2025 there's about $32 billion of unlocks for altcoins for this year like that is just you just can't get you can't get in front of that so if that cuts off that amount of the crypto industry and then you have memecoins which are just you know rotational pump and dumps I think that's why I'm mostly just hiding out in Bitcoin i think the L1 narrative is

being tested right now in terms of value acrruel so I don't I don't think it's as meaningful to hide out in there so you know I think a lot of the reason why we haven't seen such interesting innovations in terms of toko structure has been the regulatory thing and that only ended like a couple months ago if you can even make the argument it ended so I think it'll take time i'm paying attention to the new token structures that get introduced to the market in the future but as it stands whatever exists today I'm I'm pretty pessimistic on just wanted to point out on on unlocks which is very important uh the the the most of these m alcoins have massive unlocks uh on like regularly uh one coin that

stands out positively ironically on that front is is soul specifically uh the the the the largest unlocks uh they they're they just finished uh we have uh still larges relatively on April and then they go down by 95% uh May relative to March um and then go down another 50% uh from June on from July onwards uh becomes very manageable in relative terms i think the only lesson from this memecoin drama is retail investors organizing investing like a tribe so I just shared my screen here no if you can

light that up it's an article from the Financial Times today and it says it's called retail investors take on hedge funds in Europe's answer to meme stock mania so it's now in Europe right a handful of European stocks have become a battleground for retail traders taking on hedge fund short sellers they're organizing on Reddit like Wall Street Bets they're identifying stocks that are heavily shorted we talked about how you 99th percentile short interest and those hedge funds are short those kinds of names uh and other names also they're targeting hedge funds like Marshall Waste and Millennium and European defense shares have have soared but I think this is the

main lesson from the whole memecoin drama it's retail investing has transformed markets postcoid robin Hood's transformed it coinbase has transformed it social media has transformed it and uh I think it's permanent too i think what people mistake is they think that's the zero interest rate phenomenon i think it's just a change in psychology i agree i agree you know markets bottomed in October 22 at elevated PE ratios versus the norm you know generally didn't bottom at uh where we where we concluded that and think about well why are why are valuations elevated today i would say it's because of this you know something

I've been trying to sort out is do you have a 19% correction like Q4 18 when you had Trump 1.0 trade war and you had a growth scare we've only had a 10% correction the bare case is there's more to go because valuations are frothy and earnings growth is slower but this is the other side of it we're now post QE post trillion dollar stimulus and retail investors are a sizable bid it's not everywhere but it's in those stocks it's in those Twitter momentum stocks where they're creating the bid or they're creating you know a a short squeeze so I agree it's a permanent It's a permanent shift it's a psychological shift mhm ram have you looked into looking at

hedging positioning and and and puts comparing like Q4 2018 to right now because my fra simple framework is people are too hedged for it to go down like that and I'm just curious if you've looked at the data from that Q4 2018 i love it you got to join the show more often man question i know by the way Forward Guidance is also my regular rotation it's a terrific podcast i really enjoy it yeah we we got some good interplay between both our shows i love it that's right so the answer is uh there was significant uh hedging demand and buying and put options in 2018 in fact in the 3 days leading up to the bottom which took place December 26th on December 25th Trump on I think it was on Christmas Eve or Christmas said something the

equivalent of go out and buy stocks are cheap so that that marked the bottom so uh but yeah there was significant uh put buying and markets were heading lower despite the aggressive put buying which we saw in this correction too right we saw like the put call ratios peaked like two weeks ago then the dip kept dipping by the way it's another uh phenomenal podcast with the interview with Charlie Mceliot who's uh from Numeura the head of options you probably wonder we should get him on this show too but uh who's interviewing on the OddLotss podcast uh you know but the conclusion from all this is that like the derivatives market's leading the spot market right and so you that aggressive

put calling put buying behavior uh can force not can and it will force dealers to delta hedge by selling short futures uh and it's really the sellers of volatility that uh are helping to equilibriate markets so it's I think it's a really interesting you know concept to unpack we should bring on Charlie on the show here and really double click into into that it's also interesting from the market infrastructure point of view you saw that Bloomberg reported I think it was yesterday or today that Coinbase is in advanced talks to buy Derabet and the

last reported valuation of Derabet was between 4 and 5 billion i mean that makes Kraken's acquisition of a derivatives platform last week for 1.5 the biggest until then it makes it seem you know nothing in comparison i mean these are big numbers and the volumes the potential volumes must be astronomical i think that's such a good buy though like Darabid is just phenomenal because I'm I'm I I used to trade options a lot more than I do now now I mostly just use them as like long-term like leap calls is pretty much the only thing um but whenever I would look at onchain options the spreads were just so horrendous that I'm just like nobody can there's no way anybody's actually trading these things they're terrible but the only exception was there bit it wasn't on chain but

there was a lot of really good tight volume there tight spreads and you know so much of the crypto industry is used to just trading pers I think to whoever can capture that dare bit and bring it to retail because I think it's still a lot of more sophisticated money on bear bit than you know retail is still punting in in in per move for them to go after it I agree I can't speak to the price but it's great and you know look zerodt options have been all the rage the last two years it's all part of the same concept going back to Animal Spirits retail investors taking control of their trading there's an app called Dub which is a copy trading app it's growing quickly mostly organically what's the name again i think it's called Dub and that's you know those those

products are growing quickly so this this is 2021 vibes for me 2021 similar kind of setup you know you had February and back and bringing in new markets i mean bringing in the kind of investor that wants every all of their trading under one platform which is something they get often in traditional finance but in crypto it's not been that common so when does the party end i mean I would look at like Palunteer and names like that as like a clock palanteer was down 40% from the high now it's down 20% again in the last two weeks significant rally i think these retail investors are are they're smart they're trader they they have a sense of what's going on i don't think Palunteer gets to new all-time highs and I just pick that one as an example across many you could pick

another one like him perhaps even Bitcoin by the way but I do think you get another rally higher this rally is moving very very quickly though so it might not mark out in time like to the summer it might mark out in price yeah i I to one thing that's really interesting today is I believe Yeah so the EU the Euro zone ETF was was read today and we've seen like the last two months has been this huge rotational flow into Europe i've been pretty excited about it but the trade has gone too far too fast like they were literally there's like a Forbes magazine cover about longing rest of world equity and I was like "Oh like crap the trade's already over." And so to see that red on the day like Mag 7 was so well bid i

think there's this huge repositioning again of like I I I keep saying pod shop monkeys because I just read like shrub stacks article all about it and he used that name nomenclature and it's just such a great way of putting it but yeah I think they're they're piling up in that mag seven you know tech trade again and and the fact that it was read on today I think is the signal you know you know one of Millennium's top holdings in the 13F filing was Reddit was Reddit yeah way so can you imagine Reddit becoming like the meme stock of this title that would be epic that would be that would be so meta that would be absolutely brilliant speaking of which and to wrap up here have any of you seen the movie Dumb Money

nope no it's excellent it's the movie about the GameStop saga yeah it's really well done i don't know if it's on streaming yet i saw it on an airplane but it was much much better than I expected and I think it is going to have a strong cultural influence once it hits streaming the weirdest thing was just having Seth Rogan be a hedge fund manager i just couldn't take him seriously in it i was like "This is Seth Rogan he smokes weed he's not a manager." I think that's I think that's also kind of the point of the movie so true yeah fair play anyways we got through a lot today i thank you all very much for being here felix thank you for joining us we got to get you back on and Ram and Alex thank you so much for being here also thanks

all of you for listening you know we'll be back in one week to discuss more about how the worlds of crypto and macro are colliding until then everyone [Music]