Arthur Hayes on the Fed, Treasury buybacks and Bitcoin's next run

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show where the suits are finally stepping on the field, but we've been running routes for over a decade. I'm your host, Jay Hamilton. It's Thursday, May the 22nd. Now, today's episode was recorded on Tuesday, May 20th, but buckle up, folks. It is full of so much alpha. Today, we are joined by the legendary Arthur Hayes to talk about April 9th. Why is April 9th such an important day for Arthur? It has nothing to do with tariffs, but he saw a signal on April 9th that said him to him, let's go risk on. It is time.

So, we're going to break that down so you guys understand why that's important. And it leads to the rest of his cycle predictions. He's going to give us his prediction, bold prediction, very bold prediction for Bitcoin in the next two months. We're going to talk about altcoin season. We're talk about Bitcoin dominance. We're also going to talk about Treasury Secretary Bessant's liquidity lever. What happens if the Fed and Joe Powell don't play ball, which it doesn't look like they're going to. Can we still get liquidity in the season? Can we still get a risk-on environment? Can we still see Bitcoin and crypto do well? Well, Arthur's going to break down exactly how that can happen. Before we jump in, we are looking for a host for Milro Macro. That's right. I want to hire somebody. I want a new team member who can host this show. Somebody who can

meet with people like Arthur Hayes and other macro experts, Dan Tapiro on a weekly basis. So, if you're a podcast host or if you know a podcast host, please refer them. Hit the link in the show notes. apply today. Today's episode is brought to you by Letin. Get cash without selling your Bitcoin. It's also brought to you by Coin Shift, powering top crypto treasuries with their yield bearing stable coin, CSUSDL. Without further ado, Arthur, welcome back to the Milk Road Show. Thank you for having me. Always a pleasure, my man. No one no one brings the energy and the vibes like you. Uh I just can't wait to the day I get to party or hit a ski hill with you, you know? Uh or try to or try to return your forehand or your backhand in tennis. uh something like that. Okay, let's let's let's start with April 9th.

What what happened on April 9th that was such a signal to you? So, obviously on April 2nd was liberation day um you know assuming you believe in the the Trump nomenclature and uh team Trump rolled out these really aggressive tariffs. The rate were rates were higher than anyone had expected and the market started melting down. Bond yield bonds were prices were going all over the place. Stock prices down, Bitcoin down, people throwing a fit all over the place, you know, all these billionaires going on social media complaining about how they lost some money and why Trump needed to change attack because they were losing money like um I think it was Einhorn was, you know, winching on Twitter or X uh for days on end. You know, after

about a week, dysfunction started to show up in in the financial markets and, you know, in our fugazi fiat financial world and evidenced by declining bond market liquidity, which is really what the authorities care about in any country because the government needs to fund itself. And so if the market in which the government funds itself, and we're talking about, you know, the American empire, the US Treasury market, then they need to do something about it. And and so the the index that you know I monitor and a lot of other people monitor is called the move index and it's an index that tracks uh bond market liquidity and volatility. And so when this index rises you get more volatility. Why is volatility bad in the

bond market? because lit basically the entire fiat world runs a massive carry trade and they're borrowing dollars and they're buying stuff, right? And so if the volatility increases on the bond market, you're not going to buy as much bonds because you need to increase the amount of equity you hold against these positions. No one's going to lend to you. All these sorts of things. So people stop showing up at auction. they stop providing liquidity in the markets and things start to break down and people have to start exiting positions and all and all these bad things for the very highly leveraged fiat system. So by April 9th I think the day before the move closed at like 130 something then intraday on the 9th it hit about 172 and I think it's only hit a level that high three other

times in in since this index has been uh published for the last like 20 or 30 years. So, and that's encompassing, you know, 2008, COVID, 1987, 1998, all these pivotal dates in sort of um global financial uh crisis over the last, you know, three or four decades. So, really, really bad. And then you get Jamie Diamond goes on CNBC and starts talking about how tariffs are bad and the markets are melting down and obviously that was enough. And then all of a sudden, Trump rolls out the 90-day pause and everybody except for China. A few days later, Secretary of Treasury Bessant gets on Bloomberg and talks about how he's got this tool, the Treasury buyback to make sure that the Treasury market functions well. And that

was basically the bottom. So that was, you know, 74,500 on Bitcoin. I don't know what the level in the S&P and the NASDAQ was. I think they were down like 20% over from that previous week and a half. And since then, it's been up only. Bitcoin's up what 30 35% since then. S&P NASDAQ are green on the year since then. Credit spreads have declined. Um things have returned to normal. Liquidity is back. Uh volatility has declined. All these sorts of things. And the move is like I don't know 110 or whatever it is now right now. So that was the date they pivoted. They provided a monetary stimulus in the form of we're not going to try to divorce this global system that we said we were going to, at least

in the same manner or pace that you thought we were as of April 2nd. And everything go, oh, great, cool, back to status quo. Let's go. And markets ripped. So, I hope you bought some Bitcoin on April 9th or 10th or 11th. Um, because I don't think we're seeing those prices again for a while. I want to give a a little bit of a history lesson. I saw your talk at a token 2049 recently. Uh which uh was as as a fellow skier calling it full send was uh just a great great title. I absolutely love that. Let's let's all go full send, baby. It's it's time. Uh in that talk, you gave a little bit of history lesson of um what Janet Yellen did when she was Treasury Secretary. Uh

can you go back and and just give us a a brief history lesson? what did she do? Because I think that a lot of a lot of our listeners, a lot of people think that only only Powell and the central bank has the ability to affect liquidity. And I think that understanding what Yellen did helps us understand the power that the Treasury Secretary has. Yeah. So let's put our minds back in 2022. What was happening back then? So back then the United States and a lot of the world was suffering from inflation due to the a lot of COVID stimulus that was provided and obviously it was the worst in the United States because the US provided the most stimulus of any major developed or developing country

aka China uh in the world and so what would happen back then you know CPI was I don't know 9 10% something crazy 40-year highs you had US president Biden sitting Jay Powell down giving a press conference saying he's the man who's going to solve inflation for the American people. Now remember, inflation is very, very bad whether you are a dictator or you're a democratically elected leader. Inflation affects everyone. And so either you get voted out or you have a revolution if it continues. So everyone wants to make sure that there's no inflation doesn't go crazy. And so the central bank was taxed aka Powell to fight inflation. So he's busy, you know, stopping quantitative easing, starting quantitative tightening, which means he is reducing the size of the Fed's

balance sheet. He's doing 0.75% interest rate raises every single meeting. He did that, I think, for three meetings in a row in 2022. Fastest rise in uh Fed funds rate since the 19 late 70s, early 80s under Vulkar. And you know by the fall of 2022 the effects of tightening credit both from a um increase in the price of credit and a reduction in the quantity of credit was taking its toll on the financial markets. Um S&P was down the back end of the bond market 1030ear yields were starting to to spike in a bearish deepening fashion. And in the crypto land, you know, we had the failure of Teral Luna in June of 2022 and that essentially destroyed Alama FTX and, you

know, the financial caper that our favorite white boy Sam Baker Fever was running and by, you know, November of 2022, you know, FTX had had gone under. All this is basically a derivative of a red increase in the price of credit and a reduction of the quantity. Now, if you're the federal government in the US, essentially you are tied to the returns of the stock market. The marginal driver of tax revenue for the US government is capital gains taxes. So, rich people who make money in the stock market, top 10% of of uh US households who own all the stocks. And so, on the one hand, Biden has to make sure or whoever is handling Biden because we know he's a vegetable or he was a vegetable, still is. Whoever is handling him say, "Okay, we need to

juice the markets, but we can't have inflate. We can't be seen as sponsoring inflation because that definitely means we're not getting reelected. So, okay, you pal, you keep doing that inflation fighting thing. Now, Janet Yellen isn't uh worked for work for the government. She needs to make sure that the federal government needs to get funded at an affordable rate. And right now, rates are not are not affordable as PAL has to raise rates to to quash this inflation. So, is there a way that they can defensively juice the financial markets to make sure that rich people make money and therefore pay more capital gain gains taxes but retain their inflation fighting credibility at the same time by having Powell do his thing? And so, you know, I call her bad girl again yelling because she was really the one in charge. Her or one of her staffers said,

"Oh, there's this sterilized $2 half trillion dollar sitting on the Fed's balance sheet in the reverse repo program." Why was it there? Because so much money was created during the COVID time. people had all this cash and they said, "Oh, the bank is paying me zero, but these money market funds because the rates are rising that because the Fed's raising rates are paying me 2, three, four, five%. So, let me put out the money market fund." The money market fund parks at the Fed and earns a risk-free Fed funds rate essentially. There's $2 and half trillion dollars in here. And but this $2 half trillion dollars is not being circulated in the economy. And so Yellen says, "Okay, I'm going to issue more Treasury bills that are securities less than one year versus Treasury bonds." So the long 10, 20,

30-year bonds, and because I'm going to have a yield higher than the reverse repo, maybe five, 10 basis points, I'm going to pull that money out of the reverse repo program because money market funds are yielding. They want to earn the maximum amount of money for their clients as possible. And a Treasury bill versus a reverse repo are pretty much the same credit risk. It's still a US government essentially. So they're going to remove money from the reverse repo, put it in the treasury bills that Yellen is selling, and that takes $2.5 trillion out of that facility and juices the financial market. So if you take a look at sort of from third quarter 2022 up until early 2025, we reduced the reverse repo from 2 and a half trillion down to essentially zero. And you know, Bitcoin 15,000 to, you know, was it 110, S&P rips, NASDAQ

rips, gold rips, everything rips, right? And so if you were stuck in this, oh my god, Jerome Powell is a new Paul Vulker. I should I should not be investing. I need to wait until the Fed cuts or, you know, starts queuing again, you missed a monster rally because you were focusing on the wrong person. Janet Yellen was in charge. He said, "I'm going to do some markets. Here's a way that I can do it." and $2.5 trillion dollars was essentially reinvigorate reinvested into the global financial markets. So that was 2022 and I think people were making the same mistake in sort of earlier this year when they said okay when's pal pow and Trump are having this feud about like independence and this and that and who's going to retire when and blah blah blah and when they're going to cut the

rates and you know quantitative tightening quantitative easing and he's so focused on the Fed and Besson says okay don't worry about him I got Treasury buybacks in the same way that Yellen had the reverse repo program I have treasury buybacks and so believe me when I tell you that the Treasury market will be well functioning and my boss Donald Trump will get all the money that he needs to get at an affordable price. And he didn't say that explicitly, but that's implicitly what he was saying to the Bloomberg journalist who asked him this question. And so, you know, as of, you know, third quarter 2022 versus today, we have to listen to the Treasury Secretary because they have all the power. When you issue $36 trillion or have a $36 trillion pile of debt, you know, you're the one in charge, not the Fed.

Can we call him BBC? Is it is it the big best showc I'm cool with it. I'm cool with calling it BBC. You you can't you came up with it, not me. So, okay, let's let's explain uh treasury buybacks. I pull up a slide that uh you guys created at Marom uh because I really want everyone to understand how treasury buybacks work because it's it's easy to get lost in a lot of the lingo here. Yeah. So, imagine you know you have this stuff on your books and it's the old stuff, right? Nobody wants to give you money for the old stuff. You go to the bank like what's I want the new thing.

I'll give you I'll lend you money for the new thing, but of the old thing, I don't know if I want to lend you money on that. Right? So, basically, as you run this this basis trade where you buy an on ther run bond and you sell a treasury uh futures contract over time, the on ther run bond becomes the off therun bond because people want the most liquid bond that's closest to the benchmarks. Let's say the 10-year, the fiveyear, whatever bucket. And so all of these hedge funds who are such are the marginal funders of the government are long all these illlquid treasury securities and the banks say okay the less liquidity that uh these securities have the more I'm going to charge you in terms of margin and therefore these hedge funds can only can't do as much at

auction because you know they're not getting as much leverage. And so what can investment do? Okay. Well, if these guys are the ones showing up at auction and they're willing to buy debt at whatever price I'm issuing it at because they're just running an arbitrage trade. Well, how can I make sure that they're able to get more leverage from the banking system? Well, I'll take that old stuff off your books and I'll give you some new stuff and I'll do it in a way that is budget neutral. Meaning, I don't need to go to Congress or get some approval. I sell a new bond with those proceeds. I buy the old bond. And so the old bond trades a bit rich, a bit expensive to what it should. So the the hedge fund makes money and then they put the trade on again with a new bond and

the bank says, "Oh, great. You got new stuff. I'll give you more leverage." And so then these hedge funds can show up at the treasury auctions and bid on debt. And that's essentially what the treasury buyback is. It is not, you know, money printing as a first derivative. It's more of the second third derivative of its effects that gets us to the ability to for the banking system to give more leverage to hedge funds that are the ones showing up at treasury auctions and bidding on debt at whatever price Besset wants to issue it at. So I think everyone needs to remember. Yes. Best was a guy who broke the Bank of England and he's this amazing macro trader and you know he's talking about fiscal responsibility and all these nice things that Wall Street likes to like likes to hear. But at the end of the day he's a

bond salesman for Donald Trump. And so forget all that [ __ ] about what he did before. It doesn't matter because his job is to sell bonds. And so he's going to tell you whatever he needs to tell you. He's going to prostitute his reputation as this sort of fiscal responsibility person to sell more bonds. That his job is not to make the government more efficient or any other stuff. His job is to sell bonds. And so if he needs to do Treasury buybacks, he'll do Treasury buybacks. If he needs to continue doing Yellen's policy of issuing more bills and bonds, he excoriated Yellen. He said, "Oh, you're [ __ ] idiot for not terming out the debt when the debt was so cheap." But guess what he's done in the least in the last two quarterly refunding announcements? He's in the exact same thing as Yellen because he's in a box.

He's got to sell bonds. You only to sell bonds, I sell bills because that's what people want or do treasury buybacks. Remember, he's a bond salesman. He is not a hedge fund manager anymore. And I think people remember what he is. So, whatever his personal view on the situation is, he's got to sit up there on Bloomberg and Financial Times and a Milkin Institute and he's got to read the talking points. That's his [ __ ] job and his boss is Donald Trump. He's not his own boss anymore. Selling your Bitcoin should be a last resort when you need cash. That's why there's Lein, the trusted platform for Bitcoin backed loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties.

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Put your treasury cash to work, earning native yields and protocol rewards. Built by the team behind Coin Shift, which is trusted to manage over 1 billion in business treasuries on chain, including a gitcoin, and hundreds of leading institutions, cycusl is gaining traction at milkroad.com/coinshift. I want to I want to touch on a few things here within uh the US. Le let's talk first about Trump tariffs because I want to talk about the what what are the risks here and a lot of people are uh worried about tariffs obviously now obviously much less worried now than we were a month ago uh but I don't think that that uncertainty and that that FUD has disappeared by any

means it's still pervasive throughout the market I think there's a shift happening but we're not we're definitely not in riskon territory right now like we're still more in risk off than we are in risk on you are you worried about tariffs? Are you worried? I mean, the big worry is that China and the US aren't going to be able to come to terms. Like, that's the big concern. We have a 90-day pause right now. You know, are they going to is that a concern or does it lead to the same end result regardless of what happens? I think tariffs, if we take a look to next year around the same time, we're going to see a similar Chinese trade or ex capital surplus and a similar US trade deficit. the tariffs will have done nothing because at the

end of the day they're too painful politically to properly execute. And I wrote about this. So number one, you have to apply the same rate to everyone. You can't have China at 100% and some countries at 10%, right? Because then what do you do, right? Okay. Well, if I'm at 100%, that country's over here at 10. Well, I'll give you I'll pay you a little bit of vague country at 10%. I'll ship all my [ __ ] through you. You rebrand it and sell it to America, right? You make a little bit of money on the top. I get to say I get to reduce my effective tariff rate and everybody's happy, right? US consumer pays a little bit more and then everybody gets to claim that tariff did something. You know, there's a little bit more revenue at the Treasury Department in the US and

tariffs worked. No, they didn't work. The new [ __ ] right? Because, you know, not everyone is on the same side as the US. You know, then it's not, you know, is it a China issue, but it's not always a China issue. The number two and three largest sort of trade countries are, you know, Taiwan and Japan and Germany and these are staunch. South Korea. These are staunch US allies who have hundreds of thousands of US military personnel on bases on their home soil. And these are bases that are very unpopular with their domestic population. Japan's 120 US military bases. Japanese do not like that. But the politicians say, "I don't give a [ __ ] right? We are staunch allies of the US and we'll host these bases." So how can Trump go and say, "Oh, we're going to destroy your export industry by putting 100% tariff to

reduce your trade surplus down to zero." And at the same time saying, "Oh, please host all these military bases." and if things kick off in sort of the Sea of Japan or you know with China and Russia we expect you guys to host you know our naval fleet so that we can hem them in like this doesn't work right so you can't geopolitically they cannot charge the same tariff rate freight across the board so then there's always going to be cheating so number one it just doesn't isn't going to work and then number two the American public doesn't want cheap doesn't want expensive stuff so they they hate inflation so you're telling them oh you're going to go to Walmart and it's not going to be everyday low prices anymore who's in charge Republicans okay let's put the Democrats the show and see what they do and then

so it's just it's not a, you know, red versus blue or Democrat Republican thing. It's the guy in charge made my [ __ ] go up in price. I'm broke as [ __ ] Therefore, I'll put in the next person. And I think finally that message has percolated through to Trump, which is why you got the first 90-day pause and now you have the the next 90-day pause with China. And I'm sure there's going to be some sort of like optically nice agreement that people both sides are going to claim to to do something to reduce these imbalances, but I don't think tariffs are the way. And so if you're afraid about, you know, afraid that global trade is going to decline because of tariffs, I'd say, you know, that's a that's the wrong thing to be afraid of. What I would be afraid of is

capital controls or some sort of um taxes on foreign capital invested in the US. That is a way to over time reduce the imbalances because you can you can either attack the trade account through tariffs or you can attack the capital account through capital controls or taxes on the foreign ownership of assets and dive into the fear around capital controls. What's the is that is that a real risk for us right now? I think for the United States that's the only way that they're going to be able to reduce these imbalances. What does that mean?

And you know a modest you know even a 1% tax on all portfolio assets invested in stocks, bonds or property would yield hundreds of billions of dollars in revenue every year. And so at that point then the the foreigner who owns this stuff is like okay well you know the the yield at home is x the yield in America is y minus tax. Does it still make sense for me to invest these assets in America? I don't like I don't maybe I don't like to pay taxes. Okay cool. Well, then I'm going to take my capital, sell what I have, sell the bonds, sell the stocks, sell the property, take that capital, repatriate it back to my my own country, and then my domestic currency um appreciates and over time that that currency gets so expensive that the

export competitiveness levels out. And you know maybe manufacturers do want to move stuff back to America because you know on a purchasing power parody basis these East Asian using them as an example currencies like Taiwan dollar, South Korean Juan, Japanese yen, Chinese yuan are a lot more expensive. Therefore, I'll move my factory. Now this is like 5 10 15 20 years sort of process. But that's sort of how you get to the same place that the tariff would get you to. What's the problem for US financial markets? foreigners were the driver of returns for the past almost 30 years, right?

Since China joined the WTO in 2001. So if you take that buying power out of the market, then stocks crash, bonds crash, property crashes, unless they print the money, which is obviously where we what we're, you know, we want to know as a crypto holders or Bitcoin holders is when they're going to print the money, why are they going to print the money? So this is why they're going to print the money because, you know, they're very, you know, Democrats and Republicans are very on this. We need to rectify these imbalances. The rhetoric is different depending on who's in charge, but the intent is the same. It's going to happen. And so, okay, well, neither party can tolerate the financial markets declining in in value because number one, there's a lot of taxes to be

made from those and all their donors are rich and that's what they own. So, they need to make sure uh that they're protected. So, what do they do? they're going to print the money. And so that is how we get to a million dollar Bitcoin is capital controls forcing foreigners out of the US. The US saying, "Okay, great. We don't have the foreign money. We'll just print it instead to keep our markets afloat so that we can charge taxes and afford, you know, this welfare state that we've created for ourselves." Everyone likes to say a million dollar Bitcoin. Uh, and for good reason. I'm manifesting it. I just keep saying it. Just keep saying it. Yeah, let's go. I mean, I don't think maybe it will happen. It will happen. But when, right? I want to just because we're talking about a million dollar Bitcoin.

I want to get down to a more when level of like the next year, but just because we're talking about when do you think a million- dollar Bitcoin could be realistic. I think that we're going to have a crack up boom boom in sort of like 2026 2027 time period. I think if we're going to have a million dollar Bitcoin, that's when it's going to really manifest itself. Okay, let's talk about short term right now, the rest of this year. Lot of a lot of pundits, a lot of experts saying, you know, pretty much the same thing that maybe basically very similar to what we were saying coming into 2025, which was, you know, we're going to we're going to end Q4 is going to be is going to be peak. Maybe it goes

into Q1 2026. Lots of people saying, you know, maybe we're we're pushing it back a little bit. It goes into maybe Q Q2 2026. What's your timelines right now? Do you think that we could see it a shortterm little bull market here through the summer? Do you think everyone sells in May and goes away for the summer? I think we really I think we can go you we go through 110,000 and then so we we sort of run until in the 150 $200,000 range. I think that could happen between now and sort of like early July of this year. And then I think sort of the the next decent correction and that maybe is a 15 to 30% correction, I don't know, uh will be in

August um between late July and late August because what has Trump done essentially? And you know, as a trader, I love it when politicians put these binary outcomes because then I it focuses all attention on these dates and then I can almost certainly know that there's going to be something that's going to happen. And usually volatility in the first instance isn't great for what you own. So you want to be sort of de-risking. So what do we have in July? Late July through and I say the pivotal date here is a Jackson Hole Symposium by the Fed where I think they're going to radically change what they're doing. But so end of July is the first X date for 90-day tariffs for everyone except for China. So how many deals is going to Trump going to have announced? And if he hasn't announced a lot of deals, is he

going to ratchet up the pressure on the tariffs to those who didn't come to the table? I think yes, because that's his negotiating style. He wants to get a little bit more juice to present to voters in 2026 about how amazing the Republican party has done at this campaign promise of reducing the imbalances. So, I think Trump goes a little bit more maximalist pressure into these dates. maybe even goes over them because he's like, "Okay, well, the markets are already up on the year." So, I can afford to have things uh decelerate a bit if I go a little bit hard ball on the tariffs after this 90-day extension. So, I expect a lot of volatility. I think it's and middle of July, whenever that is, is the rest of the world. And then China is I think August 12th is when their extension expires. So, again, a lot of volatility.

Trump saying, "No, no, we're not doing a deal unless it's very good for America." yada yada yada. Market's freaking out. Oh my god, they're they're not going to do a deal. And so we go back to sort of the April 2nd to, you know, that week sort of um volatility in the markets. Uh and then we have the the debt ceiling. So I mean assuming that there's no sort of bill passed to fund the government and the debt ceiling raised, that's essentially when the the market is saying that the Treasury will run out of extraordinary measures to fund the government in the mid August period. How how do I get come up with that date? You can look at the T bill market and the term structure the interest rate curve and look at for kinks in the market

because of how the rules are around money market funds and how they have to mark their books. They can't have a bond that doesn't get paid. It reduces um it might have their nav go below one and that's sort of regulated as very very bad and so they don't want to own they don't want to own those bonds they believe are going to could expire when the treasury can't pay them back. Now, everyone believes that the Treasury is that the debt ce ultimately get raised. So, you're going to see a kink in the yield curve and that's when you would say, "Okay, that's when the market says there's going to be the exit." And that's right now is around um mid August. So, we have all these things happening around then. So, I don't want to own a lot of risk from late July into

the Jackson Hole Symposium. And so, then we get to Jackson Hole. What do we expect from the Fed? If markets are crashing because Trump is trying to get a little bit more juice out of these uh tariff negotiations, ultimately they'll go back to status quo. We know that's what's going to happen because they can't take the volatility. Then we get the setup for Pal to do supplemental leverage ratio exemptions. We set the stage for Pal to announce that he's going to do he's ending quantitative tightening, but the receipts from maturing mortgage back securities will be buying treasuries. he's already said that they're thinking about that. So, I think those two things could be on the table to be announced at Jackson Hole and then we get this rip roaring markets

from then until the early uh first quarter of 2026. So, what's what's the um I have two questions here. One, like what's the the short-term catalyst? You're the only one that I'm hearing say this right now that like we could go to like 150 200k Bitcoin this quickly. Lots of people saying we could be there by the end of the year, but not a lot of people saying that we could be there by July, right? And I'm all game, Arthur. I'm in. You got me convinced. But but why? Like is the Treasury buybacks does that have impact this quickly? Is that the catalyst here or is there something else? I think it's just FOMO, right? So, you know, we hit the 110, went down to went, you know, depth of oh my god, the bare market's over D. We

went down to 70 something thousand. And then you know there's people never Bitcoin is never going back up 110. That's it, right? So then it hits 110 then [ __ ] on high volume eclipses that that means it's game on, right? And then we run and and it's not based on, you know, any major new fundamental change. It's the same thing. Everyone believes they're going to print the money. And so then all the things, all the confirmatory biases start, oh, the US government's going broke. Oh, they got downgraded. Oh, bestin, look at the deficit. Doge isn't working. Oh, this. Oh, that. all these things that already happened that you could have bought Bitcoin at 74,000. Now it's oh my god that you know the situation has just changed so dramatically when there's no new information. It's just that the

price changed and so all those things that were positive in your mind gets you to buy more Bitcoin at 110, 125, 150, right? And so we just run and so that's that's the you know this human psychology and how markets work is why I think that we run to those sorts of of levels very very quickly. uh and then have a pause and and and if that happens, do we get altcoin season? Is this like is this Bitcoin just increasing Bitcoin dominance or is this going to trickle down and cause an altcoin season in the short term as well? I mean, obviously ET East had a good run, but it's still 25,000 at a level of Bitcoin then Bitcoin E the Bitcoin ETH ratio is still not great.

So, you know, to really get all uh dominance going down, you really need ETH to rally. And so, we'll see if that happens. But, you know, I'm more focused on Bitcoin right now cuz they that's what everyone owns. The people who are afraid of a bond market meltdown who own a lot of bonds, you know, the large institutions of the world now they have this Bitcoin ETF and they can buy it and they can express that fear in terms of of buying Bitcoin. And if the price keeps rising, then it just confirms that oh [ __ ] something's happening. It's not just going away. It's not just high bid in NASDAQ, right? So, or it's it is high bid in NASDAQ and it's crushing the NASDAQ this year. And guess what? I can I can join the train. I can join the party. And so that's why I think Bitcoin

dominance probably e either stays flat or increases um if we go on this run. I think altcoins really come into the space sort of like later in later in the year once we get into the meat of the of the rally. Okay. So let's talk about about that. So, we're we're up to uh we we've we've gotten up to July, everything, you know, stay away, be careful, all these indicators that you're saying that you're going to be watching. Then we go into into the fall. Do you think do you think recession and things are are not looking good or do you think do you think we're we're pumping and we're heading to Valhalla into the later half of the year? I know it's difficult to predict this far away.

No, I mean recession is irrelevant. Who cares? Doesn't matter. We don't care about recessions. They don't matter. All they care about is money. How much money is there in the world? You know, China is busy, you know, dealing with a debt deflation trap and they're not printing enough money uh to get themselves out of that by choice. And so, even though the fiscal deficits are massive in China, it's just not enough to get things really really going. So, they're kind of out of the picture. We'll see what happens with Japan and what the BOJ does in in June. I'm not sure. EU is irrelevant right now. And so it's really all, you know, the show is it's the it's the Trump show. And think about, you know, by the fall, it's almost one year out from midterm elections and Trump needs to start showering goodies on the Republicans to

get reelected. And so it is fulltime, it's full send time for the economy to so start going gang busters. And what does that mean? You need to give credit. That is what the US economy is based on. It's credit. And so that is supplemental leverage ratio. That's Treasury buybacks. That's ending the conservatorship of Fanny and Freddy. There's all these sorts of things that they can do to increase the credit into the system to start juicing at least financial markets to start with. And that's why I think the falls when they they really need to start getting going because they only have 12 months. The Republican legislators need to start campaigning on what did what did you do for me lately is what the voters going to be asking. And so I think all this talk, all this doom and gloom that's out

the window. It's America's the best place in the world. Look at what we did in the first 100 days. I'm a [ __ ] amazing. You know, we beat back China. They [ __ ] bent the knee. You know, we did the deals in the Middle East. You know, all these sorts of things, right? Maybe there's a recession, maybe there's not. I don't really care. It doesn't matter. I just know the money needs to be printing. The markets need to go up because the party in power is getting reelected. In the same way that the Democrats, the same thing with, you know, Fed cut rates for Kamala Harris. You know, unfortunately for them, she lost, but it's the same it's the same playbook at the end of the day. that playbook really starts in earnest in the fall. And so that's why I think the

that's when we get the the real juicy, you know, just like day after day of just green candles everywhere across the crypto ecosystem and everybody feeling good and we just got to buy stuff and and do you think we'd get an alt we'll get an altcoin season like in the past where everything goes up or do you think it's different now? I think it's I think people are getting a little bit more discerning. Now, that being said, I don't know what the new news piece of [ __ ] narrative is going to be. You don't know what it is. I don't know. But hey, I'm a trend follow. If the the trend is the trend is your friend until it ain't.

So, I'll I'll be trending I'll be trend following. I'm momentum trading the [ __ ] out of that. Whatever it is, I don't care. Doesn't matter if it's complete fugazi. We can believe something once. I'll be it probably will be a complete fugazi. So, but like the stuff that has already launched, it's the question is okay, we've done this altcoin season like three times now or four times, whatever you want to count it. Okay, where are your clients? Are they actually paying you real money? If they're paying you real money, where's my [ __ ] cut as a token holder? And so I think for any coin that's not new, that's what we're going to be asking ourselves. And there's very few projects that have real clients, pay them real money for product and service, and the benefit of that goes from the protocol to the token holders. So hopefully ETH

sort of catches a bit and we sort of get this DeFi resurgence, but it's not going to be all the dog [ __ ] DeFi that went up in, you know, 2020 and 2021. It's going to be stuff that has, you know, as I say, fundamental season, real cash flows. Cash cash rules everything around me. That's what I want to see as an investor, as a token holder. And I think we're really going to be rewarded. And I think we've really seen that narrative starting to play out if, you know, obviously I'm an investor and adviser of Etherfi. it was down to like 50 cents, 40 cents, whatever it was, you know, pretty much the lows that had been at post its token generation event. Thing has rallied uh almost 3x um from from those lows. ETH only went up 50%. You know, Bitcoin only went up 30%. Why?

Because they've got real cash flows. They're doing token buybacks with 5% of revenue. People like, "Oh, okay. Well, this is a real project. They've got this new uh card that they're coming out with. you can spend your staked ETH and other things. So, I think those are the types of projects going to do really really well in this this altcoin season. And then if you're if you're the next L1 with, you know, a massive amount of token supply to give to VCs and no actual customers and no transactions on chain cough cough bar chain, then you're not going to be doing so well or monad or whatever the [ __ ] is a new thing out there. So, I think that those are the types of things where people are going to be a little bit more skeptical because the fundamentals and the cash flow just don't match up. And it's just

and we already had a chance to see it work. Okay, I'll give the benefit of the doubt to something new that has none of that stuff. But if you've already launched, like, show me some [ __ ] results. Finally, crypto is growing up to look at fundamentals. I don't know if we're growing up, but I mean, you learn after after so many beatings, you hopefully you learn something. Yeah, maybe. Maybe not, though. Uh, one thing that I really am getting a lot of insight on right now is the future of crypto exchanges and particularly centralized crypto exchanges because we're going through we're getting legislation in the US. Uh, the Genius Act on the stable coin side got the vote yesterday. That's great to see. We're probably going to get that

through pretty soon. Then we're have market structure bill after that. you know, we're going to have a lot more players offering crypto exchange services than we do right now. How do you what do you what what's what is your outlook on the crypto exchange market and the current players? How do you think this plays out? Do you think Coinbase continues to dominate? Do you think that we see new banks enter the space and start to offer these services and they take over because they've already got the all the customers and they've got the access to that distribution? Yeah. Yeah. So, obviously this is a very US- ccentric situation.

If you want, you take a look internationally, the market's very, you know, obviously very well-developed. You have the dominant Binances, Vets, um, all those sorts of players, um, who have the majority of the market share. And what do you see internationally? It's a perfectly competitive market where the only thing you compete on is price. So, there's spot trading and the thing that, you know, myself and BitMX invented, purpose trading. That's it. There's not been really any innovation in the centralized exchange space uh, since 2016. uh it's really just about marketing and and market share. So if you move over to the United States where you know it's basically been you know Coinbase and Kraken offering a pretty you know toned down service uh due to the regulations and now you have you know JP Morgan said they'll let you buy

Bitcoin for example if I'm Coinbase I'd be [ __ ] my pants right so you now have the largest bank with the most important banker in the world who literally could tell the president go [ __ ] off and he'll automatically change his whole international tariff policy is now going to be selling Bitcoin. Do you think you're gonna be able to charge 25 or I don't know hard 100 basis points whatever core mbace charges for you to trade spot anymore when JP Morgan can do it for free or whatever because all they want to see is more balances or aum whatever the thing is that the the street analysts are going to reward them on. I think it's be very very tough for a lot of these uh cryptonative firms to compete with the distribution angle and the ability for these like you know one-stop shop financial institutions to

offer crypto because yeah Coinbase is cool and all that but like you know if the price is right the customer doesn't care uh and you know we've seen that internationally where it's literally just about the price and so I think the price of crypto trading is going to come down a lot in the United States. Um, if Jamie Diamond is going to offer Bitcoin, then Goldman Sachs and Morgan Stanley and Bank of America and Wells Fargo and all of them because they just copy each other now that it's okay to do so. And what are they going to compete on? You know, Bitcoin spot trading, Bitcoin, it's not that hard. It's the same. The product is pretty simple. It's just price. And so, you know, great for the US consumer. The price is going to come down. You're going to have a lot of choice on on which exchange that you

want to use. Now, I think that if you're talking about sort of the fun altcoin, shitcoin space, you know, these institutions probably not going to be as forwardleaning into that. And so maybe that's where there's going to be some opportunities for players to really differentiate themselves and create a unique product offering. But, you know, if you're talking like Bitcoin, E Salana, spot, and perp trading, like it's going to be perfectly competitive, very cheap to trade, great for the US consumer ultimately because there's going to be lots of choice. Uh, I'd be very very worried if I were a Coinbase.

Okay. So, you're mega bullish on Bitcoin right now and you're certainly not the only one. That seems to be the consensus trade right now and for good reason. Anything else that you're bullish on right now in the short term? So obviously this is a little bit it's it's a bit more private markety but there's a theme that we're sort of developing at Maelstrom in that uh we're starting a leverage buyout group internally at the firm because we see an interesting opportunity especially within the uh US capital markets has emerged right so if you take a you know go back to sort of the the pre-Trump days in Biden you had this big spa boom in the early days of COVID and then the SEC kind of shut that down but you have a lot of these spack SP sponsors who raised a bunch of money.

They've listed their spa security and now they have 18 months to find a target and the SEC previously wasn't approving any any targets. But now obviously that's that's changed. It's business. Let's do let's do some business under Trump. And so there's all this capital in the high single digit billions that needs to find uh credible targets to acquire. Now what have we seen in the capital markets do very very well? These Bitcoin and crypto treasury trades. Uh we were in the UPXI deal. There was the um David Bailey and the Nakamoto thing that did really really well. And so if I'm a spack sponsor, I'm like, "Oh, okay. Well, I've got the thing that the market wants is sort of crypto exposure or crypto light wrapped up in a nice uh tradable security, but where are the

companies out there that I can actually acquire?" And so, you know, at Mailro, okay, well, we we know how to do this. Let's go and find some cash flow positive companies that are probably not going to be in the exchange space. that's a little bit easier to digest. Uh we're going to raise some money, buy them, audit the books, put in some proper management, dress them up real nice, and then we're going to flip them over to the spack guys and give them some some companies to buy. And so that's something that we're working on uh pretty actively uh right now. We have a few companies that we're we're interested in doing this in. And so I think there's some going to be some interesting public market stuff in the US, not exactly just um XYZ shitcoin out there. not the thing that every one of

us listening into this can buy. Can we Can we invest in Maelstrom? Can we get an own? You can invest in a spa. You can invest in a spax stock that ultimately be spaxs. But come on, I got to make some money. That's how I throw these parties. What about the rest of us, man? I thought we were friends. Arthur, just pleasure to get you back on the show as always. Appreciate your time. Uh, and uh, yeah, it's been great to chat with you today. Thanks for having me. Thanks for listening in everybody. Have yourselves a wicked awesome day. I got to remind you as always that none of this was financial advice. This show is in for information and educational purposes only. You should only invest what you're willing to lose and you should always do your own research and take some time and

make don't just listen to what Arthur says or what I say. Actually make your own decisions. Everybody make your own decisions. You are an adult. You can do it. Appreciate you. Have a wicked awesome day. We'll see you back again tomorrow. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro.

You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends. Have a wicked awesome