Is Bitcoin's Rally a Short Squeeze, or a Real Regime Change?

Transcript

They'll cut benefits starting with Gen X. So come all of us and younger. So that's gonna happen. That's that's the move. They're gonna say qualify for these benefits 8 to 10 years later in life. >> But it's the boomers that are going to decide that, right, for us. >> Yes. >> A lot of them Hold on. 10 years forward, the boomers will be way more dead than they currently are. I think people need to be careful about the electoral predictions of boomer power. >> Uh they're hanging on, man. They're hanging on top. Hey everyone, welcome to Bits and Bits, where we explore how crypto and macro collide one basis point at a time. We're here to discuss the latest stories in the worlds of crypto and macro. But quick heads up before we begin. We have our own channels now. So

if you're on the Unchained feed, please come subscribe if you want to get your hands on these episodes. There's only so long I can harass Laura to keep us on the Unchained channel. And before we begin, a quick commercial break. This episode is brought to you by 1-in Aqua, the shared liquidity layer from 1 in. Back multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at 1in.com/ aqua. Before we get started, I want to ask you for something. We're making a bunch of decisions right now about Unchained.

What we make next, when we go live, what we should be doing more of, and I'd rather hear from you before we make them than after. So, we put together a survey. It takes just a few minutes. It's anonymous and there's a box where you can tell me what we could be doing better. I read all the responses. The link is in the show notes or you can snap the QR code on screen or go to unchained crypto.com/servey. Thanks. >> All right, so markets today. Bitcoin has been flying uh up about 7% on the day. I see it above 87K as I'm looking at the screen right now. ETH has been catching up along with it. Cleared 2790.

Brent is around 100. WTI around 95 and change. Came back in a little. 10ear stubbornly high, still at 4.95%. Gold at 4,340 an ounce. S&P 500 and NASDAQ are both up at the close uh 1.5 and 2.3%. So with that backdrop, as always, I'm your host, Austin Campbell, high scholar of Zero Knowledge Group. I'm here with my usual two co-hosts, Rahm Alawalia, Maester of Wealth, Leader of Lumida, and Chris Perkins, the golden hand of Franklin Crypto. So guys, let's start with the markets here and specifically, let's start with Bitcoin because this is interesting in the context of the world.

first weekly candle to close above its 50week moving average for 45ish weeks. That line has marked the end of past bare markets and obviously it continues to run. There's a debate going as to whether this is short covering or real buyers out there, but I'm going to remind everybody every trade has two sides. You always have a buyer and a seller. So, in early September, we couldn't get this far. And now we closed the weekly average at 81,160.

Monday has added another leg. Galaxy Digital and Alex Thorne are noting the 50we is the bare market ceiling, and you have to reclaim that. quote, "In four of the five completed bare markets, once the 50-week moving average was first broken to the upside, the bare market bottom was definitely in." Benjamin Cowan said a rally to a higher high and weekly closes above the 50week SMA would materially weaken the bare case. And Jurian and Timmer at Fidelity said, "I'm sensing that a new four-year bull cycle is underway." Uh there is the case that it was all shorts. IT Tech uh said Coinbase premium negative 166 of 168

hours. It was short covering that drove the bounce. Real US buyers never showed up. Listed companies have only added 5,900 BTC against 89,000 in July 2025 and spot ETF whole week. Counterpoint the case that the reclaim holds. Glass node said corporate treasury cost base is around 80k. ETF cost base is around 85k. It's all spot. Um and a desk note that was circulating on the street is a pure squeeze. Usually gives back 50 to 70% the next session of the gain. This one did not. So Rahm, you're a markets guy. You've been watching all kinds of

markets for a very long time. We've just seen Bitcoin reemerge from the dead, like sort of move up from the rubble levels that we were seeing for a while. What are you making of the price action? Do you think it's just shorts? Is there more? >> It is a short squeeze, but it doesn't matter. It doesn't make it illegitimate. You know, rallies off of bottoms uh do find shorts offside, then they have to get involved. Uh then that can attract momentum and then momentum people get involved. Then the FOMO buyers show up. That's just a classic dynamic. I I don't think uh it invalidates anything. It's impressive.

So, what causes is a surprise. A surprise being that possibly the Clarity Act passes, that the Dems have moved the ball. And that surprise is kind of upsetting what consensus had been just the day before, which is that Clarity Act would not pass. So you had a lot of people concluding would not pass and you had this kind of deterioration in Bitcoin up until this event. So that is like a kind of a wildfire set of conditions there, right? Dry timber offsite positioning and this news impulse. So the thing you got to focus on then is the Clarity Act. Will it pass

or not? Right now expectations have gone up quite a bit. So what happens here uh turns on, you know, the path of of Congress. >> Chris, what about you? What are you making of this price move? >> I I think we're in a regime change right now. Um you're right, Austin. Prices go up when there are more buyers than sellers. And from the beginning of Bitcoin, there's always been this push and pull um where is the asset a frontier risk asset or is it is it price movement based on its fundamentals and I think you can say that across crypto. Now there over the years there were some issues around

fundamentals where we couldn't embrace fundamentals because the regulators didn't allow us to. If a token had a cash flow it was a security and it was left for dead. Now we're seeing the opposite. Securities are just fine. We have a roadmap for them. We have exemptions as well. The regulators are providing that clarity. So that artificial barrier to investments based on fundamentals has been removed. And what gets me excited about this is that again it was really acting like a frontier risk asset very sensitive to geopolitical stresses, macro stresses. It feels like finally we're starting to look at the fundamentals instead. And I think a lot of that is because there's a regime change where retail came out. Now

it looks like retail's starting to come back. Little price action and they come back. But the institutions are here and they're underwriting based on fundamentals. And so what I think you're going to see going forward is less of this asset class blind frontier asset type of play, more of a discrimination and a determination of value based on fundamentals. I think that's that's what we're I think it's probably bigger than most people realize in the regime change uh that that that's that's happening. We've had a lot of negative things that you know could have crushed Bitcoin and other assets with rate hike. Um we have geopolitical stuff going on. Oil's over 100. There's a lot of reasons for a front tier risk asset not to be

performing right now. But if you look at what Bitcoin itself is on a pretty amazing store of value that's maybe a little bit more transportable and has additional value, you're starting to see those fundamentals take hold. So like I I think this is, you know, I think we're we're entering into a bull cycle, but what makes me most excited is that differentiation now we're more and more focused on fundamentals. I think as I've been looking at this, I also have a point related to what Rahm was saying earlier that's been bouncing around in my head, which is that clarity didn't pass originally. We saw a leg down to 75K and we saw some people

dancing on graves on Twitter. A lot of people who had some hot takes like, "Oh, it's over for crypto. Look, they can't get anything passed. The industry killed itself." And then Bitcoin did not keep going down. So if you had been a short, if you had been looking for a large leg down on the failure of clarity, if you had been thinking people were losing faith, your entire thesis on this whole thing got invalidated by that sort of price action, right? You had a gentle dip and then things resumed as they were. And I have, you know, at least some sort of intuition for the short case on some of these things. I think that probably rattled some people who had been positioned for a clarity decision coming in negative. And so to

Rahm's point, short squeezes happen. You'll know it's purely a short squeeze because it gives that sort of like pinch back over the next session or two. It is something that consistently happens in markets because that is forced buyers closing out positions and then once that happens, you return to organic demand. The fact that we're not seeing this, and Chris, I think you're alluding to this, tells me people are seeing something else here, like ETF flows are turning positive. And if we look at some of the rest of the crypto market, it's not just Bitcoin rallying. There are a lot of other things moving, some of them on fundamental news, right? Like, >> take a token almost nobody usually talks about, but like Avalanche is up close to

50% over the past seven days on some of the stuff they've been announcing, too. So I think you may be right about the regime change. And so what I want to press on with you there is assume clarity is fully dead. Do you think that changes anything about what's happening with price action or are we off and building anyways? I >> I think we're building building anyways and and cautionary tale for the shorters out there. You have to be really careful. Uh volatility works in both directions. We've seen time and time again face ripping volatility up and you take unlimited um you know risk when you're shorting something and and it's it's just a very dangerous asset to short. Um so look clarity would have been wonderful. We would have had what

we call an enshrinement of it takes it would take an act of Congress to change things in many cases. Uh and it would have been wonderful. I think towards the end there's a few provisions that got inserted that people were left scratching their heads. Um but where are we? We're entering a phase where we're having pretty amazing regulatory clarity. Um what was one of the biggest challenges in the past? It was taxonomy. We didn't know what was a security and we didn't know it was a commodity. We got great rules for both. You know, we we know how they work in our current um economy and and financial system. uh but but no one would tell us which one it was and and it was very difficult. Now we're going to know and now we know and

now we have road maps to have successful capital formation trading etc. whether you're a security or commodity, we're going to get three years of precedent, 2 and a half years of precedent, whatever. Uh, and that means something because once you have precedent, and by the way, we're operating in what we like to call the post Chevron deference world. And so these regulators, they're smart. Um, I know I know Chairman Celig, he was an he was a very strong attorney. They understand how the law works. And that's why some people are like, why aren't they moving faster? because they have to make sure they stay focused on the law as it stands to have regulations that have some duration to them. And I I think look if there's a change in administration, a change to Congress, could could we see some, you know,

changes to uh to regulation? Sure. Um I think many people in Congress wanted to wait and see how the elections went and then maybe they'll have a better negotiating uh position. Give it a shot and lame duck, see what happens. But I I think we're fine either way. we have clarity um and even in the absence of the law. So it's very powerful for institutions. Enshrinement would have been great. Federal preeemption would have been great but we move forward. We march on. >> So one final question because I want to get into the investor psychology of it when things start moving here. Rom Coinbase premium remains negative. I think it was 166 out of 168 days if I'm remembering my notes correctly. And that

tells me that this is not a US retail bid. Do you think this is one of those things where this is purely institutional traders or because I know like you see the RAIA business, you see people who are not thinking finance 247 as price starts to move is that going to get them excited and they're going to get involved again? >> Yeah, I don't think this is Raa driven. We can measure that through the ETF flows >> which is only six million, right? Yeah, it's not it's not enough. It's not enough. I think these are uh you know there's a cryptonative component.

Uh I think there's a there's a quant component. Uh there's a a macro trader component reacting to news flows. I think that's that's what it is. A lot of can turn on the flow. What happens? Does this thing pass or not pass? Right. Probabilities just repric like that in a day. >> Yeah. >> Okay. So now the game just reset to see what's going to happen. What's Congress going to do here? is event driven. >> No, that that makes sense to me. And the reason I ask about the retail flows is if they're not here yet and things keep moving, there could easily be another large leg behind it if they get interested again. So, all right, speaking of things that retail will pay attention to, when we come back, we're going to talk a little bit about oil and the Fed, but before that, let's take a

quick commercial break. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the DeFi TVL if you're wondering. That's according to Dune Research commissioned by 1 in. But there's a solution. 1-in Aqua is the new shared liquidity platform. It lets LPS back multiple positions with the same token balance and keep their tokens in their wallet till a swap comes. Why does that help? Because the LPS don't have to split their tokens across positions, they can cover more market conditions and pairs with their full balance. That means more activity across deeper liquidity. See how it works at 1in.com/aqua.

Remember that providing liquidity carries risk and fees aren't guaranteed. >> All right, welcome back everybody. It is time to talk the rest of macro markets. So crude has fallen for five straight sessions from the September 15 peak, mostly on Trump's opening talks with Iran, but gasoline and diesel are still climbing. The Fed just raised rates and pushed its first projected cut currently out to 2028. So let's talk about crude.

Brent peaked uh 108.75 on September 15. It's fallen gently for four straight sessions back to 10387. Monday it was dropping again significantly down below 100 at some points. Uh Trump said he would probably be open to meeting Iran's president at the UN General Assembly this week and Saudi shipments of oils are partly recovering after the pipeline strike. Uh the shortage seems to be in other kinds of fuel. Gasoline futures were up six. Diesel about 1.5 last week. Uh Russian refinery throughput is 3.8 billion uh million barrels a day, lowest in 20 years. Diesel is down. Um and JP

Morgan's uh Natasha Kava said, "We simply don't know how to model the endgame here." The Fed also had some things to say. Fed raised rates 3.75 to4, a unanimous vote, the first increase since July 2023. Projections moved up to a median 4.1% in 2027, which was at 3.6% in June. Uh, and chair Kevin Walsh said, quote, I would be hardpressed to describe broad financial conditions as restrictive. So, we removed a dose of accommodation. Uh the 10-year continues hovering very close to 5% uh 4.95ish as of right now after crossing 5% last week. So Rob, I

want to start with you and then I want to get to Chris. We saw a Fed hike. We saw Bitcoin rally despite a Fed hike. We've seen the long end remain stubborn. We've seen oil only coming back down a little bit here. this my take this seems to be a market that expected what the Fed did and kind of shrugged it off. How are you reading things and like what are you liking in this macro backdrop? >> Yeah, it was interesting. the the CME Fed fund futures probabilities were moving higher over the last really two and a half now three weeks or so and it started Monday around 85% then as a day wore on and then Tuesday moved to like 90 low 90s and uh you know when when the

probabilities get that close to a decision point that close to a meeting the Fed does not like to disappoint uh I also noticed that Black Rockck's Rick Reer and folks like Edward Denny who are followed by a lot of money managers they flipped Monday and Tuesday. So that also helped make this thing just a done deal. Uh so yeah like you said a lot of this was priced in and discounted. it was being discounted as the Fed fund future probabilities were going up and in a single day today the markets shown an extremely strong rally. Uh and it's gained plenty plenty of that kind of pricing in of rates going up.

>> Uh so yeah, no it's uh pretty healthy to see. You know, this the Fed really should never have cut rates period. They they did adjustment cuts that they shouldn't have done. Now they're adjusting higher again. Uh and Trump is supportive of it. He said he would support the decision. It's like a new Trump. We've never seen this side of turn. Ricardo, I had to do a double take. I like did he he really said he he's going to support rates. >> All right. He didn't criticize Worsh.

Um so so far so good. you know, worsh, he's trying to establish his credibility. Getting a rate hike in there helps him accomplish this task. They are focused on getting the long end of the curve down because that helps most ordinary Americans with mortgages and and auto loans. Uh the economy is strong. The economy is strong. Uh so this is not a rate hiking cycle. That would be the wrong read from this. The Fed's not trying to squash anything. They're doing an adjustment hike because the economy is strong.

And yeah, it it was a good decision. I just think a better decision would never have been to cut when they did this last year. >> If they hadn't cut, Rahm, there's a possibility that the markets would have gone down. And and I think what happened here was that the market is looking at this as Fed independence. And I think that's why that's why the market is liking this. You know, he's tweaking. It wasn't a shock rate hike. It was a tweak. Um it was baked in. Um and he was able to do it. And by by moving against the president, he can say, "Look, I'm independent, guys." And I I think that is why the markets like this so much because of that assertion that nope, I'm independent. Um so that's great. I think

the other thing that's really interesting is geopolitically it feels like the world is on fire right now. And the one thing a good friend of mine told me once, he's like, "If you want to know the truth, look at financial news." Uh, I was on the phone this morning with colleagues in Saudi and I'm like, "Are you guys okay? Is everything okay?" And they said, "Yeah, it's like it's fine. There's very little impact here. The news is overblowing everything." And so maybe that's, you know, it does feel like there's a lot of um a lot of thing like I personally was was wondering if Trump was going to turn it on last night with with the Houthies. um he's held off there. I think there's a lot of willingness to make a lot of this come to an end. I don't know the solution. Uh

but I feel like maybe the maybe some of the headlines are overblowing how bad it we think it is in the Middle East >> which could be also helping you know markets. >> The the Houthis point is a great one to point out because at the same time this weekend the Saudis announced an investment into the United States. Was it like$2 billion dollars? I think it's $15 billion to buy stock. >> Yeah. >> Managed by an American money manager and then billions of dollars in middle market investing, which is a main street story. If you want to have a main street story, that's the story. And clearly, you know, that's consistent with Trump's policy. So there's there's some kind of quid proquo is my guess. And we'll see

what happens after the midterm election. So Houthis might see the other side of that quid proquo. >> Yeah. I I don't know. I thought it was coming. I thought they were about to get it, but um not yet. So, we'll see what happens. >> I think what's been interesting to me about the market response here in particular is one, I agree with the comments on Fed independence. The fact that Trump is out supporting Walsh on this tells me that somebody got through to him on the concept that if you're constantly attacking the Fed and calling their independence into question, that's going to be a one-way ride for markets and it's not going to be the direction you want, right? Because if we truly

believe that monetary policy in the future in the United States of America is going to be at the whims of a future president, you should rationally have somewhat less confidence in the markets of the United States. And I think Trump maybe was also noticing every time he badmouth like the Fed or Wsh, the long rate goes up, which is the exact thing he does not want. Right. We've seen this trend and now in reverse we hiked rates. Rahm, to your point, back up to where they were before. So, all we really did here was roundtrip ourselves. I think you're correct about that. But the tenure didn't go up, right? I think anybody who's got this idea that mortgage rates were going up

off the back of this or main street lending was going up off the back of this just kind of got thrown for a little bit of a loop when the long end just sat there and quite frankly did nothing. Um, so to me the constructiveness in equities markets comes all the way back to something WSH said and Rahm I want to ask you about this one based on what you're seeing in stocks and like call it core fundamentals in these companies. Worsh was saying the economy seems strong and it's hard to see policy as restrictive right now. So all we're doing is getting a little bit less accommodative. Do you I guess agree with that view? Like what are you seeing that supports or disagrees? Yeah, I know he's right. Like

this is no longer a rates sensitive economy. It's a healthc care servicesdriven economy fueled by entitlements from the federal government and it's an AI capex driven economy and it's a baby boomer economy and they're spending on travel and leisure and restaurants. So this is not a rates sensitive economy anymore. It's also not an energy sensitive economy anymore. uh you this is a dynamic economy and earnings growth is clocking to 28 30% year-over-year and the capex spending is going to happen anyway. It's not as if the latest data center deal lives or dies on a 25 point 25 basis point move.

It turns on policy in DC. That risk by now I think is priced in. >> So he's right. I mean they could raise rates 50 bips and it really wouldn't matter. Yes, there'd be a short-term blip in markets. There' be some uh volatility, but it would get priced in and then markets would recover and go up. So, as a final point on that one, I think you just alluded to something that people are maybe underestimating in the United States, which is the shape of the market we have now is not the shape of the market we had in 2008. There's significantly less dominance of very rate sensitive high capex things and

there's significantly less dominance in the market of like NIM driven things. If you look at what's happened with the big tech companies from 2008 to present the index composition, it's very different, right? And I find it hard to make an argument that like Google or Meta are particularly sensitive to a 25 basis point move in rates or Apple. And I think you're also right on the boomer's side of things. That's a retail focused thing. Again, not super rate sensitive of like I'm running a cruise line or I'm running a you know restaurant chain or something like that. That's not a rate story to me. Where rates come out is more you know when we have really capex intensive industries. So AI will get

that a little, but there's a lot more going on in AI than just the rates financing. So I feel like story has been >> unexlained >> except for one thing and that's the servicing of our debt. >> Yes. >> Well, you're going where I was going, which is isn't this just the government? Like go ahead. >> Yeah. And and so that is one of the things that people think are feeding the crypto cycle. Um you know what how does this end? Rates are going up. I think we're spending more on servicing our debt than our entire uh Department of War or Department of Defense budget, right? So, how does this end? You know, how does it play out? Do we inflate ourselves out of this ultimately? I don't know. Um but gosh, maybe that's why when I talk about fundamentals

and I talk about commodities, maybe that's why Bitcoin's looking good because, you know, it's hard for a lot of folks to see the ending in sight. How are we going to bring fiscal responsibility back? And you know, in many cases, the US is better than many of the other folks out there. So, it's kind of the thesis that many of us had who came into the space is kind of playing out. And uh I don't know what's the endgame here. What do you think, Austin? >> I mean, historically, governments have always picked inflation if they can, right? We've done that in the United States repeatedly. If you look at the history of the 40s and 50s postwar, financial repression.

If you were to go and then look at the 70s financial repression, right? Like every time we get into that position, we end up in that way. And I think with debt to GDP where it is, there's a sort of counterintuitive thing that starts happening, which is if you have $30 trillion of debt outstanding, right? I will remind everybody 1% of the debt is $300 billion. If you raise rates 25 basis points, that's a lot more free cash flow in the hands of Americans given that our debt is relatively short-term and rolling quickly, right? Like there is some bizarro like inversion of thinking that happens when the debt gets big enough,

rate hikes are no longer restrictive, but in fact just spray more cash out as well. So, I think the fiscal dominance factor, that is to say, Congress's spending will continue to drive things. And like, you know, a running gag from a friend of mine who still trades on the street is like when there's a bubble in everything, that's just inflation. >> Yeah. >> I think technology is going to be the cure here, right? The US had a lot of uh debt post World War II was over 106% in 1946. It fell to 23% in 1974. And what you had during that period was federal interstate highway, expansion of

the workforce, uh the rise of multinationals at specialized technology. You're seeing that now with AI. So that productivity growth story should be able to lift the tax base. I would not be overly concerned about >> debt to GDP. >> I don't know, man. >> I hear you. It should. But what are we seeing? We're seeing data centers come under fire. absolutely indicted by both sides of the aisle. People want to put a stop to them. Nimi this, Nimi that. Not in my backyard. Right. So, that's that's being held up. What else are we seeing? We're seeing the frontier models. I don't know. You guys see Alex Karp today on CNBC. He was talking about what we've been talking about. The liability these guys are starting to to bear. Um, what do you say like Open AI? There's no

public. It's never going public. It's going to get nationalized, right? the liability like so I hear you and that's the way we the only way out of this is to earn our way out of it and I think there's a lot of ableminded folks who think that it's very much within our capabilities but there's a lot of obstacles to realizing that dream which we should be able to accomplish liability stacking and then the nimi stuff with the data centers >> but Chris are you critical on open AI here what's going on Trump said something funny last week now you're talking about open A not being able to pay its bills so I look I I agree with a couple observations like number one this is it's mostly position right politics it's politics every chip that TSMC Nvidia manufacturer gets sold and installed that's

fundamentally what matters and data centers still growing it's just political posturing the substance is that you're still seeing this capex which is one and a half% of GDP it's driving growth you know there were good arguments has to be made that without that the economy would just be kind of limping along and weak. But it's very vibrant because of all this data center spend. And you're right about open AI. Um thing is that's a comp that's a company issue though. It's not it's not a sector issue. If openey defaults on its debt obligations, which they have a good chance of doing, I pointed out those liability risks November last year.

>> Someone else will assume it. It's like foreclosure, right? 2008, someone doesn't pay their mortgage. Someone says, "Gee, I'll step in and I'll assume that." And it's going to be a firm like Meta, right? The stock went up seven points there in this Muse thing because of their investment AI. Or it might be another firm that wants to see faster inference and a better UX. So, one way or another, the data center is getting built, the chips are being sold. I mean, I would raise another point on growing our way out of it, though, is that assumes that Congress doesn't just spend even more because we're growing.

To me, the thing I would keep an eye on is is there ever at any point going forward a sense of fiscal restraint from Congress because that is fundamentally what you're going to need to grow out of it instead of inflate out of it, right? Because if you're growing at call it 6% debt to GDP, but you're spending a 7% debt to GDP deficit, you can't grow your way out of that. We need to actually spend less money, right? And there, I'll be honest, if you look at political systems globally, that only starts to happen after the pain has been significantly more than what we have had here in the United States. Like, we've had a little bit of inflation. We have not had the kind of inflation that gets political parties kicked way out of power in disruptive fashion or like

causes politicians to sort of like fear what is going on on the streets. Here it's kind of BAU and people screaming at each other. I mean actually to make that point we could sort of like look at what are the headlines dominating like Washington DC right now. None of them are really just inflation, inflation, inflation, inflation, inflation. People are not angry enough about that yet for Congress to stop spending. >> You know, it's data centers, data centers, data centers. >> Yeah. >> Right. >> So, I would sort of a a prediction here.

Uh we can throw this one out. I think it will be until the 2030s when the social security fund actually runs out of money to pay full benefits that Congress punts on this too. When you hit that point, you have a problem. Because now you're saying, do we take money out of other things? Do we really fire the deficit up to a hilariously unsustainable like Argentina number? Or do we cut benefits? I don't think raising taxes will be possible in that environment because if you raise taxes, that will just slow the economy and therefore you slow your GDP and you're going to end up in a world where something's going to give when Social Security runs out of money.

>> Yeah. They'll cut benefits starting with Gen X. So come all of us and younger. So that's going to happen. That's that's the move. They're going to say qualify for these benefits 8 to 10 years later in life. >> Yeah. >> So is that but it's the boomers that are going to decide that, right? For us. >> Yes. >> A lot of them Hold on. 10 years forward, the boomers will be way more dead than they currently are. I think people need to be careful about the electoral predictions of boomer power. >> They're hanging on, man. They're hanging on top. I >> I'm not so sure. Look, look at GLP's agent and longevity investment.

>> Nope. >> I'll fight on this one. Mortality >> mortality is a decaying exponential series. You can get higher quality of life through your 60s and 70s relatively easily. But extending life from 91 to 92 is very very hard because of the exponential decay. the boomers at some point will start hitting the wall. Or here's the other point, the first person has already been born who is going to live past 150. One of those two things has to be true. And I don't see evidence of like significant longevity extension.

I think what we're doing is expanding the shoulder of healthiness. We're not fixing like the terminal decay path. >> I don't think so, Austin. I I think we're about to unlock a new age of innovation. AI is optimizing things we never could have imagined. We're learning about we're gonna we got quantum on the horizon too that's gonna and that compute's going to create all different types of highly bespoke >> what about quantum gives you a new liver >> right like at some point you're just suffering through physical breakdown >> ultimately you're going to come up with a situation where you're going to have highly bespoke real time monitoring of your health with the ability to optimize it because what does AI do? It optimizes things optimize all parts of your health

with real time monitoring and identification. You watch >> well actually to Austin your point there's actually focus on that. How do you develop lab grown uh organs? And actually Putin you know Russia's got a high consumption of vodka. He apparently has an expressed interest in exactly what you just said. How do you grow the artificial liver now? Can we get there or not? How quickly do we get there? Is it effective? Those are those are questions we'll see. >> Right. Yeah, >> it'll be expensive at first, right? Which is not great. You'll have the halves and have nots, but ultimately watch.

>> That is the nature of markets. All right, let's talk about AI agents then because I we'll just pile right into that. So, right now we are experiencing sort of what I would call I think the mainstreaming like we've gone past the hobbyist phase and we're now getting to early adopters for AI agents. And I want to give Meta a significant amount of credit here as we start because Muse just hit. And what's going on is Meta launched Muse on September 8th as a secure private personal AI agent that sends email, books travel, fills in forms, can buy things, keeps working after the app is closed. And notably within the release, if you read it

carefully, they said they're already working on privacy deployments for this. And I will remind everybody Moxy Marlin Spike is over there now from Signal. So I don't know that actually they're like faking it on that one. The way it works is Muse runs on a cloud computer and there's a second layer that approves every action that it takes on the internet. You can get a free tier. There's a $20 plan. There's a $100 plan. These are US only for now. Go America. Uh it was number one on the US iPhone chart on September 18th. 730,000 downloads in 10 days. Chat GPT had about 700,000 in its first eight. So running on about the same course. Trust right

now is the drag. There was an Oenheimer survey that 8% of consumers would share their passwords with Meta, 30% with Google. Let me tell you right now, for the love of God, just use a password manager, people. Um, and this is provoking some commercial reactions. Amazon shut the door Sunday night. Shoppers using Muse on Amazon are getting a popup that continued access by an unauthorized AI agent violates Amazon's conditions of use. Amazon said they asked Meta to leave it out. Muse doesn't identify itself and quote appears to capture and store customer credentials. Amazon statement was that third party agents should operate openly and respect the service provider decisions about whether or not to

participate. Meta shot back that Muse has no visibility into people's passwords or payment methods that they have other implementations for that and noted that Amazon runs its own shopping agents Alexa for shopping and buy for me and took in more than 68 billion in advertising last year. So legally can they do this? uh Amazon one and them lost an injunction against Perplexity's Comet uh originally having it blocked from using their services while operating as an agent. Then the Ninth Circuit vacated it, but Comet runs in a browser. Muse is running on Meta servers. It's significantly more complex.

There are some other things going on. XAI has Grock bots. They are a persistent cloud computer per bot that signs into apps. It's aimed more at work. It's a more complex implementation. It's a multi- aent framework. Apple is shipping iOS 27 with a Siri that chains across apps. Open AAI hired Peter Steinberger from OpenClaw, the creator, to drive the next generation of personal agents. And Stripe is getting involved. They are checkout behind Muse. Grockbot is working with Instinct through its link wallet. and everybody is trying to win payments here, possibly using crypto.

Basically, the age of AI agents is hitting the mainstream. So, Rahm, I want to start with you because you've been on the AI economics thing for a while. Meta has been spending money but not deploying too much. The llama models are like usable, but certainly we're not at the top of the pack. And then out of nowhere, Muse, what do you think of this? What is it telling you about the future of the space? What did it tell you about meta? >> Austin, before he answers, before he answers, can we get it? I gota ask Rahm. Like, we know how what he thinks about Sam Alman. What does he think about Zuck?

>> I'm a Zuck fanboy. Uh, interesting. >> Yeah, I have a tremendous amount of respect for for Zuck. >> And where does D where does Dario fit on that hierarchy? >> I I think Dario is incredibly talented for what he's accomplished. I I just think how he deals with the US government and he should change his presentation of AI to the American public. He's an extraordinary leader. You can't take that away from him. Of course. >> Yeah. So, Zuck Zuck's number one. >> Number two, three. >> Steve Jobs is number one. >> All right. >> Okay. Elon is on the list, too. Zuck is a, you know, he's a real champion. He's a real champion.

>> Just wanted to clear that up. Sorry. I didn't mean to interrupt. >> No, no, Jensen's up there, too. I'm a big fan of founder CEOs in public markets, you know. So, >> sorry. >> Uh, no, no, all good. Uh, so yeah, look, this is a big deal. This is a major, major deal. is rising. AI agents, I think, are a bigger deal than computers. It's going to be transformational. I was uh listening to some Steve Jobs wisdom over the weekend, which I do from time to time. And you know, he developed the personal computer before there were color graphics, before there was a graphical user interface. We use a mouse and a pointer to click and as an input into the PC. And you know when he passed away a couple decades later, we have

computers in the palm of our hands and our pockets and they're interactive and it plays music and it's multimedia. It's all these amazing things. And AI agents are now this new form factor and they're it's helping people save money, make better decisions, meet them in their channel of their choice. Uh why do we need to use a mouse anymore? Why do we need to use a keyboard anymore? we just will and summon what we want and the AI starts doing it. We're moving at the speed of willpower more and more every day. So I think this AI agents is a is a extraordinary development. It's why I think semiconductors are great

opportunity. Uh and meadow is first out there. But yeah, Google is coming. Google Spark is in testing right now. It's going to be compelling. Apple sees this. Everyone was going after the personal assistant AI. It was the obvious thing, but there are other AIS coming. The personal concierge, the personal doctor, the personal wealth manager. It's what we're building at Lumida. All of these niches are going to get filled out. So, I think it's super exciting if you're long the AI trade and we're going to be mainlining AI now to consumers. Right now, it's been mostly an infrastructure and compute story.

This data center policy abstract concepts. Now consumers are sourcing tangible value like when they first got their AOL CD and went on the internet, right? That's what's happening now with these personal assistant agents. >> I think there's a lot of opportunity for value acrruel, right? It's an app. Um value acrruel tends to go to apps over time. Uh massive unlock for crypto, mind you. Uh why? Because of the composability of of various tokens and other assets, real world assets. 24/7 markets like sorry guys like I'm going to go to sleep after way too early at this point in my life but the agents are going to keep going and and so this is going to transform capital markets as we know

them trading algorithms liquidity everything I feel like we're not there yet I mean and I'm starting to hear it more and more talked about I was at a cocktail party this weekend and that's what people were talking about oh I just got this new agent it's doing this it booked travel for me it did this and this this is starting to slowly hit the mainstream Sometimes we live in a bubble. I think the only thing that needs to probably be solved still is trust. You know, when people first started working on these things, what did we all do? We used our minaxs, right? Because we were very concerned about handing over the keys. People are starting to hand over the keys more and more. It really comes down to safety and security. I think there's going to be a couple bumps along the road. Ultimately,

I think it gets figured out. Um, but a lot of value acrruel is happening. a lot of potential value acing, elimination of arbitrage. Crypto stands to benefit massively. Like the other thing about crypto, because I'm a crypto guy, is AI is running around disrupting every single industry and institutions. SAS apocalypse they said and and I think that was a little bit overblown, frankly. I think great founders are going to great SAS founders are going to figure out how to use AI. But what is the one technology that really complements AI? Yeah, there's maybe a little security things that we're we're fixing right now, but it's a truly complimentary technology, AI and crypto and and that is very different than the

other industries that it's fundamentally disrupting. So, one of the things that I've been tracking here too and I'm getting increasingly optimistic on is in the early days of AI and agents, the compute requirements for this stuff was ridiculous, like genuinely ridiculous, right? You have people who are to run models much simpler than what we're seeing now, needing to buy thousands of dollars of hardware. And I feel like that and Rahm, correct me if you think I'm wrong about this from the consumer side, but I think that's going to inhibit a lot of people from going big on this thing. Just like, you know, in the early days of PCs in the 80s or

early 90s, most households were not having computers for similar reasons. However, one of the things I'm watching is as models keep dropping, right? Like I think Chat GPT just dropped like Astra 6 today. Great. But also coming up behind them are a wave of models that are essentially compressed, smaller, lower parameter, much easier to run locally versions of the very powerful models that only six months ago were state-of-the-art. So we're starting to see things like, you know, implementations close to the current Quen, you know, openweight style models that can run on a phone, right? that are talking much smaller numbers of

parameters or much more optimized like Nvidia is working with Neatron. So there are things coming here that I think are bringing these because to the average consumer because Rom to go back to what we were talking about what people are using them for. I honestly do not need chat GPT Astra 6 to book a hotel. Right? I am blowing up an ant with a bazooka if I am using that amount of compute to be like, hey, I'm going here on this day. Find me a hotel with these parameters.

>> That's a great point. Yeah, Muse is one of the weaker models out there, but it's having some of the most significant commercial impact to your point and the frontier models are racing to build the model that scores the best on these eval benchmarks. But it turns out if you've got distribution and can generate useful value that's good enough. And we've already crossed that point. >> Yeah. To to me part of what I've been looking at from an economics perspective is are we moving into a world where call it vertical integration distribution and deployment will start leading a lot of these models in terms of capabilities as to who's winning given how powerful they are. Like you noted Muse is not the most

powerful of the agents. doesn't seem to matter. I can get it on my phone. I can hook up all the connectors. I can give it a wallet. Like to quote, you know, one of my friends, it just works. And I feel like there are a lot of model companies that have built more engineering for engineers on top of engineering for engineers. And nobody stopped to be like, yo, is there a good Google Docs and Microsoft connector? Can it do that stuff without generating, you know, infinite markdown files and working in a way that's totally unintuitive to normal human beings? Do you like agree, disagree? Like what are you seeing with the roll out?

>> Yeah. No, I agree. It's impressive. I mean, the the level of uh competition here is going up. The the venture dollars here is increasing. You know, the consumer is going to experience a lot of AI this holiday season. the Apple has finally upgraded, you know, Siri. So, you know, this AI bull market is still maybe in the third inning. We still have a long way to go. >> You know, did you guys see Google and Apple are also hiring in stable coins right now? We saw that hit today. So, it's it's all coming together. It's all coming together. I think it's going to be a big season for for the holidays on AI as well. I think that's right.

>> So, I have a hypothesis then that I want to bounce off you guys and see if you agree or disagree here. If this is the path we're going down, are we going to see this space bifurcate pretty rapidly into consumerf facing things that are significantly less about frontier model capability and significantly more about can mom use it and non-consumer implementations that start looking call it a lot more cloud computing eg institutional only. I >> I think that's natural. Um, you're going to see different apps uh with different areas of complexity. Um, different needs for compute. Um, look, when uh when OpenAI solved the this this latest math

challenge, I think it cost to make $18 million in compute because normal people like you and me don't need $18 million in compute. So, for sure. But, um, Austin, I have I I have to leave it there, buddy. I've got to leave you guys. You carry on smartly. Good to see you. Take >> Chris. Be well. Cheers. Cheers. Have a good one. Yeah, look, I I think you're going to see all sorts of niches being filled that didn't make sense to be filled before. You're going to see water just filling in every single nook and cranny. You're actually going to see an explosion in software development >> because it's so cheap and easy to make customtailored software. So I do think that you you you know software firms do have real risk

be not because software is going to go away but they're competing with specialized tailored software. So you know Salesforce it's going to be hard for them to grow and maybe the service nows of the world you know others that are gen generally delivering value and have lock in etc. They should do fine though. Yeah, I was going to say to me I've started looking at from an investor perspective. Is it literally just the functionality of the software or is there something else going on? Because I think for people where it's purely the functionality of the software, you're about to get competed away to basically a marginal cost of close to zero, >> right? But if you're either compliance or liability related like HIPPA data

privacy things like that that is a service that although the software provides it that is not the software >> that is something else or it's the network >> right like good example it's really easy to code Facebook that's not the hard part >> yes >> right >> it's getting the network going so >> as an investor I've been trying to look at these as I look at like the SAS apocalypse and whether it's overdone or not and ask the question of like well is there more there right is there just literally just the functional capability of the software or is there something else glued on top of it I think the people who have more honestly might get even better because now they can build the software faster to leverage that

yeah no I agree look we're going to see layers and waves and waves of competition coming I mentioned the Steve Jobs example earlier you know Xerox Park was in the pole position They had the guey, uh, they had the mouse and pointer, they had localworked PCs, you know, and they're gone. Uh, so we're going to see more waves of competition coming. So it's still it's still early days. Um, this is accelerating though. You know, the ability to produce code and iterate is just going higher. So like the pace of change we saw from the 80s to the 2010s will get a lot more done faster now. I think the difference

I would say is this. Like I'm not in the camp that says we're going to see this super intelligent AGI. I don't see that. I just don't see that. We're not going to see the AGI that's as smart as Albert Einstein or Isaac Newton or Richard Feman. I just don't see that. But you're going to get midwit AGI which is extraordinarily competent and highly effective and that's good enough to unlock dramatic productivity growth and it gives humans uh a continued special role for meaning and agency and purpose because AI is the amplifier for the human's goals which is good. That's actually not that's not a

bad conclusion. It might still take a while to get fusion. It might take a while to get uh molecular molecules designed for our DNA because the AGIS won't be able to design that as fast as we want. There are tradeoffs to that. But it's a it's a it's an encouraging and optimistic world nevertheless. Well, I think that's actually a very good place to end because that framing is very interesting. Which is to say, imagine AI makes you average at everything because there are many things most people are not average at. We only have a limited amount of time. And as a result of that, like you said, if you understand the implications, that is a huge productivity multiplier, but it does not obsolete humans or take all the jobs.

>> All right. Well said. So, on that note, as always, thank you for joining us for this episode of Bits and Bips. We hope you're enjoying your agents, and we'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. As a reminder, we've got our own channels. Please subscribe. Until then, everyone, thank you for watching and hope you enjoyed this episode of Bits and Bips. Just remember, nothing we say here is investment advice and please check unchanged crypto.com/bits andbips for more disclosures.