The Bull Market Is Back! But Bitcoin Isn't Leading It?

Transcript

Bankless Nation, it is the fourth week of September and we've got a bull market on our hands. It's a bull market, but whose bull market is it? That is the question. The majors are up a little bit this week, while the middle of the market is up 30%, 40%, 50% in just 7 days. So, what's going on? Even crypto guru Ben Cowan has said that the bull market is on. We're going to talk about, we're going to dissect the current state of the bull market. >> Yeah, I think once Ben says it's on, he's been bearish lately. Once he says it's on, that's confirmation enough uh for me. We also got to discuss Zcash at a near 10-year high. I think that's a

fundamental change in the market and I want to get your take on it. Also, David, tell me about Kshi. They got cooked this week. There was a bunch of wash trading, a million identical $5,500 trades. The Wall Street Journal is talking about this. Some guy on Twitter is talking about this. And also, I saw Vitalic has blessed a prediction market called Truo. That token was up a lot. He said this is the prediction market without any of the corpo slop. So, we'll discuss what that means. Meanwhile, as we discussed, the 30-year Treasury, the 10-year Treasury are all printing their highest yields since like 2004.

Not only is it a crypto bull market, but it is also a bond yield bull market, which is bad. Usually, that's bad. Do we care? Does Bitcoin even care about high yields? I think that's another question that I want to ask. Let's just look at the charts. However, Bitcoin made its first leg up from like $63,000 up to $78,000. And people weren't totally sure if that was, you know, a head fake or not. But we have since made a second leg up from about $77,000 up to $85,000. And now people think it's on. I also think it's on. The second leg up off the 200E moving average, I think, is is a pretty big deal. That marks a eightmonth high on Bitcoin, the highest prices

since January of this year. And so the people who have previously been been saying there is going to be a fourth quarter dump, you know, we're not done through the bare market. We're going to once again touch the 200 week moving average once again in fourth quarter, maybe even go below it. Those people are starting to change their tune. >> Yeah, I think there's starting to be growing consensus even among the psych the crypto cycle investor experts. people like Michael Nato Cyclers. >> The four-year cyclers. Uh Michael Nato from TDR I would say is one of them. Uh Ben Cohen also from Into the Cryptoverse is another one of them. And both of them are aligning and saying that the weight of probability is exactly where they

they'd want to see it for calling an early bull market. In fact, we'll get to Ben in a second because he's kind of flipped on this. He was holding out. He thought we were still in the bare market that there would be another leg down that we wouldn't see a light at the end of the tunnel until sometime in October. And he's on this week. He's apparently changed his mind on this. But Michael Nato, I talked to him on Wednesday for the TDR podcast and he said, "I'm ready to say it now." He was previous weeks he was cautious that this was an early bull market. And he's saying he wasn't sure yet, but now he's at 85% probability. I think there was a number of metrics that really nailed that uh to him. One is the golden cross was confirmed. Okay, so for people who don't know what a golden

cross is, that's when the 200 day uh moving average um the the 50-day moving average crosses the 200 day moving average and that finally happened in previous cycles that has indicated that we have broken the back of the bare market and we've entered the early bull phase. He has some other reasons that he thinks we're in the early bull market. So there's a a reset in the holder structure. You know, he follows these onchain metrics of the cohorts, the cost base of the cohorts and and which cost basises are holding what coins uh where you you see this process of coin cycling from weak hands back to strong hands and the strong hands form the base for the next market. Anyway, that reset has

completed. Now we've got a bunch of strong hand and in the 56k to 92k range of Bitcoin. 37% of all supply now sits there. So we've gone through that cycle. We have a reset in leverage. You know, Michael Sailor Strategies STRC that's back trading at almost 100 and that that is a belt uh weather for leverage. A lot of the leverage got flushed out during this bare cycle. We have a bunch of the KPIs that were hit. So, uh, you know, realized losses as a percentage of change in realized cap, those types of things, supply and profit, all of the KPIs you'd say would would be bare market bottom indicators. The majority of those were hit. We just hit the

golden cross. And then this, we reclaimed the 50week moving average. We did that two to three months from the cycle low. That's exactly what we we you would expect to see. And the 50we moving average right now is 78.8K. So, we've locked in at least one of those, a monthly close above 78.8K. We lock in another and another after that, then we're kind of like that solidifies it. It's that that would be according to all previous times we've seen it the end of the bare market and definitely final confirmation that we are in the early bull phase of the market. And I haven't kept up with Ben's work, Ben Cohen's work. I know you are

having him on the Bankless podcast tomorrow, but I think he's been a 4-year cycle believer who sort of held out and has said, "No, we're still in the bare market, right? The bull market is coming. It's coming sometime this year, but not until a little bit later." And he changed his mind on that this week. Yeah. Both Mike and Ben I categorize as these guys who move slowly, require a lot of evidence, but when they change their mind, it's firm, as in they're not going to change their mind again in one or two or 3 weeks. And so it's it's kind of a big deal because it takes a lot of evidence for them to change their mind.

The last time I was talking to Mike on the TDR, we really talked about comparing the last bare market to this one. And the last bare market was, you know, we had the Teral Luna collapse followed by the three capital contagion followed by FTX, like one, two, three sucker punches that created just so much pain and pressure, downwards pressure on the market, followed by the Gary Gendler era of operation choke point 2.0. Pretty bad time. Yeah. Uh and during that time you had Bitcoin not at the 200E moving average but below the 200E moving average for almost 2/3 of a year and then again for another third of a year

later and so a meaningful amount of time below the 200week moving average which was unique idiosyncratic in Bitcoin's trading history. And then so when I was on the TDR with Mike last we talked about how we are at the Bitcoin is at the 200WE moving average but also we had no three hours capital we had no uh SBF. Uh we have not Gary Gendler but the two most positive crypto regulators at the SEC and CFTC. This this bare market is different. Granted we were saying that when Bitcoin was at the 200WE moving average. Bitcoin could have potentially broken down below the 200 week moving average. But I think now if you are accepting that we are indeed in a in a

bull market, we're not going back down to the 200E moving average for a while. You can take this bare market which was two pretty short time, a pretty short time at the 200WE moving average, never got below it. Compare that to the actual fundamentals of we don't we don't have to pay for our sins cuz we didn't have very many sins. Michael Sailor paid for his sins by selling Bitcoin under his purchase price. Uh, and we didn't spend too much time there. And so to me, those two things are congruent. Like very big, painful bare market for very valid reasons in the past. This bare market much shorter because we have a lot less debt and we get to move on quicker. I think those two things check out. Yeah, the 200E moving average is 65.5K

right now. And you're right, we we did spend some time below that, but not very much time this bare cycle below the 200E. >> The furthest we ever got below was about 5 to 8%. Uh last bare market, we got 35% below the 200E moving average and stayed there for a while. >> Yeah. If we if we do now, here's a here's a if type of scenario. If we do hit that 65k or go below that for some period of time, say we get a few monthly closes below that 65k amount, you're saying you don't think we will. Michael Nato agrees. So does Ben Cowan now. They all agree. But if we did, I think that would break the back of this early bull thesis. So that's a number to to watch

out for. >> Oh, certainly. >> But like that's it's not evidence of we went down there. It's already broken. See, this is like all of the people saying it's not going to happen and this consensus that we are in early bull does raise an eyebrow for me a little bit because if everyone's saying it then it's like well maybe but >> well previously everyone was saying that we were going to break down in October in Q4 and so that also raises an eyebrow. You should as of being in the market you should always have an eyebrow raised. >> Yeah, that's right. Okay. But I I do agree that uh it looks like we are in the early bull phase. So I you know I think that's probably true. Ben Cowan talked about he actually released a video why I was wrong. Maybe you're

going to have to ask him why >> not why you Ryan was wrong. Why I was wrong. >> Exactly. Why Ben was wrong. He he's he's bullish now of course. What he got wrong in his words. He he said I assume the interest rate hike he's talking about the Fed hike that just happened with with WH last week would immediately bring Bitcoin down and it didn't. So where he got it wrong is he said my thesis was that rising energy prices would cause the long end to go up then they would raise rates in September then the dollar would go up and Bitcoin would repric because of the rate hike. That's why essentially he he thought there would be one more leg down. Also previous bare cycles have lasted 9 to 12 months. It was getting towards about 9 months but you could see it last 12. So

that's why he was calling for kind of a bottom October toward the end of this year. But what he got right or wrong I would say if you could sum it up is probably macro is just overindexing on macro and Bitcoin crypto just plowed through all of those macro concerns and that I think is a lesson for all of us. It's just like I enjoy some good old-fashioned macro com commentary. I really do. But I have to treat that and I think any savvy investor who's been here for a while, including Ben. Ben knows this. You have to treat that macro analysis with a grain of salt because it's a very complex engine. There's so many other factors. The thing that won out here, I think, was coin holder

rotation and seller exhaustion and it was just time to go up after 9 months of crypto winter. And so you don't want to be out of the market when the market decides it's just time to go up. >> Yeah. Yeah. I do I do take that perspective. I was trying to not be a four cyclinger on the way down, but for some reason I see myself being a four cyclinger on the way up. CoinDesk had a pretty interesting article. Uh I I thought it was pretty interesting. It says uh the data proves that Bitcoin doesn't care about rising bond yields over the long term. and they had a bunch of analysis and they say basically say that uh the correlation between the 10-year yields and Bitcoin is at 0.18

inverse and so you know if if yields go up bitcoin goes down with a8 correlation which is very low that's just not that's insignificant and I one of the reasons why I think it's insignificant is because so much of crypto cycles are herd mentality and when it's time to go up it's time to go up people like the last bears sell then they're not in control of the market and the only people left are those left to bid and people who have cash see the the herd get the contagion of like well somebody's making money over there let me allocate let me allocate and all of a sudden everyone's allocating and we get momentum on our side so like my rationale for why Bitcoin is up at the

200WE moving average and why it's up season right now when things have been going up for like five weeks straight is because it's time People are bullish, people are allocating, and that's that is spreading in a like a contagion across the investor field. >> Well, in the words of Michael Sailor for to to all of the the former bears, he says this to Ben Cowan, welcome back. So, welcome back early market. >> Feels good. >> Now, that doesn't necessarily answer the question as to whose bull market this will be. So say we are in the early phases of a crypto bull cycle. The question now any investor in this space

has to ask is okay what assets do I want to hold for this next fifth crypto bull cycle. And the answer previous to that was certainly Bitcoin. You want to have a good portion of Bitcoin outperformed last cycle by a lot. >> Um will that continue this cycle? It's been interesting to see a bunch of other tokens, some altcoins, let's say, outperforming. Ether up a little bit on the week, about 9%, but you'd even consider ETH a blue chip. And maybe we'll talk about that uh in a little bit. Let's let's first maybe talk about some of the coins that you've seen outperforming and whether we can uh extract any pattern from this early bull

phase into what we might see into the into the future. what what's been doing really well. >> Yeah, you said ETH was up a little bit. It's up 9% which is a good amount, but it's a little bit in comparison to Athena which is up 40%, Uniswap up 30%, Onondo up 30%, Jupiter up 30%, Arbitum up 30%. And so the the the like benchmark, the hurdle to be above the market was something like you needed to be up 15 or 20% this week to be beating like an index of all like legitimate crypto assets.

>> What do those things have in common? What's what's the thing that ties them? >> I'm so glad you asked, Ryan. They make money. They all print revenue. Athena prints revenue. UniS swap the fee burn on Robin Hood chain is printing uni fee burn you know revenue Jupiter all of these things have revenue arbitum the only significant layer 2 token to receive the pump is getting revenue 10% of Robin Hood chain fees which is why arbitum and not any other layer 2 tokens are up this week it's revenue yeah so arbitum is up which is like in a world where layer twos are just they've been just bleeding uh for the last few yours.

It's not like there's a secular narrative. Oh, let's pump L2 tokens this time around. Only ARB is pumping and it's pumping because of its ties to revenue from the Robin Hood chain that you can clearly see. It's a different reason for >> uh you know it being up than we've seen in previous cycles. >> Just like we talked about keeping one eyebrow raised during the bull market. Um Bitcoin Cash moved 50%. Don't tell me that. >> So, like, >> what do you tell me? Let me look at X XRP. How did that do on the week?

>> Yeah. How did XRP do? >> XRP um on the the >> 17% 17% >> 17%. So, okay. Well, I don't I don't know that that disproves it, David, because it is true that everything is getting a bit of a a raise from this, but also it is true that um the cash flow generating tokens, the tokens with buybacks and real revenue story are outperforming disproportionately. >> Yeah, there are it's been that true for a while. Delphi Digital put out a tweet about like how revenue generating assets, a basket of revenue generating assets were up like 17% while the blue chips, ETH, uh, Bitcoin, Salana were

down 30%. And they put that tweet out in June and that's been only even more true ever since. Well, some people have been going f far f farther. So, I actually saw um publisher David Feld uh from Banklist published this in Bank list in the newsletter. This is not Bitcoin's cycle. And he made the case that, okay, look at all of these assets that are pumping. They're they're they're pumping. They're growing fast because of cash flows. Guess which doesn't have cash cash flow. That is Bitcoin. And by the way, who is the next marginal buyer of Bitcoin? Sailor has all he wants. Last cycle, we had ETFs. And you could quite clearly see institutions being the next marginal buyer. Does Bitcoin have that this cycle? Will it continue to outperform? And another way to take a

look at that is like market cap Bitcoin dominance. Right now it's at about 59%. The usual model for what happens during the early bull cycle is we get early Bitcoin dominance. So Bitcoin dominance increases early in the cycle and uh then alts follow later. So it's always Bitcoin leads then alts follow. Is this going to be a little bit different this time? Like maybe what David Feld is saying is maybe this will not be Bitcoin's cycle, at least not to the extent it was in previous cycles and and certainly in last cycle. Do you buy that argument? Do you think that other crypto assets are going to get their time in the sun and Bitcoin just doesn't have as

much potential this cycle? Also, obviously >> much larger market cap. You have to take that into account, right? can't we're not comparing apples to apples when we we compare like a multi- trillion dollar asset to something that's you know in the you know tens of billions. >> But that aside, do you think Bitcoin will do as well this cycle as as last cycle or do you think other crypto assets will take take center stage here? I I do go back to the era of like DeFi summer where Bitcoin and Ether were unresponsive while there was like money flying hands, euphoria, insane amount of wealth generated in like the lower market cap assets or the brand new assets. And then

what happened, you know, Bitcoin went from $6,000 to to $660,000, you know, Ether went from $300 to $4,000 plus. Uh and so like maybe like the attention always starts inside of the cryptosphere and then it bre you know then it overflows and attracts attention and that's what moves the blue chips. Uh and so that pattern could still play out. But nonetheless, I am also concerned like the average typical commentator on crypto Twitter I would say is just like our blue chips are really big and they're hard to move and who is the marginal buyer of Bitcoin when gold is still doing its job as gold and who's the marginal buyer of Ether

after like Tom Lee? I don't know who's buying the blue chips cuz it's not me. I'm done. I'm done. >> They're too big, >> right? It's not going to come from cryptonatives. It has to come from some new set of buyers and the market's maybe still establishing that. I I still think there are net new buyers, right? Even Michael How is certainly not a cryptonative, someone I do follow, I enjoy his macro takes. I enjoy his global liquidity takes. He still talks about Bitcoin as a 5x kind of levered gold type position in that if you believe in debasement you could buy gold or you can buy Bitcoin and it has a 5x multiple to gold when global liquidity goes back up. Right? So there is a set of institutional believers out there who

aren't sort of the crypton natives that you interact with that I do think will continue to be the marginal buyers of of Bitcoin >> and they are going to believe even more this cycle as Bitcoin recovers as new time uh all-time highs are are breached. Yeah, I do think on the longest of time frames like if you believe that thesis and therefore you are looking to have exposure to debasement and you weigh Bitcoin or gold and you have a 10 plus year time horizon then I bet you that that plays out. I think the very large wide random walk that Bitcoin walks to like around the debasement exposure line is very frustrating for investors

because like you can be correct about debasement on a 5 to 8year time frame, but Bitcoin just randomly walked down at negative 30% while gold was more steady around the debasement line. But then Bitcoin does the thing where in two years it makes it all back and then some. So, it's a very frustrating random walk. Let's talk about an asset that's at all-time highs and that is a bit of an outlier from what we just said, which is we said assets that we're pumping are assets that have some sort of cash flow or revenue attached to them. And yet here we have Zcash, which just made a 10-year all-time high on the price. Now, I'm not sure if that's market cap all-time high. It's probably still price. market cap alltime high is by far

uh up massively because Zcash inflation of course. Okay. Yeah, it's the opposite of what I was thinking. Of course, >> this is why the Zcash chart is kind of especially in the first like third of its life, but also most importantly in the first like one month of its life because people like somebody I tweeted out Zcash alltime high and then I think Austin came into my replies and was like technically it's a recent era all-time high and if you go and you look at the Zcash alltime high chart, it starts at like $10,000. But that talking about in price or in market cap?

>> In price? In price. in price like the the the first Zcash tokens were trading at $10,000 for like >> a day. >> You're talking about this stupid that thing does not count. >> Yeah, of course. Count that's stupid. >> The thing that the the line the vertical line that is like reminiscent of Hunter Biden's laptop token does not count. >> Yeah, it doesn't. I mean, market cap I think is the true expression of like how is this doing as a store of value asset? So Zcash quite clearly is in the store of value asset category. It's a crypto monetary asset. It's like early bankless thesis stuff where we were like, okay, there are crypto assets that are emerging that will have monetary properties. It's sort of the Bitcoin

play but private. And now we are at a market cap of we exceeded$ 26 billion last week. And this has been an insane overperformer even during >> the bare market and certainly in the early bull market like what are we up here Zcash we went from about eight 8 billion now we went from just even during the bare market up to now it's like 7 billion right now to >> 7 billion was after it pumped for the first time and it's I I think that was even not even a year ago like when bit Zcash went from a $300 million market cap up to like two billion What? When was that? That first vertical lineup.

>> What? What's that? The first vertical right here. >> Yeah, that one. >> 10 billion. >> 10 billion at the top. What was it? What What date was it? >> Talking about 2025. November 2025. >> Yeah. So, it's September 2026. This whole Zcash thing is less than a year old. It's It's put on $26 billion in less than a year >> in the bare market. And into the early bull market, put that much on. And when you start getting to $26 billion and you don't have cash flows, you are a store of value crypto asset. You know, part of your explainer for this was just like this is Bitcoiners rotating in. It's like it's catching the Bitcoin trophy.

>> Who is it's not ETH money. It's not Salana money cuz those assets aren't big enough. It's Bitcoiners shaving off like 1% of their market cap. Yeah. And when that goes into a $200 million market cap, it goes to $26 billion. It's Winklevoss twins. It's Barry Silird. It's Grayscale. You know, there's an ETF here. You can kind of naval. You you could see that rotation into this. But, uh, the reason it's meaningful, I think, is because this is a true competitor maybe to Bitcoin. I mean, $26 billion is still slight in terms of Bitcoin's total market cap, but the category it's pursuing is store value.

And the only other asset to even try to claim at this type of market cap level that it was pursuing a store of value type type strategy has been Ether. Ether the asset and not even the full Ethereum community has has kind of claimed that you know and Vitalic has you know been a little wishy-washy even about that. And so we have another crypto money that seems to be emerging in the game. And you wonder if that's going to persist for this entire market cycle. And if it does, what are we going to get to?

Hundreds of billions of dollars for Zcash. >> Yeah, it's hard to say that Zcash is a Bitcoin competitor when you have a $1.7 trillion asset shoulderto-shoulder with a 26 billion asset. Like that's a 65x difference. But I think the point we want to make is that it is a competitor for the marginal flow of dollars in 2026 buying assets. And so are they going to buy Bitcoin or are they going to buy Zcash? And if that flow split is 5050 from the marginal buyer of Zcash like that that does make it a competitor >> the other Go for it.

>> Yeah. Well, don't you think it's the first viable competitor that we've sort of seen? It's like >> after after Ether had its like very valid attempt. Well, who's pursuing the store value race right now still still left in crypto, >> right? >> I mean, do you think Ether is in the race? >> I do. Absolutely. I think Ether is in the race. I think it's Bitcoin. I think it's ETH. And I think now when you get over $25 billion, Zcash is in the race, too. And I don't >> see anything else. >> Yeah, there's there's one more to keep an eye on that I know that the the the team is like interested has their eye on the ball here, which is like the near team. And I do think that there is an interesting pairing between Zcash and near and Bitcoin and Ether. So, so Ether

won the blessing of like the Bitcoin bid, like the trophy of Bitcoiners are going to buy this thing because there's going to be like a an agreement that like, okay, maybe maybe hedging my Bitcoin exposure of my multi-t trillion dollar asset with a little bit of ETH is a good idea. And so that's why ETH just did so well in 2021. And that's and I think that same thing is happening to Zcash today. Then there's like why also because of the privacy the technical superiority the more the more modern uh asset the one with less tech debt. I think near is also kind of fulfilling that same thing. It's also on the privacy meta. So you have Zcash the private money and then what is Near doing? It's doing private intents and so

crosschain like it just privatizes your asset transfers across chain and the the volume around near intense is up like 85% on the two week that near is the biggest mover of the week this week is up 54% uh in 7 days and I think if like there's in addition to the Bitcoin bid there's always been this like second place trophy which is like the smart contract bid that Ether Ethereum has won Solana then won it later like if Salana won the dominant smart contract bid flows beyond 2021 and I think one of the reason why near is up so much in the last seven days is because it's winning the smart contract bid and that is the marginal flows and so kind of going back to this problem statement that a I put

in my article but we were talking about earlier is like the assets that are more attractive than our blue chips are these much smaller cap assets the 26 billion market cap asset instead of the $ 1.7 trillion one or in Near's case it's like the what is it $8 billion asset instead of the $500 billion one. So the blue chips are not getting the bids and it's going down to these more modern more more new assets that are capturing the the the marginal flow. >> I think that could be the case. It could also be the case that just near is the recipient of kind of this revenue meta pump as well. I mean intense are generating cash flow on near as well and you can kind of see that you could see

it has product market fit in a set of applications right it's like the intense application around privacy >> also doing things in AI so maybe it's coming for some of the smart contract bid but I'm not sure it certainly doesn't seem like it's coming for the store value bid though which is like what ETH bulls in sort of the you know the the glory years would would uh would claim and It it does seem to be trying to actually create a business that is generating cash flow with apps and revenue and sort of more more central kind of control over the product roadmap.

>> Yeah, it is uh it's doing kind of like the ultra sound money thing where it's using the revenues from confidential intents to like buy and burn near and they they have like they're averaging I think like 60% of near issuance is getting bought and burnt and they're doing the ultrasound money thing. I still think the ultrasound money narrative for Ethereum was the best narrative that we had and then and then ETH price went from down from like 4,000 down to like eight and 800 and we all threw out ultrasound money to the garbage. I still think it's the best narrative. It's still worth that being the narrative and I think like that's kind of why nearer is stealing the week won the week this week is because is because of something like downstream to

that. What remains to be seen whether this momentum can hold and what's going to do well during the early bull, but uh we're going to be talking about it on a week- toeek basis. Coming up next, there was a Howard Marks memo. I was waiting for this to drop uh talking about yields and why Treasury market, bond market is going crazy, what assets to buy in order to hedge against them. I want to talk about that. Also, does he mention cryptocurrencies in the memo? We'll discuss all that and more, but before we do, we want to thank the sponsors that made this possible. I've been trading crypto for almost a decade, and I've used so many different wallets, exchanges, aggregators, or frontends, and I'm basically always looking for the same thing, just one interface with a

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your trading fees back on near.com using the bankless link in the show notes. Not investment advice. Bankless Nation, we've built something for you. Introducing the Bankless MCP. Chat GBT and Claude are great at a lot of things, but ask them anything beyond the basics of crypto about protocol mechanics, tokconomics, or just what happened last week in crypto and the gaps will start to show. The problem is context. Banklist, on the other hand, has spent almost a decade building one of the deepest archives of crypto data anywhere. more than 2,000 podcast transcripts, 10,000 articles, and countless conversations with the people actually building this industry. And now we've structured all of that data into the bank list MCP. So you can go and connect it to your claude or chatbt and suddenly your AI can answer your crypto queries with the entire banklist archive

behind it. And every new bankless article or episode gets added automatically so the context keeps staying uptodate. The banklist MCP is exclusively available to banklist premium subscribers. So you can go to banklist.com, upgrade to premium and connect the MCP in just a few minutes and all of a sudden your crypto queries to your AI LLM, whatever you use will get a thousand times better. So go check it out. There is a link in the show notes. And once you become a bankless premium member, you can hop into the Banklist Discord and let me know how you like it. Cheers. Ryan, we got some more all-time highs to discuss. The US 10year is at an all-time high of 5.15% yields. The 30-year is at 5.44%.

These are highs not seen for over 20 years. >> Yeah. Almost all time highs in during the decade, you know, period. Not all time alltime highs. >> Alltime highs during the conscious years of us and our audience. >> Yes. Alltime highs for the show. Alltime highs for the crypto industry. Uh and and honestly show no signs of stopping. I mean they just keep going up. >> Uh growing at quite a pace. So uh David, did you read the Howard Barks memo? No, because I knew you would tell me all about it.

>> You know who Howard Marks is though, right? It's just like >> I totally but for the benefit of our listeners, why don't you go ahead and tell us? >> I don't know. For me, he's kind of in the Hall of Fame and he's a bond investor, but he has just like these memos that he writes almost like Warren Buffett like that kind of make sense of the current environment of the market. He's, you know, very very seasoned, very reasonable, very rational, and often often right. And so I read every one of his memos that come out. It's just like every couple months or so he'll publish something on on what's going on. This memo was about yields and he knows a ton about them because he is of course a bond investor. So it's called shall we repeal the law of economics and he gives

reasons three reasons for why yields are rising and it's reasons that our audience is probably familiar with. We've talked about this and so Howard Marx is really reinforcing some of these ideas. So number one, yields are rising because inflation is high, stubbornly high, he calls it. So we have inflation PCE at about 3.7%. And recall the target, there is a target out there and the Fed has still said the target is 2%. Well, we've been above 2% for a long time >> since co really popped our ability to hold 2%.

>> Yeah. and 2% is just like we've never gotten back there. In fact, we're in 3% range and the high 3% and rising. So, we have the war in Iran, we have oil prices, lenders are demanding some protection from uh inflation. So, they demand that in the form of higher yields. That's the first reason. The second reason which has been a bankless theme of course and a theme of all of crypto is there is zero fiscal discipline in the US and not just the US all countries around the world you know fiscal situation blowing out of control uh sovereign debt is uh you know exploding there's no signs of reigning it in he said that the US has a golden credit card there's no credit limit the

bill never comes and this is of course the US flexing its ability as the sovereign uh reserve asset and the global reserve currency. It's it's kind of flexing that golden uh credit card capability, 40 trillion in debt, 1 trillion uh a year in interest payments now exceeding the amount that we spend on our military in the US. We're just spending that amount in interest. So, we know about that zero fiscal discipline. The third is a capital demand squeeze. So he talks about you've got $5 trillion in AI buildout that need to be funded by debt instruments. So this is AI data center buildout needing funds needing capital

in the form of debt and they're willing to pay for that capital in the form of yields. At the same time you have Treasury and it's trying to issue its debt too. So you got 2 trillion in Treasury that needs to be issued. This is US bonds. Whereas you have five trillion in AI debt and you know the AI people are good for it because they have the cash flows to support it. >> Do we know that? >> I mean they have the profit right now and so and also if you know Nvidia chips if that's kind of a the new oil if that is a >> a commodity as Jensen people like Jensen are saying then it's also collateral backed as well. So it's it's a competitive debt instrument and that's just raising the cost of capital up. So he says about Bessant um you know

Bessant has been going around saying I don't think yields reflect the underlying fundamentals of this strong US economy and he says on the contrary I think US long-term bond yields are reflecting the actual fundamentals that we have if you just look at those three things inflation no fiscal discipline and the AI capital squeeze that's sucking all the capital so he reiterates those points that's the reason according to Howard Mark Mark's uh yield s are rising. The question uh is how do you protect yourself as an investor from what he's essentially calling kind of the debasement type trade? Uh and he said you can do a few things. One, you can have assets denominated in

currencies other than the dollar, but the problem with that is the other currencies have a similar type of effect. They are debasing as well. Uh, two, you could go to non-financial assets like gold or non- US real estate. You could try that. Or three, you could do non US companies. The problem is there's not a lot of great companies out there and the US companies are overperforming. Or he says cryptocurrencies. He actually mentioned cryptocurrencies in the memo. So that's something. Um, a friend asked him, "Okay, Howard, should I sell my stocks?"

And his answer was this. The problem we face isn't a problem with the US stock market or with US companies. The problem is with the US fiscal management and ultimately it's a problem with the US dollar. He basically saying American companies are good. In fact, maybe they're great. It's the American government that's bad. And so don't sell your stocks. That's actually a way to protect from some of this debasement as well. So, I I thought it was a well-reasoned well-reded uh insightful memo and um kind of gave me some put put a connected a lot of dots on what's going on in in the current environment for me at least.

>> This connects to a a bit of discourse that I've been seeing around the timeline that I'm I'm picking up on. And I'll pause and give a disclaimer that this is bull fuel what I'm about to say. Uh, and I'm trying to not be too drunk in this bull market. I'm taking I'm taking evidence. I'm taking insight from my guru Ranch Adams of during a bull market, you want to be a little tipsy. You don't want to be sober. You want to be a little tipsy, but you >> It's pretty early. It's pretty early in the night to be drunk, David. So, >> I'm decently tipsy.

>> Okay. >> And so, I'm into bull stuff. But a bull the bull stuff that I've been seeing on the timeline that I agree with. One came from a while ago which um came from Anom actually when I was listening to his market bubble podcast and he talks about like the way that zoomers and millennials escape inflation is through investing. And so investing is a or inflation is a It's punishing everyone. You get out of that by investing and that's the only good way to escape. You have some type of assets. >> That's step one. >> The other the other bull take so that was a while ago that was months ago. The other bull takes I've been seeing on the timeline is like what if the bond market is you know printing in five six 7% because the economy is cooking and that this is something I've been

seeing from Felix from uh forward guidance about the economy is ripping the economy there's money flying around in the economy the economy is looking good so the b the bond market is printing in higher yields because it wants to allocate to the stock market and the stock market is the place to put your capital and the bond market is the yields on the bond market are just reflecting the cost of capital because everyone wants to invest. So what if the actual fundamentals are great of the stock market of equities now is the time to invest and the bond market yields like sorry US Treasury, you're out of luck. Everyone wants to take their money and invest in growth assets because that's the only way to escape inflation.

It's which is also somewhat ironic because a lot of these growth assets in the US capital markets are US-based companies, right? And so that is still fundamentals of the United States of America at some level and future potential tax revenue, >> right? So so maybe >> but the tax revenue is just not going to be able to pay the debt. Like it's going to you have to debase. >> You have to debate. The tax revenue is the most helpful thing. There was one time I I typed into Claude or something. I was like, "What if we just did away with taxes? What would be the repercussions? Like do we need taxes?

tax. >> Can't we just print the money to pay? And and it was like, no, dude. Like tax revenue is the majority of the reason as to why there's not hyperinflation. And so if you did away with the tax revenue, like you it would be massively catastrophic to inflation. But nonetheless, tax revenue does not cover debt. And so therefore, the debt compounds. >> That's right. I think that's what's going to happen. And uh it's pretty sensible to hold assets. And I guess just almost any asset you can hold is is certainly better than the dollar and certainly better than bonds. Uh David, there was a story breaking from Kulshi this week. Did they get caught red-handed doing stuff?

>> I don't know if they have officially got caught red-handed. This was one of the Twitter stories for the decades. Uh there is a Twitter persona. His name is ICO Beast. I've interacted with him a few times on Twitter before, but he got hired by Khi as like a crypto lead. And basically on Twitter he has just been promoting Kelchi like our metrics are look look great like Kelshi is the best look how big our pers volume is. This most recent tweet was a picture of the Kali's like market share of like regulated onore volume and the he asked chat is 96.7% a lot because that's how much the volume dominance Kali has over polymarket pers. Then an account named Benny on Twitter responded, "It's easy

to have 966% like market volume dominance when 3/4 of your volume is wash traded." And then ICO Beast replied like, "No, you're you're wrong and dumb." And >> I love this cope, see rage. Now these words these words are just imprinted upon the future of the crypto Twitter and all the Twitter surrounding these poly markets. ICOB follows up with why the would anyone try to watch trade when you have trading fees incredible intellect on display. Uh Benny then a few tweets later self uh inform so called themselves like I'm an autist on Twitter. Don't don't haunt me cuz me off to prove this.

>> ICOB says better to remain silent and uh then and thoughts of fool than open your mouth and remove all doubt. I'll give you a few minutes to think through this and delete this. Uh, Benny responds saying like, "No, no, no. Like, reverse Uno card. You uh, and then nothing happens for a few hours." And then Benny releases a monster thread with a bunch of evidence like hardcore evidence for wash trading on Kelshi. So, I'll summarize his points. Point number one, there's a massive dislocation between ETH volume and open interest on the ETH market. So on the ETH volume, there's half a billion dollar traded hands on the volume on the ETH perpetual. The open interest is 3.1 million. And so

that is a daily turnover of 174 times the amount of actual open interest there is. That's just like absurd. The massive dislocation, too much volume for open interest. That's the first bit of evidence. The second bit of evidence is that the position leaderboard is tiny. The number one position on the ETH market was up a whopping $17,000. When $500 million is changing hands daily, you'd expect people to be up or down more than $17,000, but all the winners or losers were in the 10 digit r the uh six-digit range. So tiny. Third, there was the same trade size about $5,500 accounts for over 50% 50% of all trading volume.

>> Suspicious. Yeah, this came from Cali's a API specifically. Later, the Wall Street Journal reported on this and found nearly 1 million near identical trades at $5,500 when with more than $5 billion of volume traded in that size in that same month. Uh, fourth bit of evidence. The original claim from ICO beast was why would there be wash trading when we have fees? Because if you're washing back and forth, you're paying the fees. The obvious answer is that Khi gives volume rebates to market makers. So that's mute. But wait, there's more. Number five, the market makers allowed to market make on Koshi are selected by Koshi. Bloomberg previously reported that Jump Trading was given an ownership stake in KHI and

allowed to market make on Khi. So not only is Jump Trading given the fee rebate, so the fees don't matter, but they own equity in the platform and therefore are incentivized to pump volume through it. But wait, there's one more. This has spilled over to the prediction market side of the business where Benny showed that Koshi has done some very manipulative metric accounting for how it accounts volume on its platform by showing the number of contracts traded which contract on a prediction market trades for less than a dollar. You know you buy 30 cents to win a dollar. So a contract for here is 30 cents but they just add this dollar sign add this errant dollar sign to the contract amount. Don't know why they put the dollar sign there, but when a

100,000 contracts are traded at 30 cents, it's reported as 100,000 contracts, but with a dollar sign making it look like $100,000 was traded when only $30,000 was traded, which more than 3xes that reported volume number. And so, as a result, a lot of eyes are on Khi. PHI has stated that uh the CFTC is not investigating Khi for wash trading or anything like that. Uh I think we're all kind of like waiting to see how this um falls out. But the TLDDR moral of the story is uh don't piss off autistic people on Twitter.

>> Has Khi responded to this? I I I see a whole response with >> Yeah, there's a handful of they they try they say facts behind the couch perpetual volume. Um saying the repeated $5,500 tickets are one paid market maker quoting fixed sizes hundreds of distinct takers. So the the maker is producing $5,500. >> They're not denying all of it. Maybe some of it. >> Yes, it's they are talking about it. It it's a lot of is unsaid. And so that's why I kind of think the story is not over. >> Okay. I I did see uh headlines about that. Thank you for explaining it, David. In contrast to that, I saw a tweet from Vitalic this week. Uh talking about a prediction market called Truo and he said this about it. It's actually

moving from base back to the Ethereum L1. So a kind of reverse L2 back back to L1 kind of direction. He said this. Glad to see that Ethereum L1 will have a new strong prediction market contender that is dedicated to decentralization and being ethical and not corpos and to act and actually trying to do interesting and meaningful things with this class of economic primitive was earlier this year I think I I saw a uh a comment from Italic basically a blanket criticism of some of the prediction markets. He's long been a champion of prediction markets in general, right? He's been all over this since like, you know, 2015, uh, 2016, the early days of Augur. But

he offered some criticism in February. He said uh overcon converging that prediction markets were overconverging to an unhealthy product market fit, embracing short-term cryptocurrency price bets, the sports betting, the dopamine stuff, not the kind of long-term fulfillment or societal information value that he had hoped. So that was his criticism and he's saying that that TRUO is maybe doing things right with decentralization and ethics and more of the Vitalic style virtue that that he really appreciates. Um the true token has it does have a token was up about 10x after this Vitalic tweet.

So it shows >> what did it start at? What was the market cap it started at? >> It's like 10x but right now it's a $8 million market cap. So it's like basically after the pump it's at $8 million. >> Yeah. So this is a micro market cap. So I guess the the Vitalic uh tweet gives you something but it doesn't give you a lot of things. And it's basically I mean not used the total value locked of True is $1 to2 million 7. >> The market cap was $1.3 million before the Vitalic tweet. It peaked at $17 million. It's currently at 9 $10 million.

>> Yeah. Uh so we have total value locked in true of about $2 million. 7-day trading value about 3,000. Um, it's just it was interesting to me in in contrast, David, because something I've been working through and and you know, struggling with is this idea of just like what makes Truo better than something like Poly Market or even Khi? Like what makes a thing corporate slob or corpos? Does that matter? And one thing that I feel a little exhausted from is picking between virtue and traction. It's like this forced choice sometimes in crypto where it's just like

you have the virtue path, but no one's ever going to use it. You'll have like 1 to 2 million in total value lock, but it'll be virtuous, right? Versus the traction path where you have to sell all your ethics and become corpo slob. And just this real like growing sense of virtue without any traction is kind of meaningless. It's kind of hot air. And so just an interesting contrast point. I don't like Vitalicus we've talked about before. He's very much priest class. He's very much monk class. He's sort of the the the the conscience of crypto if you will. And sometimes that character class ignores market sensibilities,

ignores product market fit, >> and I don't know, it's a whole it's just like what what um what are we doing here if we're not trying to get traction for our protocols? And sometimes that requires the market telling us what works and what doesn't. And I'm like happy to cheer for virtue, but I want to invest in virtue that the market actually values because virtue for virtue sake just gets you unused protocols and mechanisms that don't work and incentives in the wrong direction.

Uh anyway, I'm glad to see Vitalic supporting apps. It's just it feels like it's from a different era when we were you know trying to support stable coins like rye or something like that and it turned out that tether just >> dominated everything not based on kind of a virtue but the the minimum level of decentralization necessary to grow a product >> and I feel like I I just don't want to go back to that world. >> Yeah. Yeah. There there was an era in crypto where the industry was mostly unbuilt and that was like the 2019 and earlier era. Um and I think that's when we were allowed to like be full fully

virtuous, fully imaginative about what's possible. That was coming up on a decade ago like seven years ago. um a lot we have a lot of evidence now and we now need to like weight both virtue and usage when we like think about what we are building here and and I think I think your your sentiment is felt amongst many of just like okay like my like doing the whole virtue thing can only take me so far and at some point like I have to rep prioritize other things because everyone is a market participant here and so everyone's money is on the line so it it's it's personal for everyone one here. All right, coming up next, we got a bunch of things to talk about. We got the variational token, probably one of the biggest

tokens, might maybe the biggest token launch of this year. We also have Onondo and Black Rockck collaborating on Intelligent Portfolios and a few other things. We're going to talk about all this and more, but first, we're going to hear some of these fantastic sponsors that make the show possible. Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best cryptocycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin

and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi report wherever you get your podcast. YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now. Variational has announced their TGE, their AirDrop. If you don't know what variational is, it's kind of like Hyperlid. It's kind of like lighter. It's not exactly like that. Uh the the way that it works is that um the variational product quotes you a quote on a particular asset or instrument that you want to buy whether it's an option or a perpetual or spot or something.

It's kind of like a per exchange aggregator or an options aggregator is like one in one inch for pers. Yes, but more than per um yeah, more it's one an aggregator of financial um instruments of sorts. And the cool thing is it it um they pour over into tradi and so they have market maker agreements both in tradi and on variational and so they can kind of list assets that aren't tokenized if that makes sense. It's it's very similar to hyperlquid and lighter but also very distinctly different. It's very very uh hypes. It's potentially going to be the biggest airdrop of this year. That's what people are talking about it. They are aird dropping 32% of the supply. They're doing the hyperlquid

like lighter thing of 100% of revenue is directed to the treasury to buy and burn the VAR token. I'm interviewing the team on uh Friday. Oh, cool. >> Bank subscribers will get that early. Uh and then it will come out sometime the following week. Uh so that's pretty cool. David, I saw this and Black Rockck uh collaboration intelligent uh portfolios. And these look to me almost they're not ETFs, but they almost look like what was Bitwise calling them? >> Um, vaults. They almost look like vaults. Sort of a smart contract with a set of assets that's managed by some third party who make sure that they're managing risk. Well, >> what is this?

>> Yeah, these are these are vaults. These are single tokens that wrap professionally designed models, that's what Black Rockck is doing, into a single token with Ono tokenized stock. So it's a single token that you can buy and then there's onto tokenized stocks as a part of that token like the the constituent of that token the makeup and then the strategy is built and developed by Black Rockck. So it's like Black Rockck's models on those assets and Ono's vaults. And so what do you guys think? There's three products here. There's a high income, there's a diversified growth and then there's a high growth. And you own these by owning the assets. What what is actually inside of them? like high income. Is that like what what is that? Is that bonds of

various types? >> What's in them is ono tokenized real world assets and those are so you're buying ano >> vault which is an asset that wraps up ono tokenized assets into a strategy >> man and the strategy is managed by black rockck. So they do the risk management they put their brand on the strategy. >> Yes. I don't know if it's like managed, but the strategy is like a proprietary knowledge from Black Rockck. >> Very cool. Okay. Yeah. Uh I also noticed Black Rockck put out this post and this is like they're they're all in on crypto this cycle. Of course, they were last cycle with uh ETFs, but this is a a post talking about machine native money and how AI represents machine native

intelligence, but digital assets represent machine native money. They're propagating this story that basically with the success of AI, what is AI going to need? It's going to need programmable money. What is programmable money? That is all crypto assets. That is all blockchain stuff. And so if AI successful then crypto assets are successful. This is something we've talked about for a while of course but the significance is >> it's a black rockck report going you know what $10 trillion assets under management going out to all of their institutions and clients and so good to have them in our corner from a narrative perspective I guess continuing to pump the crypto bags. Also news on this week, Binance takes a $100 million stake in

Circle, which is interesting, I would say. 1.24 million Circle shares at a 5% discount two-year lockup. Uh, plus a 5-year USDC deal where Circle pays Binance monthly incentives on USC balances. So, like Binance gets the yield, which is probably now what makes sense because Binance has a bunch of USC. Binance kind of being brought into the fold. You know, it used to be offshore. It's it's starting to creep getting crept on by the United States government so that it's it's kind of closer to the >> probably also circle worried about all their exchange eggs being in the Coinbase basket too >> and losing some of that negotiating power.

>> Yeah. Yeah. God, if I if it was my job to manage the tension between Circle and Coinbase, I would be so stressed out. Anyways, speaking of Coinbase, uh Coinbase has opened up IPO allocations to US retail investors. So you can buy into IPOs as a retail investor through Coinbase starting with Aura, the whole like Aura ring products. And so this is Coinbase on its arc to get more into like feature parody with Robin Hood on the equity side of things. So Coinbase is kind of cornered, not cornered, but like owns a lot dipping a toe in the water. I feel like from Coinbase, I still want like the Robin Hood features of I want to be able to buy my stocks at Coinbase.

>> You can do that >> as a US customer right now. I can buy stocks. You >> sure? Hasn't Haven't they had stocks um on Coindes? Coinbase for a while. >> This is crazy that I don't know about this. >> Coinbase is doing a lot of good stuff like this. They need to fix their goddamn web app. >> Their web app is so broken. It's been broken for a while. I know that they know it. Why can't they fix it? >> Yeah. >> All right. Send out >> and that's how we will tie that episode off. Risks and disclaimers.

Banklistation, you guys know the deal. Crypto is risky but not risky enough. The institutions have landed. So we are going even further west. This is the frontier. It's not for everyone but we are glad you are with us on the bankless journey. Thanks a lot.