DeepSeek, Trump's crypto executive order and the Fed: Lark Davis on the week

Transcript

GM good morning welcome to the milk Road show The Daily crypto show that keeps up with AI so you understand why everyone is talking about deep seek I'm your host Jay Hamilton the markets are red everything is crashing what is going on well it's because of a small AI company in China which might have changed the world or at least the future of AI over the weekend we're going to break that down last week might might have been the most bullish week ever in crypto Trump signed his first crypto executive order like bullish Vibes all around and I'm not really sure the market really cared or maybe it was already priced in we're going to talk about that more so we're going to talk about what Trump said in

the executive order and what it means long term because that's what matters most last Friday the bank of Japan raised interest rates nobody really cared what's going on in the markets it's so hard to understand what matters and what doesn't matter anymore also Trump is demanding that the FED lower interest rates this Wednesday we're going to talk what to expect this week and so much more with our good friend Lark Davis legendary crypto investor educator and tweet tour before we jump in here from Lark this Wednesday we've got an AMA happing in the milro Pro Discord with our research team mark it down your calendar Jan 29th at 11: a.m.

now this event is for pro members only if you're not pro and you want to join click the link in the show notes Go Pro today uh really this is all about this is your opportunity to get in front of our pro team ask some questions get investment advice straight from the guys who spend all day every day literally all their hours on investing in crypto before we hear from LK let's just take a moment to hear from our sponsors who make the show possible meet odos the defi aggregator that makes your token swap smarter faster and a whole lot easier tired of trading like it's 2019 odos finds the best prices for your swaps across 900 liquidity sources and 14 blockchains so you always get more bang for your crypto Buck whether you're swapping setting a limit order or just

avoiding gas feed like the plague OS has you covered it's like having a genius Trader in your pocket minus the coffee addiction join three million wallets already using odos to power over six billion in monthly trades start making smarter swaps today at milroad docomo Lark welcome back to the show what's up it's been a crazy week oh my gosh the weeks just are getting crazier and crazier right now it's and it's just getting started that's like I I I can't even wait for what's to come okay let's talk about U deep seek R1 what the hell is deep seek R1 what has happened is basically if you fell asleep at last

week and woke up today when you're listening to this episode you missed that about a trillion dollars got wiped out of the NASDAQ in a day and most of that came from one stock One stock which is NVIDIA which just got got absolutely smashed set a record the worst the biggest drop ever $420 billion market cap drop in one day biggest ever uh you know who holds second place in that staff by the way Nvidia actually previously also had the biggest drop ever so maybe it's more it trades more like a crypto stock maybe uh total crypto Market also went down big time all markets were affected by this um and uh it's all because of this small 200 person team in CH that has built a

better AI model than cat GPT for a fraction of the cost like what what is going on here this is a crazy story and by the way it's interesting that the crypto markets are almost completely responsive to what Nvidia is doing of course the Nvidia thing it creates market-wide panic and fear but hey here's a fun little fact for everybody yesterday meta Facebook hit a new all-time high why aren't we correlating with that why do we only correlate with Nvidia when it's going down of course if meta goes down we'll correlate with that then obviously but uh H crypto markets anyway it's a crazy story about deep seek because if everything is as they present it it really calls into question the valuation

of US tech that's really what it comes down to it's saying that US tech is way overvalued that these companies that are worth trillions of dollars should not be worth trillions of dollars of course a lot of the big tech companies in the USA are not strictly AI companies obviously open AI is a strictly AI company but they're not a publicly traded company yet Nvidia therefore becomes one of the biggest proxies for risk according to what's going on in the AI Market because they're so linked with their gpus to AI That's why meta was able to hit a new all-time high because meta's price does not depend solely on AI and Google and apple and Amazon do not depend solely on AI obviously it's an important part of their companies but it's not BL end all for their companies so if deep seek really did do what they did with $6

million it's a game-changing moment for AI it's very exciting means everything's getting better and faster with AI even crazier and faster than we thought and here's the thing you have to realize the simple fact that China is going to massively eat America's lunch when it comes to Tech over the next few decades because there are more rearch papers being released like dramatically more research papers coming out of China than out of the US to a multiple degree there are more people in stem than in the United States like it's just huge numbers of and huge investment in Science and Technology and Engineering and Mathematics in China and they're going to continue that lead for a long

time so Chinese Tech is going to continue to develop at a massive speed okay so we have to acknowledge that reality it's not to say that the United States is out of the game I mean Trump just announced $500 billion do for AI Investments the other day Okay backed by Soft bank and all these other top players so this is massive and to an extent this could have even been some kind of response to that is it a coincidence that it only came out a few days after America announces half a trillion dollar investment in AI probably not there's also a lot of nuance to this story Elon Musk for example saying that he doesn't really believe that they were able to do this without a bunch of um envidia gpus which

is ironic because if they do have there there are um I can't remember the name of the hedge fund but there was a hedge fund guy being interviewed on NBC or something like that and he said that well basically they have about 50,000 h100 Nvidia gpus and that's how they did what they did they didn't just magically do it with you know a laptop computer or something like that or you know second generation Nvidia chips from years ago basically and let's be clear okay so uh what deep seek is saying let me let me just pull up a a tweet here just to to give like the Deep seek EXC side of the story uh because yeah I mean there's a lot of nuance here and there's a lot of naturally US versus China uh game of

games happening here in speculation what's actually at play but okay deep seek is saying they saying they built this in two months which if if if these things are true it's absolutely insane and it makes sense that it's changing the future of AI and Technology but they're saying built in two months they're saying [ __ ] 5 and a half million to train versus open AIS cost 100 million plus API guys are 95% cheaper 200% team fully open source so they did fully open source it which in my mind somewhat proves some of these actually I guess it doesn't really prove any of these above things because the it could be open the the fact that it's open source you can't prove how long it took or how how much it cost to make it but

um basically if if this is true then Nvidia is worth a lot less but that's that's kind of the cold hard facts at least at least in the maybe not in the long term but certainly feels like it could be that way because you could run these models on a cell phone or a a much different device than a $40,000 Nvidia device that you really that you need in order to train these models right now I would say that at least they probably would have used one generation back of Nvidia chips so I think it's the M 800s or the 800s um a whatever the previous titles were so those were before the export controls right

obviously the new ones are under export controls and they can't say if they have those new M100 or the h100s so they may have had those or they may have just had one generation back chips so still ironically kind of bullish for NVIDIA because they're probably using Nvidia chips either way just whether newer or older generation it comes down to but also can we just take a second to acknowledge the fact like that uh we are going to need so much GPU Compu in the future if we are rushing towards this future of spatial robotics humanoid robots self-driving cars all this kind of stuff you think we're not going to need gpus that Nvidia is suddenly not going to have any business no of course not of course not but this is a typical Market overreaction to something you

know something happens everybody loses their minds the NASDAQ futures are the the E Futures before the markets actually open up they open up about 10 12 hours before the actual markets open those things start crashing because it's Sun Monday night and Market Panic spreading everyone's had you know 36 hours since the Market's been open so everyone's losing their minds and it's typical overreaction that you see in the markets and it's interesting to see crypto correlate so much with essentially one very small story but think about the impact here it is definitely an AI War let's say an arms race in AI right now between us and China and actually everybody benefits from this because means AI is going to get a lot better A lot quicker which is very very exciting but what a shot to

fire across the bow whether or not there's everything about the story is completely true or not the impact of a story like that think about that for whatever it cost to train deep seek China was able to erase a trillion dollars in US Stock Market valuations in one day right it is insane it's insane and and I think you're right like the the outcome of this story is just that it's better for us it's better for the consumer right like yeah sure oh like we all feel it maybe you wake up you look at your your portfolio you're down okay yeah that sucks but like that's going to bounce back I I that's that it was you know you if you had a little bit of

white powder you by the dip right here's your opportunity uh but I think that the fact that where this leads to is is that we might just get I mean free free AI right like it deep seek is free chat GPT equivalent of the their reasoning model is $200 a month right like great we all get free Ai and it and it evolves faster thank you deep seek I'm happy you got to keep in mind too is that um if something's free it always comes with a cost right so I mean there's the Strategic Advantage here of undermining US tech companies and US tech company profitability but there's also the

question of it was the most popular downloaded app in the United States in the last week so all that data where's all that data go straight back over to after they ban chip Tik Tok right like super valuable all that data you can't you cannot uh under understate how important the data is the data is worth a tremendous amount of money so if they're giving it away for free they're harvesting the heck out of your data man which everybody else does anyway but just to keep it in in perspective here so so you think you you sort of lean towards the uh and we won't go too much deeper on this topic we'll St talk about Trump's executive orders and crypto markets more but this is just too good of a story to not talk about it especially with its effect on all

markets but you think you you you're clearly very skeptical about the way they're portraying the story you think more likely because if you if you believe their side of the story then it's it's not just the massive companies and Fang or the Magnificent 7 that are going to compete to own AI it feels like it's more like hey wow anybody can get into the game now and it's going to be a very different path than I think we all thought which was like this you know you had to be a heavily funded $100 million plus company in order to do this now it's like oh no like we can a lot of people so I kind of the rosy side of me is like oh great this like the little

guy's gonna win on the AI side too not just the crypto side yeah I'm definitely skeptical of the story to an extent right but if it is true great good for everybody it's good for body if it's not true still good for everybody because it it creates more of an an arms race essentially arms race made out the right a highly competitive environment let's say for AI where us companies are now going to double down on their efforts so and Chinese companies will and Indian companies will and everybody's except the except the EU they're just gonna do some stuff with bottle caps you know but everybody else is gonna do AI I think arms race is appropriate by the way I do think it is an arms race okay let's shout out to all the Europeans in the audience by by the way

we love you [Laughter] guys um okay let's talk about uh Trump's executive orders uh because this was big and very exciting news um let me pull it up on screen here quickly uh I'm I'm not going to read the whole thing basically he is going to set up a working group and this might be why markets didn't respond the way that we all wanted to was because he didn't say I'm starting a strategic Bitcoin Reserve I mean he wouldn't have been able to say in executive order anyways but he didn't give us that language but at the same time we did get Senator Lumis as the chief of the Senate subcommittee we did get so many great things so this came

out on Friday uh very very very bullish let me see if I can summarize quickly here okay so going to basically wants to protect blockchain and innovation in the US wants to promote dollar back stable coins right specifically said oppose to Central Bank digital currencies wants to give Fair access to the banking system thank you right create clear rules for rules for Innovation and evaluate the potential of a national digital stockpile which I love that they're calling a stockpile now and not a strategic Reserve that that that one word sent Bitcoin maximalists into a complete

meltdown online because it's gone from being a Bitcoin strategic Reserve which would be a massive win for Bitcoin specifically to a digital assets stockpile which is oh crap they're going to put other stuff in there it's not just Bitcoin then of course speculation runs wild what other coins might be in there we can see World Liberty fi right now which is Trump's defi protocol buying wrapped Bitcoin but also buying ethereum uh they've got some Tron in there I guess Justin Suns made a big investment into um world Liberty F that got themselves from Tron as well chain link and a few other coins a so I don't know if we're going to have so many altcoins in there necessarily but I could see a a digital asset stockpile that's Bitcoin ethereum Salon xrp because xrp keeps

stuff of money in Donald Trump's Pockets so why not yeah W way maximist are gonna lose their minds man it's it's just like the story just keeps on the what this is going to do to the hype and to a lot of these tokens over the next and I mean basically so it's 180 days from from Friday uh so I believe that the date is circle everybody Circle this in your calendar July 23rd 2025 on July 23rd 2025 this working group has to submit their report to Donald Trump doesn't mean that that's the day that he's gonna say yeah stockpile is on but

that report will have the plan of whether it's Bitcoin or xrp or what's going to to be in the stock pile and of course that report also has to do a lot more it's not just about the stock pile it's also about how they're going to basically regulate digital assets and a framework to do so and including stable coins of course that's that's not all that happened also did you see David saaks interview on Fox this was so good so David Sachs who's you know Trump's crypto and AI Zar like his crypto guy he he went on Fox and he he he was specifically asked about the Strategic Bitcoin reserve and said we're evaluating we haven't decided yet called it a stockpile uh but the best is he was asked about Trump mcoin and he flat out

said I think it's fine there's nothing wrong with it it's just a collectible so everybody that holds Trump beam coin no you are investing in just a collectible that is apparently worth an insane market cap that makes zero sense but anyways so like I mean that shows the what what happened last week with with Trump is just the start of I can't even imagine where are we going to be 3 months 6 months a year from now in the progress that is about to unleash in America like the Tailwinds are just enormous that statement kicks the door open because I I saw somebody mentioned that I didn't watch the interview but

they also said nfts in that so nfts and meme coins are digital Collectibles so that means that every NFD that's been launched up to this point is not a security okay so they're just digital collectibles okay and everybody has to approach them as digital Collectibles highly volatile ones but digital Collectibles nevertheless I mean come on it's just a dog with a picture you know with a hat on it okay that's it that's all it is okay just and just look at it is that and it's a nice framing for it obviously from a a regulatory perspective because it just opens up the door for Taylor Swift and Mr Beast and all these people as well to do collectible coins for their fans right and nfts for their fans which is going to happen more and more here's an interesting thought for you though if that submission is July

23rd let's say it's going to take a couple months to hit the floor little while to get the vote on go back and forth on it whenever that final vote is it's probably going to be right around the market top now it's got It's Gonna be everyone's gonna tell you the opposite everyone's gonna tell you that when that happens when they approve that bill which they probably will when they approve that bill that's going to be the start of the super cycle and that things are just going to go up forever from that point likely though there's going to be so much hype building into the vote much like we saw us out when El Salvador legalized Bitcoin is legal tender it was the new paradigm of money it was a super cycle we only going to go up what happened bare Market started probably a similar situation with this

which gives us a nice lineup just you know it's so fascinating isn't it there's always a catalyst there's always a catalyst to carry us through isn't there and always I've I've even been thinking what the heck if with all this going on what are the Catalyst even going to be next cycle man like we we're we're blasting them all out now like what are we even going to have left with in then the 2028 cycle I don't know we'll see but uh I guess that's for later us to worry about right now it's just you know get that cheddar guys just mad stack it mad stack it okay get get the money out of the market because it'll end at some point maybe a maybe a Q4 around that vote but it'll end at some point I really I really like this this take on the timing I hadn't I

hadn't really like backwards math at that this could you're right like likely if if the proposal is July lik it's sometime in the in end of Q3 Q4 right is probably when this would actually go to a vote and okay we're gonna we're gonna clip this and play this again next fall and see if we can play back okay the other thing that happened was um Sab 121 has been rescinded Lark can you explain to everybody who's listening is like what the [ __ ] is sap 1221 the tldr is that basically Banks in the United States can now custody crypto on your behalf so that's pretty big that means

that Bank of America and all these players Chase whatever they can now hold your Bitcoin for you can have a Bitcoin account with them and they can sell Bitcoin to you that's massive for a variety of reasons because obviously the banking sector is huge and for the ability for people to go from well I'm G to have my savings account here I throw a little bit of Bitcoin or whatever things get real crazy real quick as I always say with any of these banking Stories the banking onramps into C crypto and we're got so many of them now it feels like we're run again running out of what the heck we going to talk about in 2028 2029 I have no idea but we have so many onramps coming it's the tide that lifts all boats the more money you can bring into the market and the

easier that money can get into the market the better it is for all the assets because it has the ability for those asset prices to go up exponentially because everybody who wants to fomo in can fomo in because they'll have such easy access to this so this is a really good story for Access for US Banks um I just want to mention one of the things too about the stable coins because stable coins are not very sexy but they are so wildly important to the cryptocurrency market and you see of course the xrp guys getting much closer to Trump so does that have an implication for the RL USD stable coin perhaps but what I've always said about US dollar stable coins which was why the Biden uh Administration was so off base with everything they were doing let's just say it say it nicely

today because if you want to extend globally the dominance of the US dollar you you back stable coins 100% you go all in on stable coin regulation and you push the US dollar stable coin as the global standard for stable coins instead of fighting it you embrace it and that'll extend the dominance of the dollar for decades ahead yeah yeah like it's literally it is it is the savior to America's dominance as as the Global Currency like it's so obvious yeah completely Trump gets it somebody somebody sat down said this is going to extend the dollar dominance for decades he said yes let's do that check check you brought up Catalyst before we've got the I want to

talk about catalysts actually because I I I've been thinking a lot about this like what are the upcoming catalysts we've got we've got the FED meeting this Wednesday I'm not really sure the FED is a interest rates are a catalyst because people really care about them but I'm not really I mean if you look at the past year like doesn't really feel like the Fed was much of a cataly it was it was the recession that never happened was all that the gave us in the past year so tell us your thoughts on this Wednesday's meeting what you think might happen and Market impact and Outlook but then let's talk more broadly about other catalysts that you see it's interesting because the FED may have done the near impossible which is to pull off the soft Landing now there's only been three

other examples in sort of modern history of the FED actually pulling off a soft Landing so it's pretty rare they usually get it wrong but Papa pal may have actually done it which is crazy so yeah I I think this time we're probably not gonna have any change on the rates I know Donald Trump is putting political pressure on Drome pal to do that but I don't think Drome pal gives a crap about that Drome pal is kind of his own boss he doesn't really respond to um you know it is what it is guys the Federal Reserve is a a funky entity so Dron Pal's probably not going to lower rates this time when will he do it hard to say um Futures markets are probably looking at something later like April or May even for a lowering of the rates but we'll see we'll see

obviously Futures markets can change really really fast when it comes to that but Futures markets right now basically saying it's a pause we got a pause no no hike definitely no hike there's there's absolutely no reason to hike right now core inflation came in cooler than expected PPI came in cooler than expected CPI came in at an in at um that's consumer inflation that came in at expectation ppis uh the cost that producers pay okay um so those these things are all looking good so that's fine there's definitely no reason to uh go with a higher rate hikes and the jobs markets good people actually it's interesting I think it was Stanley dren Miller who said that they've been talking to all these big companies and the level of optimism since Trump got elected has absolutely shot through the

roof and people are hiring again people are going all in people are getting really excited about um the markets and the future and they're very optimistic for the business cycle so that also gives um the FED no reason to do anything because everything's working right now right so they don't need to adjust anything and here's the thing you might think well the rates are too high right now how can how can the prices or assets go up look back in the 1990s there was a similar situation rates went up went down very little bit went sideways for a while that was right before the.com bust now before everyone talks about the bust part of it right but from the time that the FED paused rates essentially to the market top there was a lot of money to be made okay

and that was about a year a year and a half of crazy money-making times so might have a similar situation repeating on our hands right now all the macro stuff is lining up for a good year for risk assets dollars weakening Bond markets under control heck the bank of Japan raised interest rates the other day didn't even implode the global economy did not implode because that mostly Unwound back in August okay and what didn't unwind in August when the when the bank of Japan stepped back because they stepped back from that initially right they said g mistake everybody we're not going to raise interest rates it'll be fine don't worry about it Mark cooled off and then a lot of the hedge funds and stuff um that had that risk built up slowly Unwound over the next few months so you can see there was absolutely no Market reaction this

time to the bank of Japan raising interest rates So Good Vibes guys Good Vibes mate Vibes 2025 okay we got lots of stuff lining up here okay so I'm with you fully fully on board um a lot of people believe that q1 and have been saying q1 would be the big quarter of 2025 um or at least that if if we follow typical cycles that you know we would we might hit a a a spring local top like I don't know if it's March or if it's April or if it's may like you know you've said you've talked about that before and then we would have the cck typical summer dip and then we might come back for you know a big end blow off the top to end of the year what's

the what's the short-term Catalyst though like Trump's in office he made his executive of orders as you said fed probably stays neutral this week what's going to get us to the like you know Bitcoin 150k that I think so many people have in their mind that's like end of March like that's where I think we're going to be you know like what's what's going to take us there there's a whole bunch of unknown Catal sort of let's say Known Unknown catalysts that uh maybe announced what plays out with the uh repeal of the Sab one two1 right will some banks start announcing stuff that could get people excited will one of the Middle Eastern countries announce that that they bought a bunch of Bitcoin that would get people excited there's a whole bunch of things and of course just the biggest thing as always is the price

going up and you can't fight the reality that every single week wall Street's buying a couple billion bucks worth of bitcoin consistently look at the Black Rock numbers they're absolutely insane so they're continuing to gobble up Bitcoin the amount of Bitcoin available continues to be dwindling right they available Bitcoin right they're buying way more than miners can produce Michael sailor buying a billion bucks every single week right and others are buying too and so right now we have institutional money front running retail money right retail is coming in some small waves around the Trump mem coin in late November and stuff like that but retail largely has not returned to the market they will because guess what the economy is good people have jobs job

Market's competitive all these kind of things no recession in sight so people will come back and buy dog coins because they always do okay and so when Bitcoin starts moving as always it is the The Shining Light that brings all the moths into the flame and yes that's an accurate analogy because people are going to come back and buy the dog coins at the top they're going to top blast dog coins guys it always happens okay Ste all MTH no I'm kidding if you're listening now if you're listening now you're not the Moss the Moss are going to come later retail I mean I know we are retail right but no the vast majority of retail investors are not back in the market yet every every indicator basically shows that so we've had a little bits of Interest here and there but

nothing definitive has stuck around yet but they will they will the herd will arrive they always do and they arrive with the absolute worst time to top blast everything but somebody's got to be exit liquidity right somebody's got to be in the plane crash it's gonna be those guys it's just it's just so hard to it's it's really just hard to wrap your head around the way crypto markets work because there's no other Market that works like this and there really has never been another Market that's worked like this um because of just technology and this time of of humanity and it's you know when you sit here dayto day you think it's it's oh it's never going to happen oh when it's going

down it's oh it's over oh when it's going up it's on but if you step back from it all and you just remove yourself from the dayto day while also continuing to listen to milk Road and read our newsletter and listening to Lark on Twitter and all that I'm kidding uh is you you really do need to like don't [ __ ] it up right now right like don't overtrade it don't make the mistake of like getting trying to get the the the worst case that every mistake that I think everyone makes is all of a sudden you try to get that you're you know 10x isn't enough even 2x isn't enough 3x how many people have I said 2x or 3x if I was like you can two or 3x for the rest of year a lot of people I think everybody C [ __ ] you man like come on I

want way more than that right but like what's what's worse is chasing that 10x 50x 100x and getting nothing which most people do yeah most people just get torn up in this market and the last month has been a typical example of that there's been some good trading opportunities right but overall it's been a rough month man it's been a rough month because there's been such extremes of sentiment literally the past three Mondays it's been over there's been something that happens that freaks everybody out going into the weekend and it's over by Monday it's over the top is in it's going to zero then by Thursday Friday of each week it's oh my gosh so back new paradig of money it's been really really tough trading these

markets especially for anybody in altcoins I mean my goodness gracious my AI coin bags are just slaughtered beyond belief right now I look at them I like I'm just gonna not even look at that for a while because they'll pop back most of them will pop back I think there'll be um AI is not going anywhere it's such a big story it's such a big part of crypto these coins will continue to grow over time and not all of them are going to be winners of course but you only need a couple of be winners to really of course outperform but I I also you know for the guys who are out here chaseing the bigger returns and scoff at a two or 3x it depends on your risk right if you're if you're just in Bitcoin salana and ethereum you're the two to 3x guy you

understand that you're probably happy with that but if you're doing anything beyond that I think it's reasonable to want more because you're taking such higher risk you're not investing in the S&P 500 here guys you're investing in probably the most speculative high-risk assets in the world realistically right when you're investing in AI agent and nfts and meme coins these are the absolute extreme of the risk Spectrum so you should expect higher returns for taking such extreme risks problem is is that most people don't get the higher returns because that is so risky and most people do lose most of their money yeah Lark always a pleasure to get you on the show my man thanks for the time today everybody listening in as

always let us know what you want to hear more about do you guys want to hear more about the macro stuff do you guys want us just talk about tokens what do you want to hear about let us know in the comments and for every bot out there please throw whatever AI or meme coin in the comments as well because you guys just pump up the algorithm for me so thanks so much for that Lark I know you probably get the same thing every time I like go into our YouTube I'm like what is this what is this AI token there's like 50 people talking about it I'm like is this legit no it's not spot do not listen if you're reading our comments stay away from any bot that is commenting about some random meme Corin or token stay safe out there everybody sorry for rambling it's late for me have

a wicked awesome day as always if you liked today's episode please hit subscribe and make sure you follow us so you don't miss out on the next one there's also a link in the description to our free 5 minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or

any asset is risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day