Delphi Digital's 2026 market report and the liquidity indicator

Transcript

The market participants out of necessity have to level up and become smarter. Therefore, they're not going to buy the 10,000th iteration of some memecoin. What's up everybody? It's LG Ducet here and welcome to the Milk Road Show, the daily crypto show that's brave enough to pre-record its holiday episodes and still pretend it might be breaking news. This is part of our holiday series and we have stacked some killer interviews in advance so you've still got signal while we recharge for 2026. Our guests today are Deli Digital, one of the sharpest research teams in crypto and they just dropped exclusively as a sneak peek just for me and maybe for our pro members their 70page I think it's 90 actually year ahead report which is their flagship report that where they collect everything that's going on in

the space bring in all their experts to kind of collab on this one big piece that looks ahead to 2026 and we have some of those people on the show today. We're going to talk about what's happening with liquidity in the macro, of course, why crypto is no longer the only game in town and how institutions may not be here to save our bags. So whether you're a trader, passive investor, whatever you are, I think this is going to be a really good one for you. Today's episode is brought to you by Chain Link, which links Web 3 to Wall Street, Bridge, send stable coin payments instantly simple, global, friction free, and reserved ETFs, the onchain equivalent of ETFs. Let's get the boys up here. LTR, Jason, and Marcus, welcome to Milk Road. And for for Jason, welcome back.

>> Thank you. Yeah, it's good to be back. >> Glad to be here. >> Okay, let's let's dive right into it because I I do want to hear from all three of you and we have a lot of material to cover. U Jason, let's just start with you. Crypto has been total for the last couple months. We know this. We even spoke to you during this time. Are we Does this trend continue? When does it stop? >> Yeah. No. Um yeah, I'm pretty sure last time I was on prices were probably around where they were, maybe, you know, maybe a little bit higher and things were bad and we come back and, you know, price is still bad. So hopefully this is a a bit of a turning point, but I don't I don't know if that's going to be the case, at least in the the very short

term. Um, but yeah, no, I I always love writing these year- ahead reports and we'll just like kind of get right into like the the macro, I guess, landscape or or overview that we're kind of looking out for for next year, right? So, kind of like go off what you said. Yeah. Right. Like a lot of crypto folks have, you know, turned bearish lately over the last several weeks, couple months if you were, you know, a bit early to it, right? Um, and looking at, you know, Bitcoin's chart and a lot of altcoins, right? And everybody's like, "All right, that's it. Four year cycles in, cycle top, we're screwed. It's over. Everybody pack it up. Come back in, you know, 18 months." And price action does kind of, you know, look eerily sim similar to past cycles. You kind of have like that double toppy structure that we

saw similar to last cycle. You kind of have long-term momentum indicators, rolling averages, MACD, right? All of these kind of technical things that some people look at. Those are rolling over. fear and greed hitting extreme levels, right? So, like if you just stare at like the having charts and the cycles, right, and the overlays, it it could be pretty easy to think that, okay, it's not different this time. It's over, right? Um, but like I kind of I guess like a big counterpoint that we bring in this in this article or in this article is that, right, the cycle isn't playing out in a vacuum of just charts and and technicals and and and patterns on those charts, right? It it past cycles were kind of, you know, driven by macro liquidity trends just like this cycle is. And right now those trends are are

starting to flip in the opposite direction of kind of like what killed prior cycles. Like if you think back to the prior cycle, interest rates were at zero. The Fed hiked rates up, you know, 400 basis points within a year, fastest in, you know, decades and blew up the market, right? Blew up equity markets, blew up crypto markets. You saw unwinds of leverage across the board. You had all those credit blowups. All of that stuff, right? came from a, you know, a very quick and fast rate hiking cycle and we're kind of doing the opposite of that. Not in the sense that we're cutting 400 basis points in that same, you know, time period, but it's more of a a gradual decline, right? So, we're starting to see like a lot of what we called, you know, macro bifurcation starting to turn into macro convergence,

right? And this kind of extends to global global central bank policies, right? We've had uh some some central banks uh hiking while others have eased. we've had elevated rates persisting um and you've had like fiscal and and monetary policy kind of pulling in different directions in different countries across uh you know the global environment for much of the last year or so and heading into 2026 like I said we're starting to see sort of that bifurcation switch to a a convergence and and a convergence towards easier conditions of sorts u global central banks uh are generally overwhelming overwhelmingly cutting rates right now they're not hiking developed nations are all running massive fiscal deficits. You know, think somewhere in that like four,

five, six, 7% of GDP range across all of, you know, the major G8 countries. And that's projected to continue effectively in perpetuity, but at least throughout 2027, right? Um, and with debt to GDP ratios ballooning, bond yields, and uh at multi-deade heights, especially the long bond yields, right? There's only one real solution to that, and it's more debt issuance, which means more liquidity needs for the system. And while generally the global bank central liquidity index has been drifting lower, key catalysts are starting to line up for that rebound, right? The Fed's balance sheet shrank uh a ton since 2022. I think 2.42.5 billion, way steeper than previous like QT type

regimes. Um but like QT ended early December. uh reverse repo buffers are basically ex exhausted at this point and uh you know the TJ spiked uh to almost a trillion dollars in in in in 2025 due to issuance political chaos government shutdown all of these things right so the TGA kind of spiking acted as a hoard and and kind of like a liquidity vacuum for markets um and as we move into 2026 and we see these things kind of normalize uh dollars flood back into the system kind of turning what's been like a fiscal sort of drag into something like a fiscal injection of sorts. And while all of this is happening here, the other big global central bank that has like an outsized influence on risk

assets is China. And China's PBOC is also starting to ease, which should generally help lift global liquidity conditions. Uh so like the general bottom line is hopefully we're going from that divergence or bifurcation of macro policies towards a a more of a a convergence which should generally bode well for you know risk assets debasement type trade assets gold bitcoin um and it kind of like leads into the next section of our macro report which is like gold structural bid kind of being that canary in the coal mine right it surged 50 plus 60% or something like that in 2025 breaking out to well like well beyond previous all-time highs. as in kind of not really looking back. It's kind of paused briefly recently but then kind of

resumed its move. Central banks have, you know, like vacuumed up gold in record amounts, right? China leading the way. Global M2 at new like all of this kind of signals the classic debasement trade, right? It's all it's all screaming that gold's outperformance versus Bitcoin is kind of like that stark difference. It's like, okay, well, gold is obviously playing out this, but but why isn't Bitcoin is like the big question or why hasn't it been over the last, you know, several months at the very least. Um, even though, you know, on if you if you zoom out, right, Bitcoin has performed very well over the last couple years, kind of fulfilling the basement trade narrative, but like if you zoom in over the last year, it really has, you know, diverged from from gold, and it's not something that you

you would have expected to persist for this long. Um, so all of this is kind of lining up for that like we said, but there is like there is kind of like a a risk here that we should highlight within markets and like the the US Treasury market is kind of we call it like a glass house, right? It's very fragile uh is is the way we put it, right? With with the US federal government running like $1.5 to$2 trillion of of annual deficits, the US Treasury has to continually is issue massive amounts of debt to finance, right, these deficits. Um, but the way they've been doing that is front-loading the debt with short-term T- bills, right? This helps keep yields down and and avoids bond market volatility, which

is extremely important because US treasuries are uh by far the most important collateral asset in the world. And when collateral assets experience bouts of volatility, it's extremely bad for the financial system. you have a bunch of people that will derisk, degross, you you have to it effectively acts as like a liquidity vacuum in scenarios like that, right? Um so the marginal buyers of like long-term bonds are effectively or long duration bonds are effectively highly leveraged hedge hedge funds running a basis trade on treasuries. And a lot of this is funded through uh repo markets where buffers like you know the Fed's uh RRP or um reverse repo facility uh are basically

drained and bank reserves are down shopping right so foreign buyers are starting to step back so Japan people like Japan are starting to step back from Treasury purchases because their policies are starting to shift a bit right and as we move into 2026 we have a huge amount of debt that the Treasury needs to refinance Besson has to refinance I think$ 10 trillion of debt over the next 12 to 14 months or Uh and so like the question becomes like how can he do this? He can't term out the debt and by that I mean he can't issue debt further out on the curve like 5 10 years out on the curve because that would signal things to markets. Market volatility would go up and things would start to unwind and you'd get some market chaos. Uh and you can't really keep frontloading the debt forever but

it's the only option right now. Right. So the question becomes we have to do this or they have to do this in a way that doesn't unwind the the hedge fund basis trade but at the same time we also need to figure out how to absorb all of this debt issuance as well right because hedge funds are buying but they're not going to absorb all of the incremental debt issuance that needs to come. How is that debt issuance absorbed? And this kind of draws us to like the conclusion of this like fragility section. And it's like, well, the plumbing fragility itself will force the Fed and and policy makers to do things, right? QT will end. Reserves might get supported. You might get bank regulations loosen so banks can like SLR exemptions and things like that so banks

can buy more treasuries, right, to kind of, you know, effectively monetize the debt in a way, right? there's a lot of levers that they can use and pull on and and adjust to kind of avert this US Treasury, you know, market fragility crisis before it happens. It's just a matter of which levers they choose to pull and when they choose to do it, right? So, effectively, this all comes down to, you know, monetary policy. They're kind of maxed out. They can only do one thing. So, it kind of comes down to fiscal policy at this point, the Treasury and uh and and and policy from that perspective. So like the big theme for macro I think I covered most of the main sections in that and Marcus might want to add one or two things there. Uh but it kind of comes back to right like

unlike past cycle tops where liquidity peaked and tightened 2026 is kind of convergent on that right we're seeing rate cuts fiscal expansion liquidity injection debasement trades accelerating. Um, so we're kind of seeing that, like I said, it's it's the theme is macro bifurcation to macro convergence and things are starting to align in a way that uh hasn't ended prior cycles. In fact, it's the opposite of what has ended prior cycles. This is the biggest year ahead for crypto, AI, and the macro. But the real moves aren't in predictions. Join Milk Road Pro today to see our live portfolio, buy, sell signals, and the AI investing portfolio, which launches in January. The link is below. Marcus, that was a long deal from Jason.

>> Give me your perspective. Maybe give me like a TLDDR from that just to just to kind of set us back up. Set set us back. And then I feel like you were a big part of this re research in this top section. Tell me in your opinion, what's the most important chart? And you know, considering everything that Jason just gave us, what's the one thing if I could take anything from this report and and watch it for the next couple months, what would that be? >> Yeah. Yeah. So, everything Jason said, I totally agree. I just want to call the attention, you know, what Jason touched on the four year cycle. I know that's top of everybody's mind, right? Like the charts line up. If you look at how bitcoins have performed now compared to the past cycles, price action indicates that there could be a potential uh

tracking of the four-ear cycle. But it's in our view that the four year cycle is not is not tracking this time because you know the the typical signals that gave us the four-year cycle were usually built on retail speculation and this time retail speculation is definitely not here right this is institutional driven like the money the flows everything was was from the ETFs and um I think to your question the most important chart that everybody needs to look at right now is the TGA um treasury account balance right because um it has ballooned to about $1 trillion over the past quarter. Yeah, this one this one the the draw down the draw down this is the TGA balance sheet you're looking at uh basically the wallet balance of the the treasury and you see from August to

end of this year it it rose from like 300 uh billion all the way up to 1 trillion and this was during the phase where the US government shut down as well so there were a bit of complications in there but what we got to understand here is that this amount of liquidity was basically removed from the system right and to Jason's point the RP balance was low so they they couldn't touch liquidity from that front. They had to draw it from bank reserves and uh we all know that QT ended December 1st and it's not really they didn't really have a choice in my opinion because liquidity is very tight right and and if you look at these chart there are signs that shows to what Jason has said that liquidity has to flow again. So this is why the Fed ended QT and and they're even starting you know

your QE not QE uh short-term T bills repurchase. Um but yeah, anyway, this chart is very important going into 2026 because this chart would eventually have to be dropped down, right? In order for more liquidity to enter the system, you want to see the TJ balance actually fall. And there there are many ways that it can do it. The most uh common one that everybody's looking to right now is the Trump tariff refunds. So that would come out directly from the TGA. And another reason why the TJ has been looking like this is because of the revenues that the tariffs have been collected. So I I don't know if people know but the the tariff revenue actually flows into the TGA. So if the the tariff goes well in the Supreme Court or whatever and there's no refund and stuff

like that and Trump actually pushes for you know the checks to go out to Americans, you would see a roughly 250 billion decrease in in just the TJ balance sheet. So that should provide some flows for um liquidity sensitive markets uh in in in this area. So, you're telling me that if Trump did issue these uh new Trump checks, they would come directly out of the TGA. So, that would be however much 2,000 each, which I'm not sure what the exact amount would be, but it would come directly out of this trillion dollars and flow right back into retail's hands essentially.

>> Yeah. And and this this cycle, retail is practically absent mostly because most of retail has been rinsed over and over again. We had memecoin speculation, we had NFT and and we all know how those u narratives ended out, right? Um but it's very clear that this trend in our report that this year is an institutional year. The flows have been driven by institutions and all these little pops and the narratives that we have seen so far are just capital rotating from one sector to another to another. And if we look at the US net liquidity, not not M2, M2 is literally just amount of money printed, but you got to take out everything else that happens, right? the TGA and everything, US net liquidity is still down ever since 2022. We have been

in a sideways range. We have not made new highs. In fact, we've been making new lows. So, in in in that terms, there is not a lot of liquidity flowing around. Sure, tokenized financial products are the future, but there is a big sticking point. They all need to speak to each other. This is a tough problem to solve, but chain link does exactly that. It's the universal language for financial markets, linking Wall Street to web 3, banks to blockchain, and so much more. See how chain link is linking the world by going to milkroad.com/chainlink. Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe. Bridge helps

businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge. >> Yeah, that makes sense. I think one thing that's really important to me when we talk about retail, like you said, Marcus, is the role of the more fringe assets, right? Because that's typically, you know, retail knows about Bitcoin at this point and they know they've gotten the clear institutional signal in the last couple years that it's like, listen, all these big banks and everybody is is adding to their balance sheets. So, they might have it in their balance. Retail might have it through their 401ks or whatever else that they hold, right? they might have some exposure, but definitely there's been no explosion of altcoins, right? Um, and Jason, I think you you kind of were alluding at that, saying that the

section in here that's titled the that crypto is no longer the the main game in town or the the the best game in town or however you position that ties largely that, you know, there's been no alt season this year or this this this cycle, if you call it that. >> Yeah. I mean, there's been siloed alt seasons, right? But nothing like we've ever nothing that we've experienced in any of the prior cycles, right? I've been here since 2017. So, like I've seen a few cycles and and the alt seasons that we've seen in those were were fantastic, right? Every pretty much every coin was going up every day 5 10 15%. You didn't need to be good. You just need to be here and show up and click the green button, right? Like it was amazing. Everything just went up. I remember in in in 2021, right, just like

on FTX, like before all of that stuff happened, right? I was just like literally every day I just log in. I just look for the coin that had like the most volume that was like doing the bad. just buy it and it would just everything would just go up, >> right? >> A simpler time. >> It was Yeah. And that's like the alt season that people have become like kind of accustomed to. And then when you contrast that to what has happened over the last two years, you're like, "Holy shit." Like it couldn't be any more different. It couldn't be any more different. >> Yeah. >> Right. And that's kind of like the uh you know, part of like this crypto is no longer the only game in town from the perspective of like overall speculation.

from the perspective of overall speculative dollars, right? Prior to this this cycle, if you were just like looking at, you know, 2020, 2017, whatever, right? If you were just looking at like what's like the most risk assets I can buy that are like the coolest tech or have the most upside potential in the future or the most promising, you know, whatever, most promising innovation, right? Like a lot of those answers kind of funneled you into crypto. Crypto was new. It it was promising a lot of stuff. uh a lot of the innovations you saw from like an infrastructure or tech standpoint were actually really cool and interesting um and novel and that was the case for for many years for like most of crypto's existence and then when you fast forward

to this cycle that's not really the case anymore right um like AI is is and robotics are are extremely interesting the the tech is extremely promising there's a lot more traction generally speaking on that front in AI than there is generally in crypto outside of a few of the killer use cases, right? Um, so from that, you know, from that perspective, you have like speculative dollars flowing into into AI, you have and and robotics, you have solar and battery tech, which is kind of adjacent to to the AI, you know, AI sector with respect to energy consumption and things like that. But a lot of innovation that has happened in those sectors is also extremely interesting has a lot of potential and unlocks, right? similar in

this similar in nature to the interesting pioneering tech of AI or of crypto and then you have other things like bioengineering and all of these things which are also extremely fascinating and extremely cool and enabled by AI and things like that right so like from a pure speculative investment landscape perspective the surface area is much larger now prior prior cycles you could really you really were just funneled into crypto for that nowadays there's a couple other areas you can go and some of those areas probably have more traction than crypto does at this point right So there's more competition from external capital to come into crypto. On top of this, like we've already alluded to and we'll talk a lot more about, institutions are firmly here. They're they're entrenched.

They're they're unequivocally interested in the industry and they want investment exposure. And a lot of those sophisticated traders are not even sophisticated, all of those trady investors looked at crypto. They're like, "Okay, I'll get my exposure to the majors like Bitcoin, ETH, and Soul through IBIT and ETH and whatever." And then I'll just go buy crypto equities and I'll buy Robin Hood, I'll buy Coinbase, I'll buy Galaxy, I'll buy crypto adjacent equities that have exposure to crypto but are regulated businesses that have business models and cash flows and things that I'm familiar with and I can model and underwrite a lot better. Right? So crypto equities from a from a sense have vampired and attack vampire attacked the speculative

bid that might have otherwise flown through to crypto altcoins like we saw in prior cycles. Right? So you have that going on as well. And then on top of that, you have a crypto industry that I wouldn't say is I mean it's still new from the grand scheme of things, but it's not new new anymore, right? Crypto has been here for a while. A lot of us have been here for several cycles. We've seen a lot of things come and go. We've seen a lot of interesting ideas. We've seen a lot of not really. We've seen a lot of griffs, scams. We've seen a lot of everything, right? And what this means is the industry participants begin to level up out of necessity. they start to understand things. In 2017, nobody knew what open interest and and funding were with BitMX per nobody knew any of

this stuff. They weren't like I mean, yeah, people did, but the vast majority weren't talking about this. They sure as hell weren't talking about global liquidity and watching weekly CPI or monthly CPI prints and FOMC press conferences. That wasn't a thing in 2017. Nowadays, it's it's the only thing you see in on crypto Twitter sometimes, right? like the the market participants out of necessity have to level up and become smarter. Therefore, they're not going to buy the 1,000 1,000th iteration of some meme coin. They're not going to buy the 120th per deck that launches, right? They're they realize like, oh, this stuff didn't work in the past. Why would it work now? So, like they get better. They learn the products. They

get smarter, right? So, you just have competition from people leveling up internally. You have vampire bit attacks from crypto equities. You have competition for speculative dollars. So crypto by and large is no longer the only game in town. So does that mean it's over for crypto? No, absolutely not. There's a lot of really cool and interesting businesses and protocols being built in crypto. But what it does mean is that if you want to succeed in crypto, you probably can't do what you were doing in 2020 or 2017 um if you were here because it's not the same market. The participants aren't the same. The market structure is not the same. Everything is completely different. So, a lot of the lessons that you understood or um learned in those prior cycles might not actually be like laws, right? They might just have been

heruristics or good rules of thumb for that cycle that don't necessarily hold as much water this time around. And that's a lot of the point we're trying to make. And we highlight the assets that have done generally okay over the last year. There aren't that many. And we we we point to things like Hyperlid, which is, you know, a perplex uh exchange L1 now as well. Um, and we we can kind of point out that like even though this this project has all of the great fundamentals that you want, right? Token buybacks, millions of dollars a day in daily revenue, right? Tokconomics that are are good, a team that's aligned with like all of the things that you you you know, paint the picture for the fundamental picture, right? Or paint the puzzle pieces for the fundamental picture of this of this uh, you know,

investment thesis in Hyperlid. It has still struggled in a in a tough market condition, right? It has still gone down like everything else. So now imagine what tokens that don't have any of these redeeming qualities are going to do. It's almost inevitable like the Thanos snap. Like it's almost inevitable that most of these, you know, trend toward zero because there's no reason to bid them. There's no structural bid, right? When I say structural bid, I mean like ETFs are a structural bid on Bitcoin, right? The assistance hyperlquid, you know, using a portion of its daily fees to buy back its token on the open market, right? uh that is a a form of of of you know structural demand. So right like absent things like that like a real reason for people to own and buy these

things and a reason for other people to want to own and buy these things like it's hard to expect that you see any kind of alt season like we've seen in the past. you probably get more of this dispersion. And that's kind of why we coined the term like market of disparity and kind of likened it to a stock picker market because when you look at equities, right, like you could buy the index and do well, but the index is really just the performance the outperformance of like five to 10 stocks, right? So it's very similar in that perspective that like the outperformance of of the market is siloed to a few names while the majority generally tend to you know do do the average or worse than the average by definition. So that's kind of like the the theme of like you know no longer the

only game in town. You got to have precision. You have to be you kind you can't really be that like passive allocator. You have to be a an active allocator in this type of market. ETFs provide investors with a structured, disciplined, and diversified approach to crypto, which is cool, but the world is moving on chain. We need a crypton native equivalent. That's exactly what Reserve's decentralized token folios bring to the table. Reserve ETFs are rule-based baskets of crypto assets packaged into a single token like Coin Market CMC 20, crypto's version of the S&P 500. Go to milkroad.com/reserve to find out what's on offer. I have a question for LTR and and this is more like I guess based on the the last section here but also lends to what Jason was saying. Are there any

innovations from this cycle that have a good chance to kind of survive through? Right? Because Jason's painting a picture for us that it's like listen there's been you know the majors have been the play and even that isn't really even the best play compared to other assets but within crypto specifically this cycle has brought so much advancement. So is what what in here out of everything that's happened LTR to you has like the most sticking power andor is the most unique and something that we can maybe continue to monitor going forward. >> That's a good question. I think like on the whole you're going to have a barbell where you're going to have these very institutionalized chains that are that are very custodied and you know you have to KYC you have to complete AML whatnot whatnot. Um, but then on the other end

of the barbell, I think you're going to have an emergence of private credit on chain. Uh, that's enabled by things via ZKTLS. And then you're going to have a resurgence in DeFi, mostly in the form of exotic RWA yield, um, on undercladized loans. And what I mean by that is we have a lot of things like maker recently pivoted to Sky and Maker was originally, you know, entirely sourced by T bills. And as more institutions have come on chain, you have things like Black Rockcks Bittle Fund, you have USDC all offering the T-Bill rate. U Maker was essentially like kind of killed off by that and they realized, okay, we can't just offer the T bill rate and have a good business anymore. Um, which is what we're seeing. So now they repivoted to Sky. They la they launched an incubator called OEX that is seeking out you know

underolateralized RWA yield. And what I mean by this is we've seen USDA which uses GPU renting as a form of yield for its stable and for its defi. And then we also recently have daylight which uses um unused energy grid stuff in homes across the you know decentralized grid essentially of solar energy that can then provide yield based off the sold energy. So I think there's going to be a lot of great things that are going to come about just because it it's almost a forcing function in the fact that yeah you're not going to be able to compete on the TBO rate or on really lowhanging fruit in DeFi and in crypto anymore. You're not going to be able to just say, "Oh, I'm gonna bring this on chain and suddenly raise a billion dollars, right?" Like, you're gonna have all these institutions like Stripe and stuff

that are already doing payments on chain with Tempo. And so, you're gonna have to really be creative. And I think we've seen that with both like the success with ownership coins and metad with this new undercolateralized stuff with more real RWA um as a function of yield. Uh, and so that's that's how I see things going at least right now. >> What about this new token framework? >> Yeah. Um, so this has been a thing I've been playing with a lot. It's nothing set in stone, but when I was going through the year ahead, I was really looking at metrics of a lot of chains and most of them are down unfortunately, but one really stuck out to me and that was World Chain actually um for Worldcoin and the World app. Oh, like from OpenAI like is is that the one hold on LTR? Is that the thing? Is that the

chain for the orb where people were like giving their whole identity and scanning their retinas a couple years back and everybody was saying don't do it because Sam Alman is going to take your identity or or enslave you or whatever is going to happen. You were talking about the same and then they launched a blockchain. Correct. Or they launch a token or they launch a chain. >> Uh they launched a chain. It it's still connected to world and basically all the apps on the world app. So you have to scan your iris and then you get access to the world app and then each day you can claim a certain amount of world tokens of oro tokens and you can play in the ecosystem among the app and essentially all their matric metrics on the app are basically up into the right.

I mean the token is down obviously but this is what we're going to get into is that all their metrics are rising their users are rising their network effects are growing yet their token is basically just going down. And so I was like this is this is really weird. We don't normally see this, right? Like usually when Salana is pumping from its $20 to $120 pump, like tons and tons of people were onboarding onto Salana during that time, just like a net crowding effect. But what World does is it's actually what I call a CAC token, a customer acquisition cost token. And the fact of the matter is is that World is used as a payment to get you to onboard. And and what I can put this as akin to is when PayPal first started, they originally got all of their users by paying you $10

to join PayPal. And they burned a lot of money. They burned 60 mil 70 mil of VC money just to get that network effect. But it ended up working out in the long haul. You know, it was Peter Thiel's famous like startup and stuff like that. But world has actually spent over $300 million uh in in CAC at current token prices. But essentially all of the holders of Worldcoin um bear that cost. And so it's not actually reflected on the company as a whole. And so what you end up seeing is that there's a chart in in this report um that that's the CAC token chart and it looks at worldcoin adoption versus market performance. And what you can see is that the market cap of world has made remained relatively stable. Um it's like it just chills around 2 210 billion, you know, and the

token price goes down, but then the users go up. And what you're seeing here is that inflation is basically offset by the net marginal user that's being onboarded. And it's a really interesting case study because basically world tells people like hey don't buy our coin. It it's not meant as like an investment vehicle like you buy this it goes up. It's purely meant as an onboarding mechanism. In fact in the in their documents they they literally say that it's literally meant to just get more verified humans. Like that's the whole point of worldcoin is to get more people to s uh scan their irises so they can have like an actual social media network effect. And why this is important is we're actually seeing more companies start to adopt this. Like if you go down a bit, Seeker, the the Salana phone, just announced their token and it's

basically a CAC token. So they're going to use this token to basically pay people to, you know, you should have a Seeker phone instead of an Apple phone and here's why. We'll pay you, you know, a monthly stipen of Seeker tokens to get you to use this phone. And eventually like you get less and less Seeker tokens, but like the network in effect is already ingratiated. We've already seen this with World and the fact that like when you first joined World, if you joined back when it first started, you've got a ton of money in world tokens, but now you get way less World tokens as far as a nominal USD value. Um, and so like this is what CAC tokens are. And I think this is important going forward for things like Coinbase as they announce Bass token. This is possibly what base token can look like. I mean,

we all see the Jesse tweets about onboarding the next billion users on chain, right? And what what's that going to be? That's all CAC. That's all customer acquisition cost. And so how are they going to fund that when they already have like a live stock? And a lot of people will be like, well, BAS is just going to be an extension of the Coinbase balance sheet. Well, there's like there's a point at which the marginal dollar on the balance sheet is less than actually acquiring a new user to base chain. And I think that's like the inflection point you're going to see with with base token when inevitably comes. Um, it's just an interesting framework I've been playing about. Uh, especially as we see more companies with equity issue tokens. I mean, Poly Market has talked about having an ICO and an IPO. Kraken is going to IPO and they

also have Inkchain. And so going forward, you almost need your your tokens if you have a stock to be non-securities, which is another beneficial part of the CAC tokens is since they're only used for customer acquisition costs and not like as an investment vehicle, uh they actually are not securities, which is pretty cool. Uh so yeah, it's just an interesting thing uh to keep aware of going into 2026. Mostly to maybe avoid buying them because like that's not the point, right? right? Like you don't want to buy these and they go up, but to be aware of like the app chain ecosystem will be good investments on these just because they'll be funded with so much money. >> That makes a lot of sense. Yeah, I I like that. Almost like an evolution of of the more I guess like DGEN driven, you know, staking for yield of like a

new token where you're just trying to get people to hold it and you're trying to get people to buy it so they can get this nice juicy yield. Whereas this is like it's not really about price action, right? It's just more about we're going to give you some tokens for using the app and we want you to use the app and whatever that app's going to be. And I think that makes sense. So you've you've kind of coined this LTR this this this term or you guys or Deli has coined this this CAC term or is this something that's been floating about already? >> I I coined it actually. Um and people have probably thought about this before like it's it's mainly just so you have you know users grow growing market cap is stable and price is declining and that's going to be like your your

hallmark example of a CIC token because basically all the inflation of the coin is being used to fund user adoption. Um, and then all that inflation is also being held by the users and that's why the market cap stays relatively stable because it really reaches like an equilibrium. >> Cool. Okay, cool. I like that. We'll have to I think we'll have to get you back later next year to to talk about any other tokens that have launched this way, especially if Bass does launch that token. That's going to be so massive and if they follow this model, you're coming right back, man. U guys, listen, I don't want to go on too long. This is a fantastic report. It's 90 pages at least in this PDF that I've opened. People can read it. Uh I think by the time we're listen they're listening to this it'll

be available for your your paid members or for everybody who can who can see this? >> I believe it's just for our members but uh we have for you guys like we said like we did with the last report we have a bunch of gift links that people can redeem the report for free with as well on the uh on the website. >> That's awesome. All right. Well, Milk Road Pro members will be getting this. Uh, one thing I did not tell you guys about uh, in when we were chatting before or in our our chat before to set up this podcast is that for our 2026 like prediction series, which is what you guys are part on these pre-recorded episodes, we're actually doing a rapid fire round at the end of every interview. Uh, where there's no talking.

You literally just answer one word. Okay? It's not there's no explanations. Then that's gonna be challenging for you guys because you're all very good uh, talkers and conversationalists. So, just give me your answers and each time I ask it, we're gonna go in order. We're gonna go LTR, Jason, and then Marcus. So, I'm gonna ask what the Bitcoin high price of 2026 and then LTR says it, Jason says it, Marcus says it. And I have like three or four maybe five or six questions that we'll go through. Okay, great. Okay, so we'll start with Bitcoin, guys. What will be the Bitcoin high and the Bitcoin low in 2026? >> Oh, man. I think high 145 honestly and then low um mid 80s.

>> Jason, >> uh yeah, I was going to say low sailor average by 75 or four. Uh and high double that. So 150 >> Marcus >> 72 and 175 >> 72 17. All right. Pretty pretty pretty close. Marcus is a little bit more in the extremes which I like. Okay. Ethereum high and low in 2026. LTR, start with you. >> Zero. I'm just No. Um, let's go with Let's go with a high. I think like that's tough. 4,300 maybe. Um, and a low I could see it going under 2,000. Like 1500s.

>> Damn. Okay. >> Oh >> Uh, I literally had to pull up a chart. I haven't looked at ETH in a long time. >> It's all right. It's a one-word answer, man. Too much too much talking. One word answer. >> Sorry. Sorry. Double top. 4,800 for the high. Uh, and low. We're going to do uh 20 2250. >> Okay, Marcus. >> 226,000. >> Okay, next question. Which sector has the best potential to 10x next year? LTR, it could be anything. Anything at all. Even Pokemon cards, whatever you want. Sorry. Go ahead. LTR. [snorts] >> Tokenized equity. Infra.

>> Uh, privacy. >> Okay, Marcus. Uh, tokenized equity lending. >> Okay, next question. Who wins 2026, Coinbase or Robin Hood? LTR? >> I'm going to go with Coinbase. >> Jason. >> Yeah, Coinbase. >> Same. Coinbase. >> Yeah. >> Okay. Next. Second last question. What AI app will grow the most in 2026? LTR. >> Gemini. >> Yeah, you stole mine. Gemini. But to go just for something different, I'll say something like lovable or some something. I don't know.

>> Marcus. >> Yeah, lovable. We've been using that quite a bit. And lovable and Gemini. Good. Yeah. >> What is that? What's lovable? Am I Am I silly for not? >> It's a vibe coding thing. It's just like browser based. >> Okay. Final question, guys. And this is you can talk a little bit more, but not too much. This is a wild card prediction. I want you to give me the most outlandish thing you can think of that would happen in 2026. the thing that would have the most outside bet on Poly Market just like Poplio did. But if it if it did happen, we'd all look to you as like the Nostradamus of crypto or of or of the econ or of finance, I guess, at this point. LTR, >> we're going to have a proofof work L1 that will absolutely go crazy uh in

2026. >> Okay. >> Most likely related to decentralized AI. >> Okay. >> Gotcha. And like the most outlandish, right? Like >> Yeah. Just insane. >> Okay. Yeah. uh the the US government starts its uh delta neutral whatever buying it's balance sheet neutral buying of Bitcoin and then everything goes to the moon and everybody's happy again >> Marcus >> uh winter me shuts down in 2026. [laughter] >> Wow. Okay. Well, it's such a variety of >> You did say outlandish. You did say outlandish.

>> Yes. This is the whole point. Yeah. I'll let you guys really think outside the box. Um, well, that's wonderful. Well, guys, thank you for coming on the show. I think, uh, we have another prediction episode coming up with Deli Digital, which will be next week when people are listening to this, but uh, great to have you guys on and have a great holiday season. I'm sure we'll see you again next year. >> Great. Thanks for having us. >> Thanks for having us. >> Want insights on what's moving crypto markets [music] and how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start investing [music] like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.