Macro signals for altcoin season, with Real Vision's Jamie Coutts

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show for markets as wild as trying to guess if your kid's about to take a nap or stage a full-blown meltdown. I'm your host Jay Hamilton. It's Tuesday, April the 29th. Now, today's episode was recorded yesterday live on Twitter. Everyone wants to know right now in this market where are we going next? Are we headed to Valhalla and we're going to pump? and this current rally is the setup for something much bigger or is this a trap? In order to break this down and to give us his predictions on Bitcoin and some other altcoins, yes, there might actually be an altcoin season, folks. We

have Jamie Coots joining us, chief crypto analyst for Real Vision. Jaime is going to break down his thesis for the bullish trinity that he sees right now. He has three key indicators that are setting off alarms for him on a setup that he is feeling really good about. So, we're going to jump into that. Before we do, if you are swapping right now, and I know y'all are swapping because there's a lot of volatility going on right now and there's some opportunities out there. You might want to check out Milkroad Swap, you can do so at swap.mmillroad.com. Why do you want to check it out? Because we've got some of the lowest fees in the space. We built this swap for you guys. Not so that we can make money. Just so you can everyone can have a cheap and easy place and a safe place to swap just 15 bips on swaps

on Ethereum, arbitrum or base and even less over on Salana. Today's episode is brought to you by Lein. Get cash without selling your Bitcoin. It's also brought to you by Coin Shift powering top crypto treasuries with their yield bearing stable coin CSUSDL. Without further ado, Jamie, welcome back to the Milk Road Show. Oh, I muted you, Jamie. There we go. That was my fault, Jamie. I did that. Sorry. Go ahead. Hey, Jay. Yeah, good to see you. Sorry I muted you. That was my mistake. Okay, Jamie let's actually go back. last time you were on the show, we had you on the show in February and uh we were this was right before we hadn't quite gone into

Trump tariff mania yet, but a lot of the global liquidity indicators were already setting off some in some indicators for you and what you were seeing. Now, here we are, it's almost May. we've basically been down or flat since since then since we had you on in February. When you step back, what are you seeing right now that is getting you excited about the future? So, we had this we had this like u you know a co moment really in in March and April and so I think by the end of February it was pretty clear that markets were starting to roll over. So it wasn't as if that was a a a um you know an a good time for markets with the

price action that we were seeing. Yeah. So it was really so the dollar was leading everything at the end of last year. The dollar tightening led to a severe um tightening of financial conditions in Q4 and this was being flagged by myself back in sort of November, early December. But at that time the markets were sort of just pricing in the euphoria around the Trump administration coming in and this change in um sort of atmosphere when it comes to crypto but also risk assets. The tightening that happened in Q4 led to really a downturn a lot of the indicators in Q1 and then p and then markets started to understand what was at stake with the Trump um tariff policies. But as we sort of moved

through Q1, we were starting to see the dollar crack. Now when you start to see that, then you start to see large velocity moves in the dollar that is expressing an easing of financial conditions globally. And so while everyone was looking at what was happening with tariffs and you know to some degree were you know I think um deservedly sort of concerned about how bad it would get because in typical Trump fashion he took everything like balls to the wall. Um but if you really understand what Trump does that's generally where he starts and then starts to sort of backtrack or use it as a negotiation tool. That aside, we

started to see the dollar break down and that improves global liquidity. So everyone's now really familiar with global liquidity aggregates. It wasn't as if we saw a lot of interest, a lot of central banks cutting rates or adding direct liquidity through asset purchase programs or anything like that. There was no QE. There were some rate cuts globally. So the central banks were easing but they they weren't easing massively but really the easing in financial conditions was coming from the dollar and it was in really when it broke down through sort of 104 105 and we had this very strange pattern where the DXY declined by 2 and a half% over three consecutive days which is rare. We

only see them a couple of times really in the we've only seen them a couple of times in the last decade. What has generally happened 90 days later is that asset prices a lot higher. And so that was the first signal. Then I started to see you know my liquidity aggregates all start to break out higher. And then I waited for some other signals which happened in really the end of end of March and the beginning of April which we can go into. So it was really setting up the environment for a reversal in risk asset prices. And we all know that Bitcoin is the best performing asset relative to every other risk asset. And if we were going to see sort of the conditions that I thought that were sort

of um that I was starting to see emerge eventuate, which I believe they have, we would see a rip roaring alt season. Sounds good. Make it happen, Jamie. Please, please, please. So this bullish trinity setup, can you just summarize what the three parts of the trinity are? Max fear and you can measure this through various different indicators. The one that I've used is the VIX on the S&P long time series. S&P is the sort of global benchmark for risk assets. We saw readings on that that we've only ever seen during major market sort of collapses right at the bottom. That was

one. Number two, following max fear indicators, we saw a breadth thrust on the S&P and equities. So this was actually something that I had cultivated over like many many years. They only ever happened I'll have to go back and I've actually got the chart so I can bring up the numbers and it's in that report that I shared with you from Real Vision. But these we'll bring it up we'll bring it up in a sec. Yeah, they only happen like a couple of times a decade as well. And that is when we reach max fear but we see a day in the S&P where 97% of all the stocks are up and that's a breadth thrust. Now a breath thrust on its own is a bullish signal. when it happens after a capitulation max fear event, you've got

a confluence at least for for risk assets and and equity specifically of a of a bottom, a potential bottom in the market. Then you sort of layer in what's happening on the macro front and that was really the liquidity environment improvement, the easing in financial conditions with the dollar falling from 110 down to 99. It's now 98. And you know, you can you can interpret that as, you know, capital flight leaving the United States. I don't really buy into that argument. What it is though for the world is a massive easing in financial conditions because a lot of the debt is US denominated debt.

And in emerging markets, when the dollar is actually falling, it allows them to repay those debts more easily. So all of those things put together, you know, put me in a in a very bullish position at the start of April, right? where as we'll we'll get to you would typically when these conditions exist see crypto and even altcoins outperform in the coming months. Okay, I want to get to into all of that but let's let's first dive a little bit deeper on each of the points of the bullish trinity here. Uh so take us through what you're seeing on maxphere. Let's talk I'm gonna bring up the VIX chart so you can talk us through this. Yeah. So what you're showing here is

Bitcoin and the S&P VIX, right? So the volatility index and I've drawn on and that's in the subchart. Now the green line just represents an arbitrary level where the VIX sort of breaks or gets above and when we've seen breaks above 40 on the VIX, they've occurred near or at the capitulation lows for the S&P. And so I've just overlaid those those indicators onto the Bitcoin chart to show you to represent, you know, where it's happened in relation to the Bitcoin price. And you can see that it's really clustered at times of max fear obviously, but also quite closely to

Bitcoin lows. Actually, sorry. This is the This is Sorry, this is the S&P chart, right? This is the S&P. Yeah. Yes. There's an incorrect label there. Um but you can see on the on the S&P that it is had occurred at those lows or near those lows. Now sometimes they cluster you you get um multiple readings above 40 but you know that's only really occurred in large clusters when there's been a major financial crisis the GFC and co I don't think we're experiencing anything quite like that. So it was through the I think one or two readings that we saw just recently um which was I think sufficient enough to price in

maxphere for the S&P given um we're not seeing anything that suggests a you know a default on global collateral uh like we saw in in the GFC or a shutdown of the economy completely. I mean everything is being walked back. Everything is being renegotiated on the tariff front. It's going to be a lot worse than what people were predicting in March and April. Sorry. A lot a lot better than what people are predicting. Yeah. Yeah. Yes. Certainly the the market sentiment is very much as if this is a major economic collapse, but we're we're not there yet at least. Uh and and I don't think we I don't I don't think we will be. Yeah. No. No. I mean it was you know we've got an administration

which is pretty bombastic but also has a massive problem to try and fix and their solution was go hard go early right to try and fix it. It shocked the markets but it effectively gave them something that they needed which was an easing in financial conditions. They got rates relatively down. Now there was a spike back up but now they're falling again. And you know they set up the environment for the Fed to increase liquidity, add you know interest rate cuts or more interest rate cuts that were being priced in. Remember at the start of the year the I think markets were pricing in maybe one or two cuts or two.

Now that's changed. If you look at all the production numbers, we've got you know soaring inventories and new orders collapsing. Now, that's going to feed through into the economic data and that may suggest, oh, and that may concern a lot of people that the economy is softening, but this is the environment where asset prices do really well because you're starting, you'll have to see the Fed start to ease, and in that environment, you get the best returns. Selling your Bitcoin should be a last resort when you need cash. That's why there's Letin, the trusted platform for Bitcoin backed loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties. They've issued

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Put your treasury cash to work, earning native yields and protocol rewards. Built by the team behind Coin Shift which is trusted to manage over 1 billion in business treasuries on chain including a Gitcoin, and hundreds of leading institutions cycusl is gaining traction at milkro.com/coinshift. And and I want to touch on where the Fed's at and them getting into the danger zone and how that impacts liquidity when we talk to their refinancing issue, which we'll talk about uh coming up. Just to finish the point around the current setup of Maxphere. So the question that I have right now is just you know is this are

we in a a a short-term rally? Are we at the beginning of a major liquidity event coming? What is what is giving you the impression that this max fear this spike in the VIX is going to lead to better gains in the future? Well, it's allowed asset prices to reset. number one, but unless you've got the trajectory for economic growth and the conditions for high asset prices, that's not enough. So what is actually built into the framework which gives me sort of a positive outlook and so you know I I fall back on a lot of the work that Julian Battel and and Raal Pal does at real vision for their business cycle analysis and you know the ISM sort of

was above 50 and it sort of has now fallen back below 50. Above 50 means expansion. Now we'd had you know two years of a sort of contraction in the business cycle or a downswing in the business cycle which sort of bottomed in at the end of 2022 early 2023 and has now been sort of gradually moving higher. But that recovery has been elongated by the by the economic conditions are really what um you know the central banks and and liquidity have allowed for. So we're not as if we're at the end of a bullish cycle where there's a ton more downside. we're actually in recovery phase and we've just experienced a max fear sort of um you know capitulation before we'd even reach you know you know the the fall or the

end of the business cycle. So business cycle is recovering and now everything that's happened is giving the central bank which had been resistant to adding more liquidity, cutting rates because they're worried about inflation. Now I think the cover that they need to actually do so at the same time as the US government needs to refinance a ton of debt $9 trillion of its $36 trillion outstanding needs to be refinanced. So it's only going to happen in this environment where there's, you know there is actually, you know, less gut sovereigns buying US treasuries. I mean, there isn't a bias strike, but it is, you could argue that

you're starting to see the signs of some withdrawal. Now, who's going to make up the shortfall? It's going to have to the Federal Reserve and US banks. The outlook is is pretty bullish based on the business cycle. where we are in the liquidity cycle is we're just starting the next major uh swing higher. And when you put those two togethers, there's really that is what makes asset prices go higher. Okay. I I want to touch on a few different things, get deeper into them. But first, I just want to So, when we think about the bullish trinity max fear, we've got that setup. We feel good about well, you can feel good about this type of fear in terms of what the historicals typically say comes next.

When we look at liquidity and where we are right now with liquidity, you've talked about the breakdown in the dollar and the impact that that has on global liquidity. When you have a a macroate indicators, an MSI uh as you call it that you've built when I'm going to pull up this macroate indicator because I would love you to just talk through these three indicators and why they are looking the setup is so good right now so positive right now. Right. So the three components are global money supply, global uh global central bank balance sheets and the dollar. And so when all three are bullish, when they're exhibiting bullish momentum, we can

generally back test a system which shows that Bitcoin outperforms or the a strategy where you're exposed during these periods of macro bullishness or macro and liquidity bullishness, then you can actually outperform on a risk adjusted basis. So, you know, I don't invest purely based on this indicator because, you know, I I I own Bitcoin and various assets for the medium to long term. But it does give me an understanding of which regimes are most supportive for these assets, and we're currently in one of those.

Okay. And and now I want to switch to what you were just talking about a few moments ago which was the the bond market variable here because the bond market plays a pivotal role in the liquidity cycle and there's some dangerous things happening in the bond market and which you were just mentioning but can you just go deeper into them a little bit more? Yeah. So I mean at the time that I wrote this the the the two areas or the the area that was the most concerning was what was happening in the bond market expressed through just the the yield on 10-year bonds and also the volatility that was that was showing up in the bond market.

And so from you know a US government's p perspective and really the Federal Reserve's perspective as the sort of overseer of the of US treasuries anytime volatility increases in the Treasury market that is concerning it's concerning because when volatility increases on the global collateral asset it will result in a massive pullback in risk takingaking right and the whole system is highly leveraged. treasuries through the repo market are extremely rehypothecated. So when haircuts are given to lending ratios or the inability for for uh you know financial or for companies and also financial intermediaries to borrow through that

market because of heightened volatility that's a concern to the uh Federal Reserve and also the government. So, at the time, you know, the the move index was 137. It's now down to 105. I think the US 10year could be around 4.25 now. So, it's backed off a little bit. So, those conditions have um eased. And so, but they are definitely worthy of um keeping very close attention to because if they both start to move higher, which they typically will move higher together, then that I mean that would be concerning for risk assets because it sends a signal. But ultimately, what's going to happen? The

the the central bank is going to have to ease. They're going to have to uh introduce extraordinary measures to calm the bond market. So all things lead to the same thing which is debasement of currency more liquidity which assets perform best in that environment. It's Bitcoin and with a much more sort of cyclical you know volatile pattern high quality alts. Okay let's go to the GMI the global liquidity sorry GLI the global liquidity index because as you mentioned we your your hypothesis is that liquidity will increase right now. Where are we right now and what do you where do you think we could be the rest of this year, the rest of this cycle?

Yeah, I'm actually doing some really interesting work on sort of modeling out the GLI and the impact for, you know the whole crypto complex. So, not just Bitcoin, but looking at different indices and different sectors within the the crypto economy. We've only got data going back to sort of 2020 on this. And um I use a index provider called Bit Performance. um which I've worked with to develop these crypto indices which are really now you know available for for retail. So people should check it out. This chart I think was from the end of March and really where we're at now it's already broken out. It's um it's a lot higher now. It's being driven by the dollar because the aggregates that it's

measuring are price and dollar. So when the dollar the DXY falls naturally this aggregate will increase. But you know people would argue that's just you know that's not the same thing but the correlation is there now. People would argue that you know it's a spirious correlation. Well you know it may break down in the future but you know from a first principles basis it makes total sense right if there's an easing in financial conditions. There is usually more liquidity available to invest. That money flows into sectors where seek the best returns. Traditionally, we've got you know, we've got time series which which track all their asset prices and we know which assets traditionally have done well in environments where liquidity where the dollar is falling

and global liquidity is actually improving. So, the the GLI um index here is already at new all-time highs and I I looked at sort of what to expect based on in the past where the GLI has broken the previous high. So, it's had a period of contraction or sideways range which we've been in for two three years now. The longest sort of contraction period in Bitcoin's history and that's really a hangover from the excessive liquidity added in the CO period. You know, the the extraordinary measures they had to bring in after they tanked the economy and shut us all down. So now we're out of that period of of contraction and and

like the the the understanding is that you know global liquidity has to rise. It has to rise because global debt to GDP is three and a half times. So you have to support the collateral otherwise everything collapses. So okay fine they had to address the inflation situation but sooner or later the US government with 9 trillion due this year needs to refinance. Liquidity has to come back in. I think, you know, we'll probably see a 10% increase in this aggregate over the next year. Modeling it out based on, you know, different ways to regress, you know, prices versus um GLI for what it's worth is likely to see Bitcoin, you know, trading above 150.

The model actually suggests around 180 which was the the result of a different modeling um exercise I did in Q3 last year when Bitcoin was around 62,000. So about 180,000 by the end of 2025. And so this is just, you know, a different way to do it using different methods and a different indicator or index and kind of arrives at the same price. But what's interesting here is Jay is the way that other assets within the crypto complex react when we're at this specific point where we're breaking out to new alltime highs on GLI. And it's actually altcoins, you know, specifically the smart contract platforms that do really well in this environment. DeFi applications do as well, but the data

and the time series isn't as strong as it is in smart contract um platforms. But the bit performance in indices go back to 2017. But they they do experience a a pretty big um uplift. And maybe this time around um you know DeFi applications do better than some of the smart contract platforms because they're cheaper and you know they're starting to exert some sort of moat or uh customer ownership or consumer or sorry user ownership more than the smart contract platforms. Who knows? But actually we're in this sort of juncture where typically you do see outperformance of altcoins and we've started to see that uh and I was talking about it on my breadth indicators in the report as well.

And I want to I want to get to which altcoins you're looking at and which ones you're liking. And Sue is one that's been ripping recently that I wanted to chat with you specifically about because I know you've done a lot of research on that. Uh but before before we jump into that, let's just let's wrap up the the third part of the bullish trinity. So we've talked about the max fear that we've gone through. that is an an indicator of usually a reversal and a recovery and a good setup to come. We've talked about liquidity you know, I think you're saying liquidity up 10% from here leads to bit would on your model lead to Bitcoin around 180K, but 10% liquidity increase

is a pretty conservative estimate in my view. I mean, I think you we could see a 20% liquidity increase in which case Bitcoin and alts could be even higher than that. Would you would you agree with that? It's definitely within the realm of possibility. It's I don't think we're going to see anything like 2020 which was I think about a 20% uplift in year one and then it continue to increase in 2021 but at a slower rate. Um but that's where that's a critical sort of understanding to know as well. So when you're tracking these measures it's the rate of change that really matters more than the level. But so we're in I think a period where the rate of change will be most aggressive and this is really where you capture the most gains. Um, but yeah, there's a possibility. I think I I I tend to use

the more conservative 10% um in just my modeling, but I do in that report, I think you saw that I did add the 20% and what that would mean, and it's like, you know, prices get a little bit silly, so I don't tend to talk about them as much. I mean, it it certainly feels like yes the prices get silly, but also that's what happens when we get into these euphoric bull markets. the prices really do get silly. So, uh, don't put it totally out of the realm of possibility. But let's Okay, let's talk about the breadth thrust that we see saw recently.

You mentioned this a little bit at the beginning, but for can you can you kind of walk us back explain uh what happened here and why this is such an important indicator for you. Right. So, you've got the you've got the chart up and it's the S&P going back to 2005. And so I think there are five of these events that have taken place during the last 20 years. So they're significant. They're important. Now from a statistical standpoint then the you know people would argue that five events is not statistically significant but it's the best we've got given the data that we have. And 20 years of S&P data I think is a decent sample size. And what we've seen is when we've we've had max

fear followed by an extremely bullish reaction off a low then it is a tilting of the supply demand equation back in favor of the bulls when 97% of the index is up following a day in which there was a huge decline and the VIX spiked well above 50 I think on the day. you know the combination um shows that there was a real inflection point. Capitulation meets overwhelming buyer buying response the following day. And so I think it's significant and it has always set up um a bullish market environment for the next 90 days, 180 days, 365 days. Okay let's let's shift to portfolio

allocation and some specific tokens you're liking. I I want to before we go on to altcoins, let's just chat a little bit more about Bitcoin. What would you want to see? So cycle, you're thinking Bitcoin could hit 180 base conservative estimate. Maybe we can get into some silly numbers higher than that if we get much much bigger liquidity liquidity injection here. What are you watching for Bitcoin right now? What what are the support levels you're looking at? Well, the the support level that was reached back end of end of March, start of April, sort of where was that? 74 75,000. Yes. Which was the level that I was, you know, during the period I was

talking about because that exactly that was the exact level that was the top of the range from the big pullback sideways range that we had last year. And we should also caveat, you know, when we say these big pullbacks, it was a 30% pullback. Just 30%. Yeah, just 30% in a in a 90 vol asset that these things happen year in year out, every bull market many many times and you get the same panic and everyone the bed as they always do in a in a panic. And it was actually you know, I made this point recently as well. It's fascinating point here, Joe.

Like, you know, you get these people that go on CNBC, they go on Bloomberg News, and they talk about how Bitcoin has underperformed. It's like, these guys are supposed to be managing money for a living. When you adjust for the volatility of Bitcoin, it has massively outperformed the S&P. Yeah. Two and a half to three times the volatility in Bitcoin versus the S&P. The S&P was down 19%, 20% from peak to trough. Bitcoin was down 30%, 31%. it massively outperformed on a on a volatility adjusted basis. And so I you know I was writing about this in back in the bare market of 2022 when I look at each consecutive bare market and look at risk adjusted

returns. Bitcoin back in the 17 or the 18 bare market. You rank all global assets, commodities, fixed income different types of uh equity markets emerging markets, you name it. Bitcoin was at right at the bottom. Come to the 2022 bare market on a on a riskadjusted basis, equities was below even though Bitcoin had fallen 75%. Given the volatility in every other asset class, Bitcoin is starting to look a lot better even though it falls 70%.

Now to us who are looking at our portfolios we might not think about that think about it in that way but it's very important for asset allocators for multi-asset managers because they run the models based on historical volatility and I I I would argue that Bitcoin is getting less volatile in absolute terms. So volatility is compressing over time in Bitcoin itself but it's also becoming relatively less volatile as other asset classes get more volatile.

And I think that is my interpretation of that is the whole free art system is just it lurches from one calamity, one crisis to the next. Volatility is inherently getting the instability in the system is increasing. And as people look at Bitcoin and go, "Wow, that's a really volatile asset." What's actually happening is everything else is getting more volatile. Bitcoin's getting less. And so from a portfolio asset allocation standpoint, that means asset allocators will start to increase from maybe they're 0.5 or 0.2 their tiny holdings.

Maybe it's point, you know, 75, 1%, 2% 3%. Because from a diversification standpoint, it actually makes a lot of sense. Yeah. So that was the outlook on sort of the performance of Bitcoin. Um it just feels it it Bitcoin feels like the easiest trade of all time right now. Like it just it's it's the no-brainer trade. And I know it's maybe if you're in crypto, it's certainly not the most exciting trade to listen to a podcast and people to tell you to buy Bitcoin.

You're like, "Come on, folks. Like give me something else here." And we are going to get into some other stuff. But it it for for so many reasons it is just lining up and we've been talking about a lot in the show. So I'm not going to open up the deeper Bitcoin conversation here. Uh let's talk about Oh, I I want to touch on micro strategy first and then we'll get to altcoins. What are your thoughts on micro strategy? Yeah. So, I've added it to the um to the port the pro proc crypto uh portfolio um apologies back in March because as I was starting to see the confluence of indicators, not everything was in place but I thought where it was trading relative to the old uh resistance level that it was going to actually um you

know that there was enough evidence there to buy Bitcoin. But I went for micro strategy as a higher beta version of that. Now, there's a risk there. Micro strategy has a lot of inherent risks because you're trading an asset or you're buying an asset that trades at a premium to its net asset value or its Bitcoin holdings. And that is a um that's a premium that's built in based on the expectation that Micro Strategy is in a unique position to continue to acquire more Bitcoin versus the dilution that's required to buy more Bitcoin. that the market will continue to support this thesis and support this policy and that they'll be able to generate new forms of revenue from Bitcoin in the future through lending or various other

services as Bitcoin becomes a global reserve asset, strategic asset and more integrated into the financial system. That being said, the NAV spread or the that NAV premium had come down in March significantly. was trading on a um on a non diluted basis around about 1.6 on a fully diluted basis. I think it was about 1.8 and that was at a level that I thought was reasonably attractive uh for micro strategy. So I added that as a play and it's it's done okay. It's been slightly outperforming Bitcoin as what you expect but I think I back tested look what happens during environments where liquidity really ramps up. Micro strategy tends to outperform. So, you know, I'm I don't think I bought into

the thesis that, you know, micro strategy forever. You've got these hardcore micro strategy bulls and they make a compelling case and some of them are very very smart corporate finance guys and they understand the mechanics of what um sailor is trying to do. But just in the last, you know, week, we've seen the entrant of a brand new player. You know, I think the company you you might I don't remember the name of the company, but you you might. Is it 21 Capital or the Jack Mullers? Yes. Yeah it's it's Yeah, I think it's 21 Capital. Yeah. Yeah. Now, they're not Microsoft. They don't have the same They don't say have the same, I guess, credibility in respect to being able to execute this strategy for the number of years. So they're new, but they are a serious

competitor now. And what that does to the Micro Strategy premium, I'm not entirely sure, but I'm still comfortable with holding Micro Strategy right now because they are the market leader in this. And every time 21 Capital or whatever their name is comes in, it's 21. It is 21. Okay. 21. So it it's going to it's going to push Micro Strategy up. The question is, you know, are you know am I right on the on the on the premium on the NAV NAV premium? Um will will it compress or will it expand? Um does this new entrant actually make the case for Micro Strategy even stronger? not necessarily sure but it's only so I added it as a a beta play on Bitcoin because you know I'm sort of at a max position in Bitcoin as it is then I

turned away look to look at um some of the altcoins because we are at this really interesting point where altcoins well perform now I you know the structural issue in altcoins makes long-term investing in that space extremely difficult and it's a structural problem that needs to be addressed through higher utility and usage and two better tokconomic policies, better listing TGE events which I think is going to be partially addressed through new regulations like Fit 21 by the end of the year. All that being said, high quality alts I think are a slam dunk at this point um given the 60 to 70% pullbacks in most cases.

So, Sue was one that we had here in the portfolio. um you know I added it in October at $1.70 went all the way up to five that came back I added it um last week um before it ripped and the reason for that was actually just looking through the fundamentals of Suie. So I have um I've built dashboards, you know, I've been back testing a lot of onchain metrics. There's a lot of noise, but there is some sort of signal in seeing onchain metrics um where you're seeing um network activity grow. Mhm. And I just saw that um during the during the last sort of 90 days, especially the last 30 days, Suie was outperforming. Um price

was down considerably, but actually it was outperforming in terms of fees. Um TVL was ticking up. stable coin market cap was ticking up and these were signals that actually you know more capital was flowing into the Sui ecosystem despite the price action and I knew that given that where we were in the cycle and things that if that was the case then it should outperform everything else when prices start to reverse that was the first of two sort of additions the other one was Tron and before we get to Tron Suie up 60% roughly in in the last week I should have got you on the show over a week ago Jamie before before the Suie pub, but that some of this is it it was it kind of sort of caught the narrative and a

bunch of attention was on it as well. Still feeling still feeling good about Sooie even after this 60% increase. Yeah, I mean there's given what what I've sort of laid out in terms of um where I think we're going in the next 6 to n months um maybe even longer. Yeah, I would expect it to be you know multiples higher. You know, Salana reached a a market cap of around 80 million, sorry, 80 billion in the last cycle. So, there's definitely a couple of multiples on SU provided they continue to execute on the strategy and grow. It comes down to, you know, growth of um adoption. If those numbers start to slow while others while other networks start to grow, then that will

you know, that will cause me to change my view on SU. Okay. Okay. Let's go to Tron was the other one that you mentioned. Yeah, Tron was an interesting one for me because I've I've totally canned that network for years. And look that, you know, I always try to outline the risks right up front. So this is not a this is not an asset that is, you know, devoid of of of risk. This is a very much a controversial network because it is by all accounts pretty much controlled by one person. It is not decentralized in the traditional or in the blockchain sense of the word.

So you've got keyman risk and you've got all sorts of issues that we've seen from similar situations in the past where um networks have been extremely centralized. In saying that it does 9 million day $9 million a day in fees. The next biggest network is you might have the chart I think is Ethereum or or Salana at around 1.5 might be there. it is. Now, are people trading NFTTS? Are they doing a lot of DeFi stuff? No. What are they doing? They're using it as a stable coin platform. It is a peer-to-peer way to move US dollars globally at a fraction of the cost.

So, it is used for that and used for that one thing only. And given that stable coin growth is going to continue to accelerate with the stablecoin bill in the second half of the year, I think that that asset should continue to do well. Now, I looked at it also from like a um you know on my trending indicators and my relative strength indicators and it was all very very positive. But what I've come to sort of understand from the last week of price action is that Tron's been underperforming. And I think that I I'm still going to hold that position, but I think it's underperforming right now as everyone sort of goes back and and tries to basically buy the um the assets that

have underperformed the most is that a lot of investors, a lot of digital asset um crypto hedge funds were probably hiding in Tron as, you know, as a lower beta play as the markets were tanking. I think that we saw that in BNB as well. And there's been a bit of a rotation out now. Neutron's up, but it just has underperformed those other assets. But I think given the the fact that the network is growing, fees are growing number of users growing, stable coin market cap is growing, then you you know this is an asset that will continue to do well. Caveed with the risks, the fact that this is a highly centralized and and controversial network.

Yeah, I've got the uh the daily fees up here on this chart. Yeah, 9 million a day for Tron and next closest is Binance at 600K, Bitcoin at 440K. Like there's, you know, there isn't even anyone in the ballpark. Yeah, I think this is being ranked by uh fees on a 90-day percentage change. So, it's not showing uh I don't think it's actually showing Salana and Ethereum, but they're doing over a million a day. But the point being is that that 8% increase uh that Tron that that the 8% increase in fees over the last 90 days in Tron is actually more than or it's slightly less

than Ethereum and Salana do in a day. So it's astronomical. Now there's probably a lot of spammy illegitimate sort of transactions, wash trades or whatever that's being used on Tron. So you know you have to take it with a grain of salt and that's why you know it's a very small percent of the you know overall holding but it is quite striking when you look at those numbers relative to the other networks. Okay, last last question before we let you go Jamie is when do you think we might see this altcoin season? I know timing is very difficult to predict, especially on something like altcoin season, but what are you thinking? How are you framing

that in your mind? I think we're I think we're just we're we're in it right now. We're starting to see the very early stages. If I look at the alt season index that I've got, if I look at the top 200 equal weighted index versus the market cap weighted index which is an excellent way to look at you know, which large caps versus small caps, which one's outperforming or underperforming, we hit a level which was consistent with where alts reversed and did a you know a a pretty impressive 6 to 12 months in 20 at the end of 2020 start of 2021. So I I think the conditions were that everything was washed out and now we've got the conditions which sort of lay the

groundwork. But I don't think that this is going to be you know a broad-based very what I should say is that in alts the the the outperformance that we've seen this cycle have lasted usually around about 3 to four months and it hasn't been equal across all alts. Right? So it has been there has been quite a bit of dispersion which is good to see because you know you can't have lowquality assets outperforming highquality assets and I and I judge that by basis of like what how you know what's the adoption you know you can't see you should not see that uh for continued periods of time because the defining difference is ultimately are these things being used so what I expect to see is you know the next sort of 3 to

6 months outperformance but again like using fundamentals to sort of navigate like which one should actually outperform is going to be cre because it's not going to be evenly spread. Just buying any old application or you know second tier third tier smart contract platform you know may have you know very high volatility and returns at certain periods but it's going to it's rarely going to be sustained. Mhm. Yeah, it it's it we're growing up as an asset class and it's not the same as in past cycles where throw a dart board, throw a dart at a board of any altcoin. You know, there was only, you know, in past cycles there were only a few thousand tokens and even in the last cycle there was probably only about 10,000 tokens

and now we've got millions of tokens and it's just the dispersion makes it so much more difficult which is why there is there is an opportunity but you unfortunately now need to do your own research and think for yourself and develop your own conviction. So hopefully that's why you come back and listen to the Milk Road Show every day. Jamie, thank you so much for joining us today. Really appreciate your time and you breaking this all down. Yeah, it's great to be back on Jay. Thanks very much, man. I want to remind everybody uh you can follow Jamie on X. Uh and if you want to learn more about the reports he's putting out, you can check those out over on Real Vision. Good friend of ours. They're putting out amazing stuff over there. Thanks so much for listening in everybody. Before I let you go, I

always get asked what cryptocard I am using, and I use Crypto.com. Why? Because no annual fees, up to 8% cash back in crypto, so you get more money on chain. Lots of great perks. Netflix Spotify subscription, and if you're a traveler like me, you get lounge access when you're traveling to crypto conferences around the world. Hit the link in the show notes if you want to get your Crypto.com credit card today. Thanks so much for joining in, folks. Appreciate you. Appreciate your time. Have yourselves a wicked awesome day. We'll see you guys back again tomorrow. As always, if you liked today's episode please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5-minute daily newsletter where we simplify crypto for

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