Why crypto is not rising after rate cuts, with Scott Melker

Transcript

GM. Good morning. Welcome to the Milk Road Show, the daily crypto show where you don't need to be smart, you just need to be patient. I'm your host, Jay Hamilton. It's Wednesday, September the 24th. What is going on? We got rate cuts and most assets are doing well, but crypto is not doing so well. What's the story? We're going to dive into that. Are we still bullish? Are we bearish? What what happens next? What's going on with hype? Arthur Hayes sold a bunch of hype. That got a big headline. And there's a lot of hype competition coming out. What's going on there? We're joined once again by the one and only Scott Milker, the Wolf of Wall Streets to break it all down. Before we jump in, if you guys are doing swaps, if you're trading, if you're making any moves in your

portfolio, which I'm sure you are, make sure you check out Milkroad Swap at swap.mmillroad.com. Why should you check it out? Because it's what I use because it's got some of the cheapest fees in the space. That's literally why we built it. We built it for ourselves. So check it out. Today's episode is brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns. It's also brought to you by Nexo, the platform that grows your crypto without locking it away. With that, Scott, welcome back to the Milro Show. >> Thanks, Jay. >> Okay, I I'm in I'm in Croatia right now. Uh we're here on our our annual retreat and I am I'm I'm kind of tuned out, man.

So, I'm hoping you can bring me up to speed. Uh what's what's going on? We got rate cuts and I everyone was, you know, here we go. alt season's on. Every KO is saying that. You can tell me if you disagree with that take or not. Uh but we're certainly we're not seeing we're not seeing the move that everyone wanted to see. Stocks are doing well. Other assets are doing well. What's what's what's the story? >> Well, it's interesting. You have a long history of rate cutting cycles and pivots that you can look at and usually have this trend where you have the yield curve inverted, which we had obviously for a historically long time. It uninverts, then the Fed pivots, then the stock market goes down. markets actually generally tend to perform poorly after rate cuts before obviously heading back

up many months later into the next bull cycle. But usually when the Fed is cutting rates, especially when you have Fed Powell Chairman Pal coming up and saying, first of all, he looked like he'd just been beaten up by Mike Tyson when he took the meeting. Like he looked defeated, like utterly disheveled. And when you have him roll up and say, "This is a a mer, you know, a uh riskmanagement cut and the job market's kind of weak and we've admitted that inflation's going up, but we're still going to cut." Like most cuts come because there's something wrong. And he kind of hinted at the idea that maybe something would be wrong. And this certainly lends to a stagflationary environment. So gold is sniffing that out almost at $3,800 an ounce. The

surprise I guess is that the stock market is also going up while gold goes up. But that markets Bitcoin or otherwise would not be performing so exceptionally right after a weak meeting like that or weak announcement. It's not really that surprising to me. I mean, there's a lot a lot of negative economic data to point at for reasons why we should eventually see a a retrace, but you know, the old famous saying, markets can remain irrational longer than you can remain solvent uh tends to stay in play here. But I think that it's no surprise that Bitcoin is chopping sideways. We've had quite a few altcoins actually launch, right? I mean, you had the huge Ether move. You had the huge Salana move. There's been all kinds of hype around Aster, which pulled a I

don't know how many 100x that never looked, but obviously a massive move. I mean, Hemi was one of the big kind of hyped launches of this cycle a month ago. That's up 7 800% since the launch. It's been a long time since we've seen new tokens launching and going up without having the Christmas tree retrace on the other side. So, there are a lot of bullish signals for crypto. It's just that Bitcoin itself is consolidating. Mhm. So, two questions. One on the uh a little bit more macro first. In your view, where where it does Powell and the Fed think we are? Are we in emergency mode or is this just insurance?

>> I think Powell wants to do as little as humanly possible before he gets out the door and the next guy comes in. I mean, that's really my feeling about it. And honestly, if you zoom out, PAL's irrelevant at this point. First of all, I would argue the Fed is irrelevant because we're in a fiscally dominant environment. The debt is running out of control. If you actually looked when they cut rates last year, it didn't work, right? We saw that yields continued to rise. That's actually until today, Wednesday, Thursday, and Friday since the meeting, 10ear yields went up after the rate cut. Today, they are seemingly dropping a bit, but the market's not believing it, right? So, it's very clear that the Fed is somewhat neutered. Like, they're not the main thing you need to be looking at for

where markets are headed. I think we know that in the spring when Trump gets his way and Pal is gone, we're going to get like a massive just cutting cycle and zerp. So, once a few months here and there, I think Pal is just trying to b his time and not let anything destroy his legacy in the next seven to eight months. So, I don't think it was necessarily an emergency, but I think that when you cut rates, admitting that inflation is sticky and rising and you're concerned is a really negative signal. It's basically them saying that 2% is it's okay if we're not at a 2% benchmark rate anymore.

>> So, if you're not watching the Fed and where should be watching where is the signal on the macro side? I >> I think this is irrational euphoric FOMO and good luck timing the top of it. I don't know where the signal is. None of it makes sense. Stocks tell you one thing. gold should be telling you the opposite. You oil going in one direction, yields going in another direction. Every signal is conflicting, right? You have clear signals like gold that we should be heading into a recession and then you have stock markets hitting all-time highs, right? So, none of it uh jives at all. I don't know anyone who can parse this data and make sense of it. So, that's why we see this massive divide as to bears and bulls. where where does AI fit into the

equation for you? because that is everybody you everybody tends to agree on exactly what you're saying and then the one point that everybody seems to not know what to do with is okay how how big of an impact is AI having can we predict this are can can we just continue to go up like this inde I mean another year of the S&P being up over 20% would be insane to all of us like nobody >> there should be a retracement but you know as my friend Matt Hogan said it seems that governments have made recessions illegal Um, that's what I've found so impressive is the amount of levers that they can pull, the amount of buttons they can push to just artificially continue to inflate asset prices. Uh, the problem is a consumer inflation trailer is is is

following at this time as opposed to just getting asset inflation and not consumer inflation, which is actually the the needle that's what they want. That's the needle they want to thread, you know. So, I think that uh I I don't know where to find the signal right now. I really don't. I wish I did, but I think you just have to ride the wave while it's happening, you know. But as for AI being the main question, I'm not an AI doomer. I'm not a technology doomer. I've never been a technology doomer. I remember the stories of the record players going to be the end of music. You know, we've we've had these stories about how technology was going to end everything for humans and jobs indefinitely over time. The one thing you can bet on is uh human ingenuity and that it's basically just going to be a

multiplying factor in productivity more than it's going to be the end of jobs. And even if it was the end of jobs, I don't know if you've ever read the price of tomorrow by Jeff Booth, but you know, technology is naturally deflationary. And deflation is actually a good thing when it's not in a manipulated economy. Like your TV and your computer and your phone getting cheaper is a good thing. And that's happened by many multiples over time as technology improves. In theory, if AI actually takes a lot of jobs, it should lower the cost of all things, which should give people more free time, make things less expensive, allow them to use that productivity to pursue their own happiness and new entrepreneurial ideas, and really it should cause a renaissance. That's what

technology should do. The problem is the uh fiat economy and inflation and the way that we manipulate monetary policy. So, that's not the case. But I just don't believe that AI replaces everyone's jobs and they all become homeless. That doesn't seem like the way that human history has ever gone. >> Not homeless. Not homeless. Enjoying a margarita beach. I prefer >> jobless. They're going to be with you over there. Wherever. Yeah. >> That would be nice. That would be nice. I'm only here a week a year, so it's not not enough for the full year quite yet. Uh, okay. So, let's zoom in for a second.

One thing that I always like to ask you is you have such a good um read on the day-to-day news narrative, what people are talking about. How are you finding from your all your shows and all your appearances and all the guests that you speak to? What's the vibe right now? Everyone feeling uh bullish, bearish? Which way do you lean? >> The bulls are shortm Yeah. From my show, the people who have been bullish are bullish and the people who have been bearish are dogmatically bearish and it's a very aggressive split and everybody is deeply entrenched, you know, but I think generally most people say ride the trend, right? I mean, listen to try we being a doomer as

I said and trying to time the top indefinitely, you'll eventually be right right when you go completely bust trying to short. So very hard I think to to predict that. But if you look at if you zoom out aside from all of the economic data and markets, it's really nothing but tailwinds right now for crypto specifically. It's hard to imagine that you get go into a, you know, despair and bare market right now when you have ETFs and treasury companies and the government coming in line and talk of strategic Bitcoin reserves and legislation and just so many more buyers seemingly than sellers. It just seems like the simple laws of supply and demand should keep a really nice floor

under Bitcoin at least for a while. >> When you when you say so many buyers and sellers, where are you seeing the flows that matter and that you could see continuing because like obviously debts have brought a tremendous amount. >> I think that's a big piece. Yeah. >> And can that continue? Has that topped or nearing the end? >> I I don't think it's near the end. I think that there will be a consolidation. I think that the good ones will buy the bad ones and the big ones will buy the small ones and we will see a lot of that, but I think we're just seeing it trickle down. So, I think the Bitcoin treasury trend is slowing, but then you saw obviously the Tom Lee effect and the Ethereum treasuries and now you're seeing, you know, Salana. I mean, Ford Industries raised 1.65 65

billion cash like not not in kind and basically market bought $ 1.5 billion worth of Salana >> within 48 hours right now have a $4 billion I think ATM to do more if they so choose I think a lot of these assets are going to have a lot of buying pressure underneath whether that ends up moving it I I I don't know but like who's selling in those amounts right now like who's so dogmatically bearish they want to exit the market >> why do people invest in real estate because it spits off cash flow. But I'm not here to manage rental properties.

That's why I'm looking at Figure Markets. Their new democratized prime product backs your money with real cash flowing assets and returns up to 9% APY. It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you? Download the Figure Markets app today and get 9% on your idol funds. Go to milkroad.com/figuremarkets. If long meetings and judgmental bankers are your thing, Nexo is probably not.

Nexo is a premier wealth platform built for people who value their time and money. It's built for people who have idle cash lying around and want it to grow fast. Whether it's Bitcoin, Ethereum, or even Forex pegged assets like USDT or USDC, Nexo offers up to 14% annual interest and access to cryptoback credit in under 24 hours. Your assets need a platform built for growth. Join Nexo. What about uh on the institutional adoption side? You speak a lot to institutions. You know, we all love to pontificate on, you know, which institutions can spell Salana and Ethereum versus which are still learning

and trying to figure out their way through the crypto world. What's what are you seeing there? Any any major catalyst coming or anything that's tipping your hat? >> Yeah, I think the biggest catalyst on the institutional side is this generic uh listings for SEC from the SEC for ETFs. I think that that's really really big is that basically if you follow certain steps you know that your ETF will get approved. We're about to see an explosion. I had James Safford from Bloomberg on this morning and he said he thinks we'll see hundreds of new ETFs in the next year. Hundreds, right? Because they have these generic listing standards. Basically, if you get futures on Coinbase for 6 months, you're good to go, right? And so that's 12 to 15 coins right now. And then think about how

they'll be indexing those and mixing them and there'll be new coins listed. So you'll have this indefinite flow of six month down the road uh ETFs to look forward to. So I think that institutions are still just getting their bearing as to what they can and can't buy and are looking forward to access to more things. The other big story last week along those lines was that Grayscale had an actual index ETP product approved, right? With multiple crypto assets under the same umbrella. That's the way that investors actually invest, right? I mean they they go buy a mutual fund. They don't look at it. it's managed and targeted and they're done. That's what people who want broad exposure to crypto are going to buy uh on the stock market, right? They don't want to have to think,

should I buy the Bitcoin one or the Ethereum one or the Salana one. They're going to say, I want 5% crypto exposure and they're going to buy an actively managed fund that has 70% Bitcoin, 20% Ethereum, 5% Salana, 5%, you know, so >> I think that's what's coming and it's going to be really compelling. >> Yeah. the the generic listing standard was something I don't think got enough attention. I'm I'm glad to hear you James on your show because I know he's been shouting about this and it is it is it is such a major >> it it allows for a much faster flow for a token to list as an ETP product. Uh what's the impact though? That's what I can't figure out. So like okay sure now

you can list faster 6 months great but that doesn't necessarily mean that like there's all of a sudden a whole bunch of demand for all these right. Yeah, >> I think it's plumbing. So, like it's just one of those situations where now if you want to, you can, which has always been a huge question mark for the crypto industry. Paul Atkins also said today that basically crypto companies in the United States are going to be able to launch new products without the burdensome rules of the past, right? Clearly, the regulators are just getting out of the way and are going to let this industry do most of the reasonable things that it wants to do. But to your question, where will that demand come from? Remains to be seen. But still good to know that we'll be able to have the access to these products that we haven't

for so long. I mean, you think about it. There's BNB treasury companies. You really can't buy BNB in the United States. >> Like, you really can't find a way to buy Binance token as a US citizen without jumping through serious hoops. It's one of the biggest crypto assets there is. So, simple things like giving us exposure to some of the main assets that people love to trade around the world seems very sensible and those doors are wide open. Yeah, that is when you say it like that, it's it's we always forget that there is still plumbing that needs to happen. And if you've been in the space, you can really get caught up with thinking that everybody knows the access that we know and has the abilities that we have to buy on chain in the way that we do, but

so many don't. Not even to mention the the the issues we have around specific tokens based upon the borders that we live within as well. Uh, I want to shift slightly to my favorite question right now, which I know you're going to hate this question, so I know I almost like asking it a bit more. Uh, is is the four-year cycle over and how do you think about this cycle from here? >> I think the fouryear cycle is different and I think that in the future it's a superior cycle, which is that there's a higher floor. There may be a higher ceiling as well, but I think volatility dampens as the asset class becomes more institutionalized and larger. And I think that there's just a much higher

floor. I think there's a lot of buyers that are always waiting to buy dips right now that are not going to wait for a 75 85% draw down that you would have seen in past bare markets. And I think that if you deeply believed in the four-year cycle, altcoins would have moved much harder and much faster by now. So it's already to some degree been disproven. So, I think the four-year cycle now is more about global liquidity cycles, election cycles, a lot of other things. And so, yes, I think that the four-year cycle as we know it where it's Bitcoin makes a new all first of all, Bitcoin wildly preempted the four-year cycle with a new all-time high because of the ETF. So, that should have already been a signal. I I'm not saying there won't be cycles. I'm just saying I don't expect them to rhyme exactly like the

previous ones. I think that we just kind of grind up like normal markets. So, do you buy into a cycle peak? Like, do you have a thesis around when you think the cycle might peak or you you're more so secular trend, doesn't matter, we're going up? >> Uh, I don't really have a thesis on the peak. I mean, everybody seems to think that in the next three or four months we get this raging move up to 150, 180, 250, you name it, and then bare market. >> I don't know. I I you know also like if you think it's becoming more institutionalized a bit more of a global asset we're going to be in midterm cycle you know come beginning to mid of mid next year and the Republicans certainly don't want to lose so they would be

inclined to pull those levers and push those buttons to keep markets up. So uh we'll see but I don't have like a grand thesis on a blowoff top or anything like that. >> You don't have the date marked in your calendar of when you can take off >> to sell everything. No exit all markets. No, I don't have that. >> Okay. What's the uh dats really caught caught media. >> We were talking a and have been talking a ton about dats. What's the next narrative?

>> Oh god. I I it might be AI, but I think that that's pretty strong. I mean, the crossover of crypto and AI, wherever that develops, I think will be extremely compelling, but it'll all find its way into DATs. So, I think we're at the very beginning of the Listen, I I think we're at the very beginning of people trying new things with these DAT structures. I think we're going to see an evolution of the way that people approach these based on the failures of the early ones or the cautionary tales of things that went wrong. So, I don't think this DAT trend is remotely over. I I think maybe the part where they start they trade at 20 to 30x multiples to non-existent NAV might be over because nobody's buying that hype. But companies forming to be

cryptob-based or to buy these assets, that's not going anywhere anytime soon. I think we'll see cycles like before of all of the big crypto narratives coming back. We'll get the RWA move and then we'll get the AI move and then we'll get the DeFi move and they'll kind of cycle through. I don't think any of that is done. Uh but it's hard to point to a next institutional narrative when we're still waiting for these ETFs to be approved. We're still waiting for legislation. We're still waiting for Clarity Act. We're still waiting for strategic Bitcoin reserve. I think there's a lot of things on the docket right now we need to clear before looking for new narratives >> as we uh as we head into Q4 and we we look to what comes next. Hype has been such a big token this year been the the

the winner of 2025. Well, you know, I don't know if you and I have really talked about hype, but would love to get your thoughts on hype, but also more so the rising competition that we're seeing around hype and where where you might see any opportunity or alpha there. >> Well, I think it's a good thing that decentralized trading platforms are finally getting a lot of shine, that they're actually usable, that they're seeing real volume and deep liquidity. Obviously, when you have CZ, who's really never tweeted about much besides a meme here and there, and BNB coming out so aggressively uh behind Aster, which is effectively, to my knowledge, I don't go so deep down these rabbit holes, but a direct competitor to

Hyperlid, that's clearly going to draw a lot of attention. You've seen what that token has done. I guess we'll see if the platform can justify that kind of move on the token, but clearly that's going to be a major direction. you're going to see a hyperlquid on every blockchain, right? So, I think that that will be definitely a next mover and I think it's a departure from C from centralized exchanges, which is generally a a good thing, right? I mean, we all love our centralized exchanges. Everybody has their coins on some platform, certainly as an on and off ramp, but doesn't mean it's the best way to actually trade.

Yeah, it's definitely it's it's it's important that we head that in that direction for sure and as you said having great products like this aster I mean is just taken what what's exciting to see is a that there is tokens doing really well right now is always the reminder to be patient right there is still a lot of opportunity to be had but seeing Aster do so well also really there could be I could see a few things that we've talked a lot of themes that we've talked a lot about over the past year are the power of revenuegenerating crypto protocols. And as institutions come in, as more institutional capital comes in, they're going to look for those projects that have true revenue and want to support those because they can understand that, not the, oh, this project is just a a tech idea or a tech

uh a shot at a new tech, which maybe it works, maybe it doesn't. So, you can see how those hyphen decentralized protocols like that are really set up to do well in that narrative. >> Yeah, absolutely. I agree with that. Scott, it's always a pleasure to get you on the show today, man. Thanks for catching me up on what I miss while I'm in Croatia and uh we'll we'll get you back again next month. >> Thanks so much, man. Have a great trip. I really appreciate it. >> Thanks, Scott. Thanks for tuning in everybody. As always, got to remind you today's episode of Financial Advice. I'm not your financial adviser. Scott is not your financial adviser. Investing is risky and if you need help with your investments, you should speak to a professional. Thanks for tuning in y'all. We'll see you back again tomorrow. Have a wicked awesome day. If

y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why did we build it? Not to make money, just honestly so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillgro.com.

Check it out today. You won't be upset. And you can join me in my favorite place to make swaps on chain. 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 5minute 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.