Bitcoin DUMP and PUMP on Weekly Close! What to Do? #CryptoTownHall

Space Summary

The Twitter Space Bitcoin DUMP and PUMP on Weekly Close! What to Do? #CryptoTownHall hosted by Crypto_TownHall. Delve into the world of cryptocurrency trading with expert insights on Bitcoin's weekly trends and market behaviors. The daily Crypto Town Hall, led by renowned hosts, provides a platform to understand the nuances of pump and dump scenarios, strategic trading actions amidst volatility, and the significance of community engagement. Uncover valuable tips on risk management, research-driven decisions, and the benefits of long-term investment perspectives in cryptocurrency. By interacting with industry experts and fellow traders, you can refine your trading strategies and stay informed in the dynamic crypto landscape.

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Questions

Q: How does Bitcoin's weekly close impact trading decisions?
A: Bitcoin's weekly close often sets the tone for short to mid-term strategies and positions in the market.

Q: What are some strategies for handling pump and dump scenarios in crypto?
A: Implementing risk management techniques, setting stop-loss orders, and avoiding emotional trading reactions can help navigate market volatility.

Q: Why is community engagement essential in the crypto space?
A: Engaging with the crypto community provides valuable insights, market sentiments, and networking opportunities for traders and investors.

Q: How can traders benefit from industry experts' perspectives in crypto?
A: Learning from experienced traders and industry leaders can offer different insights, strategies, and perspectives that contribute to better decision-making.

Q: What role does research play in making informed crypto decisions?
A: Conducting thorough research on projects, market trends, and industry news is crucial for informed decision-making in the crypto space.

Q: How can technical analysis help in cryptocurrency trading?
A: Technical analysis involves studying price charts, indicators, and patterns to make informed trading decisions based on historical price movements.

Q: What are the benefits of a long-term investment perspective in crypto?
A: Adopting a long-term investment strategy can help in riding out market volatility, reducing stress, and potentially capturing higher returns over time.

Q: Why is it important to understand market fundamentals in crypto trading?
A: Understanding market fundamentals such as project developments, regulations, and macroeconomic factors can provide a holistic view for making trading decisions.

Q: How can traders manage risks effectively in the cryptocurrency market?
A: Implementing risk management strategies like proper position sizing, diversification, and setting stop-loss levels can help mitigate potential losses in trading.

Q: Why is it beneficial to engage with industry leaders for insights in crypto?
A: Interacting with industry experts can offer valuable perspectives, tips, and market insights that can enhance one's trading knowledge and skill set.

Highlights

Time: 00:09:15
Bitcoin Weekly Close Analysis Exploring the significance of Bitcoin's weekly close and its impact on market sentiments.

Time: 00:12:30
Risk Management Strategies in Crypto Discussing effective risk management techniques to navigate volatile market conditions.

Time: 00:17:45
Community Engagement for Crypto Traders Highlighting the importance of engaging with the crypto community for valuable insights and networking opportunities.

Time: 00:21:05
Expert Advice on Trading Psychology Learning from industry experts on maintaining emotional discipline and rational decision-making in trading.

Time: 00:25:40
Long-Term Investment Strategies in Cryptocurrency Understanding the benefits of a long-term investment perspective for sustainable growth in crypto.

Time: 00:30:20
Technical vs. Fundamental Analysis in Trading Comparing the roles of technical analysis based on charts and fundamental analysis based on project fundamentals in crypto trading.

Time: 00:36:10
Research-Driven Trading Decisions Emphasizing the importance of thorough research for making informed and strategic trading decisions in the crypto market.

Time: 00:41:55
Risk Mitigation Strategies for Traders Tips on managing risks effectively through diversification, stop-loss orders, and position sizing.

Time: 00:47:30
Insights from Industry Leaders Gaining valuable insights and perspectives from experienced industry leaders for enhancing trading knowledge and skills.

Time: 00:53:20
Community Networking in Crypto Exploring the benefits of networking with fellow traders and industry professionals for shared knowledge and opportunities.

Key Takeaways

• Understanding the significance of Bitcoin's weekly close for trading decisions.
• Insights on navigating market volatility during pump and dump scenarios.
• Expert advice on strategic actions to take during Bitcoin price fluctuations.
• The importance of staying informed and engaging with the crypto community.
• Tips on risk management and maintaining a long-term investment perspective.
• Learning from experienced traders and industry leaders in the crypto space.
• Exploring various perspectives on trading strategies and market analysis.
• Insights on leveraging technical and fundamental analyses in cryptocurrency trading.
• Emphasizing the role of research and education in making informed crypto decisions.
• Opportunities to interact with prominent figures in the crypto industry for valuable insights.

Behind the Mic

Introduction and Good Mornings

Dusting. Yeah, all good. Good morning. Hey, man. How are you, man? Scott. Why is Scott on stage? He's meant to be on a boat somewhere. Can he actually hear me? Is there someone using Scott's account? All right. Am I glitching again? DB? Maybe he just really missed you, Mario. And he didn't want to have to spend a Monday morning without you. I don't know, man, because I did get a message from him last night saying, mario, make sure you cover for me because I'm on a boat. So it doesn't seem like you missed me, but we'll go with that. Let's dig into the. We've got the panel immediately filled up. It's pretty good.

Discussion on Bitcoin and Market Reactions

Matt. I want to dig into directly to numbers and then I want to get into the market, looking at the markets as well. But just looking at the bitcoin and ETH, one thing I was asking about last week, especially after Black Monday, and I know we discussed it briefly. You weren't on stage. I want to get your take on it. We've discussed it briefly. I think it was someone else from Bitwise. Regarding your client's reaction to Black Monday, did you get a sense of fee from them? Because based on the person we spoke with from Bitwise, I can't remember who it was. They didn't seem to care much. Yeah, that's exactly right. I mean, that was the incredible thing. We got a few phone calls asking what was going on, but almost all of the phone calls were about whether this was a good time to buy, not whether it was a good time to sell.

Investor Sentiment and Market Volatility

We saw net inflows across the complex of our products. That was true at many of the providers, not all of them, but we each serve a different clientele. So our investors, I think, demonstrated that they're in it for the long haul. They saw it as more opportunity than risk, and I suspect that's what we would see if we saw another sharp drawback. I really think people are pretty diamond hands in the ETF space right now. That was a debate that were having in the early days of the ETF's launch. So that was just another test. And obviously today there's been a fair bit of volatility. It's going to be volatility throughout the week. How have they reacted to volatility so far? Because the argument, there's two arguments being made. One of them is that those institutional investors are sophisticated and they would not be reacting to fluctuations as we saw last week.

Understanding Institutional Reactions

Yet last month, it was pretty brutal. And the other side of the argument is that they don't believe in crypto like we do. So they could not. You know, it's hard to believe that they're diamond hands. Yeah. Actually, this is the thing that I think people miss. If you're a professional investor who's allocating to crypto, even today, that's a risky move. From a career perspective, from a reputation perspective, from a peer perspective, you're sticking your neck out. And what that means is that the people who are doing it in the early days, and we're still in the early days, from a professional investor perspective, they aren't like, 51% confident. They have to be 80, 9100 percent confident that crypto is going to matter more in the future than it does today, or else they're not going to do it.

Trends in Investment

If we go back, we had net inflows into 2018. We had net inflows through the FTX crisis. And the reason for that, the thing people miss, is that the only professional investors who are jumping into this space are not dabblers. They're people with very high convictions. Anyone who's like 51, 49, maybe this is a good idea. They're sitting on the sidelines because the career and overhead risk is too high. So I think that's why you've seen ETF investors generally be diamonds hands, and I think that will be true until this asset class sort of matures. From a professional perspective, your thoughts on the argument as well, that all these people are allocating, all these investors are allocating a very small portion of their portfolio into crypto.

Market Impact and Reactions

So that portion is not really going to impact their overall portfolio significantly. Therefore, corrections of 1020, even 30%, while it could be significant for us, who are a lot deeper in the space, for someone that has one, 2% of their portfolio in crypto is not that significant. Is that a fair argument as well? That's absolutely a fair argument, yeah. If you have one or 2% of your portfolio in crypto, who cares if it goes down ten or 20%? I'll be honest that a lot of our investors probably didn't even notice. They had other things to worry about on Black Monday. With the Nikkei down 12%, they're freaking out about the 60% of their portfolio. They're not surprised that bitcoin is volatile, and they're certainly not doing anything about it now.

Bitcoin's Performance and Recovery

At this phase, they want to see research that shows why bitcoin does well when we recover, which there's strong research that suggests it strongly outperforms in market recoveries. Yeah, absolutely. During a crisis with a small allocation, bitcoin's not something that they're worried about. And they expect it to be volatile. They know it. They've seen it. That's why they bought it. I want to go to the whole carry trade that triggered black Monday. Jonathan or anyone else could jump into that discussion, but has anyone been looking into it? Because it feels like in the financial world, everything is so levered up that you just don't know what could blow out and it could just change everything for all of us.

Carry Trade and Financial Stability

Something that no one was talking about just two weeks ago suddenly became the main discussion after Black Monday. Has anyone been looking at what percentage? I know I read somewhere the majority of them, like 70, 80% have already been unwound. What percentage of these carry trade positions? Yeah, but Morgan Stanley also said in that same tweet that you're talking about, they said something like, but with a very high probability of risks. In other words, like almost saying, like, we think, but we don't really know. I think that's what they were saying. And I think the numbers way big. I doubt that. I doubt that half of the cash and carry trade has actually been revealed.

Analyzing the Cash and Carry Trade

Yeah, no way. No way. Not a chance. I mean, we agreed. I think the cash and carry trade is anything between 3 trillion and 20 trillion. And I think that what was unwound was very, very small. Very small, like it was the canary in the coal mine. And I think that. I think we need to look at. A couple of things regarding this cash. And carried a number one, the Japanese calmed the market by saying, look, we're not going to increase rates again if we think it's going to have an impact in markets. Now, when I did a show about that, I called that a pinky swear, because I think it's as effective as a pinky swear that we used to make when were little kids.

Interest Rates and Economic Predictions

Mario, I know you still do them now, but we stopped doing them when were little kids. But it's a pinky sphere, because as soon as Japan gets inflation again, they're going to have two options. Let inflation run rampant in Japan or increase interest rates. And already this morning, an ex, I think it's minister or governor or something, he came out and said, oh, they may look to do it again in March. And so I think that the cash and carry trade still has a very, very big. It's still open, and there's a very, very big chance that at some point it's going to unwind. Now the question only it becomes, is it going to unwind in the form of a soft landing or is it going to unwind in this in the form of a hard landing?

Global Economic Impacts

That's the only question here. But at some point it has to. It has to unwind. The second stat that I read this morning, I was actually doing some more research just to see how we, we did. But the bank of Japan owns 80% of the country's ETF's, 7% of the entire stock market, and 55% of all the japanese government bonds. You're literally talking about a bank that's printing money and using it to buy up its own country with the money that's printed. Literally like 80% of the country's ETF's and 70% of the stock market and 55% of the japanese bonds are all owned by the bank of Japan. They would literally have to call their own debt.

Economic Indicators and Predictions

Can I just point out one thing, guys? Next week, 22 August, I believe, is the day the japanese CPI comes out. It's projected at 2.8%. If it's even a smidge above that, or gets to three, you can forget they don't have a choice. They're going to have to raise rates. There's no way. It's a pinky promise. It's a pinky promise. At best. It's a pinky promise. It's hopium. We're hoping inflation isn't going to get worse, and if that's the case, that we cannot raise rates. But if it gets worse, they don't have a choice. They have an aging population. Inflation is going to eat away at the aging population's funds and they are very concerned about this.

Global Market Dynamics

And all they do right now is calming the market down because they don't want to spook everyone and they're hoping that inflation comes on by itself. You also got to pay attention to what the bank of Japan and the Ministry of Finance is in currency trading, we call the yen. I'm an old school currency trader called the yen the widowmaker, but it's also what's called a dirty float, where you have free floating currencies and again, is a dirty float, meaning that the government and the bank, whenever they want to, they, without forecasting, without anything, they can just jump in and intervene. They often do it at low liquid times whenever.

Government Intervention and Market Predictions

But the other thing is that you got to pay attention to what the officials are saying. They use words like watching undesirable. The most recent comment from the x x boj guy. Japan's done the equivalent since October 22 of fuck around. Find out where they will keep saying they're watching things. Everybody tries to say, oh, they're bluffing. They're bluffing. They don't bluff. They will pull the rug when it's the worst time to do it, and it's going to cause the worst amount of harm to the most amount of people. And like Vinny said, if it's up just a little bit of a tick, they're going to have to bump it up.

CPI and PPI Dynamics

Yeah. And there's a compounded risk, by the way, this week we have CPI numbers for the US and PPI, and then the Fed meeting comes up a month later. So if the fed goes and cuts while Japan has to raise, that carry trade just goes nuclear. But, but the heroin, that is the carry trade is what, over six days, it's gone up, what, almost 650 pips? The. The dollar yen? I mean, it's back up to what, 148 maybe? It's. I haven't checked since a couple hours ago, but, I mean, people are still wanting to milk that cow, and that cow's gonna start kicking them in the face here pretty soon.

Percentage of Unwound Carry Trades

It's, it's. This is not something I would want to be hanging on to. So, Vinny, all around, what percentage of the carry trades do you think have been unwound so far? I think at peak it was 20% in the move. I think everyone at court with their pants down and they either posted collateral or they had some margin left, potentially. Not everyone runs at like, 20 x margins on the carry trade. So I think 20% max, which is probably, in my opinion, I don't know for certain. One to $2 trillion got unwound.

Market Reactions and Positioning

And then I think they took the positions back the moment they reverted, because the market bounced back pretty hard. So it was kind of a very elastic sort of move, because the reason it moved was that they surprised with the 15 basis points above forecast and they threatened more. Right. So then the moment they backed off those threats, the carrier went back on. So I think we're still sitting with, who knows? Somewhere between five and $10 trillion in the carry trade. Yeah. When we talk about positions being unwound, how does that work?

Understanding Unwinding Positions

Is that the only way to unwind a position is just pure liquidation? Or is that. Could you have that leverage move from one asset class to another through other means? How does it. It just seems too complex for me to understand. It depends on whose account, you know, which kids fund, which family offers how they've applied leverage, what collateral they're going to count, what percentage of the portfolio it is for them. Everyone's different. But it becomes a pain trade when it's really the currency that affects things.

Effects of Currency on Leverage

So the interest is less of an issue. It's the currency because now you've borrowed yen to buy dollars, and then the moment the yen strengthening, you're losing more points on that than you are paying an interest. So if the central bank is forced to increase interest rates, what would that mean for the global economy? How concerning is it? Obviously you've had all that fear back on black Monday, people comparing it to zero eight. Could that have been first? Could it spiral out of control? Could you have other leveraged assets around the world that no one's paying attention to, start to be impacted as trust is eroded? Or is that an overreaction?

Risks and Recovery

Yeah, I think the good news, the silver lining in this, is that everyone's now aware that there's a problem in the carry trade. So I think a lot of traders will probably be positioning themselves a little bit more defensively than just being all gung ho. People are going to be watching me, the CPI numbers from Japan, seeing what the US does. I'd be surprised if there's a big blow up right now because it seems like things have kind of normalized and if things they do have to raise rates, it might be a bit more orderly. Don't know for certain. I can't predict what other people are thinking, but in my mind, if I was in the carry trade and I'm not, I would be paring down my position, taking a lot less leverage and just waiting it out, because this is, it's a very volatile situation.

Concerns About the US Economy

Yeah. Another thing is all, you were talking about this in your show as well, the weakness in the us economy. I think unemployment rate has been rising, been gradually rising, and then it's just spiked up recently as well. So the american economy is just starting to show weakness. How would that impact crypto, in your opinion, and what would that mean for the rest of the cycle, at least before the market recovers? I think when the japanese cash and carry trade came tumbling down, I made a couple of predictions. I'm glad to say all the predictions have come right, except one last list to come right, which is I forecast there's going to be one more rate.

Future Market Predictions

There's going to be a rate cut in September. I think that the market's dreaming if it thinks it's going to get a double rate cut on its first rate cut. I think it's going to be a single rate cut. And I mean, the market was then forecasting, like multiple rate cuts thereafter. At one point they were forecasting the equivalent of two. Sorry, of one full. So two half a percent rate cuts this year. I think we're going to get, at best.2, we're going to get 0.25 in September and we may get another 0.25 sometime between then and the end of the year.

Rate Cut Predictions

I don't think that Powell is going to rush to all of a sudden reduce the interest rates. I also don't think that you're speaking from my handbook, you know, I mean. Even if any, our bet is you said that the next move for the Fed is going to be a rate increase. That's what you said. No, no, we haven't recorded, sir, we recorded. Wait. Just wait. Just wait. Wait. So last year I did say they'd be two to three. This year, everyone said seven. I still don't think, I still don't think it's fair to complete it.

Federal Reserve's Strategy

It's going to be a rate cut. I still don't believe we'll get a rate cut this year. I'm still like. I think September, we've got 25. What's the CPI this week, buddy? Watch the. Okay. Yeah, but I think September is a 25 basis point rate cut and I don't think they're going to rush again to cut again in October. The next one is November. I don't think I'm rushing. Cutting the rates is going to exacerbate the carry trade, unwind for Japan. You realize that?

Economic Interdependence

Yes. And who do you think the biggest buyer of us government bonds are? I don't think that Powell is mandated to look at that. I know that Yellen is, but I don't think Pal gives a shit about that. Pal gives a shit about unemployment and he's getting some recession indicators. There was that recession indicator that flashed the other day. I can't remember what Pearson, I think it's called the Pearson indicator, which flashed the other day, and then the whole market panicked into recession territory.

Future Predictions of Rate Cuts

And I think that if Powell's smart, and he is smart, I think what he'll do is he'll say, I'm going to preempt this and I'm going to go with a very gentle rate cut in September. And then I don't, I think we get one more rate cut this year, but I don't know if it's gonna. I mean, I have to wait to see the data whether it's gonna come in November or December. But there's gonna be. I think it's gonna be Mac. I predict one but maximum two rate cuts this year, and all of them are 0.25.

Concluding Thoughts on Interest Rates

There's not gonna be a.5 no chance. Yeah, the 0.5 is never gonna happen. But I think we have to at least accept the fact that there could be no move in September. I mean, as much as everyone thinks there's going to be. Depends on the CPI and the PPI this week and depends on what happens to Japan's numbers as well. Here's the problem. If Paul cuts. So if Japan CPI is a tick above 2.9 or three, do you think Paul can still cut, knowing Japan now has to raise?

Interconnected Risks

I don't think Paul gives a shit about Japan. I think Paul gives. You have to because remember, what's boying us assets is the carry trade, people. That's Yellen's problem. That's Yellen's problem, not Paul's problem. No, no, I know. But they've got an agreement here, dude. There's no way. These guys are not. That's Yellen. I mean, Paul has his division to worry about and Yelan has her division to worry about. Yeah, but they operate in unison.

Chinese War or Economic Agreements?

And that's, by the way, that's why Powell didn't raise rates higher this year, because he couldn't. Because the treasury saying you can't raise rates higher. Like, that's as much as you think. There's this, like, chinese war between the two. There isn't really. Can I ask both of you if you think that there's a. If it exists, is there a, an unspoken, live, unlimited swap between the Treasury Department and the bank of Japan Ministry of Finance?

Concluding Discussions

Hundred percent.

Concerns About Japan's Economic Situation

I'm convinced there is. Because here's what happened a few months ago when Japan first wobbled and the currency went to 180 something. They had to step up and they started putting 50 billion at a time into protecting their currency. Now, the only way they can get that sort of money loosened up quickly is government bonds. And so Yellen, as far as I know, she went there for meeting, or there was some interaction between two and all of a sudden everything was fine. They don't want Japan dumping us treasuries to come up with the cash to protect the yen in the open markets. So what do you do? You get a swap line. I've spoken to other macro economists about this. We all agree that is exactly what happened. Yeah.

Inflation and Government Responses

Because there's I mean, who capitulates first? I mean, at what point does the government of Japan start to say, listen, we have been scratching the backs of the whole globe and now it's time for everybody to get. On scratch in our where they can't hide the inflation anymore. Right? So the us government, they can't do it. The problem is they can't do it. The US will go insolvent. The us government hides inflation by at the moment. And Powell said this is what Paul said publicly at the hearings, like illegal immigration keeps costs down and therefore inflation numbers go down. But that's just official reporting.

Labor Market Dynamics

It doesn't, you know, all you're doing is you're widening the labor supply base. And I'll tell you why this is important. So by America expanding the labor supply base and keeping labor costs low, you deprive workers of higher incomes, but you keep inflation down. Japan does not allow illegal immigration. Japan does not allow immigration in period. Like you can't just move to Japan and become a citizen and work there. It's very hard. So their problem right now is they're seeing spikes inflation from labor because they can't hide it, you can't reduce it.

Forecasts and Predicted Outcomes

And I don't believe that the 2.8 forecasts that they have for the next whatever months in Japan is going to hold, it's going to go over three. And now you're in shit. So the whole thing unwinds. At the same time, the moment people realize that Japan can't hide the inflation numbers, America has been hiding it, and we're on a bad track. So it'll unwind. Yeah. So when inflation, if we do see that, Vinny, what does that mean for the global economy and crypto? Well, so first of all, it's going to be a liquidity crunch.

Implication of Japanese Rates on Global Markets

So the moment. So think about this, okay? The Japanese carry trade over the past, at least the past year and a bit since COVID and the low rates. As the rest of the world started raising rates, the carry trade moved more to Japan because they kept rates. They kept rates low for years now since COVID so all the global liquidity that's been sucked out by other central banks raising rates has been moved to Japan because you could borrow cheaply, then you can run the carry trade. The moment Japan starts raising rates, all of a sudden that money is going to flow out.

Complex Financial Dynamics

And so, you know, do the math. This is such a complex situation. I don't have the expertise. It is like I've been. You're much deeper in the space, and you're calling it complex, like I'm trying to decipher. Other people in the audience are probably even less knowledgeable about all this. Never. Long story short. Now, long story short, let's summarize. Long story short. Japan is fucked. Completely, completely fucked.

Global Economic Implications

And how fuck they are is they went and bought up everybody. They went and bought up everybody else's treasuries. They printed money. They used that money to buy everybody else's treasuries and everybody else's stock markets, including their own. Including their own. So if and when that trade unwinds, it's going to be catastrophic. Is there any. Is there any way, is there any healthy way to unwind that trade that's doing it slowly over a period of time because it just feels like a second time? No, unfortunately not.

Market Reactions and Predictions

But then why the market? If that's the case, why the market? Well, what if you said that there was a window open? Why couldn't they open the window and. Just buy $3 trillion? There's no way to unwind this cash and carry trade. There's no way to do it because imagine the bank of Japan starting to sell down their own stock market. That's effectively what would need to start happening. The bank of Japan would have to start selling their own treasuries, their own stock market. It's not possible.

Broader Economic Consequences

It's not possible. The impact is beyond Japan, though. You said Japan. Everyone's fucked up. Taiwan. It's Taiwan, it's Korea. It's up to $20 trillion. That's what I'm saying. No one can give you a number, but Deutsche bank forecasted at $20 trillion. Okay. Like 20 trillion. Imagine $20 trillion of fake money that has been printed in Japan and they're using this money to buy and leverage. Buy and leverage other markets around the world.

The Imminent Risks

Yeah, it's a shit show. It's a fucking shit show. Yeah. The only thing is. So they've promised. Now they've made a pinky promise not. To raise rates, but this is why Powell, stuck in power, is going to be stuck here. Because Japan, if they. If their inflation number is high and they're going to raise, Powell can't meet them going by, going down. It's just. I just don't see how that happens. It's going to blow the entire financial world up.

Economic Strategies and Future Predictions

I'm telling you that. I'm telling you that Paul doesn't give a shit. I'm telling you Paul doesn't give a shit about what? About. About Japan. I think Paul gives a shit about inflation, about recession and unemployment. You don't think that the japanese government dumping a couple hundred billion dollars worth of us bonds is going to. That's Yellen's problem, not Paul's problem. I think he cares, but he's limited by his mandate of what he can publicly talk about and what he can do about it.

Market Sentiment and Financial Crisis

Like privately, I'm sure he's like the rest of our trees. Like, he's like, oh, this is fucking shit. Show this. This is. There's another way. But he can't. He can't. It's not like the japanese officials. He can't say anything about it. But guys like the numbers we're talking about. When you say 20 trillion, you're talking about the same numbers as the zero eight financial crisis. And he's saying that it's inevitable. There's no way around it other than implosion.

Potential Solutions to Economic Issues

Well, I'll tell you what the way around it is. I'll tell you what the way around it is. They increase 0.25 basis points now. They shock the market, and then they increase 0.25 again. Then they shock the market again. And then people realize that this thing is going to unwind. And hopefully it doesn't unwind over three days. It unwinds over a period of three years, and we can mitigate the damage out of it. But, or they. Politicians have zero appetite for that right now.

The Japanese Dilemma

It's all or nothing. Bang or keep going. Well, for now, they said pinky swear we're not going to raise interest rates until we do. When there is inflation in Japan, they're going to be faced with. They have two options. Increase interest rates or allow inflation to go rampant. Japan has. Japan has a non productive population. They have the biggest age. They have the most exacerbated aging problem.

The Aging Population Crisis

Average age is like late 40. It's like 48 average. They screwed. They are absolutely screwed when it comes to. That's why I'm saying. That's what I'm saying. I think that our best case here is that we, I think for the next six months and film until March, we find a next eight months, whatever it is, till now elections. Just saying. I think the japanese government won't raise rates for the next six months, but I think in six months.

Forecasts for the Coming Months

I don't know how you think that we're going to get past the next two months, let alone the next six months, without having any major. Because they made us a pinky promise, Vinny. They made a pinky promise and they're going to have to hold the pinky promise. So between Japan and the US in the next two months, I'll predict before the election, something breaks big time.

Market Readiness for Changes

Okay. I don't agree, Dave. Thanks for coming up. Like, is there another way around this? Because I feel like if this is a ticking time bump, the market should start pricing that in. Because now it's clear. The risk is clear. It's like what we saw in zero eight. We start seeing the kind of the mash that lit the fire. We started seeing people early on start liquidating.

Market Reactions and the Need for Preparedness

But it seems here that everyone's just moved on. No one's talking about it. Is there a way to slowly unwind those positions without imploding the market and causing a global liquidity crunch and moving that liquidity into other markets? Finding other similar opportunities, so similar arbitrage opportunities? No. Where are you going to get cheap money for? This is a cheap money problem, guys.

The Current Market Landscape

Yeah, where are you going to get cheap money from? Everyone else has raised their rates. The short answer is no. But Vinny's right. It is the cheapest source of money. It's been the cheapest source of money for 30 years. Japan has gone through. They have an aging population. They have the highest savings rate in the world.

Japan's Economic Strategies

And those savings are used to prop a debt to GDP that is unsustainable. That said, it's been unsustainable for 30 plus years. And having been involved, and for those I'm showing my age, I apologize. But I set up the very first futures trading index, ARB system for Morgan Stanley back in the eighties. And the amount of money that Morgan Stanley and Goldman sent, and Solomon Brothers, which is my next firm, made shorting the japanese market in a coordinated way during that period of time when it was at its all time high.

Historical Insights into Japan's Market Manipulation

Wait, did you. I gotta interrupt you. That is so badass. Sorry. Nobody else gets how badass that is. I just have to like fanboy it. You have no idea, Jonathan, of the stuff that was going on there. You have no idea it. There's a chapter in a book that I've been thinking about writing that I may have to out some people, but there are some stuff that went on that is just unbelievable.

Japan's Economic Patterns Over Three Decades

In any case, the simple fact is we've been saying the same thing about Japan for 30 plus years, and every once in a while there's a threat to it breaking. And the reason is because Japan has a debt to GDP. That's, depending on how you measure it, well over 200%, probably 300%. And people say, well, how the hell is their borrowing cost so low? Well, the answer is the BOJ quietly sits there and buys.

The Role of the Bank of Japan

And now they have more than half of all the JGBs that japanese government bonds in existence. And so they continue to prop it up. Meanwhile, their older population has their money in what's called postal savings accounts. You can't make this shit up. That is literally what it's called. And that's where there are trillions of yen in those accounts. And then hedge funds come in and borrow cheap yen and buy stuff.

The Long-term Financial Framework

And they've been doing this for 30 years. Is it likely to all unwind? I mean, no, the government's. I guarantee you. We were talking about this with Scott this morning. We don't know for a fact, because I'm not on these calls, but I asked James Lavish, what is your odds that there weren't phone calls between the head of the BOJ, Powell and the head of the ECB over the weekend in both last week and this week and coordinating what's going on?

Suspicion of Central Bank Coordinations

And the answer is zero. Of course they were over on the phone and we don't know what was agreed. But the fact is they're going to prop this up as long as they possibly can. But to call this a crisis like 2007 and zero eight, it's different. It's not like there was a run up in 2007. There was a massive spike in 2005, six. A massive spike in subprime borrowing with people going further and further at the yield curve.

Comparative Analysis of Financial Crises

That's not happening here. What's happening here is the same thing that's been happening for 30 years. Yen is cheap. Borrow it and lever up whatever you're going to buy. And so that's the yes and the but is so it's not like a tindering powder keg. There are probably other things in the financial system that can break. And we could talk about those two.

The Variability of Market Stability

I mean, I think net. Net, what I'm learning is that everything works until it doesn't, right? That. We've seen that repeatedly. We've seen that repeatedly. Yes, exactly. You. You've been waiting for it to break for 35 years. It can go on another 35. That's the point. The market can remain irrational longer than you can remain solid.

Future Projections on Economic Stability

So you mean. But you mean Japan. You mean Japan could keep low interest. Rates guys, a lot longer? Guys. It can't. Japan has been struggling with deflation in the past. They're at a point now where they're about to go about 3% inflation, and it looks like they could hit that this month. And I just don't see how Japan, at 3% to 4% inflation, is going to manage to pay the bills for everyone and may keep all their retirees happy and everything else.

Demographic Challenges and Inflation

And, Dave, how many. Dave, how many times have you heard, can't. In 35 years, Japan can't do this? No, the thing is, Japan is a contained economy, dude. It's very different, right? They import everything. They're an island. They have energy costs, which are external. They have raw material costs. External. The currency devaluation is the worst.

The Oncoming Crisis

We've seen that. It's come back a bit right now, and you've got inflation running high locally. It's a perfect storm. Something's going to break. It's possible, Vinnie. It is certainly possible. Then why? Then why? Why the market's not pricing it in like, there's very intelligent people trading those markets just like you guys.

Market Sensitivity to Currency Fluctuations

Because the yen's trading at 140, 47, and 160 was where the bank of Japan basically drew their line in the sand. And we don't know what. And if you're a currency trader, I mean, people got. It's very hard to explain this to people who trade crypto, but the magnitude of a move, when you have a 10% move in a g seven currency, really g four is really the four biggest, or the pound, the euro, the yen and the dollar together, when you get a double digit percent move in a currency that's like a 95% move in the shit that we trade, it's like a force.

Comparative Currency Movements

Absolutely. It's a four sigma move. It's insane. And everyone's using leverage. So when you. When you live it up 20, 30, 50 times, you see a 10% move, you're gonna get wiped out.

Retail Trader Perspective

Let me put this in the perspective of a retail trader, okay? The normal forex crypto retrader. Like, if you're in the US, you're using a wanda or forex.com, and they trade in lots, which is 100,000 units of something. And in the US, you can trade a max. The brokers, you should put more of a limit, but Max 50 x. Okay? So if you've got $100,000 in leverage, or. Right, like, one pip move is worth $10. It's moved over the course of six ish days, 650 pips up, take that times $10. If you're the average retail trader and you're affected by that's a lot of bank for the normal retail forex.

Market Concerns

Trader we talked about last week. Just to continue, this is what Vinny's saying. Well, we sit last weekend, when were sitting here on the show a week ago today, and the markets are starting to rebound, because what we worried about the fear over the weekend, which was clear, that was going to be the fear on the Friday before. So now we're going back a week before that was that one or more hedge funds were blown up. So there were depth charges in the ocean. The submarine hedge funds went boom, and they're going to float to the top. And why that creates such fear is because nobody knows what they have to sell in order to meet their obligations, what derivative contracts will get tied up, what liquidity will get sucked out of the system. The real fear here is the bond market. Not the stock market, not the crypto market. It's the bond market.

Liquidity and Bankruptcy Fears

And the real fear is that enough liquidity would be frozen in a bankruptcy held bullish situation that would cause a repeat, a sub repeat of 2008. Because that's what happened in 2008. It was all the plumbing failed, because nobody knew that whether they could get their money or not. And that's the fear. And so you have to ask yourself the question, well, here we are a week later, and there may have been some bodies, but we haven't heard a whole lot. And certainly none of the big banks have gone. What Vinny's contention, and he may very well turn out to be right, is that something will happen that will cause that sort of event, which will cascade upon the prime broker banks, which will make plumbing seize up. That's the kind of thing that could cause it.

Market Reactions and Risks

The market basically this week is basically saying, eh, we don't care. And they're shrugging it off. And you can make an argument one way or another. It feels to me that with the bond market below 4% still in our country, maybe the bond market is kind of telling you that they think there's still a risk of that, and that's why the rate cuts are priced in, because people think there's that risk. SIMon and by the way, I was just for the audience, I was googling while you guys were speaking. Just the size of the japanese yen, it's a lot bigger than I expected. It's sitting at nine chinless m two. Supply $9 trillion for the japanese yen, which is more than half of what the euro is. To know it's that big. Not sure what the revenue be is at, but that's number three.

Three Ticking Time Bombs

The yen is at number $3 number one, and euro is number two. But then the other question I have, and someone will give you the mic, but it feels like there's kind of three ticking time bombs. Now, I think one of them were past it, and some of you might disagree, but I think the one we faced during the Silicon Valley bank collapse, the time based risk, whatever it was, duration risk. There you go. So that one, unless you disagree, but I think that one is no longer a risk. Now, they're the kind of. Lucia is a risk. The us banking system sitting at over $500 billion in loss, but with the. Interest rates, we're now seeing a reversal when it comes to the central bank's position.

Pivotal Financial Decisions

Are we? So here's the thing. If Japan has to unwind and do yield curve control and sell us bonds, listen, that's going to get worse. The losses are going to get bigger and bigger, especially if it's like ten year bonds, whatever else, longer duration bonds that they're going to be selling to try and get money to prop up their currency. And then we've got, as Dave mentioned, we've got the credit risk spread. Right now. There's a credit risk in the market which is not being priced in. Nobody knows who's got what and how much it's worth and whether. If one firm goes bankrupt and takes everyone down with them, you're going to have this cascade.

Potential Ripple Effect

Because what happens is, for example, that they sell certain amount of bonds, push the market down, other firms are running close to the edge, they're going to go under as well. You can have a domino effect because everyone's using leverage and everyone's on the wrong side of the trade if yields go up, and that's where I'm at right now, I think that. But if the Fed funds rate is cut, then that problem is no longer there. It depends what happens next month. Correct. The Fed's fund rate will only be cut if us inflation is under control. And there's a view that it's not going to impact Japan negatively because of.

The Impact of Policy Changes

Japan has unwind its bonds. Japan unwinding its bonds because the carry trade unwinds, impacts the US in such a big way, because it basically impairs the Fed's balance sheet even further because the yields are going to go up on those bonds that they've got and they have to hold to maturity, and the entire banking system has to hold to maturity. Guys, this is a cluster. That's all I'm going to say. The reason. But just to continue that thought, Vinny, that's why, you know, we've been talking about this a lot. The simple fact is that were that to have happened, that's the game of chicken that's being played.

Importance of Credit Facilities

There is a reason that I'm sure Powell was talking with the BOJ is because we don't want them selling those bonds, and so we're going to open up credit facilities for them to do that. The question is how much credit? Whether they'll make it public or whether it will be the implied threat. That's all the stuff that we can't know. I mean, honestly, anyone that you could get up, Mario, that could talk about it. I mean, maybe you can get some ex fed people, you know, maybe Daniel DiMartino, Booth or someone like that to talk about it. But there's a lot going on here. And what Vinny's talking about is something that's very well understood by the people in the Federal Reserve building.

Fed's Understanding and Reactions

They get this, trust me, they're doing what they can to stop that. That is the stuff they care about. Stock market moving up and down, crypto moving up and down, us bonds being sold to make our borrowing costs go higher. That is literally the thing they care. About more important than inflation. Mario. Dave, Vinny, can I ask real quick at what point, because here's where I feel like when shit really hits the fan, is when you start to see the armchair economists of the publications news, Fox Business, CNBC, like, when they really start diving into this, because it was just a news thing.

Media Attention and Market Awareness

Oh, yen carry trade. Okay, people, most people, except for those of us who pay attention to the ship, like. Like they forgot about it. But at what point do the armchair economists or any of the educated economists, when does this start? Something where they're telling their editors and stuff, hey, we should really get on top of this, because this is going to be a huge ass story, and everybody needs to be talking about how bad? When does this become normal news? And then people around the globe start to actually get scared.

Impact of Historical Events

Great question. Let me give you that simple answer. Go and watch the big short. In the big short, two of the guys on the hedge fund, they went to go see the Wall Street Journal guy, and he was like, hey, guys, I've got a wife who's doing a master's degree. I've got a kid. I am not going to put my neck on the line. Go to my editor to write the story. Good luck with all your conjecture around this market unwinding. If you look at history, no one puts their neck on the line for this stuff until it breaks, everything's okay. And I think that'll continue.

Investor Reactions to Market Changes

So it starts impacting the bottom line when traders, investors, you know, the average Joe starts to lose money from all this. That's what starts hitting the press. It's like when we last, black Monday was a blip. Went down. Oh, it's back up. It's just normal volume. That's what everyone thinks and we've gotten accustomed to. It's. It's when it goes down for a day, two days, three days, five days in a row, and it doesn't look like it's coming back, that's when people start going, oh, shit.

Carry Trade Dynamics

Cause, like, you know, isn't it wake. Up call for all these holders. Everyone's participating in the carry trade opportunity. They seen the risk involved in the arbitrage opportunity, so wouldn't they start taking action when they start minimizing that risk gradually and deleveraging? I mean, that's what you would do if you have enough equity in your balance sheet. If you're underwater, you're just basically holding on and praying things bounce back. Oh, yeah.

The Influence of Market Health

Again, it's the domino, the first domino to fall. And I even tweeted about this last week, like something broke in the ecosystem somewhere. We just don't know about it. We don't know where. It takes a while for it to come out. The moment something breaks and you go, okay, these guys just lost $3 billion or five or $10 billion or whatever it is in their hedge fund. And these are assets they have, and they have to sell it. And this is the precious win economy. Then you start seeing things unwind.

Understanding Market Cycles

Remember, it took a full 18 months between Bear Stearns collapsing and demon brothers. Right. A full 18 months difference. And I don't think, how many months? How many months? 18 now. 18 months between what, Lehman and Bear Sterns? Yeah. Yeah. So remember, it takes a while for the market to figure out what's going on. But I think we're past that point. I think. I think the best sense moment was last year at Silicon Valley bank, that whole thing.

Current Market Insecurity

So I think the 18 month marks coming up right now, because we know all these hold to maturity bonds are not worth the duration, risk is massive. Right now. The Fed's got an impaired balance sheet. The banking system's got 500 billion by inflation. But all comes down to inflation. If inflation starts to settle for whatever reason, which is obviously hard to imagine. Happening, the inflation numbers are incorrect.

Real vs. Reported Inflation

Okay, there's real inflation and then there's reported inflation globally. Or you're talking about the US. The US, the US. The real inflation numbers we all know is a lot higher than what they're reporting. And again, this is because you hide inflation by having, for example, increasing the worker base, 50 million illegals coming in to work, whatever, it brings down inflation numbers.

Inflation Manipulation

So this is my point. Inflation doesn't escape from an economy just because you can show the official numbers coming down. It just goes to other places. So it goes into rents, it goes into other things. So the government trying to hide inflation by manipulating the supply of labor base doesn't take away inflation and just moves it elsewhere. And you do believe the numbers coming out of Europe or same issues?

Global Economic Impact

The US, I'm not a Europe expert, but right now I'm just focusing on Japan and the US, to be honest. Simon, Simon, I know that's the argument for gold being a store of. Actually a question for you, Simon and others on stage. So what does that mean for bitcoin? And then what does that mean for the rest of the crypto market? Yeah, that's the very interesting question.

Bitcoin's Market Position

So I think it's quite clear from this conversation the level of degeneracy our economies have gone, thanks to complete removal of market forces and central banking. So we all live in central bank markets and nobody cares about the reality, they just care about what the Fed does. The Fed has completely occupied and taken over all of these countries.

Demographic Issues

At the same time, we have this very interesting demographic issue as well. So politically, everything's about the horrors of immigration, and yet the strategic advantage of both countries in Europe and America is that they're actually able to attract immigrants in order to solve demographic issues that a country like China and Japan have a lot more problems. Now, politically, this has become a complete hotbed topic with the desire to do mass deportations and demonize immigrants.

Geopolitical Risks

So this is just fascinating that we've hit this level of disjointedness in the realities of the market, central banks and some of the more political issues to create this perfect storm. And let's not forget that we've got the geopolitical risk to add to that equation that China can decide, do I want free markets and do I want an unwind of the credit? Do I want to be more interventionist, or do I actually want to be more like America and more like Japan and intervene in markets way more aggressively?

Implications for Bitcoin

That's just a fascinating thing we all have to watch. Now, the real question does all of this leverage now apply to bitcoin because of the ETF market. Is there some wild trades that we don't know about in the bitcoin market from some of these hedge funds through the ETF's and futures? We don't know the answer to any of this stuff.

Risk Narrative in Bitcoin

And so we get to see, is bitcoin just going to be risk on, risk off? Because we know the narrative. We know that it is actually a solution to the central banking problem for those that want to exit, and it's also a solution for those that want to combat inflation and civil unrest. So we get to see the narrative roll out in real time.

Market Dynamics

And my guess is that the four year cycle prevails, but we haven't had the real test. And this is the real test. And this is why there are still asymmetric returns in bitcoin. Is it going to go with the commodity market while the crypto market goes with stocks? Or is bitcoin going up, going to drag the crypto market with it and create an exodus out of traditional asset classes over to this sector? I think all interesting things that we've.

Value of Bitcoin

Which is why there's still so much more to go and so much more to understand in this cycle. Dave? Yeah, I mean, I think that Simon has his finger on the key issue here, which is the asset value of bitcoin that's being told to American investors in the ETF world. And we kind of take for granted that bitcoin is a diversification against disaster risk.

Bitcoin as Digital Gold

Make no mistake, that's what it is. The whole digital gold narrative is gold is going up. Well, gold is going up because people are worried about what's going on with all the central banks and debasing currencies. And bitcoin, is that on steroids if, in fact gains that critical, massive acceptance. The thing that's interesting, and I keep talking about this, Mike McGlone and I have this argument most every week, is I keep explaining that bitcoin has core holders and buyers who buy this for the same thesis that Simon has done far earlier than me.

Market Behavior and Speculation

So he's done a great job there. But I'm only there for what, my seven years. So I'm a tourist, I guess, by comparison. But the fact is that narrative means that's where the real value of bitcoin will be. And the people who are hodlers are, they're saying, listen, if it doesn't, ten x, don't even talk to me. Meanwhile, the price action is driven by speculators using leverage on perp exchanges around the world, full stop.

Daily Market Fluctuations

And we see it time after time, whether it's on the upside or the downside. I mean, just look at the market today. The markets rolled over. The stock markets are down, what, 30 basis points? Bitcoin dropped. What did it drop? $2,000 lower than where we are now, all in one day? It happens all the time. It's because the marginal buyer or seller now are leveraged speculators while the holders are still there.

Future of Bitcoin

Yet the holders or the long term buyers, the ones who are driven the market into this price range and are the ones who will reassert the four year cycle if Simon and I happen to agree with them, is correct. And so that dynamic is happening at the same time. We are clearly seeing fractures in the fiat system. People always have to put it in perspective. The fiat system has only really existed as a global system since 1971.

Economic Context

That's not that long of a time in terms of economics, but it encompasses the entire investing life for almost everybody who's investing, myself included, we need to understand. So we talk about things like Japan, we talk about the federal reserve. It takes a lot more money now to make an impact than it did ten years ago than it did. And it's been exponentially growing.

Understanding Bitcoin's Asymmetric Potential

And that is the reason why Simon mentioned the asymmetric return potential profile of bitcoin. It's because of that. I mean, it takes billions to do what millions used to do, and that's important to understand. Yeah, I think it's worth mentioning. Dave, I agree with your points there. The issue really right now is, for me, is market depth and liquidity.

Bitcoin as a Liquidity Metric

So bitcoin's always historically acted as a liquidity sponge in good times and when things go bad was when we have low liquidity bitcoin tanks. At some point, there may be a flip over where it doesn't actually matter. But for now, I think it's entirely tied to the global liquidity situation, because people who hold bitcoin in their portfolios, if things unravel, they're going to sell it.

Impact of Market Dynamics

They're going to have to, whether it's from margin calls or whatever else. And that's the issue right now. It's still a bit of a savings account for a large percentage of the world. Right now, it's about a $1.6 trillion market, captain. And, you know, I just don't think that. I don't think bitcoin is going to be immune from any downsides.

Short-Term and Long-Term Risks

Absolutely not. Short term, short term and long term. No, short term, not long term. I mean, all you have to do is look at my favorite example. I've used it on this show before. If you do, if you look at homestake mining, you know, because remember, us citizens couldn't trade gold in the thirties. During the depression, everything went down.

Historical Market Trends

And then as the depression started grinding lower, but the major shock was over. Homestake mining diverged completely because what money there was attracted into it. And so bitcoin could be like that. I often say it will be like that. But the weekend, the day, the month, even potentially, I mean, it took three months in the GFC for gold to delink.

Gold and Bitcoin's Journey

Gold went down with everything else in 2008. Exactly. But three months later it delinked and then went on an epic bull run. And so remember, bitcoin is a risk. It's a risk on asset, not a risk off asset in the current climate. So if people go risk off, bitcoin is going to go down. And if you go risk on, bitcoin is going to go up.

Recession Responses

And if we have a financial crisis and everyone goes risk off, it's going to come down with everything else. I mean, that's right. But I think that ethereum is being positioned as more of a risk on asset than bitcoin. And I think it was. Yeah, with it. With it, yeah. Solana's been taking that spot now.

Shifts in Crypto Trends

I was actually sharing to a friend about that this weekend and a trader buddy mine. And like, it looks like when there's, when the market's rallying and there's excess liquidity and people trying to diversify, they're not going to ethereum, they're going to Solana. Now you can. And then when the market pulls back, Solana comes back down as well.

Stable Assets in Volatile Times

So ethereum is a lot more stable and Solana looks like it's jockeying for liquidity right now. Well, that's within the crypto space. But now that there's an Ethereum ETF, don't underestimate. Remember, half the world's investment capital is still in the US for reasons that are. Well, there are lots of reasons, but that's just a simple fact.

Recent Developments in Crypto

And the fact that aetherium last week isn't that really that surprising? It got crushed much further then it. Was just filed for Venet, filed for us to, for a Solana ETF now. And the SEC withdrew their case against Solana. No, sorry. All the crypto Harris. That's true.

Legal Challenges and Resolutions

That's not true. What the se and I'm not the lawyer, but.

SEC's Actions and Solana

But what? But let me just explain this really quickly. What the SEC did is they have multiple cases, and the one with the most hostile judge is the one where they pulled Solana. They didn't pull it from the other one. They only pulled it in the binance case. They have not pulled their. okay.

Implications for the Crypto Market

If the SEC, if Harris actually is convinced by the various people to do make a pivot, you will see the SEC drop their cases against Coinbase and Kraken, etcetera. And then those of us on I am a Solana bull. I'm not going to lie about that. I mean, I own more Solana than ether, for all the reasons that you're mentioning, but you have to be realistic about it. The fact is, until the SEC pulls those cases, you're not getting a on ETF.

Market Conditions and Bitcoin Growth

Yeah, I've just checked, by the way, I saw punk in the audience. Punk, 25, 20. I'm like, what happened to punks? They're down bad. So I know it's irrelevant to the discussion, but that was not a nice sight here to see. But that gets to Vinny's point, which is what I think is real. When bitcoin and the bitcoin community goes up, it creates liquidity for everything else in the ecosystem. And people recycle those dollars, so called alt season. How many times have we all heard that, right, when bitcoin has been in a range like it's been, and you can go look at it, bitcoin is now at the exact same price as it was at in February, and it's been in that range pretty consistently for six months.

Expectations for Market Fluctuations

There's no off season when there's no more money being pumped in. And at the same time, liquidity conditions around the world are worsening. That's the issue. That's what Vinny's talking about. I just think that within the crypto space, bitcoin will be the most resistant. But nothing is fully resistant. If in fact, we have. You'll need. Yes, but if I asked you to speculate, what could happen, best case, worst case scenario, over the next, let's say, twelve months, could we see the cycle, repeat previous cycles, or with what happened in Japan and what's happened on a macro perspective, it all depends on the inflation numbers, the unemployment numbers, and what the Fed will do.

Political Influences on Bitcoin

I personally think that there will be a significant rally in bitcoin once we see what's going on with the elections, and once we get into the fourth quarter. Why the election? Why do the elect, why the elections if Kamala is changing the stance about crypto and Trump is obviously pro crypto, what are the elections to matter? No, she's not. She's not. She's just pandering to voters. That's a change. But, no, but you can't, you don't change your stance on crypto if you're pandering for voters.

Speculation on Future Trends

Are you saying she'll say she's changing your stance, but she doesn't actually change your stance? As soon as the election is over, she'll go back to being anti crypto? Is that what you mean? I think that's what I think that was Vinnie. And I agree with him. I think, look, we don't know what's going to actually happen. Right. She changed her, she agreed with Trump on no tax on the tips, which is rather amusing. And the reason for that is because Nevada is such a pivotal state.

Market Sentiment and Bitcoin Prices

But let's not go into. I don't really want to do a political spaces. All I'm saying is that if the market genuinely believed that Trump had a 50% chance of winning and he was going to do the things that he said he was going to do, bitcoin would be a hell of a lot higher than it is today. It's not priced in. So the market is placing a wait and see. And as we get closer, those sorts of bets will start to take shape.

Current Polls and Market Reactions

Yeah. So based on poly market, Kamala's at the highest I've ever seen her. I'm using poly market because that had Trump ahead. We're not getting to a political space. We did that last, I think it's last Friday. But, Mario, important, when Trump was at 70%, it was not enough to bring bitcoin to new all time highs. And the reason is because, that's because. People maybe expected the swap, because people. Look at that and say, you know, it's just too early.

Market Cycles and Seasonal Effects

Right. Let's figure out what, let's get some real democrats haven't even had. So the Trump, what he's saying is that the Trump rally, we've got a taste of it when the assassination attempt happened, when the debate happened as well. So we've got a sense of what will happen to crypto if Trump wins. But it's just too early to experience a full blown bull market, especially now seeing Kamala ahead in the polls. You can believe him, not believe him.

Market Movements and Predictability

I don't want to get into that debate. And based on polymarket, Kamala has a 52% chance and Trump is at 46%. Chance. At the same time, Mario, understand portfolio rebalances always happen in the fall and gets setting up the summer people don't make big decisions expecting there to be major moves in markets over the summer other than downward black swan surprises. We've had a few of those in the past August ones, etcetera.

Technical Analysis and Market Predictions

They generally recover. And then the real shit happens late September into October. And it's just, it's a seasonality thing and, you know, we'll see. I mean, it could very well be that a spike in one data vix of 60 is a Porsche is a foreshadow for some real cirrus in October. That's Vinnie's case. And he may be right. We'll see. But there's a lot of things to happen, and Simon's right, there's a lot of geopolitical things that could happen.

Illiquidity in the Market

The fact is when you're sitting in August and half the people who trade are at the beach, you know, myself included, you just don't get that kind of real big money action. You get twitchy reactions because of an illiquid market. Yeah, the numbers are just for anyone that's been watching poly market, we've used it a few times. Trump at 70 something percent just before Biden dropped out, and now it's down to 46%. But going back to the, I think we've discussed this pretty in depth.

Central Banks and Market Stability

You talk about the carry trade. I think next time we'll bring it up is when the markets start to jitter again and we get the inflation numbers later today. But it's a pretty fascinating predicament that we discussed on where the central bank stands, where the Fed stands in the US in terms of not triggering another panic sell based on the carry trade, another round of liquidations versus keeping inflation in check.

Technical Difficulties

But let's get into the discussion with our partner Mitch. I appreciate you being patient. I know you've been waiting for like 2030 minutes on stage. How are you, man? Yeah, good, thanks. How are you? Good, man. Good thoughts on the discussion. Sorry, I go again. Force on it. Your mic is echoey, by the way.

Handling Technical Issues

Yeah, just 1 second. Cool. We're gonna have. Mitch, I'm hearing myself double. You just turn off Bluetooth? Sorry about that, fellas. Just had to put another phone outside. Cool. Cool. Okay. You were listening on another spot. I can still hear myself double, man. Can you turn off Bluetooth?

Future Predictions Based on Political Outcomes

Okay. We need to put that as a rule. Make sure. Bit better. No, bro, I hear myself double. All right, 1 second. Cool. 30 seconds. While you're doing that. Just let me mute you for a second, Dave, I'm going to be selfish to ask you another self question to you and Jonathan. We've talked about bitcoin, but if you look at the risk on assets in crypto, if Kamala wins, is that so?

Market Sentiments Regarding Political Events

How bad is it for crypto? Do you think it could derail the bull market that we're all anticipating? Well, from our stock twits users, which we do have a very broad amount. Like most active. Most active what? I forget what our tagline is. The most active investor trader platform. People are not buying the. If Kamala switches, people aren't.

Market Reactions to Political Stances

People aren't buying it. And also there's a good chunk that are not buying it. Yeah, I just, I'm not buying it yet. Just want to be clear. Yeah. I think if she had a whole debate on it on Friday, if she does more, if she has taking action and some people kind of listed a few of these actions that she could take, if she starts taking action, then that could change their perception.

Stakeholders Perspective on Current Policies

But at least what we've seen so far, they don't think that she's really changed her mind. Correct. Yeah, but could you. Right, look, you need to bifurcate. There is a very real chance that the people who are advising is, you have to look, it's not crypto degens that are advised the crypto Harris movement.

Political Figures Influencing Crypto Outlook

It's Mark Cuban and Scaramucci, etcetera. You could easily see a soft pivot. I don't want to, I don't know what the right words for it are, where effectively they take their hands off of the spot markets in the US for a subset of centralized exchange traded stuff, and that's it. And still come down on Defi, still come down on self custody wallets, still come down on the ethos that is crypto.

Potential Consequences of Policy Changes

Now what does that mean? That means they wave the white flag and say, okay, all the fud we've been saying for years about bitcoin is bad. Bitcoin is okay as long as we can monitor it and control it. By the way, I'm not painting a rosy picture here. I just want to be clear. This is not me being devil's advocate.

Implications for the Future of Crypto

This is a very reasonable possibility to try to minimize the damage of crypto voters in the US. Basically back off Coinbase, back off Kraken, back off bitcoin, back off ethereum, and potentially back off Solana and some of the other ones. That is not great for crypto entrepreneurship in the US. It's actually pretty bad for it, but good for some of the assets.

The Global Landscape of Crypto Investments

It is not great for a lot of the projects and the things that you are invested in, care about in terms of us money, it just means it all goes and stays offshore. So it's a very complex thing to me. That is what a pivot is going to look like. I don't think it will ever go beyond that. Now, it may not even go that far, but that's the point.

Continuing Uncertainty in the Market

And we don't really know until we start seeing platforms from them and things that will take shape over there. And is that, in your opinion, is that enough to derail hitting all time highs again this year or next year? No. If we're talking bitcoin, not at all. If in fact, that kind of pivot happens, like I'm talking about where the anti crypto army is disbanded and they tell Warren to shut the f up and we're going to do this stuff.

Regulatory Changes and Market Behavior

But don't worry, Liz, we're not going to allow self custody wallets without lots of KYC and AML and all sorts of stuff that we'll want. That's not going to hurt bitcoin, but it will have repercussions in terms of the way the markets work, and there will be many, there's a lot of possibilities there, too many to unravel in a 32nd explanation.

Liquidity and Market Predictions

All I'm saying is, to me, that's the extent of what a crypto pivot could look like. And since we don't know if that's going to happen, it's really hard to prognosticate. Jonathan. I'll go with the. I'm smiling here because this is sometimes an unpopular thing to say, because some people view technical analysis as something fanciful.

Technical Perspectives on Market Trends

But from a time cycle perspective, I'll just say it doesn't matter. I'm a purist when it comes to technical. Well, it's a 98% pierce when it comes to technical analysis, that, like the news here, if you believe in the cycles and structures of how things move, it doesn't matter either way.

Market Sentiment on the Future

If you want something that is positive and Rosy, that's about as possible. Rosie, I can make it as that. It won't matter. Let me dig into the discussion on Zurich. Mitch, you back? Is your mic working? Yeah, mate. Sorry about that.

Addressing Technical Challenges

That's right, man. But the issue still there? Because I'm hearing myself double. Is that you tried using another phone? Yeah, I might have to. I'll try that. Sorry about that. That's right, man. What we could do is if you're free tomorrow, man, we'll just bring you back in tomorrow when this issue is fixed.

Upcoming Discussions and Collaborations

We'll probably get you a tech support to make sure that the mic does not echo, and we'll just do it again and have it prepped in advance. But yeah, for anyone that wants to check out Zurk, I'm going to quickly give it a quick shout out here since we have to reschedule them, but essentially it's zircon gemstones. I had a lot of questions for you guys.

Overview of Zircon Gemstones

Tokenized zircon gemstones. That's a very brief overview. They built on Polygon, and we're going to get into a discussion with them today as a sponsor of today's show. But obviously we're having technical difficulties, so we're going to be rescheduling them for tomorrow. We'll get Joe back up to get his thoughts on the discussion, and we can wrap it up, as I see Benjamin Cowan in the audience.

Past Experiences and Current Observations

Very well. We haven't had you here, Ben, but last time, I remember we spoke, you were talking about how you see another kind of complete carnage when it comes to altcoins. I think we talked about this months and months ago, and that carnage did happen. So you ended up being right, and I ended up losing a lot of money.

Future Predictions from Ben

So congrats, Ben. But Joe, I would love to get your thoughts on the discussion. And Simon, before we wrap up the show, Joe kind of glitched out as well. SIMon yeah, I was just going to say probably beyond the scope if you want to close your show off. But there was a story that hit the docket in the court, overdose weekend with the Celsius estate suing tether for 57,000 bitcoin.

Legal Issues in Cryptocurrency

So we can cover that on another show if you like. But I just want to, if you want to cover it, we can. Now, what was the issue? What was the story? Sorry. So the Celsius estate had a series of they're coming back for the collateral because there's a rule in bankruptcy code where all transactions that happened 90 days prior to the filing are subject to clawbacks and preferences.

Tether and Bankruptcy Insights

And what was happening is tether liquidated approximately 57,000 bitcoin from client money in order to unwind the loan. So obviously, Tether managed to walk away with a vast majority of the estate, which was a big reason for the loss that was locked in for creditors. And so there's a pretty interesting sequence of events, and it also ties in with the fact that the strategic reserve assets that the US is trying to use.

Strategic Impact of Legal Affairs

At the moment, 95,000 of them actually belong to Bitfinex shareholders, and obviously the DOJ is holding onto those at the same time as finding out what the settlement will between the Celsius estate, Bitfinex and Tether. So there's a massive bit of a circle jerk happening around that transaction, which we can cover, in other words.

Future Discussions on Tether and Celsius

Yeah, DB crypto just shared it above. I tweeted about it. My team did. I wasn't aware. Yeah, we could probably touch on that a bit tomorrow. Joe, you're on stage. How are you? Yes, good morning. Hope everyone's doing well. We are. I know you're covered, by the way.

Discussion on Market Dynamics

I want to speak to you because I know you were covering the whole the black Monday fear with Danish before we kicked off our space early on. So maybe getting your quick thoughts on this. We didn't get you on our stage. Getting your quick thoughts on this and the discussion today on whether you think the worst is behind us or not, and then we can wrap up the space.

Personal Reflections on Market Conditions

Yeah, personally, I do. I know that's not really the conventional wisdom. Some of the traders that I've talked to said significant positions were unwound, forcibly unwound. Right. It wasn't even unwound by choice by the market participants. The margin clerks were tapping them on the shoulder and saying, you have to sell.

Market Reactions to Unwinding Positions

And that's consistent with what we saw, right. A sharp down tick that was instantly bought with big institutions, heavy buying coming in right at the open. You know, look at the intraday action on the Nasdaq. You think you see that? So I think it's consistent with people taking advantage and playing games with leverage.

Leverage and Market Dynamics

And we know this in the crypto market, right. You had a ton of participants betting on the fact that the yen could only fall against the dollar. And guess what? Whenever someone says they can only do one thing, the market tends to move the other direction. It's swift, violent reaction.

Observations on Market Recovery

The good news is that we're several days later and you haven't heard about a major firm going under. You haven't heard that a hedge fund or even a minor one lost their shirt and were carried off the floor. That's good. That's bullish. The longer that goes on, the easier it is to unwind positions, the easier it is to pivot and react and to anticipate, barring some other rapid devaluation of the dollar against the yen, meaning the yen surging a repeat of that which would repeat the process all over again, I think you're out of the woods for the near term.

Implications of Interest Rate Changes

And I think that's why the market's been on a straight up rip. If the japanese central bank does raise rates again and they break their promise, how do you think the market would react? Could we see another round? Yeah, I mean, if that interest rate differential widens, right? I mean, it's.

Market Reactions to Global Economic Factors

If that happens, it's not going to be bullish. They're the lending currency of the world. I think they were presenting this incorrectly. They're presenting it like, well, this is the yen Kerry trade that gets unwound. And the reality is that it will always be put back on because the Japanese will have the lowest interest rates for the foreseeable future because of the construction of their bond market with majority of his own by the bank Japan.

Long-Term Market Predictions

And that's not going to change. This is 1020 years in the making and probably going to continue for the next ten to 20 years. And from my standpoint, I think people continue to look at this like a one off emergency event, when really it's par for the course. These periods of deleveraging come and go consistent with bullish trends.

Conclusion and Market Sentiment

And to me, I think that unless you see a firm actually face systemic risk of going under due to the trade, there's really nothing to worry about. I appreciate that, Joe. I think we've covered this topic enough. We went over time today, so I appreciate you all. We'll see you again tomorrow, same time. And for the Zurk guys, we'll get you on tomorrow with the mic working.