Crypto: The Wealth Machine with James from InvestAnswers

29:56I just saw a stat this morning that the German population, working age population between 20 and 55, is going to fall by 20 % over the next 10 years. People have no idea, well, Elon does, but the impact of that, Germany needs robots. fast. Everybody will need robots soon. And that's going to bring about radical changes as well. So crazy, crazy world. Hey, everyone. We're going to take another quick break and hear a word from our partners. We'll be right back.

30:29Yeah, I mean, it's very interesting because Japan has been public in their desire for robots for the same issue. China, same. Europe has been slow on the uptake, but Germany is building the TSMC plant there. Japan has a TSMC plant and the US is building three. Really interesting, I began watching mid-curve takes on Twitter. Elon had said GDP is obviously GDP per capita times capita. And everyone's like, fucking moron. Of course it is what he's trying to explain is that without capita people, you have no GDP. And with a shrinking global population, GDP growth collapses. So you have to solve that equation.

31:15And the only answer is the robots and the AI. Yep, exactly. And then that can lead to abundance. And a lot of people think, oh, we're all going to be rich and sit on the beach and have cocktails all the time. I don't see that future at all. I think the people that control the robots and control the big companies will just get richer. And those that don't will have to compete for a sub$10 an hour or a dollar an hour labor fees. I think it could be even more dystopian. We're seeing some of the moves in that direction as well with UBI and handouts and everything else. How do you view that world? Is it terrifying?

31:53I'm terrified. No, I've actually got the opposite. Because the current narrative is the robots are taking our jobs. When the narrative is so strong, like you, I start to explore what is the other narrative? Because this is an obvious narrative. Of course, it's going to take jobs. You know, I'm building a RAL AI, which is going to be a video version of me. Can that take my job? In some respects, yes. But when I think through this, I think through what is the essence of what humans are? How do we add value to each other? actually you had zero economic value for me because you've built you've made my can of la croix that's not your economic value that is economic value the economic value you give to me is i watch you on your youtube channel and i'll learn something from you right discussion humans are social creatures we like to communicate with each other and be around each other and we like experiences.

32:55And somebody floored me, David Matten, who I write The Exponentialist with, floored me with this comment. He's like, ask any kid what they want to do for a living. And it's not you and I, which was, oh, we want to be a banker or an astronaut or a marine biologist, which I wanted. I want to be an influencer. And at first, you and I of the age, we'd roll our eyes and go, really? But there again, you and I are both doing that as part of what we do. But David said, you've got to understand they're adaptive. Humans are incredibly adaptive. And if our job in the future is to entertain other humans, then they're making the right life choice right now.

33:38If that is the thing, and then when we add Web3 and the ability to tokenize these communities and culture, then it actually creates an economic system in its own right based around humans. Somebody else raised an interesting point to me, so I'm dumping a load of info on you. Somebody else raised a really interesting point. They said, obviously, OnlyFans will be AI, but you'll pay a premium for human OnlyFans. And that at a macro level also becomes interesting a fun story by the way i didn't know what of meant yesterday and i found out because something blew up on twitter so i had no idea what that whole world was but yeah well i've um people go yeah yeah i've never even been down that rabbit hole but i understand what it is but the point being is obviously that all of porn will go to ai because it's cheaper and easier to do and you don't have lawsuits and anything else but humans are still humans so for example prostitution will always survive but i see when i look at other cultures around the world take japan take china etc obviously there's negative birth rates but people are more interested in their video games and talking to ai and robots which already exist in that part of the world than having human interactions having a girlfriend or boyfriend or whatever else.

35:03So I still think the more technology - Humans are complicated, right? Any of us who've been married know how complicated humans are, and it's a difficult world. And so an AI doesn't give you that complexity. It's like having a dog. Dogs are always nice to you. They never tell you off. They never get disappointed. They're just nice. And so I kind of get that why some people just want to deal with the AI because you don't have to deal with the realities but people but other people do want to be around humans or at least interact in some way whether it's over minecraft or something else yeah that's again one of the things that startles me the most is the pace of evolution of the changes that are happening and i don't think the world is ready for that they are not aware and they think yeah Like I heard somebody on a channel saying, yeah, Tesla will nail FSD in 15 years.

36:01That's when RoboTax will come. And this is a Wall Street analyst. You know what I mean? It's like beyond clueless. But anyway, let's get back to crypto because that's what people really want to learn now. And one of the things that I'm fascinated about is these ETFs. I monitor them daily. I monitor the flows. and I know people always ask me, they think it's bad for the space and I think money coming into space is good for the space because it raises the price. That helps everybody. But do you believe there are games happening behind the scenes with these ETFs? Market maker manipulation. Do all these ETFs have the fully stacked wallets?

36:43Do they wait a week to buy them on a dip, etc.? Because I did an analysis of this and there's at least four big instances where flows did not match price in a big way. Yeah, there are ways that they're doing order flows that don't mean open market buying. So there's ways around it. I know most of the people who have built these ETF businesses, they're straight as a fucking die. And they're in the mission. Is there manipulation? There is, having been at the epicenter of the financial system, there's always somebody trying to make a price and take a price. There is no grand master plan for manipulation.

37:25You know, wait till the options come on these things and then it becomes more complicated. The more participants there are, the more complicated that world becomes. So I think it like you, it's a net positive. I think it's hilarious because at one level, I think the SEC and the authorities and the financial system think, well, we're going to control most of these assets and we can use our usual channels so we can maintain our fee structure and our control. How I think of it is it's a Trojan horse, because before you know it, you buy Bitcoin, then you're seeing that Solana is going up more. You end up opening a Coinbase account before you know it, you're self-custaining your Solana and aping into WIF.

38:09That's the journey. We've seen them all do it. We've seen them all do it. They'll start with a Bitcoin ETF. and before you know it, they've got a bag full of whiff in their phantom wallet and their worlds will have changed. So I think of it as a Trojan horse. They think they've won control. I think they've actually lost control. Yeah, that's so sweet. And can you believe the week we've just had? And I've been saying for probably a year and a half now that crypto will become part of the agenda for this election coming up. And boy, we saw four huge things happening in a few days. sab well what's the other one fit cbdc barring that and then the eth approval i mean it just shows you somebody made a decision at the highest level and i say just you know or politicians want to get re-elected how do you view all of this it's bonkers what happened i think it's very simple the left is utterly terrified of Trump.

39:10And Trump made a move and they could see it resonated. And they're like, well, the only way of equaling the playing field, what we can't do... Somebody said this, and it's a really important point. When Elizabeth Warren said, we're going to build an anti-crypto army, they're going up against a group of 25 to 45-year-olds who are distributed across the internet, whose entire passion is this one thing that makes them get wealthier and you're standing in their way and these guys know how to use the internet and means. Good fucking luck to try and stop that. I go one step further. To get wealthier?

39:49No. For some, it's the only escape. I 100 % agree. 100 % agree. So I think Trump caught that narrative because he happened to have those NFTs. I think Ryan Selkins and a few others kind of explained very clearly is like, there's 100 million Coinbase accounts, 10 million are active. It will go up to 40 million in 2025 in the normal bull market. Those are voters and you're going to tell them you're not going to allow them to have a chance to get ahead, as you say, or even escape any of this trap that we've all created. And I think they've gone, fuck. And it's so funny. In the land of the free, you can't deny choice.

40:32And then you have Warren who earns, what,$280 ,000 a year, and she's got$70 million in her bank account, which is probably funded by brown envelopes, allegedly. I don't know. How do you make$70 million in 10 years earning a salary? Question for you. I mean, look, the U.S. political system stinks. I mean, the U.K., for all of its flaws, and it is flawed, doesn't have this level of corporate corruption at the highest level. Europe doesn't have it. It has different. It has bureaucratic corruption. You know, different countries have different styles of corruption. The US kleptocracy between politicians and corporations is disgusting and everybody knows it.

41:18And, you know, RFK is going to try and run on this. They'll try and stamp him out, obviously. Oh, yeah. He has no shot. But also, if you look at the three of them, he's the least worst. I agree, but you could go up against the medical, the pharmaceutical industry, go up against the food industry, go up against the fossil fuel industry, go up against any of these, and then try the finance industry as well. And you've got a bullet to your head. Yeah, that is interesting what you mentioned there regarding how the Dems, I think, Trump said he'd take crypto donations within an hour. The Biden administration said the same thing.

42:00Trump said he'd tariff EVs from China. Biden did it, kind of preemptive strike. And so many more examples of this, I think, it just shows you exactly what's going on. Back to crypto, you mentioned your 90 % salt. What did you think of the ETH ETF? Yes. Like, you know, it was going to be a buy the rumor, sell the news. All the action popped in that 24 hour spike and then it's kind of plateaued off. A lot of people think, oh, my ETH is going to go to 8000. I'm not sure I see that happening because it will be that GBTC 2.0 event where all the ETH will be dumped out of the speculation vehicle, which is grayscale.

42:42How do you see the future of this at all? On a long-term basis, number go up. So I'm not fussed about that. The path is interesting. I think it's going to be defined by how BlackRock define Ethereum. You and I have been in space for too long. We know what Ethereum is to us. We know what it is. We know how it positions versus other smart contracts. We know the breadth and depth of the Ethereum ecosystem and how good it is. you know we know it's failures but here's a bunch of people coming into the space call them rias and they need a sales pitch and they've been given here's a cryptocurrency it's bitcoin it's kind of your life raft it's digital gold okay they bought that so blackrock are not stupid they have no interest in going to sell oh here's another cryptocurrency which would fail so i'm really interested in the narrative they craft because this has a i think has a potential to change the entire crypto space that's how big this etf is and not necessarily from a flows perspective i'm sure it'll be fine over time but more from what is the narrative of the space and my guess is we're going to build the world on top yeah we're going to tokenize the world and Ethereum is the platform to do it.

44:06And if they sell that, and we know the finance, every single investment bank has been building teams internally for years and years. ETH now gets regulatory clarity. There's going to be a raft of product coming out of finance. And Larry is clever enough to know that his existing system is archaic and it needs a revolution to spice it up. And the world will be tokenized. There's no doubt about that. And he sees that. The question is, when you actually use Ethereum, like I've dug up an old phantom mullet, I still couldn't get stuff to work. It is absolutely painful. I haven't used Ethereum since 2021 when you compare it to the alternative, which will remain nameless.

44:50Do you think the Finkster will see a better, cheaper, faster solution with Solana? I think they will look at it in a different way. Safety first. You and me. Yeah, it's not you and me moving tokens around how quick and easy it is and how the Solana experience work. And Solana and Firedancer, okay, that's also going to play into the financial system. But let's just talk about ETH. It's the settlement layer that interests them the most. And the fact that you can then build layer twos. So here's something really interesting. Most people don't realize. I was in Switzerland speaking to one of the investors in the asset management company.

45:27and she works for, she's one of the senior traders for Louis Dreyfus, the commodity trading house. She trades ags, soft commodities. And I'm like, well, you're investing off my fund. I'm surprised you guys don't use it internally, like stable coins internally, because you've got operations in Angola and wherever, everywhere in the world, and you need to move money around. She goes, yeah, we do some of that stuff. But all of the agricultural commodity trading houses, built a blockchain on top of Ethereum three years, four years ago. I'm like, what? She goes, oh yeah, all our letters of credit, our shipping, our quality standards, you know, this is this crop and this, all of that.

46:07It's already on blockchain. We use this instant efficiency. I'm like, huh. So if you think about that, what you've got is the settlement layer, the database, the super secure database that is E. The speed and everything of that bit, we've kind of proven with the layer twos or layer threes, doesn't matter as long as the settlement layer is there. And they can wait 15 minutes compared to the previous one. Compared to the finance system. Yeah, T plus two. Yeah, T plus two at best, you know. So I think for them, it's actually perfect. And what we find confusing with the endless layers will make total sense to them because they can create their own layer, settlement layer for equities, let's call it, and it can settle at the ETH layer.

46:58Okay, that's a big fucking deal. And when they're moving large amounts of money, it's important. Security comes first. Time and speed, et cetera, secondary. You have to be, and security from state attack, you know, this is big boys games if you're going to settle the entire financial markets on it. so you know you can't have something that has just a small number of validators or number of nodes it has to be broadly spread and it has to be super resilient to attack because you're playing the game of nations here so i do think even talking to you just clarifying in my head that there is no other choice yet now that doesn't mean and tolia has talked about this that you can't use different protocols for different things.

47:44Let's say you use Firedancer for the execution layer, and it can settle into the theorem as the settlement layer. These kind of things will happen too. And I think it'll get more and more interesting as we go. So, well, then that begs the question, why 90 % solve if ETH is so wonderful? Or does the consumer chain matter with onboarding a billion users first? That's where the action will be. listen I'm even easier than that things that are earlier in the adoption curve but with proven adoption go up faster in price I literally don't care whether it's Solana or some new thing but it has to be at this point in the adoption curve there was Solana, Avalanche Luna and Polygon that were the four forerunners one went to zero and Solana rose fastest out of the ashes like you, I was buying in June 2022 and really went max long as we went.

48:45So I saw the network effects were superior early. And I said, this is probably the bet, like Ethereum was in the last cycle. And then I'm a simpleton. I just used the charts and look at the ETH Bitcoin cross, the ETH Solana cross. And Solana was breaking out. I'm like, okay, No, that's as simple as that. So it's not, I leave the narrative as something I can discuss and debate, but really the proof is in the simple, simplest of metrics. And we will see in this cycle, a bunch, three, four new protocols, new layer ones that will do really well and outperform Sol. They will all go down 99 % or 98 % or 97 % in the next cycle, and one of those will be anointed too.

49:38We've seen this with memes. Doge has survived. And out of these memes that are around now, whether it's Pepe or whether it's Whiff or whatever, Bonk or whatever it is, one of these will be crowned the survivor for the next time around. And so I just observe these kinds of patterns. Yeah, it's funny because when I take into account things like the Lindy effect, that doesn't really apply to crypto. Certain things do stand the test of time, but they don't grow. Certain things stand the test of time and hang tough. And certain things just get killed over the cycle. So here's how I think about those.

50:18When I look at using Metcalfe's law in crypto, it's a two-sided equation. One is the kind of number of active users, call it that. And the other is amount of activity on the network, which I think you can capture by value exchange in dollar terms, right? And those two seem to explain most price. And price is pretty much correct in crypto. So when you think about Doge, it is a one-sided ecosystem. It is just retail investors and a whale called Elon Musk that holds$3 billion of it. And it's maintained its value because people have stayed with the meme. because it made people wealth, real wealth.

50:58And they stick with it. They're loyal to it. Now, if Elon uses it for X, which I think he will, well, you're going to create an extreme jump in value from this thing at some point. Many of them that die lose the retail investor because they don't have an actual community. Gidano, I know we're going to get hated for saying this, Gidano is more held by retail community. but they're loyal to it, which is why it maintains its value, even though the applications haven't scaled in the way that the community would have liked it to have been. And it's true with many of these ecosystems. It's the ones that fail to actually keep the retail or fail to get...

51:42XRP is another interesting one because it actually has quite a few applications, but there are lots of small microtransactions. So it doesn't create as much value, but there's a lot of retail and it kind of balances it out. So I just think of them really simply in these terms but but you wouldn't own xrp the eight years of perpetual inflation i i don't understand that at all i i have owned i bought xrp in december 20 when it got delisted because when something gets delisted and pukes so much i was like you know there's real network activity but i'm not going to own it based on my thesis you know yeah i've got some in my wallet that's left over, but it's not a position, you know, because it doesn't have the provable network growth.

52:28Now, good luck to them if they manage to do it. Fabulous for them. I'll be an investor. But until it's proven, I won't be. Okay. So when it comes to money printing, we're nearly at 35 trillion of US debt. And China has fired their printers into high gear. And I love one of your charts. I can't remember what it's called, but it's direct correlation between kind of assets, risk assets and global liquidity. That's probably, I think, you should trademark that. Where are you now with that? Because - You're not supposed to be answering me all the questions, but I have just put you, for you over the weekend, this will come out probably the following week, I've just done a two and a half hour video on this.

53:11It's like the biggest macro piece I've ever put together. It's myself and Julian Bettle lay this whole thing. But, you know, liquidity is coming. Liquidity is the key driver of all kind of scarcer assets. So equities, real estate, whatever it may be. And so all I see is liquidity from every angle about to happen. You know, if you step back and say, okay, at a macro level, the central banks are all withdrawing liquidity, which is bad for assets. And we all took it on the chin as they all came down. Great. And then what happened? Firstly, the US regional banks blew up. ETFB, yeah. So that's telling you there's not enough dollars in the US system.

53:59The liquidity was too tight. Next, Credit Suisse blows up. Oh, that tells you the banking system, globally, the Eurodollar market is starved of dollars. Next, dollar yen blows up. Oh, fuck. Okay. That's the whole Asian economy doesn't have enough dollars. and it's 87 % of world trade is in dollars. And now China is trying to figure its shit out because it's going to have to devalue its currency, which nobody wants. Next minute, Yellen is there twice in three months. So there is a dollar injection of liquidity that has to happen because the system is telling you that there's not enough dollars in the system.

54:34There's always a dollar shortage in this world. Then we've got a US election where they will hand out candy to the kids in whichever format. We've got a Basel IV banking agreement that comes into place, which forces the banks to hold more bonds. That's January for Europe, July for the US and the UK. We've got Janet Yellen having fully loaded up the Treasury General account. We'll now get a checkbook out and start spraying out the checks into the election. We got that withdrawal. The Fed, meanwhile, had played ball and said, well, we won't do quantitative tightening as much. We want to let the quidditch.

55:14So it's all coming. So it's the macro crypto summer thing. What are you most bullish about? What has got your attention? You've got your positions, your core positions, but what is driving your focus? So really, it's my huge focus right now for this year. So what I like to do is pack the bags hard and the bear. billions made in the bear um during the i go i go from total yolo risk on person you know late 2022 early 2023 now we're in this weird time 2024 where we're midway through the bull market now it's time to be much more conservative my entire focus is we're working on some new models because we do a lot of model building.

56:04So I'm very big on TA for timing exits and entries and risk management. And right now the focus is on, I don't call it profit-taking, but it's kind of layering out and rotation at the same time. So taking profits from asset X that I've done crazily well. So my biggest position, nearly half of what I have, is driven by options and microstrategy. So I made the decision not to buy spot Bitcoin, but to do synthetic longs and microstrategy when it was like - Talk me through your microstrategy theory, because some people understand this, others don't. Talk to you through why you think it's an endless money machine.

56:48Well, the simple way, you like to break it down. There's a lot more mechanics to it. But if you imagine a stock, a stock is a function of the future price, future earnings expectations. All right. Now, in the bull market, Bitcoin's going up, which means that the new FASB rules, etc., it's going to realize much more profit, much more value. And as it gets indexed, it has to be purchased more and more. And it just got out of the MSCI. Well, at the end of this month, in fact, in six days, it's going to be added. And then you're going to get that perpetual bid. And then you've got Sailor, the D-Gen, stacking all he can, borrowing money for six, seven years.

57:32at 0 % to buy Bitcoin, making the asset harder, making the price go up. It's like a self-fulfilling prophecy. What's really interesting, though, is it'll go up in a bull market, but it'll be crucified in a bear. That's just the reality. So this is why the timing is so, so important. But considering just the simple way to think about MicroStrategy is the assets that it holds will go up as the price of Bitcoin goes up, which means the company becomes more valuable, which means it has to be purchased more. And when it gets out of the S &P 500, that's a complete game changer. Why does it outperform Bitcoin?

58:12Yeah, it's completely outperforming. So I have ARB models that, if you look at it on a trend line, as it gets bigger, it gets bid more. And I know there was one or two hedge funds that went short. One of them got killed doing it. Another one was probably about to get killed doing it. it's hard to explain, but think of it as a multiple. So you can take MicroStrategy in the bear. It has a market gap less than what it held in Bitcoin. That's when you buy like crazy. Then the multiples have become sometimes nearly 1.7x. I guess it's because it's discounting the future ability to purchase Bitcoin. So it's like an option.

58:56It's like Bitcoin plus an option on the future of Bitcoin. Absolutely. That would be the way to look at it, right? Yeah. Yep. It's also an easy on-ramp for many. Like I know people in the UK, for example, they can't buy Bitcoin, but you know what they can buy? MicroStrategy. This guy sent me a picture from the UK from a bus stop, and he watches my channel. He's an old guy. He thought he'd never had a shot at retirement to 65, 66 years of age. Him and his wife, he YOLO'd, put everything he had, like 20 ,000 pounds into MicroStrategy at the bottom. Now his life has changed. And he had the on-ramp to do it.

59:34He didn't have the on-ramp to buy Bitcoin, didn't even know where to begin. And that is the difference. That's like, you see the GSAL premium on Grayscale, 500%. Why is that? It's an easy on-ramp. It's like people buying gold in China at a 30 % to 40 % premium. Why? They need it. They expect maybe war with Taiwan, et cetera. I mean, all these factors there's many factors and it's complicated but uh and so when you're looking at options are you looking at long-term options or do you do shorter how do you structure these kind of bets i do leaps so uh what i do uh because i have a lot of margin uh i'm in a position to sell a lot of puts and i use that to buy a lot of calls so it's that simple synthetic long and uh And I keep a very big mattress because that can wreck you.

1:00:25And you sell short-dated puts against long-dated calls? No. The magic there is I sell out-of-the-money calls against the synthetic long. I let the putt expire worthless, long-term capital gains. I hold the call, convert that to equity down the line, and then I get more margin to play with. That's my infinite money glitch. And again, it's a super risky strategy if you don't know what you're doing. but if you crack the magic sauce, it's very special. What else are you trading around in the Solana? You said you've got other bets in Solana. You obviously own Solana, your main crypto bet. What else have you got that's interesting there for you?

1:01:06Well, you can guess one of them. It's Nasana and Render. The AI plays. Nasana is a very interesting project, and I got into that when it was a very low cap. I can't remember. It was like$50 million or something. and I'd analyzed all the others that are pumped by pumpers, all garbage, but this one has real legs. I also, this is going to sound very bad and I hope I don't offend people that are against gambling, but the whole gaming space is super interesting and there's two, there's one, one that I actually use and I own called SCS, Salona Casino, and the other one, Divi, coming out, I just voted for in Jupiter yesterday?

1:01:49Like between those two, if you look at the, everything's going to the blockchain, okay? And humans be humans, which means they're DGNs. And gaming, sports gaming, betting on the Eurovision Song Contest. I mean, people will bet on anything. Formula One, rugby, you know, America's Cup. And now you've got these blockchain platforms that have everything on them and you can bet frictionlessly and you know the house is rigged against you because it's somewhat transparent. You can watch everything in real time. So I think gaming is a big one and DEXs. They're my big place. I do not, I did mention I'm conservative.

1:02:30I don't dabble in NFTs. I don't dabble in meme coins, although I do own some bonk, which I got from the phone, but it's a crumb. But it was funny. It is a crumb that not too long ago, I looked at the value of the wallet on the phone. It's like you get over$2 ,000 worth of free gear for a phone that costs 500 bucks. It's bonkers. So it's a crazy world. And it's also fun. So I do enjoy sharing what I see and analyzing cryptos and identifying winners, hopefully early. And I think we've got a long way to go for this bull run. Well, at least call it eight months to 12 months at least. So that's my final question for you.

1:03:14Yeah, we've got time to run, non-specific. I'm not going to ask you a stupid question of what date and whatever. We don't know what price, doesn't matter. How are you thinking about the end of the cycle? Because this is the one thing I had to put a whole piece out on this to help people think it through. I went through the last cycle and didn't sell anything because I didn't want to. I just wanted to buy, to add, to compound. I've done that twice and I've sold out one cycle in the middle. So yeah, so I've traded different ways. How are you thinking about it for the end of this cycle for you? You're taking lifestyle chips off, you're staying in, you're standing by the sidelines.

1:03:54Give me your rough thesis. So this is probably the most important question today. First of all, to be a successful investor, you never want to make the same mistake twice. I was caught out last time around. My target for Bitcoin was$89K. I'd actually exited out of things like Matic and stuff. Kind of got a lot of the exits right, but not Bitcoin, not Solana. I was not aware of the shenanigans that were happening behind the scenes until it was too late. And that was the problem. However, I was in a position to have cash to deploy at the bottom. So waited, waited, nibbled, nibbled. And then when things really bottomed hard, went in hard with a lot.

1:04:38That's where I could use my, like when you've got a big mattress of leverage, you can do things which work creatively with that on a proxy like MicroStrategy than you can by buying SpotBitcoin. That was my decision, which I published as well. The interesting thing about this cycle, which has me confused. First of all, I didn't want to make the same mistake twice. So I made a conscious decision to invest more than seven digits in a team of developers to build tools that will help us identify the tops. That was, first of all, I do not want to miss this top. Second, we're building right now a set of profit-taking rotation optimization models, which are going to be critical to scale out.

1:05:21And the very interesting thing, when you do the math of this, imagine you sell 20 % of your bag, layers going up to what is your top price target. if even if you take 20 % of your bag off or 20 % of the dollar value off, at the end of the day, you only leave between 11 % and 13 % on the table if you assume we reach all-time highs. Like the math behind profit-taking is fascinating. People want to try time the exact top. Okay, Bitcoin's going to 150. I'm going to sell it at 149. That is a losing strategy. Now, there is a wild card here, which also has my little brain perplexed. what happens if you get the perpetual bid and bitcoin etf does what gold gld did up for eight years even through a financial crisis what about that and i'll put that question back to you do you entertain that thesis yes i everybody has ptsd because the last cycle was stunted for whatever reason it started earlier more aggressive because of what happened the 2020 shenanigans and then the FTX, it was more stunted.

1:06:27That's what my view is. And it caught many of us by surprise. Would I have done anything different? No, I wouldn't have sold a penny anyway. So it was not in my thesis. I have a long-term thesis. Jeff Bezos is the richest man in the world, not because he fucking traded his stock. It's because he didn't trade his stock. I know it's antithetical for most people, but it is really the way to get rich is just do nothing. but we all live in the real world and we want to cash in some lifestyle chips and we want to you know make sure that we feel like we've achieved something out of all of the hard work that we put in um so my view is i'm just going to use time somewhere towards the end of this year i'll take a third off then i don't give a shit and then if we have a super cycle i'll take a another chunk off but i don't know what to do with that money i don't really need to do anything else So let's just sit in cash and wait for a bear market and hope it happens.

1:07:22God forbid if it doesn't happen, but at least I'll get some exposure. This is why, you know, if you can avoid trying to do too much, in seven years' time, you will thank yourself for not having done it. I've done both. I've sold out in 2017. The other thing is, let's say your$1 ,000 is now worth a million bucks and you sell out and you nail the high, you're within 20 % of the high, brilliant. Market collapses down 90%. You will not put your million dollars back in. You can't do it. Even though it's de-risked, nobody can do that. And so which case you will under allocate compared to what you would have had.

1:08:06It's weird. The psychology of investing, particularly when this is a high stakes game, we've all got lots of our net worth tied up in these bets. The psychology of investing is really hard. So, I don't know. We also build out models in the macro investing tool, GMI, everything else around the timing because we need to do it for the asset management firm to a certain extent. But me personally, I'm trying not to fret that noise, but just give people the tools to understand it themselves. Well, it's so funny. This perpetual bid thing, I'm obsessed with because it means we've got to change our on-chain analytics that drive a lot of the top indicators because everything is different right now at these ETFs.

1:08:47But we have the hardness. So Bitcoin has never been as hard, the 0.85 % inflation rate. We have demand. The 13Fs turned a lot of heads. I mean, I know for a fact there are state pension funds, there are police pension funds in San Francisco that are saying, hey, CalPERS, we need some of this Bitcoin stuff. You got Ray Dalio not in there yet. You got, what,$36,$37 trillion in sovereign wealth funds? You know these better than anybody else. They need to deploy. That, just that perpetual bid could keep this thing afloat. and there may not be a bear market. And if there is a bear market, maybe it's only a shallow bear, like a 40 % drawdown.

1:09:29I don't think the perpetual money machine overcomes cyclicality. Liquidity in, liquidity out. I don't think you can avoid it. So it's such a dominant force that if the Fed have to, and the other central banks have to reduce liquidity at the end of the cycle, which they almost always do, it will hit the assets. But the point being is, I don't believe they're going to gift us the chance yet again to buy an asset down 90 % and give us a 30 or 40x return every time we go back to the casino. I mean, it's hilarious the opportunity they've given us. And you've taken it, it's made enormous life-changing profit.

1:10:09That's my biggest fear is the damn thing goes down 40 % and we're all caught offside waiting for the last leg and we don't get it. That's a bigger fear. Yeah. And this is why I don't want to be trapped out of the market either. A lot of people fear getting trapped in the market. My fear is being trapped out of the market. This is the largest wealth generating machine humanity's ever been given. That's such an important point. There was one time in my life where I moved all to cash and that was December 2019. Only one time. Because I know, like you know, you've got to be in the market, never be out of the market.

1:10:46That's why a big part of my focus is that rotation piece. I do have one final question for you, though, if I may. The head of Goldman Sachs, I can't remember his name, came out this week. He said, no Fed rate cut in 2024. Now, I have a theory on this. Since Jerome Powell is a lifelong Republican, I think he wants to torch the Biden administration. What do you think? And also, they can't sell their bonds. They need to keep the rates high. How does your calculus work on this? and they're torching everything, commercial real estate, selling of vehicles. I mean, people's credit cards going through the roof.

1:11:23Firstly, for most of the liquidity formula, it matters not about rate cuts. Cast your mind back, 1994, the bond market blew up. Similar, not less extreme, but it was very extreme at the time. Everyone thought we're going to get a recession in 95, 96. We didn't, we skirted it. And what happened was the Fed cut once or twice, 25 basis points, 50 basis points, and then didn't do anything until 1998 in the Asian crisis. The NASDAQ went up 170 % in that period. You just need stability. You don't need... We have dot-com. We've got the same backdrop of AI and everything else. You don't need rate cuts.

1:12:14you need liquidity and you need stability. And even if liquidity stays the same, but you have stability, it gives people the ability to take risk. So I'm not worried about it. I don't think anybody knows how it plays out, but I know that Europe has to and will cut rates. The UK has to and will cut rates. China has to and will cut rates. And if they're not careful, the dollar's too strong. So the US has to do something about it. So the only answer is liquidity. And let's say by not doing something, they torch commercial real estate, which is going to happen anyway, right? It's a slow death or an instant death, whatever way.

1:12:52The answer is always more cowbell. So whatever happens, the answer will always be more liquidity, which is why this is the most lopsided, asymmetric, macro risk-taking environment in all history. Yeah. So the difference between you and I, I don't see the liquidity spigot being turned off because now it's a race to printing as much fiat as you possibly can. And the rest of the central banks will follow what China are doing. They've taken it into high gear. The West hasn't followed yet, but I think Europe will cut first and then they turn on the spigots. US is doing stealth spigoting and those that are close to the contention machine do very well, but it hasn't hit the retail pocket yet.

1:13:36and they may not the way they're doing it this time around. So I don't see them. With 35 trillion and high interest rates and inability to sell treasury bonds, they're going to have to somehow keep the rates high or else they're going to have to find a different buyer for the treasury bonds. Well, they can't because it means that to issue more treasuries because rates are too high. Yeah. That's never going to happen. Take it off the table. This is everyone's obsession with the death spiral. These people are not stupid. They know the game. You don't know the game they're playing. The game they're playing is we will keep this fucking game going forever because we have all the tricks up our sleeve.

1:14:12And once you've figured out the quantitative easing is printing up money, we'll change the bank regulations. And once you realize that we can't put the commercial real estate in our bank, we'll create an SPV and put the bad loans into it. Once you realize that they have all of the cards, but the one thing they're motivated by is they are politicians. They will not allow the debt spiral. and if you've got the world's reserve currency, you don't have to. So I really like bringing other podcasters onto the show, and the reason being is it's not all about their guests. It's about their journey too, because they're the ones who are absorbing all the knowledge of the conversations they're having, and he interviews people and makes his own presentations, and we get to hack his four years of learning journey by bringing him here, And that's why I've brought on a few podcasters, because they don't get interviewed a lot, but they're very useful because we're getting the distillation of their knowledge from what they've been talking to people about and bringing it here and sharing it.

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