The Bull Case vs. the Bear Case ft. Chris Burniske

31:14And then you can give yourself 50 % everything else. And if you buy the Bitcoin at the right time, if you buy Bitcoin around the 200 week simple moving average, basically never think about, never sell it, you know, and just hold it and have that as your anchor. Because then you're always long the industry. And then you can learn, you can be calm, you're long, you'll go up and down with the cycles. But you're calm and long. and then you learn and yeah you can add more juice to that portfolio if bitcoin's back at its 200 week and then you might look at the souls or the east or the suey's or whatever it might be right and you might add to that port portfolio but then when things are stretching you might take cash you know and use it to re-accumulate again when you see bitcoins near its 200 week or under distress And also I try to teach people this don't fuck this up idea, which is only have a small amount in the long tail.

32:14So if you use that barbell, you're going to have 50 percent Bitcoin. You won't go wrong. You're going to have 10 percent where you're going to learn stuff and you're going to learn a lot of hard lessons. You might make one win and you might think you're a genius, but generally you'll learn hard lessons in the middle. Just again, don't take too much risk with that middle capital either. It's all right to go a little bit further out the risk curve, ETH, Solana, whatever. But don't go too far out because there's a lot of regret within that. But the minimum regret portfolio is that, as you said, majority Bitcoin, small tail, and then something sensible in the middle bucket that has potential decent growth, but no existential risk.

32:55Right. Yeah. And if you're anchored, if you're anchored to Bitcoin, I think it gives you a lot of kind of grounding within where we are each cycle. and your exposure and the feeling of, okay, well, things are at lows or things are at highs or whatever it might be. So hopefully people do that. And there are compliments to Bitcoin, like Zcash has been on a tear here. We'll come on to that one in a sec. I just want to finish up our conversation about where we are.

33:28So you're looking at the kind of structure, the feeling, the nuance of the market, and you're like, it doesn't trade great. Um, the things that don't add up and there's some sort of maybe reflexivity or memetic power around the four year cycle that causes people to cause this to happen because we've seen a bunch of OG selling because why wouldn't they, you know, they bought at$10 and they're selling at a hundred thousand dollars. It's a sort of a round number and they've always sold at this time of year and it's always worked. And then we had the structural break in markets in October that could have caused more damage than people yet see.

34:04um so we could be probabilistically speaking at a top point and people are some it's kind of 50-50 split right now it seems that people think it's topped and others think it hasn't yeah and it's you know it's not a it's not a euphoric top it's like a distribution top you know and the weird thing is your if we go back to your paranoia points which i think is a really nice one what's the paranoid opposite of your view is we have no new highs yeah in any highs gold going crazy liquidity coming our way you know there's a lot to suggest in january and not at the end of the year so those be my paranoia points for that view yeah yeah and i mean this is where i guess bitcoin did go is the one that went to new highs right in the in the second half this will be the first time in a cycle that none of the rest of the market did.

35:05And we have these first times as well, because last time, if you remember the bear market, it had never taken out the previous bull market high. And it did last time around. So there's always some nuance where some old rule is broken. And, you know, as I've pondered, Ethan Sol here, going back to their former highs, the way that I've come to think of it is the whole market is focused on fundamentals. And when I say fundamentals, I really mean it not in values, but I mean fundamentals of what are cash flows? What are buybacks? What is the supporting structure to the valuation of this asset? And so there's a fixation now on fundamentals.

35:49And that's, for example, why hype has done well. As an example, it has strong buybacks due to its profitability. And people have said, okay, well, that's destroying the long tail with the exception of names like hype that have fundamentals in their favor. But I think people aren't fully acknowledging that it's also hitting Ethan Sol and that Ethan Sol in 2021 were excused from fundamentals. And actually, if you look at ETH as a multiple of fees, it is much more expensive today than in 2021. You and I've talked about this in the past. I think layer ones are excused because of Metcalfe's law. It's not about the cash they generate at protocol level, but the amount of economic activity that happens on the network.

36:43And when I back out that, I find that it's much more consistent with how things are valued. When it comes to growing your crypto portfolio, your number one priority should be to use a platform you can trust. And that's why I recommend Gemini. It's one app that's secure, trusted, and has all the tools needed to buy crypto and build your portfolio. They've been around for 10 years and their commitment to keeping users safe gives confidence when investing. With Gemini, you can buy crypto in just a few tabs and then choose how you want to build your portfolio, whether it's staking Solana or ETH at 6 % APR, setting up recurring buys or trading with advanced tools.

37:19In addition, Gemini's Active Trader gives you professional grade tools like custom views, charts and alerts so you can trade and manage your portfolio all in one place. Terms apply. Signing up is free. Start investing today at Gemini.com forward slash real vision. I think that is, I think the verdict is still out here. I think like the Metcost law work that you've done is great. You know, I think it is interesting to still look at these things as a multiple of fees or REV. I think certainly for DeFi, the multiple of fees makes total sense. Really, what I think it will all come down to is what are these things yield?

38:00And I think that they end up looking like the staked assets end up looking like T-bills for these digital nations. And I think that their yield, like the yield markets will figure out the valuations, right? Based on true fees paid. Because I think we'll get out of some of this boom bust, which I think relates to some of the Metcalfe's law stuff of driving things over time. And we should, you know, especially with stable coin use, it should just become more consistent, right? And less boom bust. And so my expectation would be that, hey, if Ethereum is an older network, that's more widely used, okay, I'll tolerate, you know, 5 % yield on this thing staked, truly coming from transaction fees, not coming from inflation, Right.

38:58And if ETH is yielding me 5%, then I want a minimum of 7 % from Sol. Right. And if Sol is yielding me 7%, then I want a minimum of 9 % or something from Sui. And I think that the asset prices themselves will recalibrate, right, to accommodate that those yield levels. and so I think that's where this ends up it's the simplest kind of deduction down to what matters for the critical mass of people that hold the asset which which in all these cases are the stakers that makes sense it just feels like we're not there yet the market has an inability to provide investment I think we're getting there because and this is where if we are going into a bear market, I think there is a bit of a reckoning where already the long tail has been in a bear market, right?

39:53You could already say the long tail has been in a bear market basically since Q1 of 24. And so that's the cannery and the coal mine. I think that a lot of the valuation stuff is going to come for ETH and SOL and BNB and SUI and these names. And people are going to start to ask, the more high growth and the more anticipatory the gains of the asset, the more it will be excused from this exercise. But the more mature the asset, I think the more people will look at it as like a digital nation state T-bill. It's high growth, right? It's emerging markets. And also, the more you forgive them in the first cycle or earlier cycles, the more they get punished in the bear market, generally speaking.

40:38I mean, that's a pretty strong rule of thumb is you know a lot of things you know we saw it in ETH's first down cycle we saw Solana's first down cycle we've seen all these things they get obliterated in the first down cycle because there's not enough proof of the value of the protocol yet there's there's a hunch there's a forward extrapolation but not much proof so we then overshoot the other way um so I'm going to share some things with you in a sec I haven't told the producers but I'm going to share some charts just to check you through some of my views. So if we are in a bear market, what probability do you say, would you ascribe to, hey, look, I think we might be in the usual 12-month down cycle?

41:2170%, 70%, 65%, 70%. Okay, so you're pretty convinced of that. And in your working framework, do you think it's as deep as normal bear markets? No. Okay. Interesting. Yeah. And that's where I think it gets trickier here. So it's like, you know, if I look at Bitcoin and I got another screen here, but like if I look at Bitcoin, Bitcoin's 200 week is at 55K. Right. So that's kind of where I was first go to. And, you know, Bitcoin is really respected. It's 200 week in 2015, in 2019, in the COVID crash, we went beneath it a bit with FTX sales in 22 and 23. but 200 week has been a pretty good barometer.

42:08That is like the extreme level for me, right? Because at 55, you're 70 off of 125. You're 56 % down. Your favorite neighborhood spot grows with square. Indeed, my favorite neighborhood spot has quickly become Todd Snyder in Williamsburg. Todd Snyder is one of my favorite menswear shops and has supplied me with all the clothes I have needed this quite hot summer. Every business has different goals, but Square is the business platform that supports them all. From opening a new location, selling something new, or just expanding their reach. Indeed, I've seen it with Todd Snyder. In Square, also, you can get real-time insights, so don't wait for end-of-day reports.

42:52Go to square.com forward slash go forward slash realvision to learn more about how your business can grow with Square. That's S-Q-U-A-R-E dot com slash G-O slash R-E-A-L-B-I-S-I-O-N. That's a lot, lot less down, a lot less down than previous. You know, previous was about 80 percent. Before that was 85 percent, right? So you're way less down. And I can see something more like 50 percent down, which is 62 and a half. Okay. You know, I can even see 70, 75. Basically, you defend the tariff flows, right? Tariff flows, I think we're around 74, 75k for BTC. And then the risk curve is the lower the market cap, generally, the more they'll fall.

43:45Exactly. Long tail goes down 99%, as it often does. So a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030. I think you've got five years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now. Yeah. And so, you know, if we defend tariff flows, that's a 40 % drawdown. That's like hardly a bear market for crypto, right? Yeah. Don't forget in previous cycles, we've had like seven 30 % pullbacks. Yeah. you could still make an argument that we would still be in like a Bitcoin bowl, right?

44:24If we, if we bounce from that, that, that level. And again, what's frustrating with a lot of that stuff is like, whether you're bullish or bearish depends on your timeframe, right? You give me a 10 year timeframe, I'm bullish, right? You give me a tactical, you know, three to nine month opportunity from a month ago. And I turned a little cautious, not even what I would like categorizes oh chris is bearish you know so um yeah and then i'm gonna be really interested to see where eth bottoms where soul bottoms where a lot of these names bottom relative to their prior loss right um because it would also be a weird cycle chris because bitcoin dominance hasn't moved in the way that it normally has no it's like there's so many parts of this that would be confusing.

45:16Now, it doesn't mean, I mean, this time is different. One thing you're saying is the same as the four-year cycle, but most of the structure of it would be different, which is fine too. These things can happen. But I'm just, you know, that's another thing I would say is like, that would be weird. Well, here's what I'm prepared for. So, you know, do you remember how in 2021 people were calling Bitcoin like a pet rock and they were like, people were not we're not having Bitcoin as an asset because in 2021, Bitcoin basically 3X'd, right, from the 17 high to the 21 high. And from its bottom, it went 3K to about 60, 70K, so about 20X.

45:59So it basically did, for example, from the bare low to the high in 21, it basically did what hyperliquid did this cycle, if you nailed hyperliquid at the low and the top, right? just for a scale of like how much these returns have changed the cycle and why people are mad. But where I'm going with this is Bitcoin was unpopular in 2021. It actually traded beneath its 200 week in 22 and 23. And then it had a great cycle because it was so unfavorable, right? Or out of favor. Now it's so in favor, there is a world where it actually underperforms into the next cycle, where if it follows more of this logarithmic channel, the returns mute quite a bit, right?

46:45And people go too heavy into Bitcoin, this bear, because they're like, well, Bitcoin is the trade. And I still think, knowing all this, I still think if you're in crypto, you should have a very significant Bitcoin position. There's another probability we have to way up is that something goes horribly wrong with micro strategies and Bitcoin, Bitcoin underperforms ETH. Micro strategy and all the dots. And so I think there is a world where, you know, Bitcoin has gone from being the darling to being out of favor, the cyclist, the darling. There is a world for it to disappoint from the next bear into the next bull, not provide the type of returns that people expect.

47:28And those returns to come in a few other more unexpected crypto assets. So how my framework, the kind of one of my big lessons learned is every time I override a kind of macro framework with emotion is when I've kind of got it wrong really badly. 2009 was my worst year because of that. And so I've got this very robust framework called the Everything code. Again, probabilistic because I tell you what you say seriously, there's many other outcomes that can happen. But I got to this weird thing where I started realizing that the ISM, the business cycle, was a perfect four-year cycle until recently.

48:11I'm like, what the hell is going on here? What's gone wrong with this cycle? And the work that I'd done was this was all a four-year debt maturity cycle. And because of 2008, we had a debt jubilee and everybody forgave interest payments for four, five years. And what they did was restructure their debts. So this three to five years cycle, we got this perfect cycle. This is the Bitcoin halving cycle. This is the whole thing. And then suddenly it stopped. And I'm like, interesting, because I calculated this four year debt cycle. I think I was the person who discovered it. So I went back and recalculated.

48:48and what i found was in 2021 and two because rates went back down to zero they pushed it out another year so it got to about 5.4 years so i'm like okay so then when i put it back on a little sine wave you're like oh that sort of makes sense so we're still in the trough of the cycle which should be coming up with the business cycle growing because we've not had it grow.

49:15And then out of that, you know, I've obviously been using liquidity as the main driver of all of this to finance the debt. So here's the interest payments that come due. And here is the liquidity to match it. And this is total liquidity in the US. So that's the Fed net liquidity plus banks and M2. And so that's where the money has to come from to finance the debts. Okay, so makes sense. And then when you look at it, how I use it is financial conditions, which for us is the dollar rates and commodities, leads total liquidity by six months, which leads ISM by six months or three months. So you've got this nine-month lead of financial conditions, which suggests that liquidity should pick up and the business cycle picks up.

50:03So that's the framework we've been using. And it's very good. So I'm like, OK, this is interesting. It's persistent over time. So we know that the ISM, so liquidity is the main thing. The ISM is the driver of the economy and financial conditions give us the lead. When we detrend Bitcoin and put it against ISM, it's the same thing. so what it's telling us is bitcoin is subdued because of the business cycle and the reason the business cycle is subdued right now is because it's not the debt rollover year this year it's next year it's the next 12 months so it's like oh okay so the debt rollover year is the thing that makes the difference and then you look at the correlation between This is global liquidity, so we're assuming all countries do it.

50:57It's pretty closely correlated, and we've seen global liquidity picked up, and it's pulling back down. And that gives us an R-squared of 90 % and 97.5 % versus the NASDAQ. So it's like it's the most dominant macro factor in history, driven by the debt refinancing cycle, and the business cycle is a component of it. The business cycle has been lackluster for a number of reasons. And then when I look at this, this is US total liquidity against the crypto total market cap ex-Bitcoin. And basically, it's the same thing. Now, recently, we hooked lower because of this lack of liquidity. And this has been slightly overvalued.

51:44And every time we've got there, we've kind of caught up. and so the bet to me is if I extrapolate all of this away the question is is is liquidity going to have to rise because of this or not because if it is the correlation of liquidity is so high that I would be ignoring the biggest macro factor we've ever been given and nothing would work and then I go the other way I think about this is okay well the business cycle if scott besant talks all day about we need to get main street to have money and we've got stimulus coming in terms of fiscal and we need to get yeah main street catching up with where wall street's been that tells me the business cycle needs to go up earnings need to go up corporate earnings household earnings and not just the the you know the mag 7 so if they want to win the next election or the midterms this is the game to goose and you know what's interesting is scott scott beston's a macro guy so yeah that's what that's what's in my head um and i find it hard to walk away from all of that but i also see that the structure's not great and the markets are sloppy and all of the things that you say yeah um well it's your own paranoia right we we basically have opposite that's what i wanted to talk to you that's what i wanted to talk to because I can confirm my view to myself all day.

53:14Yeah, of course. But I need to hear the whispering voice in my head to say, no, Raoul, you're a moron. That's the most important voice. It wouldn't surprise me if you're right, but you're just a little early, you know, and it's the debt refinancing year is 2026, right? Well, it is. That's the point. So it's kind of, I can't see how we get a bear market unless all liquidity leaks into an AI bubble or something else. Well, that's what I'm, I guess that's what I mean is like, okay, crypto Twitter is so fast moving, right? And I know we both experienced this where like, there's a type of audience capture that comes from the impatience of crypto Twitter.

53:58And it's actually one of the things that like I've spending, I've been spending quite a bit less time on Twitter of late Because I'm like, this is actually not only is it unhealthy for me as a person, it's counterproductive to my investing ability because there's so much pressure when you appear to be wrong, even if it's just a duration thing. Right. And like I've had periods in my, for example, in 2021, I didn't venture. I didn't venture invest that much. It was a gangbuster year. I didn't underwrite that many things. I got a fair amount of pressure for, are you still in the market? You know, are you still relevant?

54:39Like there were questions from different places that I had to endure through 2021, even though it was ultimately the right thing to not be deploying that much capital in 2021. But that only became apparent by the end of 22. And so it took about two years, you know, and then by the end of that two year cycle, you know, let's say when I want to go buy soul, the people that were, you know, questioning me, let's say in 2021, then don't have the conviction to buy soul at the end of 22. Right. And so it's this type of thing. And I think crypto Twitter is the worst for it because anyone can comment on anything.

55:17And so there's pressure on kind of these longer duration views where you can ultimately be right. And it causes a type of buckling to that pressure, which is just counterproductive. Yeah, it's hard. Look, you know, you've had a lot of abuse. I get a lot of abuse endlessly from trying my best to actually help people. Just want to understand something. I'm guessing you have a bias in how you invest, that you'll take money off earlier, but you'll be earlier to pick bottoms because bottoms are easier than tops. and I've sensed that you've got that's your structural bias which is it's pretty good because it's very hard to do both well I mean I think I'm better at buying bottoms than I am selling tops as well they're hard so you would rather be early and take that stress off your mind than you would so you're very well noted um and you know there's a few structural biases you know one of uh a good friend of mine, actually two of them who are excellent traders, they just aim for the shoulders and above of bulls and the knees and below of bears.

56:30And it's like, it's good enough. You know, if you, if you exit, you know, ETH between four and 5k or 3 ,500 and 5k, that's good enough. If you were buying it between, you know, 1k and 2k type of thing and apply that to every other assets. So shoulders and above, knees and below. And then another one, Joel, actually, my partner at Placeholder, cued me into this. JP Morgan apparently was asked, how did you do so well in life? And he responded by selling too early. And that always just makes me chuckle because he had to he went through a lot of booms and busts right and i'm sure he was eating shit from the masses or different people who are like i'm making so much money how come you're not in this trade while he's taking profits and it was very boom bust in the equity markets right in the early 1900s but he's stacking cash while everyone's you know really ebullient and and proud of themselves such that then he has cash when times are not so good.

57:43And so it's kind of one of those simple things of like, I will feel it too. You know, like when ETH was ripping and Tom Lee announced his 20 billion at the market facility and, you know, that was late summer, right? That was a crazy time, very euphoric. Like I would argue that was a banana zone, right? and I had to step back and be like wow I feel really good people around me feel really good people on Twitter feel really good like that's just a time to be taking some profits um and you know of course if I share that people are going to be like you're an idiot why would you take profits here it's going to 20k but you just got to withstand that if you'd have looked at that liquidity chart would have told you the same thing which is liquidity wasn't going up fast enough for the market to accelerate.

58:33And we bumped. That was what you showed. That was that red bump, right? It stretched beyond liquidity. That's right. And the reason being is it was exactly then in July when the M2 chart decoupled, all of these charts decoupled. And we're looking at this thinking, what the fuck is going on? And we realized for us, the explanation is it was the TGA rebuild. Suddenly they started ramping up the rebuilding of the TGA, which was withdrawing liquidity and there was no reverse repo less to drain so suddenly it was a big event and then we had the government shutdown but that was you know your intuition was perfect within that because it got to the top of the range and there was no fuel to that fire so it just and nuked again as did um as did solana because it just if not we're just doing rotations we're just circle jerking all the way through crypto and you know that's what i'm trying to figure out right now is like is Zcash, which is a very clean narrative that I understand perfectly, but is the signal here this is just a rotational circle jerk within crypto again, or is this something meaningful?

59:37It's really hard to know. It is. It is. And, you know, I've been deeply involved within the Zcash community, so I have some bias here, right? I'm friends with Zuko. So, you know, I sat on Zcash Foundation, set up a grants board that I sat on for their first year. And so there's a lot of emotional affinity, let's say, that I have for this protocol. And like in 2016, when it launched, it was the most anticipated coin. Right. And it launched at a multiple of Bitcoin. And at that time, it was a better Bitcoin, which is the same narrative that's coming back now. I share all that because I'm biased.

1:00:20right um and and i am long zeke um and i do believe in the protocol that said so i'm i'm going to paint both stories and i'm going to paint what i think is going to happen zeke is ripping but so is dash and so is monero and so is decred so are a lot of these og privacy coins now zeke is ripping the most so we you know that's a difference it has done the best but all these privacy coins are ripping some of the like more kind of like um long-running bitcoin ogs so people that even predate me in the bitcoin industry have cued me into some things and and again i don't have the hard data on this but like that apparently you know some bitcoin whales will use some of these coins to you know anonymize their profits end of cycle um juice a bit more return Like there's all kinds of things that like you get whispers of that I don't participate or dig deeper on in this industry.

1:01:23But there's kind of that explanation for, well, why do all these privacy things run at the end of a cycle would be one explanation. The truth is we are not going to know until or if we get a bear market and we see where these assets bottom. And, you know, if Dash and Decred and Monero and these these privacy coins all go back to the bottom of their ranges, but Zeke holds materially higher, a materially higher low, that is very strong signal to me. So I think I think Zeke's 50 week moving average is at$50. And what happens, Chris, if your base hypothesis that the cycle is over for now or over and it keeps going?

1:02:08I mean, how do you deal with that? How do you deal with, look, you fundamentally believe that this could be a very big thing. And percentage market cap versus Bitcoin has to go up over time because privacy is going to become a larger deal. And I get all of that. How do you deal with that? Or do you just have to remain fundamentally long and just forget about it and extend your time horizon? Well, so I hope to buy more in that sell off if you get it. Yeah. So I would say, like, personally, I have an amount of Zcash. It's not astronomical, but it's an amount that I'm happy with that I will never sell.

1:02:50And I kind of treat it like an amount of Bitcoin that I will never sell. And the only way people did phenomenally well from Bitcoin being$1 or$10 or$100 or$200 is basically just being like, never sell, right? The hodl mentality. And so there is a portion of Zeke that I view that way. And then for me, when people ask, hey, what are you looking at, especially if there's an incoming bear, the opportunities of the next bear will be most obvious from the bottom of the next bear. And these assets reveal so much about themselves in where they bottom and how they bottom. right and for me like right now i look at zeke and i love that it's cleared its 2021 highs and it had a monthly close higher than anything it had in 2021 and so i think that is um a point in the right direction right of because right now you know i was talking with barry silver about this as we both were he was he was shilling both and you gotta listen to barry you know barry's a wise man he's annoying me right he's been telling me about zcash forever and i'm like i'll stop going on about it and then he calls me up and says see i told you i mean the one where barry really got me was a ethereum classic i remember i was at arc when ethereum had just forked and there was eth and this bastard child other asset and i had some otc desk calling me asking me about uh if i knew people that wanted to sell etc or sell etc and i it was the first i'd heard of the ticker i was like etc what's that and they're like oh it's a theorem classic and like everything was getting branded in real time and you know barry ended up creating a grayscale trust trust around the classic i think i don't know for sure but i think gemesis or maybe dcg took a position i don't know any of this for sure.

1:04:51But what I do know is because ARK was down the street from Barry is like, you know, I would say Barry was instrumental to making ETC a thing. And for me at the time, I was like, this is ridiculous. Why would anyone buy this like valueless asset? You know, like sell all of it you can. That was the view. That was the predominant view at the time. And here was, you know, someone else taking the opposite view and really kind of, you know, dreamed ETC into reality and it was extremely lucrative. So anyway, you know, I have a lot of respect for Barry. You do too. And yeah, Zeke is, um, so it has cleared its 2021 highs, which is important, but it's basically back at its 2017 highs.

1:05:34And it's, it's the reason I brought up Barry is it's been this like wildly volatile ranging asset, right? If you look at it over on a weekly or monthly basis. And so it's kind of this problem child where most crypto assets are value destructive. There's a very small set that are value creative, right? Or value constructive. And Zeke is kind of a Schrodinger asset right now, right? And we all, like anyone who's been in this industry for a long time knows that, you know, Zuko and his team are as hardcore cypherpunks as you could come by, Right. The their contributions to zero knowledge technology are above anyone else in the industry.

1:06:18Right. They've really been a bellwether of these things. There's all the exchange integrations, the lore, all these things that make Zeke a great asset. But it's still been a problem, a problem child in the markets. And so what I'm really watching for is even if it keeps going parabolic, you know, I don't trust that parabolic move. I wouldn't chase that parabolic move. And this is why I haven't been on Twitter being like, yeah, like Zeke, you know, because I don't want to be responsible for people then later, you know, being like, you told me to buy this thing in this parabolic move. It's because it's an unproven, it's an unproven narrative right now.

1:06:57As you say, the best thing is the retest of the low, but the retest in the bear market is the best. And that is what we're going to need. We're going to need to see where this thing bottoms, when this heat comes off. And, you know, if Dash is selling off, if Monero is selling off, if Decred is selling off, everything else is selling off. I really want to see, does it go to 50 or 60, which is where its 200 week is? Does it bottom at 100? I want to play the other scenario that my thesis is right. And 26 is a very strong year for crypto. And we have some correction. It corrects down to 250. Take a random number.

1:07:36stabilizes and then rips higher and ends up at a thousand by the the end of 26 do you do anything not do anything kick yourself or just hold your core position and say it is what it is i'm just gonna have to wait to to lean into it i'll make the decision based upon what bitcoin does so like and and this goes back to that anchoring of you know bitcoin needs the tides bitcoin needs to turn the tides and the tides need to turn around Bitcoin. Maybe a better analogy to use would be like there's these very large ocean flows, which are called thermohaline circulation. That's like macro, right? And then that comes in and that hits a reef pass.

1:08:18And that reef pass then creates current. That would be Bitcoin's flows within macro. And then there's all these nooks and eddies and corners to that reef of all the microstructure. And so you got to pay attention to the macro, pay attention to how Bitcoin changes within that. And then once I'm reasonably assured of Bitcoin having formed a bottom is when I get quite interested in, okay, where is everything else that's a really quality asset? Where is it priced? And what is the opportunity? Another thing I want to think about is we've had the liquidation. There's no real leverage left in this system but i think there are some risks still there's the dats that we've talked about a bit we don't really know how they behave in a bear market when they're trading at a big discount to um nav the other one is these kind of yield generating stable coins we saw a bit of what happens when they unpegged on finance yeah and we've seen the story before and i worry if i put the main players in this together, they've probably got like 18 billion.

1:09:25And basically, they're risk arbitrage hedge funds. But I don't see them as big in the market. So that concerns me. There's always a red flag to me. If somebody, in theory, has a lot of leverage or positioning, and it's not seen, that worries me. Yeah. And I've really started referring to those as like yield instruments more than stable coins. I think they're really interesting yield instruments. but I think it would be better for the industry if we thought of them as yield instruments, like stable-ish yield instruments, to imply the risk that's in them rather than stablecoins. Yeah, I think that makes sense.

1:10:00Final question for you. My thesis has been that we've had almost no inflows into VC, liquid hedge funds, etc. We've just seen ETF flows. And that's it. Why is that? I know we've had an AI boom, but why has crypto failed to attract the capital flows that it's normally had? You're normally fighting off new investors in VC, but most people aren't even raising funds right now. Yeah. Well, definitely like the bubble is in AI, right? So that's just sucked all the hot air out of the room, right? So I would start there. Which is good, probably. Yeah, I would say it's healthy, healthy in aggregate for for the industry.

1:10:53At the same time that we've talked about this oversupply of coins. Right. And so I would say the token industrial complex has come to an end. Right. Like people have kind of realized ways in which it works, ways in which it doesn't work. I would color myself as like optimistically naive at a point of time at a point in time. And I've had to basically disabuse myself of some of that naivete. Um, and now it's like the valuation gongs are ringing. Right. And so now everything needs to justify why it's valued the way it is. It's either, it's either, it's a combination of that with flows. Right. And, um, you know, I think flows are so key to any asset.

1:11:45And very simply, for example, I have this conversation with the Celestia team a lot. They need to get to a place, and as they've gone through their unlocks and everything, they're getting to a place, and especially if they reduce inflation, where they will have such little inflation, call it 25 basis points with proof of governance, that if there's a lot of demand for their data availability, they could turn their flows such that there's a structural bid, right? BNB has done phenomenal over cycles because it has a structural bid. Hype has a structural bid. Bitcoin and ETH have structural bids.

1:12:21And so like, I think it's going to be a lot of that kind of looking for the macro assets that have structural bids and pulling it back to VC. Like a lot of VC is underwriting the new ideas and the new things, right? Where there are structural flows against you, basically, when you launch those assets in the way that they have historically been launched. So then there's going back to the drawing board, right? Do you launch at much lower valuations, which I've always been an advocate of, right? Do you have like, you know, there's also a question of in this better regulatory environment, can you have 100 % of supply circulating from day one?

1:12:59You know, just rip the bandaid off. Like Solana famously did this at the end of 2020, December of 2020, Sol was trading down and then they had they unlocked something like 80 percent of their supply in one day. And then that from that point onwards is when Sol went on its crazy one year run from December of 2020 to 21 because you had true price discovery. I'm going I'm trying to connect a few dots here. But what I want to say in aggregate for venture is for crypto venture, I would say the form of crypto token venture that has has been, you know, performed and executed over the last decade or so is definitely under duress.

1:13:41And so I think people have to go back and look at that model. There's more funding of true companies, so companies that make money, say in the stablecoin sector, these kind of more mature, call it trad fi sectors. Or there's like playing at a much smaller, lower valuation scale. The other thing I want to say, though, is something, you know, a realization, a few realizations I've come to over the last year, let's say, is a lot of the distribution of blockchain technology is being hoovered up by big tech and big finance as we get regulatory and legislative clarity. And big tech and big finance have tens or hundreds of millions of users that they can funnel to these protocols.

1:14:27And so I think a lot of us were expecting there to be crypto native players that would provide distribution. And there are in the form of Coinbase. You could kind of say Robinhood is kind of more crypto fintech native than big finance as we know it. MetaMask, Phantom, those are interesting ones. But there's not that many distributors, right, with massive scale. And so now that distribution advantage is coming to big tech and big finance. And that's sucking out a lot of venture opportunity from the top of the funnel of crypto. Right. And you would kind of prefer to buy some of those names that are going to benefit.

1:15:08And then at the bottom of the stack are the Bitcoins or the East or the Souls or the Sueys or the Tia's. You pick your flavor. Right. And your risk and what you want. But it's a bit of a sandwich now. And everything in the middle is getting stripped of value because it doesn't have pricing power. The pricing power is with the distributors. And then the base layers are the ones that have like the aggregate demand, right? They kind of catch everything. And everything in the middle is getting squeezed. The other thing I would say, even when you look at DeFi assets, DeFi is so competitive, right? And global in nature, open source, that any bit of yield, extra yield that you give token holders, you are making, let's just take a borrow lend platform.

1:15:54Let's say you give extra yield to the token holders. That is showing up in the rates that the lenders are paid or the rates that the borrower pays and makes those rates less competitive. And so what I'm getting at is I wrote a piece a long time ago called Protocols as Minimum Viable Extractors. And this is starting to play out where the protocols are forced to be minimally extractive to the benefit of the consumer and to the benefit of the supplier. And to your point is, what is to stop? And we've just seen Robinhood make the investment in lighter, which is a perps exchange. And we're going to see this where people like Robinhood bring these and Coinbase bring these under their wing.

1:16:42Yeah. Because they have distribution. Yeah. Yeah. And Hyperliquid. Yeah. In crypto land, they've got decent distribution. But in Robinhood or Coinbase land, they've got nothing. Yeah. And so I think that that's tough for venture. Right. Because there's consolidation at the top and consolidation at the bottom. Do they not buy businesses from you? So if you've managed to find something early, you get into the$20 million valuation. Do they not end up buying the stuff for$100 million or$200 million as opposed to, you know, like Kobe's just done to Coinbase? Yeah. And, and, you know, there is some of that.

1:17:24And, and I saw Arthur Hayes is raising a fund that it looked like to me was a fund to buy distressed assets or something. Yeah. Growth state. Yeah. More mature. Not sure. Yeah. And so I wonder if that's what he's thinking, right? If he's going to, because there's a lot of companies that are kind of in this middle market that aren't making enough money that could be bought and rolled up for very cheaply. you know, a repackage for TradFi or whatever it might be, a type of like crypto specific private equity, you know, we could call it distressed private equity. So, but there's no doubt that, you know, the season has changed and the strategy has changed.

1:18:06And, you know, I find myself gravitating towards large positions in liquid winning crypto assets. You can get amazing multiples off of venture investments, but the cash on cash returns have always been biggest in the large liquids bought and sold at the right time. My thesis has been that for a long time is you actually make more money out of liquids if you get the timing decently right than you do out of VC and in a hyper concentrated period of time as well. Yeah. And so and the good thing about that is that opportunity is available to everyone. Right. But it goes back to the start of our conversation is like, you got to be comfortable doing the kind of boring thing, you know, and like BTC is really exciting for anyone that's like, you know, not a Zoomer millennial.

1:18:59Right. It's a high octane asset. Right. So like hold the high octane asset and hold some of its friends and let that value compound. um and then that that the great thing about that is the opportunities available to everyone i think what we will have left people we've given and you've given some amazing advice within all of this i still think they're going to have no idea how to deal with whether this is a top or not a top and and that's the thing is you and i don't know you and i don't know that's the nature of the beast we can talk about it all day the price is the arbiter and that's the hard part about all of this is you have to be grown up enough to realize that in the end, price will tell us how it plays out.

1:19:39It's the perfect scoring and it's hard. And if you can't stomach being wrong, then you've got your portfolio structured wrongly for your risk tolerance. And that's always the outcome. Like you say, hey, if I'm wrong and I see Bitcoin basing again after this correction and it does something differently, I'm prepared to change the probabilities. yeah and you put yourself in a position that you can do that you've got the the flexibility to do that a lot of people don't give themselves the flexibility to have a change of opinion right right and yeah there the key i think is always having some exposure to bitcoin and then raising cash and having that cash buffer come and go depending on the opportunity you see in the space and i've done both ways i've ridden full cycles the 2013 cycle i rode that all the way up and down um and then continued all the way through to 2017 then took money off it too early way too early when bitcoin was at 2000 it went up to 20 000 and then i didn't take any off last cycle and just added like crazy into the lows and that worked really well for me this time around and then this time around maybe i'll take some off but i certainly won't take most of it off because my time horizon is like this is the best wealth compounder and don't screw it up stay allocated to capitalism exactly all right my friend as ever fantastic conversation it's really good to see you and thank you for thank you for coming along this was excellent no profile so i do appreciate it i do yeah i haven't done an interview for a while i can't remember the last one I did, but when you asked, I was happy to do it.

1:21:19Amazing. All right, my friends. See you soon. Look, what a great conversation. Love talking to Chris always. I love having divergent views. You know, things get reduced on X to I'm right, you're wrong. That's not how the world works. The world works from nuance, understanding and discussion. So when we both get to explain our views, we both get to understand the differences. And the differences are, mine is more driven by data that I use. Chris is more driven by intuition from market feel, structure, and understanding. Now, that's not to say one version is right or another. Again, it's all about probabilities.

1:22:01But learning how to navigate it, that's the magic. The magic is not on a year-end forecast or a next-year forecast. It's how to navigate these times psychologically and within your portfolio itself. I hope you found it useful. See you next time. You obviously enjoyed the episode because you're here with me at the end. But listen, don't forget to go to realvision.com forward slash join and grab a free membership. It's an incredible community packed with alpha, great investment ideas, and the research that you need to help you unfuck your future. So get started now. Go to realvision.com forward slash join.