#983 - Crypto Momentum Dominates the Market | With Greg Weldon

0:00Hi, on the 5th and 6th of June 2024, I'll be speaking at the largest AI event in Asia, Super AI in Singapore at the iconic Marina Bay Sands. Alongside brilliant minds like Edward Snowden, Benedict Devin and Balaji Srinivasan, I'll be on a stage exploring the extraordinary potential of AI and the profound change it represents, not just for financial markets, but also for the world as we know it. With over 5 ,000 attendees and over 150 side events, Singapore will become a vibrant hub for a full week from the 3rd and 9th of June. Visit superai.com to register and join me with 20 % off tickets using the code realvision.

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0:56Welcome to Real Vision Daily Briefing. It's Wednesday, February 28, 2024. I'm Ash Bennington. Our main guest today is Greg Weldon, CEO of Weldon Financial. But first, a special segment to talk about price action in crypto with Raoul Pal, CEO and co-founder of Real Vision. Raoul, welcome. It's great to be here, and I'm sorry to steal Greg's thunder a little bit. Greg is one of my favorite people in the space, so you need more of Greg and less of me. But I just wanted to pop on because there's a lot going on. Be that as it may, Raoul, what do you make of these markets? RAOUL PAL, This is, I try to distill everything down to the idiot-proof version.

1:34And crypto goes through these cycles, crypto winter, crypto spring, and all of last year, I said we're in crypto spring. And we're just in the moment of transitioning to summer. It's a little bit early according to the calendar, but you can see it happening. And crypto summer usually leads to something I refer to as the banana zone, when everything goes a bit bananas. And that's what's happening now. Coinbase today went down because they'd stress tested their system for 10x the number of usual order flow. And Brian Armstrong posted today that they exceeded it today. Something woke up retail investors.

2:11If you remember, Coinbase has about 110 million accounts, of which about 10 million are currently active. So that's kind of still bear market kind of numbers. So as people become active, it's a lot of load and new people getting into the space. And by the way, an unfortunate, for those who don't know, an unfortunate side effect of this system issue that they had was folks went onto the app, they looked at their account, and they saw zero balances. Only in crypto, right? It's a total shit show, even at the best of times. It's all part of the fun. Suddenly, there's no money. Everyone's like, oh my god, what's happened?

2:46I even saw it posted internally on Slack. It's like, what the hell has happened to my crypto? RAOUL PAL, And the market gyrates. RAOUL PAL, Let's take a look at those charts while you're talking about this, Raoul. We've got Bitcoin, we've got Solana. RAOUL PAL, Yeah, so Bitcoin today at one point hit 64 ,000, 69 ,000, whatever is the all-time high. So the market has got that right in its sights, and it wants to get there as fast as possible now. And that tends to drag in more people. What's going on really here is what's known as reflexivity. It's a loop where they launch the ETF, BlackRock, and everybody go and solicit from their best accounts order flow.

3:24It launches, that order flow drives prices up because they're buying Bitcoin. The price is going up, causes the RAAs to go to their clients and go, oh, my God, the price is going up, you should buy Bitcoin. That leads to more buying of Bitcoin, Bitcoin's price goes up, and so on and so forth. In a relatively illiquid asset, it can create quite the fireworks. And that's the kind of loop we got going on here. The next one to join that loop, that reflexivity loop is going to be Ethereum. When the ETF is announced for that, we'll play the same game all over again with Ethereum. So it's driven just by really the RAEA flows.

4:05If you see the size of this ETF, I mean, it is huge. It's going in the first couple of months do more than the gold ETF did in its first year, which got to 10 billion. At this rate, it may even be larger than GLD. So in its first year alone. So let's see. There's no mania like a crypto mania. And we're starting. And it's early days yet. This will go well in. That's the chart of Solana as well, which I think Greg will love that. That nice little wedge pattern is the sort of thing that him and I will look for because stuff like this, when they break, that's just an acceleration point. It's had a huge run up, nice consolidation, chopped around, forms a wedge.

4:53Next part of that is generally into hyperspace. So the space itself is very bullish. You can pick up any chart in crypto right now, and they all look insanely bullish. That's the part of the cycle. I mean, it's crazy. It's February, end of Feb, and Ethereum is up 50%. I mean, that was what the NASDAQ did last year, which was an extraordinary year. So it is crazy in where we are. But that's the crypto market for you. My general view is we've got liquidity to come. Liquidity, whether China kicks it off because they've got a big mess going on. And so over time, as liquidity comes into the market, we've got the election coming up, that they tend to give out candy over the election, which is some sort of stimulus.

5:37Stimulus drive prices higher, higher prices bring in higher prices, and so it goes. So it's all started. Crypto summer is just kicking off. You can see spring just passing through now and get used to this. And don't forget, people will struggle. It's volatile. Don't use leverage. Don't FOMO. Don't do dumb shit. Just stick with it. Be careful. don't get overexcited uh you will have 35 pullbacks and they'll happen in a day and you'll think what the shit you know what the hell is going on so yeah just be careful out there as i always say don't fuck this up it's always a great opportunity um but approach with caution don't do dumb shit would be a perfect real vision t-shirt well listen all kidding aside uh we appreciate you shifting around our your schedule uh to be with us today to give us this update before we pull Greg into the conversation.

6:31Any final thoughts you'd like to leave folks with? No, just listen to Greg. He knows what he's doing. Well, that's a perfect segue, man. All right, guys, take care out there and don't fuck this up, as I said. All right. See you soon. Thanks for joining us, Raul. Hey, Greg, welcome to the show. Hey, Ash, what's going on? Great spot with Raul, my main man. Wow, it's really a pleasure to have you with us. And I should say you were listening to that. Any thoughts that you'd like to add to those points that Raoul made? Well, I mean, first of all, I moved to Florida, so it's summer all the time here.

7:05So crypto summer fits perfectly with what's going on here, spring training and whatnot. I would say a couple of points that he kind of touched upon are really interesting in the context of how this market is trading. And it is trading like some of the metals did in the early 80s. It's trading like a maturing market that hasn't yet reached a maturity stage where it actually trends. And you have these kind of pushes that is aided by the illiquidity still that exists there too. So I think it's been a market that's traded fairly, I hate to use this word, but somewhat predictably, it's very tight technically.

7:44Let's put it that way. So I think that you've been able to play the breakouts. and when he shows the chart of Solana, I mean, that is a great technical pattern. When you have these kind of ascending lower highs against a flat top, I actually call that the launching pad pattern because it leads to liftoff. So that's kind of what you've seen in some of these things. I would agree, too, that Ethereum, to me, makes a lot of sense kind of even longer term. I think that it has some of the benefits that don't necessarily apply in terms of Bitcoin for that longer-term growth. And frankly, it's held up very well relative to Bitcoin on a ratio basis pretty much until today.

8:25I would also point out that when you want to talk about RIAs and bringing the financial kind of investment world in, I mean, that was the goal five years ago. So here it is. You've got it. You've got what you wanted, and here it is. And of course, it's as exciting as you wanted it to be to the degree that at the same time, again, Again, you were outperforming the S &P 500 in Bitcoin by 118%. That's 1180 basis points, even more than that. It's 111.8 basis points in terms of the outperformance over the S &P over the last 52 weeks. Ethereum is in the same camp. It's outperforming gold. It's outperforming everything.

9:05So to that extent, we've been buying it as well, I think, on this show too, the last time it was on. So it's summer. We're riding the wave because I'm a surfer dude at heart. We're going to take a quick break and be right back with more of the day's top analysis on the Real Vision daily briefing. Join over 5 ,000 attendees for the largest AI event in Asia at Super AI Singapore, June 5th and 6th, 2024. Raoul Pal, Benedict Evans, Balaji Srinivasan, Edward Snowden, and over 150 others will join the industry's most influential to explore and unveil the next wave of transformative AI technologies. Singapore will become a vibrant AI hub for a week from June 3rd through June 9th with over 150 side events that will make for unparalleled networking opportunities.

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11:12Yeah, and by the way, not only outperforming the S &P 500, but outperforming the S &P 500 that trailing 12 months is up 28%. Yeah. Yeah, I mean, this is what's going to draw that investment crowd in. It kind of gives the impression that it is a viable hedge against some of the geopolitical risk, against some of the stock market risk, because let's not care ourselves. The stock market is detached as it's ever been from the underlying economic fundamental. And you can say the economy is strong and you can look at the GDP numbers, but I could rip the economy apart in many shreds from many different angles to where it is not as strong, I think, as it might appear on the surface and that there's the piper to be paid down the road for that in equities and how that relates back to the Fed and policy and the market got ahead of itself and the forward funds market.

12:01you know, holy mackerel, there's a lot going on there too. And of course, I'd have to throw in, you know, I don't know that this is a direct impact right now in terms of order flow. But in my mind, the fact that you have a lot of currencies in the world imploding right now, and the dollar is not rallying. So to me, this is kind of showing us the way that maybe Bitcoin becomes something that's a protection against a lot of this currency fluctuation in places where So the purchasing power of the currency is just absolutely getting decimated. It's the lengthening list of places. And I could talk for about six hours and listen to you unpack some of those points that you just made in the first five minutes of the show.

12:42Let me go back to something you said when you first started talking about Bitcoin, because I found it fascinating. You know, one of the reasons why we love having you on the show, Greg, is because of the experience that you have. You said something that was so interesting to me, comparing Bitcoin today in 2024 to the precious metals market developing in the 1980s. Boy, that's such an interesting and insightful point. Tell us a little bit more about that. Because it's so familiar to me. I mean, I don't know. Most people know the story of how I started a business. But for those who don't, I mean, I played basketball at Colgate University.

13:16I had a trial with the Sixers. I didn't make it. I was looking at two European teams that were going to go play ball in Europe. and a friend of mine worked on a Florida Commives Exchange in the gold pit in the World Trade Center. It was his birthday. It was one of my best friends from high school. I went in on a Friday night to take him out for his birthday and I walked out to the floor and I'm there and I'm like, oh my God, this is unbelievable. I mean, the place is huge. You know, it doesn't exist anymore, but you know, it's trading places. I mean, the picture on my wall is I'm in this picture.

13:42This is, you know, this is where the movie took place. So I'm there and waiting for my friend to get done. The gold market to close. He's doing his write-ups, of course, his paper everywhere because it was all paper then. And I'm standing there, and I'm 6 '10", and I strike a physical pose. And this gentleman comes over, and he's like 17. He's about 6 '4". We start talking hoops. He played at NYU in the 40s when it was big-time Madison Square Garden mecca of college basketball days. So we talked for 15 minutes about hoops. And my friend's ready to go, so we go. We're going out of the town. We're walking across the floor, and I look at him.

14:14How do you get a job here? This place is amazing. There was no schools or classes for this kind of thing back then. And he says, you've got to know somebody. I said, look, you've been here two years. Don't you know anybody? He goes, that guy you just talked to owns the largest firm on the floor. I turned around and went and asked him for a job. Because of my size, he hired me on the spot. So basketball was gone. And I started my new career in the silver pit, actually. What's familiar about it is the movements. I mean, I remember days when silver would open limit up, trade to limit down, and finish limit up.

14:45And that, you know, the other point that he made that's really appropriate here, you know, and caution is the word is you're going to see these swings because everything, the volatility is more intensified and everything already as it is, generally speaking. And when you throw something like this into the mix, it could be a really hairy ride, man, for sure. Sixers had some great teams during those days. But boy, I have to say one of the reasons why I love finance, it's like the only thing that you get better at the more you see it, right? You get older every decade. You just learn more. You know, and that's why I made the decision because I was like, take this job or go and try and follow the dream in Europe.

15:24And I said, look, I can maybe go follow the dream. Maybe I make it, you know, for a year or two in the NBA when I'm in my late 20s. And then what am I going to do when I'm 30? I can learn this and do this the rest of my life. It was a conscious, you know, thought process in my head. And yeah, I mean, it's pretty amazing. It was a try by fire because because of my size, they stuck me right in the middle of everything. I had no clue. what's going on it was insane you were you were like the center of the trading floor what's going I was in what they called the point right so it's kind of I was you know the center in college so is the pit uh the pivot now it's the point you know not a point card but because in the spot that was between the silver and the gold pit were very close to one of them so I could stand kind of in a spot where I could see back into the into the uh booth right they had the largest booth with the most phones that are ringing off the okay our clerks answering the phone you got a bank of as you can see in the picture, of steps where guys are standing arbitraging or on the phone with OPEC or London Bullion or whatever.

16:21And they're either screaming the orders at me. I'm getting the paper in. I'm handing it into this ring, that ring. I have the book. And, I mean, that was my second day there. They gave me this job. And, I mean, talk about trial by fire. I mean, we had – there's a lot of stories. But we had one guy who came in, and he was a big shot. He had this big book of business. And he was like, you know, God's, he jumped over everybody to get to where he was. And he literally, and I'm not kidding. You know, the first couple hours was a wild morning. And then around 10, 30, 11 o 'clock, things would calm down and start taking rotating bathroom breaks.

16:55This guy went to the bathroom, never came back. So that's kind of how it was. It was very physical. You know, it was very male dominated, that's for sure. And it was rough and tumble, for sure. Amazing. Listen, I got to ask you this, because in some ways, it's kind of a strange echo when you talk about those. days. You had those guys on the floor then fresh in their memory, 1970s stagflation, devaluation, obviously OPEC crisis, all of these things. Nixon pulling us off the gold standard, I guess, in 72, fresh in the memory of the guys who you were trading with. In what ways, if any, do you see parallels with Bitcoin in terms of finding this precious metals like a hedge against potential potential currency devaluation?

17:39Well, I think it has, you know, I don't want to, see, to me, it's interesting, just before I even answer that question, when you see in social media or in presentations or on TV, I mean, it's like Bitcoin versus gold. And it's like, okay, I want to own both. I mean, why do you have to decide one or the other? It's like, if you like Bitcoin, gold people think you're an ass. And if you like gold and Bitcoin people think you're a jerk. And It's like, no, wait a second. Gold has value. I mean, it's created in the last minutes, and although now there's new theories on this, so I might be speaking too soon, but it's been accepted.

18:14Gold's created in the last seconds of a supernova. It's precious in the universe, created by the universe. That gives it a special property that has been mystical for thousands of years. So it has a place. It's not going to go wet, right? Certainly in times of coronal mass ejections or power grids down. I mean, gold is going to be preferred over electronic currency, that's for sure. Having said that, I think Bitcoin has bigger potential in the near term in the sense of simple. It's real simple to me. I don't have to get into all of this debate because it comes down for me to one very simple thing.

18:48You have currencies crashing around the world. I mean, crashing 98 % to 99 % depreciation in the purchasing power of these currencies since It's 2008 in 15 years. That's not an exaggeration. Those are the numbers. And in a place like Pakistan or Turkey or Argentina or even the latest one where we're talking about, what's the one now we're talking about? Nigeria. I mean, going to the local bullion dealer to pick up some gold is not really the way it's going to work, right? Everyone has a phone, has an app, have a wallet and buy Bitcoin. So to me, the potential for this to be widespread in that kind of scenario where it's a flank to safety, safety, I think Bitcoin would do very well.

19:34Yeah. And it is so interesting, the case. I think lots of times when folks talk about Bitcoin, they forget that this is truly a global commodity, this idea that you can essentially, you have been places in the developing world, developing Asia, developing Africa. Everybody has a cell phone. Everybody has a cell phone. So you have access. That's this leapfrogging effect where the wireless technology has jumped over landlines. I mean, it's just really fascinating. We talk about that all day. But I want to get to your charts as well. Walk us through them. I know you brought us a couple to unpack some of the views that you got.

20:04Yeah, just really looking at two currencies in particular, but the list is long. I mean, Turkey, Pakistan, I mean, there's a whole bunch of Angola. But Nigeria and Angola, to me, are kind of special cases. Can you talk about OPEC? In the case of Nigeria, I mean, capacity potentially 3 million, maybe even a little more per day. And what are they producing? The last number I saw was like 700 ,000 barrels a day. It might have gone up since then. But the point is there is excess capacity there that's being wasted. You have natural gas there to whatever extent Germany is involved. But you have a situation where the currency's collapsed now.

20:38All right. They've raised rates to high levels. And talk about a loop. Ruel mentioned loops before. That's another good way to look at some of these things. In this case, it is a loop. All right. The currency goes down because you're trying to stimulate the economy. Well, the currency down drives inflation higher. Inflation higher makes the currency go down more. And you're in this cycle now where this is what you get. And Nigerian Central Bank raised interest rates by 400 basis points yesterday to 22.75 on their reference rate. And, you know, inflation is 30%. So the Naira is getting whacked.

21:11And you can see in terms of whether it's against the dollar or against gold, the purchasing power of this currency is getting decimated for the people that live there. Then you take a place like Argentina or even Turkey. I mean, Turkey is a country with 80 million people. You know, you take a place like Argentina. I mean, the currencies have gotten wasted. It's a 99 % depreciation in the purchasing power of that currency relative to an ounce of gold since 2008. So to me, you know, that's... I'll tell you a funny story about Turkey. I was in an event a couple of months ago, and a Turkish businessman I was talking to, I said, oh, you do a lot of crypto shows on Real Vision.

21:47I said, yeah. He said, listen, if you want guests for your show, all you need to do is go to Turkey and go to a cafe and grab three waiters. Bill know more about cryptocurrency than anybody you have on there because it's all they talk about here, right? Because you see what's happened to the currency. The Turkish leader has gotten absolutely hammered and everybody's looking for a stable store of value or something, something to offset what's happened. And what's interesting, really, the most glaring thing in all of this is you have the dollar unable to break to the upside. I mean, you got it above the dollar index, above 104.35, which was the first level.

22:21But 107.50 is huge because this goes all the way back to like the 70s and some of the cycles, the wave counts, the Fibonacci numbers, all the math, the geometry, all overlays on this. And to the degree that what I find interesting is this ties back to the Fed. because the Fed, the market so wants the Fed to ease that they priced in so much easing that they were their own worst enemy because the Fed's never going to acquiesce to that because they're not going to cut rates six or seven times when the stock market is at record highs and gold's at$2 ,000 an ounce. There's just no way. And inflation is still well above their target rate.

22:59So kind of the market gave them the excuse to go back to being somewhat hawkish. Now, I think there's something to be said about the 475 level on the forward Fed funds for the end of this year. When they got to 475, which it hit again today, but last week when it got there, that's when you marched out, I think, with Bowman and Bostic or two of the Fed guys, ladies or whatever. And we're talking about that two or three cuts would be appropriate for this year. So it's almost like you had verbal intervention on the top side, too, at 475, because I think they understand. Look at the housing market.

23:36You could say the labor market is strong and I could rip that apart in literally five minutes because it's not. People were all excited. Headline making news. Every channel covers average hourly earnings. We're big monthly gain. The year-over-year rate's up to four and a half. Oh my God, it's above inflation. We have the ladder now where people can afford to pay more. What people didn't bother to look at, to dig in, was what we do dig as deep as you can get with this data was that hours work dropped significantly. As a result, average weekly earnings, take home pay, deflated in the month, and is only 2.9 year over year, which is below almost any rate of inflation.

24:16So again, you're at a situation where wage inflation on a real basis is negative to flat. Savings, we know, are dissipated. And you have credit cards you borrowed out the door. I mean, it's incredible, the borrowing of credit cards through economic need, number one. And now banks are saying, you know, we expect to tighten standards on credit cards and auto loans throughout the year. So you want to make comparisons back to the 70s. All right. Kyle has followed the Volcker playbook all the way. Kyle did exactly what he told us we're going to do. He was very transparent. He did everything he said.

24:53Allow inflation to run. No tolerance bands. It doesn't matter how high it gets. We're going to let it stay there. And it will raise rates dramatically and bring it back down. The difference is, in Volcker's first Humphrey Hawkins testimony, he said, we don't want a credit contraction. Powell and Janet Yellen have said a credit contraction wouldn't be a bad thing. And while it's needed, if you let that genie out of the bottle, that could be a big problem in terms of the deflation that you get. Because if you can't borrow money, you've already seen what happens to the economy when it costs more to borrow money.