Crypto Defies the Doom and Gloom

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0:51Hello again. We're back for Wrecked Vision. This week, we have Sergio back. Great to have you, Sergio. We had OSF last week on just the drinks show, but it's good to have another familiar face. Nice. Thank you for having me. Get the Mexican this week. You can get spicy if you want. Is that a Mexican jersey as well? It is. It is. Mexico jersey from last World Cup. It was a gift from an artist in Web3. It says Sergito in the back at number 9. Now, I don't know if this is going to annoy you, Mexico have qualified for the World Cup, right? Yes, we're hosting it, along with the US and Canada. Yes, yes.

1:33So we're not particularly good this year. And our goalie just broke his leg or something yesterday. So we might have Guillermo Ochoa, which has been the goalie for the last six World Cups. People love him, but it's probably not going to be a good World Cup for us. I know, but home matches would be wild. Dude, they're so expensive. I really want to go, but they're just, I mean, it's Mexico, right? Like soccer, football is everything. And so it's actually an interesting thing. This World Cup, there's 48 teams instead of 32. It's the first time they expand the field. And there's just like some weird group stage matches like Curaçao versus Germany.

2:11I think hopefully the product's not too bad on the field. But yeah, I'm excited. I mean, we're doing a bit of stuff with it as well. So it's a good year for football. It's always hopefully brings the world together, which it feels like we need a little bit of that distance. It does. It does. There was obviously a flare up in Mexico recently. But this this week, it's been more of a flare up in in Iran. That situation seems to have been getting more. Well, I don't know if it's just not dying down. Let's put it that way. we obviously had the initial strikes and then continued kind of airstrikes of which there does seem to be some form of military superiority let's say but Iran seems to be playing a game more against economic damage than it can do and it's obviously going after the Strait of Hormuz targeting Gulf nations as well as oil and gas fields and it feels as though both sides are somewhat digging in and the market about this time last week was hoping for a let's say a a quicker resolution this this does feel like it could go on for a little bit longer um what's your take on it all i think it's interesting crypto has kind of like held up better than than stocks um it also makes me wonder if the crypto sell-off at the beginning of the year was actually people just kind of like front running this.

3:39I mean, we've seen the current administration in the US kind of have some problems with information leaking ahead of time and clearly seeing of poly market and other prediction markets. So I do wonder if as preparations were ongoing, I mean, we did see like the movement of, you know, military hardware out to the Middle East and all that stuff that's public that you can track it. There's accounts that track that across the internet. But I do wonder if, especially the Gulf states that have accumulated so much crypto recently, people got the heads up that that was going to happen. And that kind of like led to some risk of in crypto first, which now leads crypto performing quite well versus stocks.

4:20Such an interesting thing. As far as what's happening, I mean, and I think, you know, it's just the history of humanity, right? Like every single time there's arm conflict, things last a lot longer than anybody, I think, would expect or want, especially when you're considering the loss of life that's being experienced, especially like innocent lives. I think, you know, Iran was what, 40, 45 years of really just not being attacked for, I guess, like a reason. And that's precisely the strait of Hormuz and the ability of them to choke just the flow of oil to the world. So it is a bit, I mean, if you get political, depending on where you stand, it's not surprising that the U.S.

5:03went in without a full plan for it, it appears. But if you just remove the politics aside, I mean, I think it's quite clear that the conflict might last a little longer, just given the fact that it would probably take troops on the ground for the U.S. to be able to guarantee the flow of oil through the strait. So, yeah, I feel like, you know, maybe we we're just going to have to wait a little longer for things to settle down. But obviously, the underlying conflict, you know, between Israel and Iran, you know, it's it's a demographic conflict that's gone back hundreds and hundreds of years. so yeah it's kind of difficult to predict what you know humans in power will do especially when there's so many eagles involved too like on the u.s side when you had department of defense secretary hexa today literally saying on a press conference like hey the strait is open except for the ships that are being shot down you know it's kind of like kind of like just crazy personalities right now and then just a sad chapter again when obviously loss of life Yeah, I was of the view that it was going to take a little bit longer just because although Iran seemed to be losing the military battle, they would probably want to cause as much damage as possible so that this doesn't happen again.

6:28And they can kind of push these levers quite a lot. You just never really know, though, because the rhetoric from the administration and just random headlines that, oh, we're about to make a deal or we're very close to it or we can stop it whenever. and then other other people are saying oh we know we can continue to do this for a long long time i don't know i one thing i i know about trump is that i can never really predict what what's about to happen and i know he does a lot of brinkmanship um so maybe you know maybe something's really close and maybe something isn't this is definitely going to be one of the longer conflicts that that we've kind of seen uh under his uh yeah i was thinking this morning i was walking my dog getting ready for the show um it reminds me of the china trade war remember that the we'll call it like chapter one or what was it called stage one back in like 2018 um which was like the big trademark issue around it was that and the wall with mexico but really like the china trade deal um was was a thing and you know we had back then there was like a couple guys on twitter from like chinese news sources that would just drop headline bombs to like really mess with the stock market and then Trump will say something else.

7:43And it was just like, obviously, the battle was being fought different places. It was not like a battlefield like it is today, but it was this back and forth between both sides really trying to have an impact on financial assets in the US. I feel like it's a little different now because obviously oil is such an important thing. And now you're even hearing stories about CBO pretty much just warning Secretary Besant to stay away from like the futures market and not try to interfere there. Like that's, that's just like very complex stuff that if it does get out of control, obviously, you know, Iran, obviously they're very, very heavily outmatched when it comes to military power, but not just the U.S., but obviously the allies.

8:26But we've also seen so many times through history, again, when, you know, smaller combatants, you know, have nothing to lose per se, they'll go to the last mile. And this, the straight situation is just such a critical point that if they keep on doing that, they really put pressure on financial markets and the US economy. And obviously, at some point, the midterm math starts kicking in. Obviously, that was already, you know, the House was pretty much all decided it was going to go to the Democrats. Like now you're getting Senate in play. You're seeing prediction markets pricing 50-50 with the Senate being taken by the Democrats and what that opens up now for other things.

9:05Like you're starting to think of like third order effects, right? Like what happens with crypto, crypto legislation, so many of these other things that were assumed to be safe under even a divided Congress. And I think that's when it gets interesting. So yeah, the longer we go with no certainty of the outcome, I think the much more complicated things are going to get under the surface. I think the sell-off in stocks, you know, led by like software and AI stuff, like, Pretty much, you always make the case that maybe it was a little overheated. But as things in the economy continue to deteriorate because of the price of gas, then it's a whole different story.

9:44Yeah, I think underpinning a large bit of this stock market rally has just been the supply of cheap energy and that being critical. And this has probably changed a lot of that. I do think Iran obviously is going to face pressures of its own, like China as well. won't be doing great if this scenario continues and they are the main export partner. So I think there will be, that's why I also think that they will both come to the negotiating table. But I think, yeah, I just think that they wanted to cause a little bit of economic pain before that happened. So I'm still bullish on this being resolved.

10:24It has been an interesting week for crypto because we've been trading somewhat independent of macro. it feels like. The correlation just seems to not even be there. We've just kind of formed this base at around 70k on Bitcoin and around 2000, let's say, on ETH. And we just seem to be going up and down and around that sort of level. Today, we did have a rally. We went up to around 73.5k, I think, on Bitcoin. So a decent day. And then we're back down about 72 now. Now, in terms of the flow, it's been interesting to see in particular that gold has started to be underperformed and Bitcoin started to outperform.

11:08And you've seen actually the ETF flows of those have also turned. So you've started to see outflows from gold ETFs and inflows into Bitcoin ETFs. Do you think this is a good rotation? A bunch of banks were saying, this is the time. JP Morgan, I think maybe one other movie, Stan Chow. were saying that they really liked that rotation about a month ago, and we're starting to now see the start of it. Do you think that trend could continue? Yeah, probably. Obviously, crypto has down massively over the last six months, and gold has had a really good performance. So not surprised to see some profit taken there.

11:46I also think crypto this last couple of weeks has really shown two reasons for crypto to exist that actually work in the real world. One is, you know, I've heard so many stories about people trying to sell their gold physically in Dubai before leaving the country to take their wealth with them. Obviously, it's hard to either travel with bars of gold or in a local spot market. I think it's trading down 20 % from spot versus obviously with Bitcoin, you can just bring your ledger with you on the plane and that's it. So that's one, I think, good story for crypto. the second one is hyperliquid you know being open over the weekend people like bloomberg and like banks referencing where oil was trading on hyperliquid i remember back in my or our barclays days you know you're having to write those those weekend uh emails around the china trade deal and all that stuff and there was not a lot of good resources as to what markets were um it was like maybe like a weekend wall street website and so on but obviously without real skin in the game I'll go into that a little bit.

12:50Like when we were both traders, like often over a weekend, if something flared up, you'd have these hundreds of people on email chains around different things, trying to price where things would open. And then there'd be updates from all the traders when they went live on a Sunday night. And it would be like this ongoing commentary throughout the weekend. It now just feels like hyperliquid's just there. So you can kind of see what stuff is. I mean, liquidity is lower, but it's definitely trading. Right. Right. And it's, you know, what is a two-year-old chain, one-year-old product? Like it's really, I think the crypto story is quite promising, right?

13:27Like sovereign wealth that you can take with you, right? No custodian, one. And then two, like the ability to trade 24-7. You know, I think even on this show in the past, not being like super bullish, the whole tokenized stock situation, but stuff like hyper liquid being able to trade macro narratives when the traditional markets are closed. I think it's a good story for crypto. And I think you see it reflected in the price of the hyperliquid token itself. So in that sense, yeah, if you're sitting back and you're seeing gold have had a good year, same with silver, some other precious metals, obviously oil is having an incredible start of the year for different reasons.

14:09But if you were long commodities, you're having a good start. it might make sense as you see the use case for crypto majors play out in real time under these types of circumstances. Then, yeah, that, in my opinion, creates some sort of, okay, well, maybe we should allocate to it again. And that's why maybe like Ether and Bitcoin are performing better and hype than some of the other, you know, alt-O1s and way better definitely than some of the other more like vaporish stuff that might not really have that intrinsic utility to it. Yeah. Hype has been the best performing L1. And obviously, we've figured out a lot on this channel.

14:53It's the per platform of choice, really, doing huge, huge volume, more than Coinbase, for example, on perps. Spot volumes are large, but there's nowhere near the size. So it's definitely built for perps. And this week it hit 37, which is an FDV of 37 billion. I think it's still single digits in terms of current valuation. But I was looking at it before we went live, I thought it was interesting that it's now getting close to where Solana is. If you compare the two on an FDV basis hype is hype is around 35 36 and solana's 55 60 um that was about a three to four times different uh not too long ago and now it feels like those two are getting closer together what is your view on that do you think that that that this move away from l1s as just their valuation coming from the activity on the network and you kind of somehow viewing them as currencies at the same time versus hype as this, right, we make money via a single app, but there are a few others, and we burn the token with it.

16:15Do you think there's a path for both of these still to have a lot of value? Do you think hype is now starting to show why it's the better model? I mean, if you look at, what, two or three years ago when Solana really kind of like led us out of the broader bear market on the back of the narrative of, what was it, on-chain capital markets. I mean, I'm sorry to say it, but it didn't deliver, right? We have a bunch of casino stuff, which is part of the crypto PMF. Pumpphone is a$1 billion annual revenue rate. That's incredible. It's a testament to that team. And obviously, the appetite that there is for people to speculate in those types of launches.

16:55But the reality is, you know, it's not really what institutions and the actual bigger capital is going to chase. And then you look at Hyperliquid, you know, going back to the whole largest platform. It works kind of like they had a really good distribution, I think, of the token early on, which I think it's important to see up for success when it comes to token performance. And just completely taking over the narrative of on-chain capital markets, like where that stuff is trading. So yeah, I wouldn't be surprised that if or when Hyperliquid steals that narrative from Solana, pretty much like Solana stole the narrative from Ethereum three or four years ago.

17:37I think it's a very parallel situation where Ethereum was supposed to be a smart contract platform and its gas issues and stuff led it to lose a lot of that buying share. on Solana came in and was able to prove more of a better playground for those types of initiatives. And now you're seeing that obviously with Hyperliquid. And yeah, I would not be surprised to see that close. I think also Solana maybe has lost a little bit of its, I don't know, like its voice. I really haven't seen anything from Solana that is markedly different from anything offered on other chains. Again, you did see that last, I don't want to call it last cycle, but maybe it was last cycle two or three years ago versus Ethereum.

18:25Now you have pretty much the same announcements. Okay. There's payments, there's stable coins, there's tokenized IWAs, but nothing really differentiated like you see with Hyperliquid. So yeah, I'm not surprised. And again, I would definitely not be shocked to see that be like a trade that really gets highlighted as we go through the year. Yeah, I think Hyperliquid for me still feels like the best long. It's one of the ones where whenever it dips, I just look at it and go like, right, this just feels like there's buyers. It's interesting to me that the other platforms have not done as well. and I've been trying to work a bit around this, like Leiter and Aster.

19:14Those coins are up and not up that much. And I think it's probably just the liquidity. I think that's the main thing here, that kind of like a stock exchange, right? You need to be where the liquidity is. And I think playing the smaller venues is just like nowhere near the valuation potentially of the bigger venues. And we've kind of, there's been some incidences around like ADL and liquidations on some of these other platforms which just show that like liquidity is not really, really strong. You're kind of nowhere. Yeah, I haven't looked at their tokenomics either, but, you know, spent a lot of time this year analyzing token distribution and tokenomics and stuff.

20:03And I do think that has a huge impact on price performance. And I think the market, maybe it always knew it, but now it's really starting to come around to like, hey, some tokens are not just not going to perform because of the structure that they have. There's tokens that obviously at the one year lock up Xperia mark, they really start underperforming. So not too familiar with those, but I think that's a good place to also start looking at versus I think the liquidity argument makes a lot of sense. And yeah, that's definitely probably the biggest reason. But I also think that when you have teams potentially or large early investors looking to monetize their investment.

20:45And it's been like, what, a year of Aster, maybe a little bit less. I mean, Aster gets a lot of flack, obviously because it's kind of pumped by CZ. I don't know if you saw this week, but he was actually named one of the richest men in the world. they revised his net wealth above 100 billion. So now he's overtaken Bill Gates, despite crypto being down 50%. But he clearly has helped champion that alongside a bunch of other things. But I just feel like I've been wondering why it's hyperliquid and nothing else. With the L1s, it's always like, right, we have the, it's ETH, and then it was the ETH killer, and then it was the Solana killer.

21:25But for hyperliquid, it feels very concentrated as a play on perks being big. And I've been trying to get a better sense of kind of why. Because I think a lot of people are going on. Of the people that I consider smart, the group chats that I've been added to, you know, you get added to all kinds of group chats, right, over the years. Some are like just fun, others are like friendly. And then there's like some really high signal group chats that maybe are not as active. But I definitely over the last two years call it. hype is usually the one that gets brought up a lot from a very constructive place and people that are like okay when you know the big sales happen to your point like you know people will come in and bid it so that to me it's always been a signal as well yeah that's i mean they got some very very big traders involved in it so that that's really helped like the smartest people are kind of bought into a success and that was like that was really good it's not just like cz is making money from this.

22:28It felt like some of the smartest people in the industry were making money from this. But that's kind of been my main takeaway in terms of altcoins this week, just to see that outperformance on a week like this. And like you said, it went mainstream again. It's gone mainstream quite a few times, but just like when it's getting close on Bloomberg about where oil is over the weekend, you just think this is, it's just staring you right in the face like this is the trade. Someone said to me on a podcast this week, I just feel like when we go into the next bull market, hype is going to be trading at 100.

23:03He was like, it's going to be like Solana. Again, one of my surprised. Solana was trading in 30s, 20s, and then it's just started to be the chain of the next. And it just feels like that's the one. and although that's you know i don't want to get people already to 100 but it does just feel like there's just bias there's just always bias um of that one compared to some of the others if you think of narratives right which is our big big part of markets overall let alone crypto i think hype had its polymarket moment uh this last week or you know over the two weekends where people were referencing it across traditional established media, financial media, trading desks, and so on, as the source of truth for what was happening on the weekend.

23:56And that's, you know, happened to Polymarket leading into the election. And you've seen the re-rating of their valuation and other prediction markets as people just really accepted them as, again, the source of truth for markets that priorly there was no real place where you could see where things were actually trading. So for me, it's that type of moment, right? To your point, yeah, there's been big traders in them, people that did really well farming it. And obviously, of course, they're going to love it for the rest of their lives because they made so much money from the airdrop and so on. But it's really, when you look back at, has it really pierced through to kind of like more of the mainstream?

24:45And I think Hype just did that this last couple of weeks. Exactly. When it starts to go mainstream, that can be kind of the change point. Solana meme coins going mainstream was like, right, well, this is just going to go absolutely insane. Same with when NFT starts to go mainstream. When you start to see that, and I guess it's not the first time it has, but it really felt like a key moment where everyone is looking at financial markets. It's like, wow, like billions of dollars of volume is going through an oil in this market over a weekend. And we've just spoken about what that tradition is like for most traders.

25:24That weekend email, that weekend email is like, it was a really good point, right? That you made. Like, yeah, you were sitting there and I like a thread with everybody, head of markets, all the way down to like the junior analyst on the desk trying to figure out what things are going to be. Like, I can't imagine this in the past weekends. It's like just hyper liquid, like levels, like nonstop. If I was managing the risk, I might even go on to hyperliquid, right? There was some, there's been some talk this week about how prime brokerages are now hooking up all these hedge funds to prediction markets.

25:55And I think that's very easily the next stage of that would be to do this for Updex as well, right? Like if they're setting you up so you can trade event contracts on Calci or Polymarket, then I think it's quite a short hop to just being like, right, well, also set me up with a hyperliquid account. because sometimes you kind of wanted to hedge on the weekend or you knew there'd be great trades if markets were live. There's a reason why Trump is doing this stuff on a Friday night because volatility is not there in traditional markets. But if they are now trading on hyperliction, traders will be drawn to that for sure, massively.

26:34I'm not on a sales desk anymore, man. When I was in FX at Goldman, thousand effects like when we worked like all all freaking week except for like saturday uh when things were happening and then like brexit yeah i you know i'm so happy i'm just playing with my jpegs now yeah yeah it has been um i think on the like more esoteric stuff i haven't really seen a lot of things outperforming we saw we've seen punks and nfc's kind of drift low we've seen most meme coins kind of drift low there wasn't a week this week quite a lot of the top movers were in this ai meets crypto sector we saw vvb i don't know if you've seen that yep just which seems a little i i kind of think that's good kind of a use case to it if you're gonna be able to pay for api calls for the llms with this token i can kind of get why that makes sense do i think it's worth billions of dollars maybe not but you know there's actually a use case a lot of the others were kind of their ai meets crypto which if you tell if you say to anyone in crypto they're like oh god what what is what is um yeah i feel like those those moves are just the same you know like captive capital that's stuck in crypto and people just chasing themselves around um and yeah i mean good for them people i know how to time it get ahead i feel like all of that is very insiderish um So yeah, just happy to sidestep all of that and keep my eyes on the ball.

28:09Yeah, top gainers of the last seven days are Grass, Render, Tau, Pi, FET. These are OG crypto meets AI names, which, yeah, I've got a real mix of... You know what, Render I do like. I mean, I haven't looked at it in a long time, but we definitely have spoken to that team a lot. And I think the use case is very interesting because what happens is, you know, obviously with the price of compute going up dramatically with everybody using AI and the chips and all that stuff, when you are creating images like we are for MiBits, right? we're creating content, we're like doing drops. And so we now have a very large compute spend, either locally on our machines, or we have to go to somewhere like render where we can get cheaper compute that's distributed.

29:03So that's one that, and for people that are kind of like geeky and curious about use cases that actually like, you know, we are using it in the real world. and I think that's interesting. But personally, I've not looked at the token, I don't hold the token, and I probably won't have time to go in and figure it out. But it is, again, for anybody that's listening that wants to understand some of the use cases, I think that one is an interesting one. Yeah, I remember Render was one of the ones that NFT people got involved with a little bit just because, like you said, rendering of images is important.

29:38A lot of the graphic designers in the space like oh this is like the thing um 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 in terms of other stories we kind of had defy away from Hype not having a great story over the last 24 hours, which was there was a wallet yesterday that had$450 million in it and went to buy$50 million worth of Aave in a single ticket on his phone.

30:26He ended up getting$135 ,000 of Aave or something along those lines, maybe$150. So he lost nearly$50 million in the process, of which part of it was also taken by an MEV bot, which I think made a profit around$10 million, this MEV bot. I don't really know what to say about that. The founder of Aave came out and he's been taking a lot of flack recently and was like, you know, this just proves that we should, you know, it's still important to have DeFi and that, you know, people shouldn't get involved. But it does feel pretty wild that mistakes like that can happen to people in DeFi. I think a lot of people assumed it's like DeFi is good, CFi is bad.

31:14Well, centralized exchanges are bad. But you look at a story like that, and you go like, how can somebody lose that amount just trying to buy some Aave? So many layers where things went wrong, right? Starting with the user. One, why do you have$50 or$450 million in a mobile wallet? Like, what are we doing, man? Two, even though there were pools, obviously, with much better liquidity, what are you doing buying 50 million dollars worth of you know have a token in one go like that's so definitely enough user error but then obviously compounded you know to everybody's point like why are we letting these types of trades happen in like the dark it reminds me like the dark forest when people refer to like defy as the dark forest back like four or five years ago um yeah i mean obviously you can make arguments for well you know should have known better um and shipping more protection.

32:09But that's a tough one because we don't know what happened. I mean, was the dude drunk at a party trying to impress a girl? He was like, oh, let me just show you how DeFi works. Like, what leads you to do that type of trade on a mobile wallet when there's so many resources and tools and just better execution, like doing it on a DEX, so many things. so yeah I think I don't want to blame it on the user they should have got a better experience but I think they bear a lot of the responsibility for even putting themselves up to a position where an MEB bot can extract so much value away from your trade and obviously the routing and so on on the protocol side obviously could use a little more work if we're letting people do this Kyle Swap who's behind it said Hey, everyone, we're aware of a large swap transaction.