Is the Bull Market Rekt? | REKT Vision ft. Ejaaz (October 18)

27:34They know their craft so well, and they have the best designed GPUs, the best designed chips. You want to train the best models, you use NVIDIA, right? And China, as of about a year ago, were technically, when you compared their chips versus NVIDIA's chips, around five years behind. Now, a month ago, China made a, actually not a month ago, two weeks ago, China made a pretty bold headline. They announced the government, they announced that they didn't want any Chinese companies buying GPUs from Jensen anymore. They put a ban. They were like, you don't need it. and they pushed forward Alibaba and a few other, Huawei as well, who is famous for like their cell phones, for their GPUs.

28:24They both released two brand new GPU designs at the time that Chinese government made this announcement. And so we compared them to NVIDIA's GPUs. And now they're only about a year behind. That is crazy advancement in such a short period of time. So the assumption there would be that the Chinese GPUs will eventually be able to be as good, if not better, than NVIDIA's GPUs. Now, if that happens, and with China's ability to scale manufacturing, they're the manufacturing kings, right? That's slightly worrisome, which is why we see on the American side, on-shoring of manufacturing for GPUs. NVIDIA's investing a ton in the US to create like factories to do that, number one.

29:08Number two, as you mentioned, Google manufactures their own GPUs. They're actually called TPUs. And they've been doing this for a while. And it's arguably the reason why their models are so good in making scientific discoveries, right? And the other third thing is probably why we see OpenAI designing their own GPUs and chips as well. So I think America's behind right now, but I wouldn't bet against America just going crazy at scaling over the next year. 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 and obviously we've seen basically these gpus are now becoming almost like a balance sheet asset as well.

30:00For the XAI deal, which happened recently, they were seemingly used to and they can be recalled, but they're taking a huge stake in XAI just for the use. Yeah, so I'm glad you brought that up. So, Jensen Huang of NVIDIA announced that they were investing$2 billion in XAI. But what was so unique about this deal was he wasn't giving them money. He was agreeing to give them$2 billion worth of GPUs. And if XAI fails to pay for them over the next, I think it's like three years, they can lay claim to the GPUs that they had already given them. So instead of equity, it's GPUs. And so GPUs are becoming this kind of like reserve currency, this kind of like influencing factor with all these deals.

30:57And it's not just limited to NVIDIA and XAI. The deal that you mentioned earlier that OpenAI signed with AMD, it's the same thing. AMD needs to deliver the GPUs. But if OpenAI doesn't pay up, then they owe AMD back their GPUs. It's pretty insane. Yeah. You only notice when you see the press releases from all these deals, but they're either spoken about in terms of GPUs or power. It feels like these are now the two base assets when it comes to all of these sort of deals, which is, I thought Elon Musk talking about it, actually just in relation to Bitcoin. The way to value a lot of things in society now is just like the power that is directed towards their production.

31:41Absolutely. And Bitcoin is one of those assets, therefore it has its value. And it's kind of very reductive at the same time, but power and GPUs are the two things. hiring the economy. I have never been more confident that the future of store of value will be digital. I've never been more confident. It's all being laid out right in front of you. What is the most invested thing this year? Oh, it's AI. No, it's not AI. It's compute. It's energy, right? And what do you think kids in the future are going to be investing in? They're not going to buy gold bars. What do you think the AIs are going to be using?

32:22It's not gold, right? It's going to be some form of digital asset, some form of store of value. So it may not happen this Friday. We may dump over the weekend, but we have time. Yeah, I agree with that too. I don't get embarrassed by any of these sort of wobbles. I do think that we're in this sort of period where four-year cyclers are coming up against, let's say extended cyclers and that's going to be the battle until I would reckon end of November and maybe middle of December and then I think we've got a bit of a Santa Claus rally but when you see what's happening in the unbelievable power of this AI rally and it doesn't really feel like it's letting up or if it will don't really think no it will be the thing that shakes it it'll have to be some sort of black swan thing it feels as though the value of crypto is going to be very much tied to these two over the medium term.

33:20So if you're not following EJ, he does a really good podcast on YouTube called Limitless, which you should go check out. But I've seen you do a number of different things about, well, videos on where AI is touching in terms of industries. I saw you do one on defense recently about Andrew Hill. Obviously, we've spoken about healthcare, but everyone talks about the Magnificent Seven, and you said you thought concentration is going up. Is there any other companies you're kind of looking at who are kind of on that second tier, maybe in robotics or defense or medical research, which are doing anything which you think is kind of interesting or is it really just the Mag7?

34:00I mean, so it's kind of like asking, hey, what altcoins should I invest in versus like what are kind of like the BTCs? That's what I'm asking. Yeah, I know that's what you're asking. So just like disclaimer, and this is genuinely what I think. I'm not trying to be like, you know, some kind of safety person here. I still think some of the best investments are these Mac seven things. And the irony comes because literally anyone you talk to is like, oh yeah, but I'm buying the top of these companies. Right. But what they don't see is that these companies are doing insane shit. Like, as you said, what happens when Google stops becoming just a search company and suddenly they're like the top pharmaceutical company creating like the number one drugs and suppliers of those?

34:43Like how much would you value Google when it comes to that? What happens when they cure cancer? Like, what are you going to do with that? Like, how much are they worth, right? So a disclaimer with that, Tesla is the same thing. Like everyone's like, oh, they're a car company. No, no, they are a robot slash computer company. Their cars are the computers. That's the way you should kind of look at it, right? When it comes to like what other types of companies, honestly, like any kind of energy, I'm not going to name names here, but I think when it comes to energy production companies, raw materials, nuclear fusion type things is a really good bet, in my opinion, especially over the next five to 10 years.

35:23Nuclear is typically ready to set in around 2030 is where the study is kind of estimate, but that will likely be accelerated. The other companies, as you said, are defense. Anderil, you can't really kind of get your hands on that. Right now, it's a private company, but they are making like crazy strides when it comes to like the VR side of AI. So I would say like those two bets are really cool. And then biotech is the last one. Biotech has kind of been a meme for the last decade because they're like, they tease little studies, but they never really scale it out. I think AI is going to change that and keeping an eye on that industry will be super important.

36:10yeah i feel like the defense side of stuff has been it's been yeah there's a lot of you can still see that's where a lot of the vcs are kind of moving into as well so i think you're going to see a lot of stuff there on the on the robot um or humanoid robot let's say stuff it still feels like tesla's the most obvious public bet right everything else is kind of small yeah um figure is the other one. Again, private company. You've got Unitree, which I think IPO'd at$7 billion on the Chinese stock market. Two really amazing robot companies. But yeah, the leaders are still Tesla and Optimus. It's interesting because I was in Singapore for the conference and in even Korea before all that.

37:02And a year ago, I feel like there was a lot more talk about AI meets crypto. And this time it wasn't really about that, which I thought was slightly surprising. I thought we'd kind of moved on to stable coins and neobanks, but the idea of agents didn't really come up that much in the sort of conversations. Do you feel that from your side as well? Do you think that the AI space has drifted away from crypto in the last year, despite it felt like maybe there was going to be some tie-ups? Yeah, undoubtedly. And I say that as one of the largest spokespeople around that during the time. Ironically, it is probably the best time to be keeping your eye on that particular overlap between those two industries.

37:53The reason why I say this is I'm confident this AI agent stuff or AI agents in general are going to be the number one ways that people interact with the internet or the digital world. You're not going to be typing prompts. You're going to be talking to something. You're going to be talking to an AI, right? And it's not just going to be a generalized AI that is like, hey, you know, that forgets who you are and says, hey, how may I help you? It's going to be like, what's up, Mando? I know that you did A, B, and C yesterday. I've got you and I've sent you this, this, and this for this morning. It's going to be something that knows you intimately, right?

38:30That's an agent. So the only question is, when do these things come into production? When did they become good enough? And when will they start becoming useful for me in my crypto world, right? Managing my positions, risk management, giving me good trade advice, and doing arbitrages in many different ways in your crypto world. I would probably see that happening sometime next year. Because right now, the agents that OpenAI, Google, Meta have been producing are kind of like slightly better than chatbots. They can send emails and calendar notifications, but they don't really go beyond that. The agents that are really killing it are all coding agents.

39:13So if you need some type of an agent to build you an app in real time or build you a feature in real time, that can be applied to crypto really well. And I feel like there are a number of repeatable things that people build in crypto. They build on the EVM. They want to build smart contracts. That can probably be automated at this point by an agent. But I still think we have about a year or within a year before we see some wider consumer applications within crypto and AI. Yeah, it's maybe not even just crypto, but I feel as though whenever everyone speaks about the applications of AI at the moment, normally around the stuff you just mentioned, it's like medical research, but actually finance.

39:53Is there any of these Mag7 that are focusing on trading or investing in financial assets? Or is that just seen as kind of beneath this AI class of we're trying to change the world? Because I just don't see that much of it. And I don't know what's happening on the private side with hedge funds building their own models completely. And maybe we just don't see them because you wouldn't want to see them. But I've just been surprised that that world has suddenly just, I don't hear about it as much. So to be clear, if you built a magical AI that could make you a hell of a lot of money on the stock market, that stuff is going to be private.

40:31You're never going to release that publicly. Maybe you can sit ahead. Exactly. Well, that was going to be my second point, which is, yes, these AI agents that trade or give you trade advice exist. They're just internal at all these big companies. You don't think they care about this? Of course they care about it. They want information delivered to them in real time and execution. AI can do all of that, right? So they've trained it on their own proprietary data sets, their own proprietary models, and they have a superhuman. Their quants are replaced by a bunch of AI stuff, or they're enhanced by a bunch of AI stuff.

41:03So that's it on the financial side. Now, on the consumer-available financial side of things, it may not be something that trades directly for you, but it's going to be something that makes you smarter about the market movements in general. I've seen two cases of this so far. Number one, Perplexity. It is a company that is kind of like an AI version of Google Search. It's really cool. They have their own browser, blah, blah, blah. They released a feature this week, which is called Insider Trading, which tracks a bunch of the top government officials and a number of other industry figures to see just how they kind of trade because these are like government officials that trade or that need to report their earnings.

41:49And it's nothing major, but it now helps you be informed with some of these larger movements that you can maybe make a smarter trade in your time. The other thing that I've seen happen this week is someone has got the pro models from Anthropic, OpenAI, and a few others, Google's Gemini as well, XAI as well, and they've given it a bunch of money. And they've said, like, let's trade conservatively and let's see how you do. All of those models, bar one, is up over the week. And they ironically took a big short position, I think a few days earlier, which has paid off for them. like pretty massively.

42:35Yeah. If you hear anyone building the super intelligence of crypto trading, just let me know. I'm sure you'll be the first person to hear about it. I'll DM you. I'll DM you. Anyway, we'll get into some questions here. We'll probably bring it right to crypto for some of these questions. But if you have any, please ask them on the site or if you're watching on YouTube or on X. First question was, any insights? This is from SovereignBTC on X. Any insights to who might have blown up over the last week in crypto? We did spoke a post-speaker. We were waiting to hear a body float to the water. There was some talk about a couple of liquid funds blowing up on Binance.

43:15It would be impossible for people not to have blown up with those. It does feel as though Binance, firstly, gave a huge amount of refunds. It seems we don't actually know how many. They've publicly said they gave around$400 million. and it seems as though it could be into the billions in my opinion because this this was a bit of an internal failure on a lot of what they were doing um so i heard a couple of funds um got caught up in that and potentially even market makers lost a lot because they had long short portfolios or they were hedging their spot with uh with shorts but those shorts got stopped out early on things like hyper liquid and uh but no one has actually none of the like the top top market makers, they've all come out and said, no, we're actually okay.

44:02So it feels as though maybe it was market makers that got hurt, but they weren't stopped out. And maybe the liquid funds that got really badly burnt maybe were made whole. Did you hear of anyone else? No, I just heard of when to mute, but that might be because everyone hates them on CryptoTru for some reason. They've been pretty vocal, actually, this week. They did come out and say, I think they got a little bit on some of their stuff, but There is a world also where Winthropy made a lot of money because if they were short a lot of these coins in perps and long spot, some of the perps were trading at such a low level that you could argue say that as long as it was on centralized exchange and they could execute, they probably didn't lose that much money.

44:46So I think it was a mixture of people, but no one massive. This hasn't taken out an exchange as far as we're aware. There was some worry about a couple of centralized exchanges, But by and large, there seems to have been users of crypto rather than like the big trading houses or anything like that. Alan on the RV website, are we now transitioning to fucked up Dover? To be honest, October to me looks like it could be a little bit choppy now. I was bullish on this reversal that we were going to go back up to kind of all time high. and that was one of those classic things where everyone gets flushed.

45:29Now, I think it could be a bit choppy. I think it could be choppy until late November, mid-December. I think then we get a bit of a Santa Claus rally. And the reason for that is what I said earlier in the show. It was Mike Novogratz here, I remember now, who I was speaking to who runs Galaxy. And he was saying, look, we see supply and it's all from OG Bitcoiners. And I think that is still a view here that this is it. If all your cycle is done, if you wanted to sell, you've been selling in July, August, September, and now October. Now we're having this wobble in October. I think some people will go like, right, actually, I'm out.

46:06I saw a couple of takes. I think Chris Bernis, who's quite a well-known TT account, basically said that too. And I think we get some choppiness. I think by the end of November, maybe we hopefully see some talk about the market structure bill, the Genius Act, that sort of stuff come through. And I also think that worry about the four-year cycle won't be there. As long as there's no black swan event that happens between now and the end of November, I don't think there would have been a reason for crypto to underperform. And the four-year cycle will not be a thing by December. So I reckon we'll catch up around then.

46:47what what do you think do you think we're gonna i mean you're not really a short-term guy i feel like but do you have a do you have a view on on rest of october i i i uh i think it's the the chop is a fair take but i think we're much higher than where we are right now by the end of october is my take i i don't think i i don't think waiting until late november i think it'll happen earlier basically i think we'll we'll get back to all-time highs before then you know mark my words one One thing I would say is that we're already at extreme fear. You know, the crypto feed and grid index, we're at extreme fear at$107 ,000.

47:26Leverage is wiped out. Yep. That's quite a nice spot to be in, I would say. Yep. So, I can't really get much more fearful than extreme fear. There were too many people on the timeline, Mando, that were like, oh, yeah, God, I'm hurt, but I'll add some here. This is definitely the bottom. And now I don't see any of them on the timeline, which is typically when that bottom actually is. One thing I would say to viewers is like the key for the market is the 50-week moving average on Bitcoin. That has been respected the whole way from 15K. Every single time we've touched it, it's bounced. It's at$102 ,000,$101.8 at the moment.

48:11we touched close to it this morning and then we bounced and we may touch it again but that level that 102, just go check it out every chart will be able to show you a 50 week moving average on Bitcoin that's the key level if we break that and we go below then a lot of people will say cycle could be close to being over if we respect that and we keep bouncing off it I think the cycle is still going and I think we're in a good spot um okay so next question does ukraine have rare earth minerals i think that's quite an easy answer yeah i think they do i don't know how explored they are but that is part of explicitly part of the deal between the u.s and ukraine for defense there so obviously that's going to be important with the um with china potentially restricting some of that jordan on youtube what are the key builder incentives you see driving the next wave apps beyond perps slash spots?

49:16Interesting. Look, I think a lot of crypto, if you boil down to it, is ways to get outsized returns, whether it's meme coins or perps or RWAs. the ones that seem to have the best product market fit is this 10x return option for it. So if we're going to do RWAs, it's going to be like loot boxes for Pokemon cards. You know what I mean? It's not going to be the boring stuff. I still think that's going to be an underlying trend across everything here. It's just like crypto is still going to be a place for people to become and they want to make a 10x. And that's why it naturally gets drawn to memes and perps and it's like the more risky bits of finance in general.

50:07I think that could happen on crypto pretty well. And to be honest, it's one of the best times to build one of those apps in crypto because you can earn revenue and the tokens kind of work. So I think revenue and then I guess AI, I guess, is what you're going to say here, Ejaz. But yeah, that's your take. Well, yes or no, I was actually going to say something else, which is, I think more of these financial primitives, perps, trading, blah, blah, blah, it all sounds boring when we frame it like that. I think you've got to consider the applications that are going to be built on top of this, which is things like prediction markets, things like being able to trade traditional equities and stocks on chain.

50:50I think we're going to see more marrying between crypto native assets and trading and perps with the TradFi markets, right? With the Reddit Wall Street bet traders, right? And I think that's going to be net net pretty awesome. Robinhood's leading that way. Coinbase is leading that way. A bunch of DEXs are now leading that way. I think that's going to create a really unique ecosystem of different users because it's just not going to be the same 30 ,000 people trading a hot ball of money. It's going to be different traders, different types of capital with different types of risk preferences. And that kind of changes the game a bit.

51:26It allows flexibility to build a new type of app. I would agree with that. I think prediction markets seem like an interesting one. Again, I still think it's that risk of... I mean, I've seen crypto Twitter sort of influencers now. They're like all in on what Jerome Powell is going to say on a speech. like they've given up on altcoins just like yeah this is what we're doing today and i think that that speaks a lot like you wouldn't actually know that even crypto has to power that but we're going to see crypto now become the payment rails for a lot of this sort of um a lot of different bits of the of finance and probably just broader like culture and i think we're going to see um yeah yeah that that will take over a lot of i think even the content of this space as well.

52:18Okay. Alan, I don't know where this is coming from, but do you think the marginal trade has moved into AI, RARE's, energy micro-crops from crypto? Seems like that's now where all the action is for new alts. Look, I think it's been a tough year for crypto on the relval. Gold is up 60%. Bitcoin is up 12%. altcoins not had. I mean, they're up, I would say, but it's definitely a world now of competing interests. What do you think about that, EJ? Do you think crypto's being left behind here or it's going to catch up? I think this is a good take if it was five months ago. I think now it is the consensus take and it's already pumped so much.

53:07It would probably make sense if there was some sort of diversification that we might see where people kind of maybe capitulate on some of their positions in gold and silver. By the way, silver never reached all-time highs for like a year prior to like the last couple of weeks, right? There are people queuing up to buy physical gold in Vietnam and a bunch of other pictures I've seen from other countries. That's typically toppy type behavior. I might be coping right now, fully admitting that. But yeah, I would say we're getting close to some form of transfer between the gold holders and Bitcoin and other assets.

53:50I do think gold is a bit toppy here, but I think it's a long term trade. I think it's tough to be bullish on Bitcoin and not be bullish on gold. But I do think this run, I mean, gold did run like this before. and when it ran to 3k um it was like oh my god it's going parabolic and then it kind of chopped around at 3k for a little bit for about six months and and then came back and it feels like we could be in this chop period now for gold maybe for for two months but what did what did bitcoin do after it started chopping when a big one move that's when bitcoin moved so we need the chop we need the right bitcoin a bit of bit of hope a bit of hopium for the for the listeners i i i think i saw that it was a roughly 30 to 60 days after gold has like it's kind of like started pumping which puts us in early november just a bit of hopium yeah we definitely need a bit of that today bitcoin has been bouncing during the show so you know that's that's good but it has not been a great period here and you have Peter Schiff dunking on crypto at the moment.

55:04Best situation. He was right. He was right. Hood on YouTube says, Ejaz, what's the view on Bitcoin miners slash AI data centers? It's been a good run, but it seems like more high-scaler deals are probably coming. What's the view on miners doing anything to AI? Yeah, I think a bunch of miners will do it. They're profiting at the end of the day. and they have the hardware to just point in the right direction that's going to make them the most money. Ironically, that's how NVIDIA kind of started. They started being like a GPU manufacturer, and then they were like, oh, this stuff is really good for gaming.

55:45Then they were like, oh, hang on, this stuff is really good for mining. And then they were like, oh, let's point this all at AI. And the miners themselves, they're technically people that just buy this hardware to serve a specific use case. I think too many people think like, oh, they're married to crypto. No, they're married to making some type of money. So, you know, in one way, that might lead to capitulation and they might point it all at hyperscaler stuff. One thing I will say is that the hyperscaler stuff isn't as simple as, oh, I'll buy a bunch of GPUs and I'll offer it to people to train.

56:17No, there's a whole thing around network architecture, designing the mining rigs, cooling systems, proprietary ownership. it is super super messy i have a bunch of friends that are working in that industry it's not as simple as i'll buy a bunch of gpus um but the other thing i'll say is if a bunch of miners defect and go to ai they'll be replaced it's all pricing economics at the end of the day if crypto ends up pumping hey now it's profitable and i want to now mine crypto again so i i it's a nothing burger in my opinion yeah i remember when nvidia said we're switching everything to ai and crypto bros would dunk on them being like that's a terrible move that's a terrible move right now the best buy opportunity yep that's that's crypto for you uh uh yeah it went on to do whatever 50x since then probably okay that's it oh sf came in actually and said direct vision friday curse remains undefeated it is true every friday they just they just don't want us to have a nice weekend.

57:23At least we're bouncing a little bit now, but let's see where we are next Friday. Ejaz is saying all-time highs by the end of October, I thought. Two weeks from now, I'm going to bet that you have a smile on your face on your Friday. I hope so. I think so. All right, Raul, let's book him in. Raul only comes on when it's all-time highs, so maybe let's book him in and produce. Let's get him back. Okay, awesome. Thanks a lot for tuning in, everyone. We'll do us again in a month with Ejaz. Thanks, obviously, Ejaz, your great takes. Community loves you. And yeah, hopefully we'll see you soon. All right, guys, we'll be back next week.

58:02Same time as usual, 1130 AM Eastern, 430 PM British summertime, the last one before the clock changes. Have a great week, guys.

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