REKT Vision: Crypto Pumps Ahead of the Trump Inauguration

0:00Hi, everyone. I'm Raoul Pal, the CEO and co-founder of Real Vision. Here at Real Vision, we're committed to give you the best knowledge, tools, and network to help you succeed in your financial future. If you're enjoying this podcast, please take a moment to give it a five-star rating. It truly helps us continue to bring top-tier content. Thank you so much.

0:28Hello again, everyone. We're here for another episode of WreckVision. a good episode it feels like bitcoin back on its way close to all-time highs as we go live um feels like our our luck has turned for these shows right we've had a few pumps uh little friday pumps it feels like obviously monday is the trump inauguration there's a lot of expectations suddenly now going into that um how are you feeling about the market here rsf yeah look i think our a lot of what we spoke about last year in terms of timings were and risks were a big rally through Christmas and beginning of January, perhaps inauguration causing some form of local top and it taking a long time for Trump to actually action any of the stuff he said about crypto.

1:18Literally the exact opposite of what we said has happened. All throughout December and first week of January, we traded pretty poorly. It feels like the inauguration has now turned into more like a by the news event or something that people are excited about because Trump is now out there or there's a lot of headlines out there saying this is going to be, you know, crypto is going to be a primary focus for the White House. So with that and with the mega rally we've seen in Ripple in the last few weeks, I think it's fair to say we have no idea what the fuck we're talking about and you're better off not listening to us.

1:54So that's my main conclusion there. Hi, Raoul here. listen i think we've got until 2030 before the economic singularity arrives now it might not be the exact date but it's around then so we have about six years to figure out how to unfuck our future i've put together a report to help you called prepare for 2030 it's going to help you take the first steps in that journey to make sure you're secure past 2030 so just click on the link below and start your journey now. Yeah, that seems... I'm back. My internet might be a bit shaky today, guys. I'm going to apologize in advance for that. But it does feel as though we are looking set for a bit of a Trump pump.

2:40Before we get started, let's just again flag we've got this crypto gathering happening in Miami. I'm still unsure if I'm going to be there, but OSF is definitely going to be there playing some golf. All the VIP tickets are gone. You've only got general admission tickets to go. You can come meet OSF, Raul, a bunch of other people at the Real Vision event in Miami. Yeah, so it does feel like that's changed. I think the main thing that's changed that we've seen is this talk about the Bitcoin Reserve being on day one. So I saw today on Polymarket that the odds that are happening have gone in the first 100 days, have gone from about 20 % at the start of the year, maybe slightly less, to now being about 45%, nearly 50%.

3:28So going into Monday, there's kind of 50-50 odds that he could do a very near-term executive order here on Bitcoin. And Bitcoin hadn't really been... I mean, literally on Monday, Bitcoin was at 89K and Ansem was tweeting out it's 75 % chance that the market had topped. for the whole cycle. And very suddenly, it's turned around, and there's a lot of focus that this could be a day one or at least first 100-day Bitcoin strategic reserve. Huge, huge reversal there from what felt terrible on Friday with what was going on in macro. Do you think that the price action is telling you that that's true now?

4:13I look at this and think, somebody knows something. This is a pretty nice Bitcoin shop. It's pretty aggressive price action. And there's no smoke without fire. I mean, there's been a few different reports. And then you have Bloomberg reporting stuff yesterday. So it is sort of like at a reasonably high level of journalism that we're getting these rumors. So there's enough excitement going into it, I think, such that we probably keep rallying through the weekend on Sunday and we then maybe see a little bit of a sell-off as his inauguration speech starts or whatever it is, kind of like how we saw with his Bitcoin speech earlier a few months ago.

4:58So the main thing really is like, yeah, I mean, I don't really have a concept of how long it will take before the US potentially starts, buying Bitcoin. But theoretically speaking, he could put in an executive order to say, okay, we're not selling our Bitcoin. And I think the market does take that positively because it's still a bit of an uncertainty, even though maybe it's an expectation now, it is still a bit of an uncertainty. And you do see a lot of FUD and market selling off every time you hear news about the Silk Road stuff and moving wallets and getting flagged as okay to sell it and all that kind of stuff.

5:35So I think that will cause a relief to the market. And it will then make people start to think about the next thing, which is, can the US actually start buying Bitcoin to add to its reserve? The headlines on the SEC dropping many of its current cases and deregulation is the wrong word, but maybe like sustainable and appropriate regulation of stuff that's just been left, you know, unbothered for years now, basically. So I think there's a lot to look forward to. And it does feel like, given the headlines we've seen, crypto as a whole is going to be a priority and not just something that's left behind.

6:20And I think, you know, the bear case or what anti-Trump people would tell you last year would be like, oh, he's just saying all this stuff to get one votes and forget about it when he comes in. And it doesn't seem like that's going to be the case now. And we always spoke about that as our risk for this year. We were like, if Trump follows through, we can have an extended bull cycle and things can go pretty crazy. If he doesn't and he just drops it, that would be the risk. And that's what would cause perhaps a premature ending. So it feels like we may be in for the more favorable scenario here, the more favorable outcome.

6:54And that for me has been, for me personally, that's been the biggest thing. away from charts and all the macro stuff, et cetera, and four-year cycle, et cetera. This for me has been the biggest thing because it's huge structural changes that are very positive for the industry as a whole. And yeah, it's got me feeling pretty bullish, much more bullish than I was feeling maybe just even a week ago, I think. Yeah, I think you raise a good point. I think a lot of people were bullish on the expectation and thought it would be a kind of buy the rumor. Silver News event. What's seemingly had, we had that sell-off, obviously, well, a little bit of a sell-off in December and even earlier this week, just because macro has been going through a little bit more of a tussle with high bond yields and high dollar.

7:42And normally that's not normally a great environment for crypto. But Trump's really kept up the momentum with crypto, which I think people didn't think, thought maybe he used it to get elected and that the policies might be kind of even like a year two or year three thing, or at least not day one. But now, it's seemingly like these are some of the main executive orders we're hearing about that can come from Trump around crypto. It does seem to be kind of a very key bit of policy and interest for him. There's a lot of focus that he's very, very focused on the Bitcoin price. He's going to be, like you said, There's the report saying that he's going to make crypto of strategic national interest, and that could potentially involve a Bitcoin strategic reserve.

8:30Obviously, there is Bitcoin related to the Silk Road confiscation at the moment, which potentially they safeguard. There's some other small pockets of it that they could also look to safeguard. So maybe it's just keeping hold of that. Maybe it's buying it. but it does feel like he's definitely kept up the momentum. And this is going to be, there are reports that he's going to be looking at this like the stock market. In his first term, he was very, very focused on how well the stock market had done. He's also seemingly, I think, going to be focused on the price of Bitcoin. So that's probably a good thing for crypto if the President of the United States is very much focused that the price of Bitcoin shouldn't go lower over his term.

9:15So we're in a good state there. Maybe we should talk a little bit about what happened earlier in the week, because like I said, Bitcoin did hit 89K. There was bearishness everywhere, right? We came on here with Raoul last week, and we spoke about the various different macro worries that were kind of rearing their head. Obviously, Raoul still was pointing to the continued bullishness, but we had bond yields hit a kind of a two-year high. The dollar hit a two-year high. Oh, no, bond yields hit like a yearly high, but back up to was like 5%. And then we had better CPI than expected, or at least lower CPI than expected, better PPI than expected.

9:57And that was on the back of a decent jobs report week before. Do you think the market just got ahead of itself there a bit, OSF? Like suddenly now we're back to rate cuts expected this year. I think some of the Fed shares came out this week and pointed to the idea that, you know, they could still have multiple rate cuts this year. Do you think the market just got it wrong there in assuming that inflation was going to stay high? And do you think we've got a little bit more space now to continue to rally for crypto? Yeah, look, I... Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet.

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11:11With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500. It's trading with a plus. It's what I said last week. I think people had too much PTSD from what happened in 2022. And we're just like, oh my God, what if we start getting rate hikes again? What if inflation goes through the roof? I still feel that's fresh in people's minds. And I felt like given the big run that we've had and people have this PTSD from round tripping and etc., the knee-jerk reaction was like, okay, now it's time to take profits because what if this stuff starts going the other way now?

11:58And I don't want to say it was an overreaction of the markets because look, like, yes, stocks didn't move that much. How much do stocks pull back? Like 5 % or something like that? 5 % to 10 %? It wasn't a huge pullback in stocks. Crypto is volatile. crypto moves around and Bitcoin pulled back about 15%, 16%. And altcoins were maybe pulled back about 20%, 30%, 40%. These are normal, normal pullbacks that you have in crypto as well from already very high levels, at least on Bitcoin. So I don't think it was even really an overreaction. It just felt like, hey, this is a profit-taking point for lots of people.

12:38Maybe long-term capital gains is a factor for retail as we turn the year. and the US tax year and all that kind of stuff. So it seems like those were really the factors. And yeah, like we had PPI come in below expectations. You had CPI come in in line, but below expectations on core. And just once again goes to show like inflation numbers are not really that bad. And it will take a lot, in my opinion, for them to get to anywhere near the levels we saw in 2022 because we're sitting here right now with the Fed base rate at, I think, four and a half to four and three quarters. And when this stuff kicked off two years ago, the base rate was like 0.25 % to 0.5%.

13:21And inflation was already up like 5%. So you're in two very different environments. And the Fed doesn't have to hike rates. Maybe they keep rates this level for longer and that will mitigate inflation. Maybe we have more rate cuts. That's not what people were expecting a week ago. So I just think it was... The fear in the market was maybe overblown, but price action was actually kind of like more normal to what you'd see, I think, in any rallying market. That's hot. Yeah, you make a good point. I think people obviously have recency bias. So they think about 2022, like, oh, we're about to have it in 2024.

13:59Like there are a special set of circumstances there, like off the back of COVID with a number of different supply side issues. And then a huge amount of demand came back. And then obviously you come off a huge period of money printing as well. Like that was a real perfect storm for inflation. In the last two years, we haven't, I mean, you've had money supply coming out of money printing out of China. But like the US has been in quantitative tightening. I mean, you could argue there's been money supplied by different methods, but it hasn't nowhere been near as accommodative than the period before that.

14:36And then you had, obviously, a lot of the supply side issues are not really there anymore. Oil has gone up over the last week or so, mainly because of sanctions potentially for Russia. But it's not like where it was, where, you know, oil was nearly$130 or around about that. Like, things feel very, very different now. So I agree with you. It would be a huge departure. And I do think the bond market probably got ahead of itself there in terms of inflation expectations and the lack of need for rate cuts. So macro seemingly, I think, is probably going to still be a bit data dependent. We've obviously got, but we've had the CPI, the PPI.

15:20We've had NFPs already this month. So we're kind of waiting until after the Trump inauguration next month. I do think each one of those data points is actually much more important now than it was last year. Last year, it felt like that was very secondary. And this year, I feel like those ones are going to be very, very important for crypto, just because macro is going to be moving a lot more with it. So if you're just looking at crypto, it probably makes sense to have a little bit more of a macro head on, I think, at least for Q1, Q2 this year, because I think they're going to be pretty important.

15:48But it does feel like for now, everyone's straight back to assuming we're going to the moon on the back of this Trump trade. I guess the only other thing to mention here was kind of the AI stuff that we had spoken about last week with Raul. That had actually kind of been decimated by Monday. That figure that had hit around$15 billion went all the way down to around$10 billion. And then completely V-shaped up to around$18-19 billion on AI agents this week. What have you been looking at a little bit? But I guess maybe I'll frame it for the audience in that at the moment we have the memes, which is the Truth Terminals first kind of coins when they came in.

16:33That's Goat and Fartcoin. Then you have the marketplaces, which is things like virtuals. And let's say Infra, things like AIXBT, ARK, which are both big open source repos. AI16Z, yeah. Yeah, AI16Z, sorry. and then you have some of the agents themselves. AIXBT has been one of the most successful ones there. And then recently you've had like more applications, which I think can relate to the agents themselves, but you've seen things like DeFi meets AI, AI-Fi or DeFi, I think they're calling it, plus some other like smaller applications and things like the metaverse and gaming and all this sort of stuff.

17:16What's caught your eye this week on that dip? and then what do you think looks strongest right now? Yeah, look, I think just to reiterate, I think I'm really, really bullish on this entire AI infrastructure and agent space for this year. A lot of last year when we talked about stuff, I was like, I'm only in memes. I'm only in meme coins and nothing else. Maybe a little bit of majors. Didn't touch any altcoins and I didn't touch the AI stuff from last year because I didn't feel like they had a tangible product narrative. and that's changed. All this stuff has real tangible products that people are now seeing on the timeline with regard to the agents.

17:55So top down, with this space, just being at a total market cap of$18 billion, that will, there's no doubt in my mind, that will 10x this year much quicker than people, I think, realize. Because I think you have to get your head out the meme coin world, get it into the altcoin world. Do you think it 10x is this year? I think it 10x is this year, yeah. Whether it's existing coins or whether it's new coins, whatever it is, like it will 10x this year. I mean, there's new tokens that are coming that haven't even been released yet that will probably be at like multi-billion dollar market caps that will fit into that market cap.

18:29So I think we'll get to, you know, 150 to$200 billion this year on that number. I think a lot of, so you have the infrastructure slash launch pass slash marketplaces, I'll bucket that all as infrastructure. Then you also have like the products, so agents, apps, and that kind of stuff. In my opinion, I see a world where you sort of have like a pump fun-like thing, but with AI agents. So you'll have with how easy it is to launch an agent on virtuals and how easy it will become to launch agents on Solana. You already have something called Top Hat, which is pretty easy to use, which is built on AI 16Z.

19:07You're just going to see, in my opinion, hundreds of thousands of agents, possibly even millions of agents, like yeah, with meme coins, all doing random stuff. And so to me, my initial thought there is like, it makes buying agents feel risky because I think it's always going to be the hot new thing. You have to keep rotating and shopping and changing. It will be an attention game for the agents unless something has particularly groundbreaking tech. But it does mean the rails on which they're built on and housed on and launched on the infrastructure and launch pads, that stuff is going to crush it in terms of fees earned.

19:40And that's the stuff that can go really parabolic. So for me, it's like, I'd rather buy virtuals at like a$2 billion market cap or AI 16Z at a$1.5 billion market cap. I'd rather buy those than going and buying like agents or apps at like$700 billion. Because I think it's more likely that will 10x than some of the agent stuff. And I really do believe virtuals and AI 16Z, I think these things can be like$30 to$50 billion in FDV. I think it will get there. and you have to remember like with this whole stuff right now you have the same crowd that was in DeFi in 2020 that was in MemeCoin that was in NFTs in 2021 the MemeCoins last year and now you have that same crowd like gambling in this stuff but this is a much more investable sector than MemeCoins ever was like I actually just before this had a call with a mutual like you know former TradFi guys that now like have a crypto fund who are like involved in this stuff and looking at this stuff and comparing it to altcoin FTVs and thinking that's the ceiling of the stuff.

20:40That's where it can get. I've never had any conversation with any of those people on meme coins. And you never really will because ultimately they have investors and they can't really pitch their investors and let me go and gamble it on a bunch of stuff. So the meme coin stuff is just a retail thing. I think this is a retail thing plus institutional plus a TradFi thing. So I think it can get to altcoin FDVs in the bull market of 2021, which is like tens of billions of dollars of market cap. And these guys have just spoken to even compared to the L1 narrative as well. And like, you know, which is kind of interesting.

21:13Can you see like the AI C &Z infrastructure being compared to an L1 as being infrastructure where like all the AI stuff is housed on? Yeah, possibly. Like, you know, starting to smoke crack a little bit here maybe, but like potentially it can be. So I think that's where you want to be in my opinion. And I still think you have to get your head out of the mindset where it's like, oh, I could have bought this stuff two months ago, I would have made a thousand decks or whatever. I think I have to get your head out of that mindset and understand why it moved that aggressively in the first place and why it can move a lot higher.

21:46And obviously, I'm saying this as someone who didn't touch anything outside of MemeCoins really for all of last year and after your perseverance, just had a sort of awakening on the 1st of January and kind of just like went balls deep, basically. Yeah, I don't know if they are... The L1 comparison is an interesting one because I think it's an imperfect comparison in that I think these, you know, the way that you talk about applications and infra, I think these are essentially the applications for Solana, right? Like how Solana would look at these is like AI-16Z is the application, essentially.

22:25Like these are the apps on top of the L1. And I think how they will work will be slightly different to how we would maybe predict, how we would like traditionally see like an L1. And I think they'll probably work by selling services over the top or there'll be a marketplace, like you said, like a pump fund. Maybe there'll be some trading related to the token itself, like virtuals in terms of the liquidity pools set up. So I don't think they're quite L1s, but they're close. They're close. They're like mini platforms in of themselves. and that's how I generally see that. I think that can work. I was actually looking at the history of open source tech.

23:09I was looking at Linux, the operating system the other day and the creator of Linux didn't necessarily make that much money. He didn't monetize it, obviously, that's why it was open source, but he monetized it in different ways. but like there's been companies which have which have made a lot of money off linux and so it's been sold for like tens of billions i think red hat was a famous one which sold for um like 70 billion and that was basically a services company built on top like a sas style company built on top and i think that's generally how these people will be set up so they'll have revenue but it'll really be about still being a core contributor to these open source frameworks like ai16z but but selling services on top of that with like special plugins or maybe they'll get into certain product lines.

23:59AI-16Z came out with humanoid robots this week they might move into. So I think there's just a lot of promise and possibility, although it is very early days. And I do think it's going to be very big. I do think it's going to be very big. I think we'll find out if the Emperor has any clothes in probably about 12 months. So I think from now until then, there's going to be a lot of cool stuff that can potentially come out of this space. And I think the macro tailwinds are behind it too, just with AI. I think Rau's criticism last week is still very valid. At the moment, most of these are chatbots, but you're starting to see the foothills of that change.

24:38You're starting to see bots which can trade for themselves, which can potentially make investment decisions for themselves. Graphene, for example, came out with one where you can buy anything on Shopify this week using one of their agents. So you're going to see integrations into retail, broader retail, which I think will be interesting. So I am in agreement with Rao's take that we are building upon other people's tech. We're building upon the LLMs built by OpenAI, bi-anthropic, for example, and then we are applying them to crypto. My honest view is that we will see an incredible amount of innovation here at that point where AI meets finance.

25:35I don't think that crypto is going to be revolutionized or creating AGI or anything like that. But in that specific application of where AI can meet finance, I actually think crypto is going to see a lot of the innovation. I don't think you're going to see these other major AI firms even touch crypto, or they'll be slower to touch finance, the ability to trade and stuff like that. So I actually think you're going to see innovation in that space where AI meets finance, maybe even more in crypto than you do from the Magnificent Seven or some of the bigger AI firms. That's my prediction. That might be a bit rogue, but I just think that we're going to experiment more with that.

26:17And that's kind of what we do day in, day out. So yes, we might be wrapping at least the foundational LLMs in different ways, but they're not going to do it for us. Like Microsoft and Google are not going to be building chatbots or like, sorry, agents that can trade crypto. We're going to have to do that ourselves. And I generally think that we're going to innovate a lot in that process. So I think you're going to see a lot of innovation in this space. It's going to be an interesting one to see. So that did rebound,$18 billion. I think the biggest winner this week was AIXBT, which is kind of the...

26:54How would you describe AIXBT? It's become like this. It's one of the most followed accounts on X. And you can basically add it, and it gives you a bit of a summary about anything in crypto. So you can tweet out like, like, hey, what do you think about Solana? And it will give you a little summary and tell you what it thinks. You like this one. Maybe you can talk about it a little bit. Yeah, I think there's two ways to look at AIXBT. The first way is looking at it as like, hey, this is a really good source of information on crypto. You can tag it on Crypto Twitter and it will give you a short reply.