Emergency crypto update: $1.6B in liquidations and whether this is the top

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show. It's the calm voice telling you not to panic set like your friend telling you not to text your ex. Your host Jay Hamilton. It's Thursday, September the 25th. The market is crashing. Everyone is panicking. Stay off crypto Twitter. It is ugly out there, folks. Ethereum's below 4K. It's red. Everything's red. What's going on? We are all together right now in Croatia and we thought we should get together and give you guys an emergency flash update on what we are seeing and why we maybe aren't so panicked or why we are a little bit more calm. You have to stick around to find out if we are panicking or if we are

still calm. We got all the boys together. We got Chevy lead writer on the Milk Road team. We got John, our macro podcast host. We got Kyle, head of research. And we got Martin over here, crypto investment analyst and head of Milk Road Macro Milk Road Pro. So, whole squad here. Uh, before we jump in, as always, just do a quick favor, guys, wherever you're listening, smash that like button, give us a subscribe, give us a review. Hopefully, you like our content. If you do, really helps the show continue to grow. Today's episode is brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns. It's also brought to you by Nexo, the platform that grows your crypto without locking it away with that voice. What's going on?

>> I just realized we should be having cheeky beers and we're not. >> We should be having milk. >> I've never had to sit in silence live through that in introduction before and it feels much different. We're all just sitting here staring at each other. >> You guys are doing great. You guys are doing great. Okay, let's let's start with the question of the day, the question of the hour. Uh you guys panicking? No, not at all. I'll start with this. I think that the most important thing to do in times like this is to zoom out. Like I'm the host of the macro podcast. This is a macro thesis, a macro asset. Zoom out. Don't overindex on what's happening this week. I think if you look at the the long-term bull market structure for Bitcoin, personally, I would feel bullish until we close for

like two weeks below 100K. To me, that's where we break structure. But we could drop another $10,000 on Bitcoin right now, and I wouldn't even break a sweat. I wouldn't even start watching the charts. Um, Ethereum, I think, is you mentioned in the introduction, is another really interesting case. 4,000 was a resistance level for ETH for I think a better part of like 18 months, over a year. Um, and it finally broke through there in August. What we're seeing right now, in my opinion, is just like a bullish retest of that level. Once that holds, I think we're just going to have a set up for another phase of the bull market, break all-time highs, you know, off to the races from there. So, I would just say like don't get over overindexed on what's happening this week. zoom out, look at the long-term structure of these assets and

don't let somebody post a meme that panics you out of your position, you know, like just stay calm and huddle and you're going to be fine. We're all going to get through this. It's going to be okay. >> And for a bit of context, about an hour ago, just before we started this, actually, when we decided we should probably do this emergency update, uh, a few of us, John and I and a few others were sitting at this table just kind of working and Chevy walked in through the door and he said, "Hey guys, East under 4K. Are we panicked?" And our finance major was sitting here and she popped her head up like, "What? center 4K and the rest of us were just continue like nope not at all and just kept going. So, uh there's absolutely no panic here right now for the reasons that uh that

John obviously said. I think um you know we're still in the middle of a bull market. I think there's still plenty of room left. Uh how long that's going to be don't know. I'd recommend checking out the Milk Road Macro channel. Uh John and I did an episode that I think actually goes out today as well. Um where we talked all about sort of the macro backdrop um and where we see the top of this market or at least how long we think it'll go. Um and part of that I think we were thinking is um it actually might extend farther into 2026 than we originally thought. You guys have heard me on here tons of times say you know Q1 2026 starting to think that might even get pushed out even farther. And so until that point, until we start to see either inflation break out too much or

things in the macro world break, which it's not, um, you know, we remain bullish and dips are are for buying. >> Martin, how are you explaining this dip? >> Yeah, for me it's just normal correction. Nothing really going on. Uh, like I wouldn't panic. I think we are still in a in a good position for the next couple months and it's it's not a big deal. I think people should really like just sit down, do nothing, and just stay focused on longer term horizon. >> Yeah. Gold at alltime highs, stocks at all-time highs. But that's part of the confusion though, right now, right? It's like we got rate cuts, okay? We had a whole bunch of every every K and every Twitter account was, you know, posting

the meme. Rate cuts are in. Here we go. Parabolic. You start to see those words around and then stocks and gold go. But why? But crypto's not >> because we've known rate cuts were going to happen for what two months now or something like that. It's been pretty obvious. So that could and easy probably was um already priced in. But what generally happens is we go through accumulation zones where we sort of just chop in crypto and in stocks and gold. And then generally it's not crypto that goes first. It's usually gold or stocks. Both of those have ripped. They're at all-time highs. And so I think it's only a matter of time until crypto follows.

Uh we were talking before and the TGA uh which we've talked about a bunch uh at least in the newsletter, not sure if we have on the podcast, but that refill was needed, that's now done. So that was probably the thing that was kind of holding things back. And so I think gold and and stocks are are up. Generally what happens though is um you know, as John said, we've moved a lot. ETH has gone from whatever it was a couple months ago, like I don't know, 1400, I think it hit, all the way up to above 4,000. Uh and um and so or above almost 5,000. And so, you know, we had these big moves and now they need to come back. Leverage needs to reset and it generally takes a little bit of time for that confidence to come back. Um, it's easier for that confidence to come back

into the stock market or into gold um because they have just more passive buying and just like ongoing buying. Crypto doesn't have that yet. So, it needs a little bit more confidence. So, generally your your less riskier assets like gold and stocks will go up first will fall. So, I would imagine give it another week, two weeks and you'll be laughing. any any insights uh on on what caused this then? What is why is this dip happening? If if everything else is going up, is this is any anybody have any insights on flows and why flows are not coming in or why flows are going out of crypto?

>> I know it's a very specific question that nobody might might know right now. I'm just curious. Yeah, I think that the the clearest sign that I the clearest insight I think I could give on this is just around what happened with the big liquidations that we saw. Um I think we saw around $1.6 billion of liquidations. Primarily those liquidations happened in the Ethereum market in the altcoin space and you know in the past when it was more like Bitcoin season most of those liquidations we would see would be in the Bitcoin market. What that indicates to me is that a lot of investor interest, attention and leverage has shifted to the alt space, which means in all likelihood a lot of people just got a little bit too excited and over anticipating alt season, taking out leverage to articulate that thesis, you

know, got a little ahead of the markets and got washed out as a result. But again, I think that's a a bullish clearing of leverage in the system to allow a setup and, you know, kind of like reset a lot of these Ballinger bands and everything and allow us to continue higher in a more um let's say sustainable way. Um but so that's to me that's what I see. >> It can't be a bowling. >> It can't be a B. We're going to have some wiggles in the chart, but yeah, to me it just seems like people got a little bit too excited and over anticipating alt season and got washed out taking out leverage on that. >> Like what are we down like 16% on ETH is that's it. Like what are we even talking?

>> It's a pullback for >> Yeah. Yeah. Pull back for ants. I don't know what we're so concerned about, but that seems pretty natural and normal to me. >> We're down like 5% 6% in Bitcoin, whatever. >> I also feel like um summer was quite bullish for crypto. While usually it's very calm and nothing's happening, but uh I feel like a lot of these flows were driven by these digital asset treasuries. So we might sort of front run the market a little bit and you know with all these new vehicles pumping the markets and now we really need to like a a pause or like you know reset the market a bit and then we can continue.

>> Um it might be also a reason >> when when would you be worried? When would you panic? What would what would it take in order for you to say, "Okay, this this dip has me worried. This has me concerned >> if Michael Sailor sells." >> Uh, right now, I would say the there's not a price that really has me worried too much. Um, it would be more on the macro side of things that I'd be looking at. If the Fed decides they're not going to keep cutting rates and they're going to change and they're going to raise rates or something, sure, I don't think that's going to happen. Um, if inflation really made a big move upwards, now that's not just meaning it goes up. It's going to go up. I think that's normal

and it should go up because that means the business cycle is picking up. But if it really had some crazy spike, I don't see why that would happen now. There was a chance maybe it would because of tariffs that didn't happen. Uh, and so I would say if inflation really took off or um if something happens with the housing market and actually John just did a video an interview two days ago went it's gone viral right now on Milk Road Macro podcast. So again, go check that out. Uh, and um, there is some things brewing in there, but I I just I'm not sure it's as bad as as many think it is, but that was a good insightful podcast as well.

>> Any uh any takeaways from that? >> Yeah, I mean, I think I agree with that take in the sense that like if something major shifted from the macro perspective, obviously that would have a big impact on the market. Um, right now I agree with Kyle that although there's some risks of those things happening, there's always some risks of that happening and nothing seems like likely to me. So for now I think we're we're more likely to continue on the trajectory we're on. As far as price levels where I would get bearish, I would say like um something I've been looking as a kind like a a general rule of thumb, something I've had in mind is that if Bitcoin closes below the 50we moving average um you know spends two weeks below there, generally speaking, historically that's marked the top for Bitcoin. So, it doesn't usually recover

if it does that. That right now is somewhere around 100K. So, like if Bitcoin wicks below 100K, I'm not worried. If Bitcoin drops below 100K and stays there for a month, we've probably rolled over. Um, but again, these are not like decisions I'm going to make in a panic on an afternoon. I'm going to be watching for sustained price action at those levels. Um, and like a a general break of market structure, which I just haven't seen anything close to that happen on any of the major assets in the digital asset space. Martin Chevy and yeah, do you want to add something? Chevy >> perception is a hell of a drug. Uh September's a historically bad month.

We've had a good one. It's now flipping back into business as usual, but it feels different because it's been so good. >> Uh we've been looking at Bitcoin dominance. We looked at it break support. It's been building over about 4 years. And you know, in an ideal world, you see it come and retest new resistance. It looks like it might do that. Um, Bitcoin is gold leaves Bitcoin by 3 to 4 months. Um, gold went up sideways and then ripped um between January and September. Shift that forward 3 months. You look at Bitcoin, it's ripped sideways. So hopefully in Q4 we'll see that last minute spike.

Yeah, >> I think once Bitcoin do new alltime highs and Ethereum and these big big ones, then it will be a you know the the bull the bull season, the start of the bull season again. >> Yeah. Continue. >> No, it's just like uh we need some clear catalyst which will like okay here we are. This is the banana zone and let's go, you know, and I think it's going to happen soon. Yeah, I think we got to remember how crazy it was. And what was it? July when we had all the craziness in the ETH stats. Uh it was a really wild time. These things were going premium above two. Uh and so you need a time to kind of digest that and reset. There's a lot of funds that want to invest in these DATs to then go and allocate to to more ETH or or to more

soul or there's a lot of DATs coming right now. Um and and that tends to take time. Uh and so I know a lot of the funds that want to do it, they kind of wait. They make sure that everything's all good, right? they don't tend to rush into things that are brand new. Uh, and so I think there's still a lot of capital to flow into these over the rest of the year here and probably into 2026 as well. >> I want to pick up on something you just said, which was still bullish, feeling like that next bull run is coming, but we need some catalysts. What What could those catalyst be? What could we be watching out for?

>> Well, I feel like we are getting these catalysts every day, but people really need to see price action, right? So like uh until we don't see new all-time highs, hitting all the new headlines again and like you know uh reactivating all these people that have been like not interested in crypto at all. You know uh your friends messaging you, hey what's going on with crypto? We haven't seen it yet. And so I think we really need not just Bitcoin maybe maybe also ETH or some you know other coins hitting new all-time highs which which is going to unlock this new wave of capital coming in. Yes, institutional are coming for sure but I think it will be like slow.

It won't be like you know now we are at four trillion for total crypto market cap and it won't be like 10 trillion tomorrow and I think institutions will not like do all all that uh uh race rice basically we need that retail as well >> but you think retail could be the catalyst that gets us to >> it's both actually but the big jump that we are all expecting is going to be primarily bar retail. Yeah. Well, and it needs price action before retail makes that >> wild jump happen. I think what we'll see is, and it's not necessarily anything that's going to be one big catalyst.

Last year, we had Trump winning the election. Boom, we took off, right? Um, and we don't really, and then the, you know, earlier in 2024, uh, yeah, 2024 was the Bitcoin ETFs. I guess that was even like end of 2023, we sort of realized, oh, these are happening for sure, right? So, like you had some of those big catalysts. Now, I don't know that you have like some big some big boom, but you just have a bunch of demand coming from one the DATs that I just talked about. That's not stopping. That's going to continue and they're going to launch more things and and different structures kind of like what Micro Strategy has done. You're going to have more ETFs coming across the board.

You're going to have staking for ETFs coming. And then the other really big one that I think is going to happen and this is going to take the you know over a year to play out um which is as rates continue to come down of course that's bullish for risk assets but what that's even more bullish for is the fact that there's you were saying yesterday 7 to8 trillion in in money markets right now I think in the US >> over 7.7 >> 7.7 trillion and so the rate right now is 4.25 25 I believe if that goes down to around you know 3% over the next 12 months where are they going to go to get more yield they're not necessarily yes some of that capital go to risk uh to risk assets but not a lot of it does most of that capital needs to remain in

dollars or kind of low risk so where could it go stable coins with yield that's becoming the thing and the thing is is that when rates go lower the yield in DeFi goes up more right the yield in the traditional world goes down the yield in DeFi goes up and so I think and now For the first cycle ever, we actually have good legit stable coins that generate yield in various different ways. You can use it with Coinbase, right, by putting into USDC. You can put it in Sky, you can put it in Athena. There's actual institutional grade yield bearing stable coins or ways to use stable coins to generate yield, whether that's using DeFi protocols, etc. I think that this is the year that we finally see that. Now, not necessarily Q4, right? Because we're only going to cut two more times by the end of the

year, but throughout 2026, I think we're going to see I mean, we're already seeing crazy growth in stable coins. I think that's only going to continue. And so I don't know that we're going to have this one big catalyst yet, but I think we're just going to have this continuous demand and continuous adoption and continuous flows, which is what continues to lead me to believe that we probably have a longer cycle and we're still I don't want to say early stage, but let's say mid-stage maybe. >> Any uh any catalysts that you guys have mentioned? >> I agree with everything they've said. I think every week that has passed and it does feel like every single week there's some kind of bullish news but the fundamentals of the digital asset space has gotten stronger and stronger that's been supportive of price but we haven't really seen like this massive breakout

to me I think that that means you know a Bitcoin of 150 and Ethereum breaking and holding 5K I think that brings a lot of retail interest back and I think that will be the catalyst because like Martin said like the fundamentals growing and getting strong people are in the space are watching that and seeing that and understand the value that's being added there. But until the price action breaks some huge level and people get this FOMO to come back into the market, I don't think we'll see a catalyst like that. So for me, what I've been watching is 5K for Ethereum. I think that that is the thing that'll bring back the FOMO and that'll bring that back to the altcoin space. Like I don't think retail is going to come FOMOing back into Bitcoin at 150. But I do think once ETH breaks

5K, you'll see a massive breakout in the rest of the asset class. And I think that's the catalyst that we're going to see. I'm not sure exactly when that'll come, but that's what I'm watching. It's kind of like when Bitcoin hit uh 100K, I was starting to get text messages, right? Uh and so that brought a bunch in because that's like that number that everyone cared about and heard about. And I think you'll get that same thing with ETH at 5K sold at whatever the all-time high was there. Those two things are very retailheavy assets. And so when they start to move, that's when people come back, right? Um so that could be the big catalyst, right? >> Why do people invest in real estate?

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Nexo is a premier wealth platform built for people who value their time and money. It's built for people who have idle cash lying around and want it to grow fast. Whether it's Bitcoin, Ethereum, or even Forex pegged assets like USDT or USDC, Nexo offers up to 14% annual interest and access to cryptobacked credit in under 24 hours. Your assets need a platform built for growth. Join Nexo. >> Interesting. Uh let's talk about the outlook for the rest of the cycle. So, and I I want everybody to focus on try to position Q4 and then and then go beyond. Do you see us having this bull

run in Q4? What's your probability versus what's your probability that this extends into 2026? And do you think that there's what probability would you assign to to Q4 of us hitting these larger goals of like 150 Bitcoin? I mean 5K didn't seem like a big goal about a few weeks ago, but it does now again. Uh versus what's the probability you think that that big pump doesn't come until 2026? >> I'd be very surprised if it took till 2026. I think Q4 is going to be a big quarter uh for crypto. In terms of what price we get to within that time frame, honestly, I don't know. But Q4 tends to

be a very good time for crypto regardless. Um, so I would not be surprised if Bitcoin was above 150 in Q4. Um, and ETH is definitely all-time highs by then. I'd put a high probability of that, so say 80%. Um, and yeah, I'd be very, very surprised if we weren't much higher by the end of this year. Now, I still believe that we're going to go farther into 2026, whether that's Q1, Q2, Q3, Q4, even in 2027, I don't know. I have the probability for all those. I think there's a chance that this could extend far longer than we all thought. Um, partly because I think in April when the terrorists happened, I think we sort of reset the cycle. And what's interesting is, you know, when we started the cycle back in 2023, Bitcoin was around 20K, 16K to be exact. Um, and

we started the cycle from there, right? We went all the way up to, you know, whatever it was, 100K or something. And then we had this big pullback from the the tariffs. And that basically reset the business cycle. It reset a lot of the the liquidity cycle, the pricing cycles. And now it's like this cycle's actually starting from 80K instead of 20K. Which means if the cycle's just starting and the floor was 80, that was the where we started at. Well, that means we've got a lot more room to go from here. And so I think that's actually going to extend much farther into 2026. >> So basically tariffs calls the smallest bare market of our lives and now we're in >> and Bitcoin was barely impacted by it.

Bitcoin was so strong during that time, but it did in my opinion from all the data points it looks like it reset the cycle. We were saying that in April I was like, "Huh, this is kind of weird." like remember we never really hit the business cycle above 50 um in the ISM PMI um and we sort of reset it and now we're we're kind of on our way back up. So >> we've been writing a lot about that in the Milk Road macro newsletter how a lot of analysts now with a lot of the revisions of the labor data and other things have saying that have been saying that there's been small like recessions or like sharp bare markets in in the recent economic past. And so that kind of does support that thesis that maybe we are starting a new cycle or you know

the old other cycle was delayed. However you want to phrase it. Um but it does seem like a lot of that's been processed by the market and that there's opportunity for an upside there. >> But the thing is I think a lot of crypto Twitter anyway you hear so many of them saying we're at the top. We're at the top. But that's because they're they're anchoring to that 20k Bitcoin, right? And so okay 120k that feels reasonable for an entire cycle. But if we started the cycle at 80K and we're only at 110K, would you be screaming for the top? You'd be like, "No, this thing's just starting." So, I think we need to change our anchor. >> I think one thing I'll I I'll say is that I'm really interested to see what happens at the ne next FOMC meeting for the Fed because as we've said, there's

been a big like a half a trillion dollar liquidity drag on uh from the the Treasury Department refilling their general account. Um so, that's been some liquidity that's come out of the market. the market is pricing in I think at like a 94 something like that percent probability of another rate cut in October. If we get that I think that's confirmation that the Fed is kind of sticking to this more dovish path. It gives investors more confidence to deploy more assets like risk assets. There's less liquidity drag. You know some of this capital from the um what we talked about the money market will will come back into the market looking for risk assets. I think it'll just be supportive. So like you're asking me probabilities that we get new all-time highs. I think once we get to that checkpoint, that is going to give

investors much more confidence on the path of the Fed, much more confidence about liquidity, interest rates, and I think that that'll give us an idea of just how bullish Q4 will get. Um, but if we get to that point and we've gotten, you know, we're going to get some inflation data before then. If it's blown out of control and Jerome Pal says never mind, he pivots to more hawkish tone, maybe that delays things more. So like I'm I'm kind of watching to see what happens there because I think once we get to that point that'll give us a pretty clear view of the road for the rest of Q4. Um so I'll feel more confident there. But for right now and until something ma major changes the highest likely I don't know what number probability I would assign but the likely the most likely thing is that we

continue higher because liquidity is going to keep flowing and that's the path we're on. Until it changes there's no reason to think it will. >> And we've talked a lot we've had in the newsletter a ton about the Dixie right looking at the dollar. The Dixie is is a lot of basically comparing the US dollar to the euro is a big big part of it. And what's interesting right now in terms of dynamics is the US is finally starting to cut and the euro or Europe has actually stopped cutting, right? And so they've kind of announced that they're going to they're going to hold for a bit here. And so what this tells me is likely the Dixie is going to go lower here, which is generally the catalyst for Bitcoin to go much higher. And so I think that's what we're going to see.

Then the other reason I think you should not be thinking this is the top is because one, the US is just starting their easing cycle or their cutting cycle. Maybe the easing comes with it. Um but don't forget China's also over there doing the same thing. So you have the two biggest economies in the world that are going into an easing, not a tightening. And so never do you see a bare market come when you have the biggest economies in the world easing rather than tightening. My mental model is I think we are going to do alltime highs by the end of this year and then January I don't know Q1 maybe might go some correction maybe a little like bigger one than we are used well we are used to big corrections but you know something like maybe let's say

30% or something and then the discussions around okay Paul's going to be replaced by someone who is going to be more aggressive with rate cuts and when the markets are start to pricing that in and like trying to frontr okay the money are going to be super cheap. So like people and investors are trying to frontr that news and like it will probably create next pressure and create a new highs again which what's interesting about that is that's exactly what happened last year. Trump won the markets went berserk thinking okay he's going to come in all the policies are going to change let's frontr run that and we went to all-time highs in Bitcoin and beyond. Uh, and then once Trump took office, we had the huge pullback. Feels like maybe it's the exact same thing. Be

very interesting if that's what ends up happening. I mean, it looks like it is. We started rate cuts in September just like we did the year before, too. There's a lot of of very sim like similarities to to what happened. >> Chevy Q4 in 2026. >> Yeah. Look, it's been a slow grind up and I wouldn't be surprised to see it a slow grind continuing throughout 2026. I'm trying to I've been sitting here trying to think of like yeah what what is that blow off top like that 2017 era Bitcoin was a five grand all of a sudden it's a 20 >> You got to remember that the administration wants to run it hot. What does that mean? It means we want to pump markets and we want to do it for extended period of time. That's not what they're trying to do is pump markets.

They're trying to run the economy hot. But running the economy hot means that markets are going to keep running hot. And if that's their goal and that's what they're continue to do, then don't fight the Fed, right? by the administration. >> Is it just a situation that we're in that uh it almost feels unbelievable that the that the S&P could have a third year in a row of 20% plus return. That is that is something that we have not seen before and that we and that that is why we were in this position of such a dichotomy of two sides. You can find the bears are loud and the bulls are allowed. Everybody's loud right now and nobody's in the middle. Everybody's on either side, right? And is that is that

because we are in a a new uh a new system, a new regime as a result of things where maybe yeah bare markets are shorter than they've ever been in the past and structurally that was a bare market maybe and we just have to shift our viewpoint to this new reality and there's a lot of people who haven't done so. >> I also feel like it's not just crypto that's now changing the market. It's also AI and there is so many unknowns like you know we cannot say for sure what's going to happen in three or five years like we might see our economy like completely rebuild and like the the the services that contributes to GDP are going to change a lot and like I I think it's very scary for for some investors

in that regard and so it's not just crypto but it's also AI adding you know a certain level of who knows what's going to happen. You also got to remember that forget crypto for a sec, but think more about stocks, the stock market is is typically over time valued on earnings, right? And as more and more tech is put into these companies or these companies launch more and more tech, their companies become more and more efficient and more and more profitable and they can create more and more earnings. And especially with AI, that's going to create like that's just going to make that exponential. And so earnings are going more exponential than ever, right? We've never had earnings grow as fast as they are. And you also don't have we've never had as much debt growing as fast as it's growing too.

What does the combination of those two things mean? It means the valuation of of assets must go higher along with that. And so to me, it's like again, we need to stop thinking about how the world used to work and how the stock market used to perform because that's based off of earnings that didn't have AI and didn't have blockchain and didn't have robotics and didn't have all the things the technologies that we have today, right? Um, so we're going, we've talked about the exponential age for for years on this show. Um, and that's really what's happening is technolog is going exponential. Uh, and as a result, the price of assets are going to go exponential along with it. And it's and it's exponential is very difficult to model >> 100%.

>> Right. It is not >> hard for the human brain. Exactly. >> Think so. We have a company Nvidia is at $4 trillion today. I don't know about you guys, but if you were investing in 2019, a trillion dollar company was a weird thing that didn't exist. And 2021 or maybe it was 2020 was the first time we had a company where we're like, whoa, there's a trillion dollar company. I think it was maybe Apple or something or Microsoft. And we're like, wow, this is crazy. And it's four years later and now we have a $4 trillion company. And we have like how many companies are over a trillion? Like five of them at least. And so like I was saying this on the podcast yesterday. I think we're going to have a $10 trillion company very soon and a$20 trillion company not too far

off either. Could be three years from now, maybe five, but I would imagine it's three. So like the frameworks we used to have, you need to throw those out the window, right? We need to be in the new world and that's a tech-driven world where I milk road map or macro. Exactly. >> No milk road map. >> No. So, one other thing I want to say on this is that, you know, you're talking about it's hard to model and like the S&P has got, you know, the third year of 20% returns. All of that you got to remember is in nominal terms and what that means is that we're valuing US dollars. So, if you're denominating everything in US dollars, you have to remember that the US dollar has been obliterated, right? We we printed $6 trillion in 2020. So, all of these models historically have said one thing

and like, oh, we're we're at a bubble. We're overvalued. But we have this situation where there's this huge amount of liquidity that's been dumped into the system that's desperate to find somewhere to go. Usually, we've just gone into the bond market. We've seen this sovereign debt crisis where nobody wants to buy long-term debt from any Western government. And so, there's this desperation to find somewhere to put all this liquidity. A lot of it's gone into gold. And that seen the biggest bull run in its entire history. That's going to continue, I think, because still there's enormous amount of liquidity, desperate to find somewhere to go. It's going into gold. It's going into these hyperscalers for AI. So yeah, I think the S&P will continue to be overvalued because the like you're saying like the it's hard to model exponential. The denominator that we're using in all of our models is

totally busted too. So it's just like we're going to get to see a lot of things at valuations that historically would have been insane, but because of how fast the dollar has lost value are going to just be the new normal now. >> And you make a good point there, which is a lot of the capital used to go into bonds or into gold, right? That was the old version. And why did it go into gold? Well, all the same reasons of Bitcoin, right? But but it's rock. And then why did they go into bonds? It's because countries were so important, right? Like governments, they they ran the world. But nowadays, who's bigger than governments? Who's more I don't want to say trustworthy, but who's growing faster and producing more profits and making a bigger impact on humans and on the world than governments. Tech companies. Meta has

four billion people in their network. The US has 350 million or whatever. So tech companies are becoming a bigger, more important uh asset or thing in the economy than governments are. And so the bond market's breaking because people don't trust those anymore, right? But we do trust Apple and Microsoft and Nvidia and these massive massive massive companies. And then of course we now have crypto, things like Bitcoin and Ethereum which we don't have to trust anything. And so there's just now there is better assets that you can put your money into whereas previous gold and bonds were your your option, right? That was your big thing. So the world is changing. So pretty much money supply is going faster than ever and more money end up in in in the markets.

>> Yeah, exactly. >> And you have to >> but in in the seven the seven companies, >> right? >> And then just for some perspective, the the whole crypto market is like a little bit under $4 trillion right now and the global bond market is closer to $400 trillion. So we're talking about enormous amounts of capital that is desperate to find somewhere to go and that's why we're seeing these crazy valuations happening. Mhm. >> But it's also it helps uh America to get demand for uh bills, right? Like there is no one else buying uh US debt but there are stable coins. So like you make sure okay you want to use stable coins sure but it's going to be backed by our bills creating a a pressure because the stable coins market like even you know

uh someone from US government is expecting uh stable coins. Right now we are about three 300 uh billion I think and they're expecting it to rise to uh 2 trillion or something by 2030. So it's an enormous growth and if it's backed by US treasuries it's going to create a more buy pressure and it's good for America right so they can benefit from it. So that's why they are so supportive for stable coins and this whole movement because it sort of helped them to you know go longer and like play the music longer right >> I don't know if you guys heard the little nugget there but you said the entire crypto market cap is worth 4 trillion and before that I said Nvidia is worth 4 trillion so you have an entire industry worth the same as one

company right so if you look at the size of the stock market it is I don't know hundreds of trillion I think >> 120 trillion and you look at crypto it's 4 trillion and so then Look at the pullback of 16% today. Do you care? Don't give a because where do you think that the crypto industry is going when it's only worth 4 trillion? We've said many times 10 trillion probably by this cycle. So by next year, but eventually it's going to 100 trillion, right? If not beyond. And I would imagine it goes far beyond that. And so does your 16% dip matter? Does your 25% dip matter? You said the big one is 30 coming in January or whatever. Does that even matter if we know that the the road is actually going to 100 trillion? Who cares? Who cares?

>> Chevy, what's your line about patience? >> Yeah, I I've been pretty patient in my own holding. Like I'm typically quite an impatient person, but I've been able to hold for a while. The question that I wanted to ask was looking back at like the com bubble, there were a whole bunch of promises that were then built over two decades. >> But the do bubble happened cuz everyone was like it's going to happen in the next 2 years. >> Realized that wasn't really feasible. Everything collapsed. With AI feels like it's moving at a pace right now, at least that I can see the demand is just not dropping off and the revenue, the earnings are there that weren't there in the com bubble. Do you foresee a point at which there could be that gap of like

we've kind of reached that plateau? We don't have that like hyper growth in front of us over the next 20 years. Yes, it's going to be adopted. >> There's going to be some short-term pain. >> We we talked we tried to draw little charts with our hands during the podcast yesterday. >> Uh very much I think that's going to happen. I think with AI, the amount of uh capex coming into AI right now is in the trillions and it's it's massive and it's there's really an unlimited amount that can continue to come in because we need to build such large data centers. We need to build uh you know so much more innovation around energy to power those things. There's so much more we need to do in AI and right now there is demand for those products but as that grows I think we're going to outgrow it.

And so at some point we're gonna, you know, here's the capex and the spend. Here's the actual like utility of AI. And so at some point we'll have to come back down, right? And same thing that crypto's been doing. It's like this, right? So uh we're definitely and who knows if we're already overbought in terms of um in terms of the AI side of things, but I think we'll definitely have pullbacks along the way without a doubt. >> So the next question I have is like I'm Australian most countries like uh >> not retirement funds. Yeah. far. Um mo most countries will be relying on the US economy. Like all of our retirement savings, our markets just aren't big enough to back ourselves. So we go to the S&P.

>> Yeah. >> Um the question I have is like is there a worry around seven companies essentially representing the S&P and when that pullback comes, they're all trying to push around AI? I mean Tesla, yeah but >> they're a car company, but they're an AI company. Um, is there some systemic risk there where it's like global financial crisis 2.0? >> Yes. >> Okay. >> Next question. >> That's through another e market because it's easy to see and to build a strong bearish thesis. Um, that's something that makes me a little

bit bullish because if everybody's bullish, that's when you know, you know, you um so, but yeah, look, I think there's some risk to this. Nobody's quite sure how this is going to play out or over what time frame. Um, but yeah, I think that there's there's a lot writing on those seven companies. Yeah, >> but I I would say there isn't systemic risk like there was in 2007 with the real estate market, right? Because these companies that are in this sort of like call them a bubble or whatever they are, we don't know if we're in the bubble yet, but they actually have real cash flows. They have real revenues and they have sitting on billions and billions and billions of dollars of cash. In two years from now, who knows? Maybe Apple has a trillion dollars instead of half a billion dollars or sorry, half a

trillion like they have now. So like there's not it's not like those things are levered up to the tits and it's going to cause this crazy systemic risk. Now, we'll see where things go. Of course, there could be lever play as rates come down and they start to take leverage, but they have like they're making hundreds of billions of dollars and they have hundreds of billions of dollars in cash just sitting there. So there's there's a lot less than what was going on in 2007 when the housing market blew up because there was it was all leverage, right? So it's a little bit of different scenario today. uh if you're comparing those seven companies now there is risk of seven companies basically running the entire world because the world is moving more and more online and not only is the world like humans have moved online but as

robots and cars all become AI owned by one or a few companies yeah there's definitely risk there um but in terms of like a leverage play like uh let's say 2007 I don't see that right now although there is issues with the housing market of course but we're talking about those seven big companies it's less of a systemic I would say today. Who knows where that goes. >> All right, I'm going to I'm going to wrap us here uh because uh we've we have achieved the goal, I hope, of calming everybody down that's listening uh with this emergency flash update. Uh this is a pullback for ants. Uh still still let's go around. Still bullish.

>> Yeah, mega bullish. >> I remain bullish. >> I am very bullish. >> All right. Well, >> you >> still bullish. Yeah, still bullish. No, I feel the exact same way. Thanks for tuning in y'all. Appreciate y'all taking the time. Uh we will be tomorrow's episode actually we're going to dive deeper with Martin on the six trends and the six themes that we think are most important to capture this coming bull market. So tune in to that. Have awesome day everybody. Thanks for tuning in. >> Thanks guys. >> If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol.

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