Market Chaos, Fed Missteps & Harris' ‘Crypto Reset’ - Bits + Bips

Transcript

the sentiment was like suicide watch. It was so bad on Sunday night, you know, my time, Monday morning, Asia time. I had multiple people that I don't even know DMing me on Twitter and and and Telegram saying like, "Do you think the bottom's in? I'm about to get liquidated this and that." Like people texting me, getting all concerned. And I'm like, "Bottom's close." Like when people really start getting this scared, it's usually when you're very close to a bottom. All right, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide one basis point at a time. I'm your host, James Safert, TradFi Archmaster, Lord of Bloomberg's End, here with Alex Kruger, Kruger Macro of House Asgard, protector of the realm, and Joe McCann, Lord Commander of

Asymmetric and Master of Bonk. We're here to discuss the latest stories in the worlds of crypto and macro news. Just remember that nothing we say here is investment advice. Please check unchainedcrypto.com/bitsandbips for more disclosures. Also joining us today is Chris Chechere, Baron of Asymmetric Treasury, keeper and trader of the golden ledger. Chris, why don't you give us a little background about who you are and and and then we'll get into the episode. Yeah, so I'm Chris Chechere, general partner at Asymmetric, head of global macro and trading. I was just real briefly employee one with Joe.

And before that, I have a deep TradFi background. I was at hedge funds with Brevan Howard running, you know, large global macro books there. I was Citibank Asia, so the Japan. I was actually based in Japan for a couple of years, ran Asia. Asia-wide for sales trading research in the rates business. And before that, I was Lehman Brothers in London and New York. And I was at Lehman when it went bankrupt. So, I think some of my experiences are probably pretty relevant currently. Yeah, I mean, let's let's get into that. I mean, that that's exactly what everyone wants to hear about right now. Let's get into macro. Let's talk about this supposed yen carry trade unwind. Like from your point of view, was it a yen carry trade unwind? Was it a vol blow up? Like I've heard both from very knowledgeable

people on both sides. Like what is your view of what exactly happened last weekend into last Monday when everything was blowing up? So, I think first let's just define what yen carry trade means because there's literally words in there that is people just talking in circles and like okay, so interest in Japan have been very very low. Interest rates in the US have gone relatively very high. So, the difference between them implies arbitrage condition that the FX rate of dollar yen in forward space is much lower than spot. That's just math. So, if you get long dollar yen 1 year from now, 2 years from now, whatever, it carries very positively as it rolls up to the spot

because you're picking up that interest rate differential. That is literally what a yen carry trade is. Now, what else are we talking about? So, how does that relate to AI stocks or to VIX etc? Well, it does and it doesn't. It does in so far as everybody had on these same positions. Everybody I don't know everybody quite a few were long dollar yen to pick up this carry and they were using that to fund other positions. They were also long for momentum reasons the AI stocks. A lot of people were short VIX. And the same trade as the yen carry trade, the yen continues to weaken that's very good for yen exporters.

There's your your Nikkei and the steeper yield curve with a low rate at the base and they raised the the level of yield curve control steepening out the curve. That was good for banks. So, when all of those things reversed, all of those things reversed. So, it's in my opinion the yen carry trade, yes, sure, it unwound, but all that did was was one trigger in a cross market var shock that ancillarily those things were related, but in general they were not. Yeah, and just to clarify a couple things that that Chris is saying here for our listeners. So, first when he talked about in forward space, he means effectively a futures market. And then secondly, when he says var shock, this is something that was definitely occurring on Monday.

Yeah, wait, wait, Joe. Real quick, define VAR, value at risk. Can you like define There's probably people out there that have no concept of what that actually means. Well, that's what I was going to do, James. sorry, sorry. I thought you were moving on. You got to lay off the caffeine in the late afternoon, brother. Um So, yeah, value at risk. Um I'll let Chris kind of dig in this a little bit more, but the concept of a VAR shock has a lot to do with the broader value at risk within institutions and their portfolios. And in most cases, when you have a shock like that, it's a correlation selling event of one. So, everything is down.

Chris, do you want to just maybe expand a little bit on VAR shocks, VAR, and how it's like applied at like say the hedge fund level, and how institutions utilize that? Yeah, as a concept, a VAR is a risk management tool. So, value at risk. Think of it as when a market is very What they'll do is they'll run backtesting and say over the last 90 days, 180 days, 365 days, if you plot a distribution of positive and negative returns, what is the one standard deviation negative outcome, the two standard deviation etc. etc. So, that'll And then, within that framework, it allows you to take a certain amount of risk. Well, as volatility starts to spike and you get violent moves, that math starts to change and they force you to make your

your positions smaller. So, it's very it's on the way up, volatility's coming down, you can put on much bigger positions, but very quickly it reverses because volatility tells you you're too risky, so it makes everyone de-risk at the same time. I I say a fat guy in a small door. People have correlated positions, they're all simultaneously, because of this model-based approach, being told by risk management they need to de-risk, deleverage. Who's going to take the other side of it when everybody is the same way around? And that's what happened.

That's right. And I think one thing to note here is that, you know, that there's been a lot, what a surprise, a lot of misinformed or misinformation on on Twitter and the internet about the actual yen carry trade unwind. I've seen estimates in the range of 15 to 20 trillion dollars associated with this carry trade unwind. That also completely throws out the concept of how derivatives are actually netted. I saw a really good article this weekend, Steno signals, forget the the guy's last name, but he's a great macro dude, was talking about there might be close to at most a trillion dollars notional in this actual trade, however you want to define the carry trade with Japanese yen involved.

And according to Morgan Stanley, Goldman, you name it, the majority of that's done. I think a lot of people saw that shock to the system, and I'd love to get Alex's take, cuz I know he and I were actively trading this, as was Chris, when this was going on. We didn't really sleep at all. I'd love to get like like the the the notion that um this is going to happen again seems foolish, because if you've been around trading, I would say as long as myself, Chris, and Alex, that was it. That was the event. And the idea that there's going to be trillions and trillions of dollars still to be unwound from this this carry trade unwind just seems a bit foolish. So, Alex, do you want to talk maybe about

your view as it relates to the unwind and, you know, the potential ramifications going forward, as well as like how you were To to begin with, I think it's all one same thing, you know? It's not I mean, the the the the the the yen carry trade unwind did happen, it mattered. There's a million things that matter at the end. Yeah, it's it's it is a wild shock. It is basically you you get the triggers, you get the it's the spark. You have the tinder there, you get a few sparks, and then eventually in 3 seconds, we get a wildfire. That's that's the way to think about it, what what we experienced.

At the end, one thing Joe by the way is like I remember we disagreed on the need for the Fed to cut rates and I want to say congrats man, you were spot on. Wish I had been as fast as you were. Yeah. I appreciate it. You know, we just keep getting over and over again. I want to go through some of those some of that tender though cuz cuz we had some weakening economic data which we can get into and on in employment and some other things, right? So we had some weakening economic data. On Friday night we got news that Genesis was unlocking all of their money and sending a bunch of money back in billions of dollars in Bitcoin and Ethereum and other things.

We can get into the jump trading on wine cuz they just liquidated I think 400 500 million dollars worth of ETH in on a Sunday in very thin markets which made this so much worse for crypto. We had which goes to the the the Yen carry trade which a lot of people already know. The Bank of Japan was bringing rates into positive territory. We saw the Yen spike 12% in like literally a few days if you look at like from the middle of July through the end of August and that's what kind of like caused this. So I feel like a lot of this was like cascading dominoes to a point where everyone was just like all right, screw it. Uh correlations are going to one. It's time to get the hell out of these things. But like specifically you said you were both like trading this. One, what did I miss?

And two, like what was it like last week for you guys being traders? Like I I cover the markets. I was paying attention. I was actually on a flight on on Sunday like looking at the stuff and I was like oh my god, this is insane. The markets are blowing up while I'm midair right now. I just want to know what it was like for you guys like what were you guys doing Sunday night? What did you do through Monday, Tuesday, Wednesday when vol was through the roof? All of vol was through the roof. Everything was kind of a little bit crazy. Yeah, I mean I'll speak more for myself and I'll hand it off to Chris cuz he he's he and I are trading partners at Asymmetric and we actually, you know, love this type of volatility. What we didn't like is that how thin the order books were. So, I

remember over that weekend, I think it was like uh top of order book liquidity for Bitcoin spot went from like, you know, 150 million bucks to like 53. That's a pretty That's a pretty significant drop. And irrespective of whether, you know, Jump was emptying their their ETH coffers or not, like that's just There's just nothing in those books. And so, it's it's challenging to uh well, first of all, you don't want to catch a falling knife, but secondly, it's challenging to actually kind of try to identify levels where you actually want to get long.

And so, one of the things that that we do uh that, you know, is is not unique to Asymmetric, but I think, you know, um sophisticated traders can appreciate this is we just did what we call this concept of like delta replacement. And so, you know, we had a bunch of spot assets that we were long, but because of the severe drop in um in the the underlying spot price of certain options, we were able to actually kind of rotate out of some of those spot positions into uh other options positions. So, Chris, do you want to just briefly touch on kind of that technique and and what we did, and then we can pass it to Alex to see how he handled it?

Yeah, I think what Joe said is exactly right, which is the volatility is welcome. Picking a level in a manic, you know, right? Like a 66 VIX is like a generational type event. I've been doing this over 20 years, and I say that with confidence. Um although we've seen it twice in this generation with COVID, but generations are getting shorter, apparently. So, basically, what Joe's talking about is if you're long spot, you can go to zero. But depending on how you optionalize things, you can replace that because look, either things are going to be dead, or history says they tend to rebound relatively sharply.

So, vol didn't vol spike a little bit, but not all that much, to be honest. In fact, the first move was lower. Um and so, what we did, like Joe said, was we dumped a bunch of spot assets to to clip what our max loss could be and replace those with calls, call spreads, things of this nature where when we return to where we were, we'll actually be doing better than had we just put our head in the sand, ignored, and held. The last thing you want to do, again, having done this for, you know, almost 25 years, is we had a very good sense of what was going on. We weren't nervous. We just didn't know where it stopped.

So, the worst thing you could possibly do is sell the bottom and get scared and then you're buying back Bitcoin at 70,000. That is one thing we did not allow to happen. Now, we're not going to put the fund at risk, but with a delta replacement strategy, there's clearly a timing component on it cuz options have expirys, but if we can get that moderately correct, we can survive, not get beat up too badly, and make it all back plus on the rebound to where we were previously, if that follows. Yeah, that basically that's happened four times in the last in the last 20 years, right? It's '08, uh August 2015, uh Corona crash, and and right now.

Uh one thing we know is that basically VIX above 30 is unsustainable. Uh it it it it mean reverts to 20 or or the teens, basically. It's a matter of time. But, uh as you guys said, is is picking the bottom here, it's uh impossible. Uh people may think that on Bitcoin actually 48 and 1/2, 49 was the level. Actually, it was the level. We talked about it a lot in in many circles. But, actually, like a a quick break of 50 would be a a buying a buying spot, it's like where you go all in. Uh but, it only works if if price reverts very quickly above 50, which happened. From uh what we talk about to practice is a big gap and and actually going all in at at 48, uh

when that thing can break is I had basically, let me put it this way, I had strong uh March 2020 vibes. It's like, "Careful, this thing could just keep on going. I have no clue where it's going to stop. Um so I I did take my time to buy the dip. I took my I took a long time to buy the dip. One thing I did do is after ETH crushed, I uh rebalanced uh a lot into ETH. Even though despite all the hate, despite you may have seen me uh talk [ __ ] about ETH online, etc. One thing is what I write, a different thing is what I do.

Uh I did buy I did reshuffle a lot into ETH uh on that uh on that uh flash, and I got out of my reshuffle uh on What was it? Uh yesterday. Yeah, I don't know what else to say. It's kind of like you're you're driving a a car, and you're driving very very fast, and and things blur and on your sides you're like fully focused on the screens, and nothing else matters. That may sound corny, but it is what it is. It That's exactly how it feels. I was in a similar boat. I was I was watching what was happening. I was like, "Man, I've seen this in in crypto cycles in the past." And like you think, you know, Bitcoin at 49K, 50K is it. Ethereum wicks to 2100. Solana

wick down to 110. It was 194 a few days prior. You think that's it. And I've seen, you know, crypto go down another 30, 40%. And that's why I think it's important, you know, to to Chris's point earlier of like selling the bottom and not doing anything is is one of the dumbest things you can do, but you know, you have to manage your risk accordingly. I I also want to point out like the sentiment was like suicide watch. It was so bad on Sunday night, you know, my time, Monday morning, Asia time. I had multiple people uh that I don't even know DMing me on Twitter and and and Telegram saying like, "Do you think the bottom's in? I'm about to get liquidated." This and that.

Like people texting me, getting all concerned, and I'm like, "Bottom's close." Like when people really start getting this scared, it's usually when you're very close to a bottom. Um at least, you know, temporarily and like Alex nailed the the ETH trade there, you know, in and out in 6 days, probably getting close to the tick lows. Like that that's pretty solid. And you know, as this relates to broader risk markets, I mean, the S&P 500 finished flat last week, basically unchanged, which is insane because VIX was a 66 handle on Monday. Now, I I've looked into why VIX was so high. Of course, somebody was massively short VIX calls. Like it's very clear, and they just got absolutely obliterated on the

squeeze, but it's also a function of liquidity. So, the pre-market VIX trading activity uh or or liquidity is is very thin. And so, like effectively, the when when it traded up that high was in these incredibly illiquid markets. Well, crypto was incredibly illiquid all weekend as well. And that's why you had most likely these massive draws in in like the the major L1s and or top 10 by market cap coins. I don't think you're going to see VIX remotely that close to that level again. There's obviously some geopolitical tension right now with what's happening in at least. That certainly could be, you know, having an impact, but I mean, I the VIX I think today, Monday, closed basically flat again or slightly up

while oil was ripping. So, you know, I I think one other thing that we want to kind of like underscore here is that uh Goldman Sachs and I and I I think which no, Deutsche Bank and Goldman both um put out, you know, reports basically showing the the change in uh in positioning by uh investment managers. And I think it was Deutsche Bank's uh which is a highly regarded positioning um metric, basically went from like 72, so this is out of like a hundred, zero to a hundred, so 72 to 31 positioning after that Monday crash. That is a huge huge move in positioning. And it usually takes months for institutional investors to

get back to that 72 level of positioning. So, you know, at the risk of sounding like a perma bull, this kind of rinse across all risk assets, you know, theoretically is providing us with, uh, I would say a clearer path to, you know, higher prices barring some other exogenous shock like what we saw last Monday. So, yes, we do have an election. We do have, uh, you know, geopolitical tension in the in the Middle East, which can clearly affect, um, things like oil, which would clearly affect things like inflation. I think something to the effect of, um, 12% of the world's GDP goes through the, uh, what is it? The Hormuz? Or how do

you pronounce it? The the the channel there, right? Like, you know, those that's a non-trivial number. I think, you know, Chris and I and and some friends were chatting earlier today about this. Like, Chris, love to kind of, you have you opine a little bit about what you think's happening in the Middle East and how it could potentially affect, uh, risk assets as well as, you know, the political landscape here in the United States given the the Harris-Trump presidential outcome, uh, especially given that like this is like a telegraphed attack. So, I mean I would love to get your your your take on on what you think's happening there and how it may affect things.

I I said a lot of like the Tinder stuff before. I might as The one thing I left off, I forgot the Middle East and what's going on with Russia you Russia-Ukraine. There was a new stuff going on. So, there's And there's probably a bunch of [ __ ] we also forgot that happened in the last like 2 weeks that like contributed to a lot of people being very jittery. But yeah, sorry. I didn't mean to interrupt you, Chris. Yeah, so the Middle East is interesting because I, you know, we've made this joke over and over. Like, did you get the Google invite for the, uh, Iranian attack on Israel? Like, wait, what are we What are we talking about right now? I mean, so common sense to me would dictate that they're negotiating for something. Maybe there'll be some some attack that's, you know, maybe ceremonious or something,

but they're negotiating for something to not attack because nobody wins in that scenario. And you know, they they they hold a little bit of power if they show a little bit of restraint or some faux type aggression. Um but you can see the anxiety in the market. Joe pointed out to me today. He's like, "Look at oil." Oil at the time was up 3 and 1/2%. There's no reason for that from a fundamentals perspective. So, what's causing that? Well, very basic, right? That's your fear premium. Uh people are getting anxious about a real attack over there. And you know, you're seeing VIX struggling to hold below 20. You're seeing oil spiking. You know, so there's some there's some like the market's giving you some signals about anxiety.

So, what do you do with that information? I think what number one, you have to respect it because if something does happen, yeah, this stuff could wick violently. Now, history has proven that none of these things actually matter over time, but in a mark-to-market world, they will probably matter instantaneously. So, you set some low bids to buy some wicks down, etc., etc. But so, my gut inclination is and I hope to God I'm right is that nothing major happens, no major escalation. And then slowly over time, the it deflates out this this risk premium, this fear premium that you see in the price of oil, that you see um you know, in VIX, which is then impacting obviously the depressing to some extent some equity prices, which probably by proxy involves crypto as

well. And then as far as a relative trade goes, you know, I I mean if I was a little bit taken aback by the bad data that you alluded to with the unemployment rate of 4.3. And I'm going to make this full circle in a second. Because last March when we had the bank blow up, we had rates spike lower, we had gold spike higher, we had the dollar get nuked, we had equities destroyed, and Bitcoin went to the moon, 50% in a week. This time we had all of those things happen except Bitcoin got pounded. So, I have a a sneaky suspicion. I mean, there's maybe some arguably fundamental reasons for that, but a lot of that may well have been positioning.

Um you know, it was you know, so now that we've rinsed it, I think and this is more of the academic side of me. Obviously, our goal is to make money, but I thought we'll find it very interesting if we get a similar scenario where rates had lowered, dollar has lowered etc. Does Bitcoin head the same direction or the opposite direction as broad risk? My inclination would be you know, Bitcoin either direction outperforms, but to be determined. You know, one thing there actually is on on March last year, we we did a I think I mean, I'm not looking at the chart right now, but I think we did drop uh Bitcoin did drop 10% very quickly and reversed. I think it reversed within like 3 hours or something like that.

But if you if you look at it, okay, it's like 10% but versus uh yeah, okay, 20. Yeah, big difference. It is a big difference right? But then it went up 50 in a week. Yeah. Yeah. Yeah. Well, what's what's interesting here is and it's good you point that out. If you look I was staring at the screens with Joe's face right next to me. Um during when when that unemployment data came out, Bitcoin went green at first. It tried. Then the overwhelming nature of you know, everything being a correlation one, it just overwhelmed it and that was the end of it. Yeah. Uh one one thing on on on that unemployment, I mean, actually we can talk a lot about it. It's I I I I do stand with the view that it's mostly uh mostly panic. So, you could call it a VAR shock. Uh you can also

call it panic. I think they're kind of the same thing. One is systematic, one is discretionary, right? Meaning uh people panic, algos don't panic, algos just follow their rules and uh if ball ball goes up, they have to de-risk. But at the end uh mechanically, it's kind of like the same thing. And that unemployment number, it was uh was put out and pushed by absolutely everybody as like we are going into recession. And it only only like a Monday at the end of Monday is started to come out basically the the more the other side of the story basically the other point of view. There's always two points of views to everything, right? And uh neither is fully right nor wrong, but one one usually has the the

upper hand that in this case it's uh if you look at unemployment, yeah, unemployment did go up to 4.3%, but the thing is great part of that that increase is due to temporary layoffs, which is not the same as as as as permanent layoffs. So that it may come back. There was uh the impact of a hurricane that at the at the beginning wasn't really reported like everybody focused on the bad things. Uh another thing that happened there is this triggered the so-called SAHM rule that basically nobody had ever heard about it before.

Uh it was invented in 2019. I had never heard about it before and then suddenly have every single bank out there talking about the SAHM rule. The SAHM rule has to do with the rolling average of unemployment crossing a certain threshold and historically, so we just triggered it and historically that implies you are instant or currently in a recession, whereas most recession indicators are backward looking. Now, I mean everything is right till it's wrong. Like yes, tripping that basically set fear, like you're saying, rippling through the market of oh no, now the Fed's got their head up their ass. They're you know, now they're talking about maybe cutting 25 instead they should be doing clips of 50 or 75.

And I'm not saying that's not wrong to be honest for for myriad different reasons, but that is exactly what started that snowball. Yep. Yeah. Yep. And what one one thing I think also is important to to acknowledge here is that I think last Monday was the kind of combination of a number of things that happened last week. So last week you had or should I say a week and a half ago, um Wednesday the Fed did not cut. Um you know, I I would I mean Chris and I were fingers crossed they would do 25 bips, but you know, they didn't cut, which we see as a policy error and that's one of the reasons why you now see futures markets pricing 50 bips in September, which is exactly what I've

been saying. If they don't cut in July, they have to do 50 in September. But the same day as the Fed, the Bank of Japan did their surprise rate hike. And that kicked off the the strong yen trade uh and weakening the dollar against against the yen. The and and ironically on July 31st, the the day of the Fed, it's also the last day of the month, you had enormous flows coming in to the equities markets and the markets finished up pretty significantly. And then it was just straight down. Thursday, Friday, Vix spiked over 20 on on Friday. You had the the the dollar-yen um weakening even further.

And then over the weekend, you had huge amounts of selling, whether it was jump or somebody else, who knows, it doesn't matter, it happened. Excuse me, in very thin order books. And then Sunday night my time, uh 9:00 a.m. Tokyo time, you wake up and the largest bank in Japan is down 21% with no news. You know, and so retroactively, people look at it and go, "Oh, it was a carry trade unwind." And it's like, imagine literally today on Monday, you wake up, James, you're on your way to the office, you're in your Rolls-Royce telling your driver to pull over cuz you can't believe what you're seeing, and that's JP Morgan Chase stock down 21%.

With no news. That's insane, right? And so this is like one of those things that it was on this this snowball of events were happening, and the sentiment to to Alex's point around the unemployment rate, the headline was terrible. Devil's in the details of the numbers. Um yes, the hurricane and these temporary loss etc. etc. Well, maybe we'll see revisions to the upside, who knows. However, revisions have been worse for months now. But, it's it all collided at one point, which ultimately I think led to the VAR shock. So, I think one thing that we should probably consider talking about is well, what is last week's activity or action have to do with the Fed's policy? Um I think you

guys know my position on that, but you know, Alex, have you have you Wait, wait, wait, wait, before before we get to rates, I actually have a I want to ask a question for I want to ask a round table question. So, you mentioned Jump Trading when you were just talking about that there. Like, one of the unique things with like blockchain is we can see everyone in these their wallets were tagged and you could literally see them unstaking and just liquidating into thin order books and it was it was kind of unreal watching ETH price just absolutely utterly collapse. So, I guess my question is like my they had to have been in some sort of it whether it was their crypto book or some other book, they had to have been involved in their like whether they were borrowing yen or they were short ball.

One, it's unique because there was probably other hedge funds out there that were doing similar stuff like selling futures, doing whatever they can in the week and get money, but we could see Jump Trading doing this. So, one is are we going to see like what other funds got hit hard here? And two, like what do you think was the cause of Jump Trading liquidating that? Was it there's been some speculation that was CFTC tapping them on the shoulder to get out of some of the stuff. I think that's insane. I don't think that's happening. There's no they would force them to do it on a Sunday in thin order books. So, they I might they were just doing a fire sale. So, I'm curious so let's start with you, Joe. Like, what do you think was the reason for Jump actually selling? Before we get to rates where

you can take your victory lap. Sure. Well, look, I mean, clearly Jump is now leaving crypto again, right? Like, this is the irony here is the last time we did this episode towards the end we were talking about this and I said, you know, Jump has left crypto I think 11 times now according to crypto Twitter and here we are once again Jump is leaving crypto and it is absolutely not true again. That being said, were there tagged Ethereum wallets selling ETH? Yeah. Do we know why? Of course not. You You like assuming that you know like I even get this with a lot of a lot of traders that follow me on Telegram and Twitter.

Um some of my wallets are tagged and they're like "Oh, why are you doing this or that?" I'm like because this is a fraction of my portfolio. You have no idea what's happening with the rest of my book and how I'm actually what I'm actually doing and why. And I think this is the same thing with with Jump and frankly anybody for that matter. Somebody's selling something because they're selling it. Like that's it. You know, could we speculate as to the CFTC tapping them on the shoulder? Sure, unlikely. Um why would Jump such a great market maker do this in thin order books over the weekend? Hmm, well, Jump does have a TradFi book and business as well.

TradFi's closed on the weekends. So, I would think if you're going to speculate, it probably has something to do more with TradFi markets and less with crypto than just these guys hate Ethereum and wanted to wick it at 2100, right? Like that to me just seems ridiculous. What do you think, Alex? Uh to me it seem a um a matter of freeing up capital in the midst of uh need. You just need to like [ __ ] is happening. You need to free up capital. I I I I don't know and I wouldn't know as you were saying if if it's just one leg or if it's hedge, but even either way, it's capital that is locked up in the system and if things are happening uh it makes sense to free up capital either because

because you think thing is going to go to [ __ ] or because things are already going to [ __ ] but but the point there is that there like this this narrative that they caused the thing. It's just they're like as as Chris was saying, there, like Jump's behavior is just part of the war shock. They're they're they're part of the Tinder. They're they're the risking for whatever reason because things are happening and they just have to That's the way I see it. I I I wouldn't read too much more into it than that. Chris, do you have anything to add or you you going to leave that one alone?

I think what they both said is right. Maybe that's something to do with raising capital for some other purpose. But we will never know the answer to that. I mean, the only in thing that's interesting is they were doing it in the thin liquidity. Otherwise, I don't think anybody would have questioned it. So. Yeah. I I mean, the the one thing I'll say is which is common wisdom which most people here listening to when when you get shocks like this, it correlations go to one cuz everything just starts going down. If you if you need to sell to make cash, you'll sell whatever you can sell and and crypto is liquid over the weekends and I think that's what we saw. The other thing I'd say is goes hand in hand with what Joe was saying. I constantly get in arguments with people who try to look at

13Fs to like understand what hedge funds are doing. And I'm like, one, this data is 45 days old. Like it's like these are their positionings, these are the equities they hold. I'm like, it doesn't show their derivative book, it doesn't show their short book. Like we're seeing possibly one side of like a really complex trade and everyone's like trying to read into like what these really huge institutions and hedge funds and smart managers are doing and there's just no way to know exactly what's happening. But the Jump stuff was obviously eye-popping. All right, let let's get to rates now. I'll let Joe take his victory lap. I'll just shout out what the numbers look like right now. Right now, the market is pricing for either one or two one or two cuts in September, the September 18th meeting, which literally right in the middle at one and a half.

Then they're pricing for 2.75 in November, four by December. So right now we're priced for four cuts before the end of the year. I mean, a few weeks ago we were priced for two two to three potentially. But not long ago, we were pricing near five in in 2024. So things have come back a little bit after the volatility has settled down, but I'll let Joe jump in and and take a bit of a victory lap here. I mean, look, uh you know, I I got to tip my hat to Chris. He and I talk nonstop pretty much every day of the week about this kind of stuff. Um and Chris wrote an actually a brilliant piece in our latest Asymmetric Market Update that you can go get for free. It's subscribe.asymmetric.financial about understanding the importance of

distributions of outcomes and how the Fed has missed the mark, so to speak, on understanding that a their high rate environment is actually consistent with a bimodal distribution. Um if you don't know what that is, you can go to my Twitter. I I have a post pinned to read about it. It's in plain language. Um and of course, you can read it in our market update. We do think that the Fed [ __ ] up. We think that they should have cut in July. And I think the market agrees. If you look at, you know, I'll hand it off to Chris here in a second, but if you look at what happened to the the yield curve, you look at what happened to risk, um you look at what happened to the US dollar, uh all of these things are suggesting

that, you know, the the fixed income market is not dumb. Uh they they understand what's happening. And then the futures markets as well. And finally, you know, I think Chris actually pointed this out to me about a week or so ago, um JP Morgan came out and and basically said the Fed needs to to to cut 50 bips. They don't speak out of turn, right? It's JP Morgan. And for them to actually, you know, kind of a firm our view, it was validating, but also I think it it clearly carries more weight than, you know, two guys in a crypto fund opining on macro. But ultimately, uh you know, I think pretty much every bank is on board at this point with at least 25 bips. The futures markets are pricing 50, and you know, Chris, do you want to

kind of dive in a little bit about the your your concept around that bimodal distribution and how the Fed has basically effed up? Yeah, so obviously we go into more depths in the asymmetric newsletter, but the brief the TLDR is basically like you have poor people and you have rich people. You have small companies and you have big companies. You have strong banks and you have weak banks. All of those things have one thing in common. They're weaker borrowing and they're paying exorbitant rates. They're stronger lending. They're receiving those exorbitant rates. So, it is robbing the poor to pay the rich.

Now, economic data is based broadly speaking on the average of all these things. So, some are doing just fine and so for example, you look at McDonald's, right? It's going off a cliff then other people eating there. But then you look at European travel, that's the other mode of the distribution, right? And so people are doing great. So, there's something for everyone. If you want to be like a dark naysayer, you can find your data. If you think the world is amazing, you can find your data. The answer is both are correct at the same time. So, how far do you want to press this because the higher you take rates, the richer the rich that have long you know, like banks with excess reserves, take rates up, leave them high, they just make more and more and more money.

They have more disposable income. Same with you know, the large cap companies, right? They're long cash. Same with rich people. All of these are the same. But the the longer you do that, you're hurting small business. If you look at um the prime rate, the real the real effective prime rate is the highest it's been since 2008. That is the real effective rate that small businesses and you know, individuals to some extent borrow at. We know how '08 ended, right? Like you hit a and again, nominal rate is not important, it's the real effective rate. And I think this is what people miss is yes, we're slightly above target, but we're at 3% arguably plus depending on season next data of real rate. So, yield above inflation with data coming obviously on a lag, that's how monetary

policy works. So, trying to squeeze that blood from a stone to wait until we're at spot 2%. You're going to have so much pipeline stuff, even if you cut aggressively from that moment forward, you're going to end up at 1% inflation. Right? And so this is why like it's been confusing for us is why the Fed has been so sticky. It's I think they just [ __ ] up so bad saying that they were never going to hike again, then now they're being too conservative on the other side. And on one hand, I understand it because the Fed has a rich history of absolutely wrong economic predictions. But on the other hand, you know, if they screw this one up, it's very hard to fix an unemployment problem and reverse them to base and turn the economy the other way.

So I feel like, okay, they've made their point, but if they don't cut 50 in September, I think I mean I'll say it right now, I think risk is in big trouble. And I think it's a unequivocally you could debate a policy error up to this far. There is no debate after that point. One thing is like the Fed is notoriously late both in cutting rates and hiking rates. Like the last since I mean I've only been tracking rates for like less than 15 years at this point and I feel like every time the Fed is doing something, the consensus is they waited too long. And then they just feel they can be aggressive and thus they'd rather be late than early and they're worried about like inflation heating back up.

And then I you you talked about like the the when you were talking about the people who are doing really well and the people who are getting crushed right now, like the first person people that came to mind were were was Tether cuz they've earned 5.2 billion dollars in profit and they're the perfect example of like the luxury travelers over there that's that are going across across across the world right now. Um those numbers are actually like mind-boggling. I they have less than 100 employees and they're 5.2 billion in profit so far this year. I just wanted to throw that out there before I let Alex chime in with with his his thoughts on macro and rates.

So actually the the first I want to say I I agree with with Chris, right? And and I think now and then I'm going to take the other side, right? I think right now is uh the way I saw it before is if if a 50 bips cut would be bearish and a 25 bips cut would be bullish because 50 bips is basically the the the Fed recognizing we [ __ ] up. We're trading a hard landing Uh we're in a hard landing uh uh market and uh we have to cut 50 is basically the market forcing our hand. Uh with the recent wash and everything that just happened I I think it's exactly the opposite right now.

Uh I think they need to cut 50 bips. 50 bips will be bullish. 25 is either a wash or bearish. No cut will be absolutely disaster. Uh and uh and that's um that's uh I think September 16th. Uh so plenty of time till till then and before then we get on the 6th we get payrolls which is basically going to determine I think if we do if they do 50 or 25 but uh TLDR I I do think that the Fed right now has to cut 50 and if they don't we may be in a world of trouble. Um uh I'm just so glad that I've got you across the line for 50 bips cuz the last time we did this podcast I was like you

guys got to be more aggressive in your in your forecast. So conservative but now you're there. And uh Changed your mind. Yeah. Um on the other side let's let's look at the other side like we have the PMIs are coming in well. Uh the uh the nowcast of the of the New York the New York nowcast Atlanta nowcasts are actually also coming in well. Uh the Dallas uh weekly economic index is coming in well. Um like like um leverage corporate leverage I could pull up some numbers but corporate leverage and household leverage are both very low relative to historical levels and uh relative to 2008 the leverage now is on the public

sector not on the corporate side. So things are not really uh is is the the economy is growing. The the fear is that yeah real rates are too high and things can accelerate and just basically collapse pretty quickly. It it it's a matter in 6 months uh we could be looking at an entirely different world if the Fed doesn't uh um speed up, I think. Yeah, and I think one thing we should probably also point out and maybe Chris can talk a little bit about the importance of this, but every August there's a central bank rave in Jackson Hole every August. It's not actually a rave, they just don't wear suits. They wear a Patagonia vest, big big fashion statement there. Um they uh they'll be

doing that again this year. And I think, you know, I mean I may have mentioned it on the last pod that we'll likely see Jerome Powell give a speech and telegraph more or less what the Fed's view is on rate cuts for September. I'll be there. I know a bunch of other folks will be there. Uh there's a the Wyoming Blockchain Symposium. I'll be speaking at it and there's a bunch of other folks um attending like Nick Carter's going to be there who was on last time, etc. But this is at the exact time as when all the central bankers are there. So, um it should be hopefully a positive outcome with respect to the speech that the Powell gives. But maybe Chris, you want to talk historically about Jackson Hole and its importance as it relates to, you know, the Fed's uh tightening or loosening um policies.

Yeah so anytime there's been large policy changes that involve QE or twist or QT, any of these things, they like to use this as a platform to do it. So, I'm not given this giant sort of cycle we've had within cycles, you know, with COVID post, it's not completely surprising to me that they would want to drag their feet to, you know, start to reverse all of this this tightening that they've done um at Jackson Hole. And there's a couple things they could do. So, like Joe said, they could telegraph rates.

And now one thing I think people are missing is I think they're staring at a tree miss the forest. If the Fed's been telling you over and over again if you listen carefully. They want to be careful from when they start, but once they start, they're not stopping till they normalize real rates. And what that means is a steady state long run that's about plus 1%. So, today, that takes you straight to 4%. Sorry, 3 and 1/2% now. Put another 50 bips in there, you're at, you know, 4%. The point is they're still way too restrictive by any historical standard and by the and every month the year-on-year is dropping. So, one thing is they could signal, okay, we're about ready to go, but just to be clear, it's not a one and done.

And and if you listen to Powell's words, he's literally said this over and over. The other lever they have to play with is you know, QT is sort of running a little bit long in the tooth. Yeah, we just dropped from, you know, we were stuck at 400 billion up in RRP for a while. Now we're pressing down towards towards 300. We had some stress in the GC repo markets that seems to be coming out. But also, we're getting into the time period where they they should start to announce the wind-down of QT as well cuz they will have drained a sufficient amount of excess reserves from the system. I don't know what they're going to say. No one has called us, but this is the type of a symposium or format, you know, like global format, that they would start to announce things like this.

Yeah, just to put some numbers to what Chris was talking about. I talked about the fact that we're basically pricing four cuts for the rest of the year. And we actually have pricing going out much further than that based on the futures market, which tends to not be usually as accurate, but it's a good indication of what he's talking about. They're basically pricing nine cuts by January of 2026, which would put the rate around 3%. And right now we're at like 5.5 to like give you concepts of like what type of rate cutting we're we're talking about here. And James, just just real quick, the one thing that we've discussed over and over that we have recently strong feeling on is because we think once they start, they don't stop. We don't think the terminal rate is wildly off. We don't know what that is.

We just think it happens a lot sooner than people think. Once they get going, they get on it, they normalize it, and then they see how it goes. So, you're saying that 3% rate I'm I'm about that's priced in for January 26, you think that's going to happen earlier. Call it three and a half by mid-2025. Wow. Oh, that's real aggressive. All right. It's not if base inflation is 2% by the end of this year though, right? Like it's this is what I mean. I mean everyone was wrong about the the hiking cycle, too. I mean they they went 75 75 like sent markets whirling. You know, on something I want to say here on on the on the FOMC.

So, at the beginning of the hiking cycle, it's there's this view to put it in a way that basically when when the the Fed cuts the first time in a recessionary environment, that is a a a sell signal. It is bearish. And and on the contrary, if it happens in in a non-recessionary environment, that is that is a bullish cut. And assuming that is true, and I would like to to to to to pick your brain, guys, if you agree on this, but before that, is the point is that we actually going to know this quite likely based on the payrolls on the on the coming payrolls of that that come in September 6th, right? And

then the first Friday of the month. So um that number, you could argue that is going to basically determine what happens afterwards. And it's it's it's literally the number that would determine like what happens in the next two three months. And it's more important than uh than the elections, for example. And uh it could even be more important than precisely what the Fed does on on the FOMC. What you guys think? Yeah, I mean, look, it's it's a it's a it's a great question. I think one way I look at it is, you know, the yield curve's been inverted for how long?

You know, like 2 years now or something? A long time. And historically, every time the yield curve inverts, there's a recession. Technically, well, I guess technically we did have a couple of quarters of negative GDP, but you know, the administration can redefine it and move the goal post for what the recession actually means, but for the most part, economic data suggests that we haven't been in a recession the entire time the yield curve has been inverted. Inverted. That being said, you know, if you apply that to something like historically when we're in a recession and you do cuts, it's bearish. In your winning or non-recessionary environment, it's bullish. That is true. I do think that this environment is somewhat different.

And also, I don't recall, maybe Chris, he's got a more encyclopedic knowledge of the history of rates than I do. Um, I don't recall real rates being this high this long uh for such an extended period of time. And as we look at, you know, headline inflation numbers rapidly approaching the Fed's target of 2%. I mean, I think the St. Louis Fed came out last week and said PCE was a 1.89 print or 87, something it below 2%, right? I think in a vacuum, yes, you're right, Alex. If it's a recessionary environment and you cut rates, bearish. If it's a bull if it's a non-recessionary environment, cuts are bullish. I just get back to one of the things that I've been kind of harping on, which is

global liquidity as it relates to it to, you know, central banks, particularly the Fed has a big influence on this. This is all starting to tick up. All the July data that came out, liquidity's ticking up. Same with August. We actually saw I got the report from CrossBorder Capital over the week or last week, same concept. So, you know, is are are rate cuts currently bullish or bearish? As it relates to my view on global liquidity, it's bullish. And the global liquidity cycle is nowhere near complete. In fact, it's got a long way to go. And so, if the Fed starts to follow Bank of Canada, ECB, etc., these other banks that are cutting and they all start to do it in a coordinated fashion, you're going to be bringing liquidity back to the market,

which on balance is is bullish. Chris, what are your thoughts? So, I think that's actually a very important question because this is a very strange cycle. Because normally you get overheated, then you got to cool it down, etc. But if you sort of think through this one, you've got you know, you've got COVID, right? So, a a big source of this is not just overheating economy. It started with underheating, right? Supply chain blew up. That's the problem. Then the government pumped all this money into individuals, put it straight in their pocket right? And so, you know, you start to put those pieces together and it's like, well, did rates have anything to do with any of this?

And my answer is way less than in the past, period. Right? You just had all these exogenous factors. So, what we're doing now is we're burning off these things. We're burning off the supply chain, right? We're burning off this excess cash that people had, and then you see in the debt levels are spiking, right? And so, right now, you're it looks like finally we're getting to a point of more equilibrium where these things are coming they're mean reverting effectively. And in the middle of that, by the way, we're re-onshoring from China, right? So, we've got the Chips Act and all these things. So, all of these things have been pushing one direction for years now that we're that we're inflationary, but as they mean revert, it comes off. So, I don't think we necessarily have to go into a recession here to slow everything down.

I think it's just happening by itself. I think if rates were 4% or rates were 6%, I don't like my gut is it wouldn't have mattered much at all. But now that we're mean reverting and normalizing, rates actually matter again. And so, if they keep real rates this high, they're going to break things very badly, in my opinion. So, anyway, Alex, the answer to your question is I do think it matters a lot. I think they can get away with a real nice sort of smooth landing here, or they can crash and burn. Just And it's going to come down to like one, two, or three month difference. You know, another thought there is is on like say we get 100K on payrolls on the next number.

I can definitely see deafening recession calls and basically we going into another like panic run. Not not in the same like nothing alike what we just experienced. Something longer and and not as not as fast basically, but but it would be pretty bad. Not what I'm expecting, but yeah. Yeah, I think the market of use algorithms that the momentum ignition algos will take over on that type of a headline for sure and crush risk. But I I I was you know, chatting with some folks over the weekend and you know, folks in equities markets are like I mean I want to say all of them, but some folks are worried to put cash to

work, right? You've got weak seasonals August and September. September's actually the worst month historically for the S&P. But what actually could be the reason that positioning takes back up and it isn't till Q4 is Q3 earnings. And so I I I think that's actually going to be one of the more important metrics that we need to wait for unfortunately and it may be you know, to Chris's point it could be too late from the Fed's perspective if they wait that long. They don't track earnings for you know, S&P 500 company or just companies in general. But I think given what's you know, the sentiment over the past week and a half or so um there was a you know, effectively eight weeks of net selling uh for

for equities and indices heading into the VAR shock. And last week you had retail capitulating um and hitting the bid uh basically selling everything they could. Uh and institutions were buying. You know, hedge funds actually got net long last week. And so what is the thing that could potentially tip off like a next big leg up? Yes, we also have the election which is a you know, potentially volatile event, certainly a volatile event. What am I talking about? It's it's Harris versus Trump. Um but I think earning surprises if if earnings are still good and companies are still growing you're not going to have I mean, would companies necessarily have high earnings

in a you know, a hard landing recessionary environment. The answer is no. And so if companies are earning money and growing earnings, we'll know in Q4 when those earnings reports come out, but that's really going to be the true tell in my opinion based on you know, what Chris is saying of how unique this current cycle actually is is whether or not companies are still growing and earning money. Yeah, I know. It'll be interesting. I feel like at least in the last like 20 years it's been like wonky things have happened from like August to October. We're we're right in the heart of that range. I did there's probably some actual reasoning for it if you guys have anything, but like there's been plenty of examples for me Mark 2008 it happened. I don't know when the taper tantrum happened in 2013, but we had

this we had the flash crash I think in 2015. There's been a lot of really wonky stuff. It all tends to happen in like that three-month period. I guess this has been the most macro heavy episode we've done yet. So we can I think we can move on from macro a little bit and talk about some of these other other topics and we'll we'll keep those relatively short unless you guys have anything macro related you wanted to to touch on. Yeah, I just just just went a quick one here is is something I wanted to mention is uh um basically it it's a pattern, right? In in equities that you see in in these extreme cases of high volatility.

It's you go max max peak max fear max volatility into the Monday open into the cash open. That's uh it it's something that happens over and over again. We just we just saw it again. So uh it I think there's value in remembering this. Uh like don't beat Sunday night. Just wait for Monday. Wait for the open. A little bit after the open. I guess would be the recommendation at least in the ETF world unless you really know what you're doing. We see so many examples in the ETF world of people putting bids out there market market market orders at the open just getting obliterated by not having people have their books fully open yet. Um all right. Moving on I guess let's talk about some lawsuits and subpoenas. Uh the Ripple lawsuit completed this week.

I mean, absent a um the SEC going back and appealing. Uh they asked for 2 billion in damages. They got 125 million. Um I mean, that's a huge win for Ripple. I would say argue for the crypto as- asset industry more broadly. Um I don't know if you guys have any different thought. I think it's a it's a it's a loss. It's an L for Gary Gensler and the SEC and their uh enforcement regulation via enforcement strategy they've used. I'll hand it over to you guys if you have any different thoughts or want to chime in and add anything. Yeah, I mean, look, like most often how these cases end up working is, you know, they put some huge number in front of you and then they end up settling. I mean, this settlement is 6.25% of what they were asking for or something like that. It's it's it's high

It's a fraction of of what they were actually after. It's a a tiny number relative to, you know, Ripple's balance sheet and um money they have available to them. But I think more importantly, the the odd thing to me is how um you know, Ripple is losing cases and they're settling with tiny, you know, fines that have taken years to litigate. Uh and yet we're in this position where the Harris re-election or the Harris election team is setting a reset button with crypto?

And it just is bizarre to me because, you know, I I think that the Ripple case is you know, that is I don't want to say it's old news. Um I think it's welcomed by the industry because we can have this thing behind us finally, irrespective of what how you feel about Ripple and XRP in general. Like regulation by enforcement is just it's not good for any industry, right? We we are obviously uh biased working in crypto full-time, but in any industry, regulation by enforcement is is stifling to innovation. Um and clarity from, you know, investors, participants entrepreneurs etc.

Yet, here we are still getting enforcement actions, and in fact, I think the other topic that that stems from the Ripple case is the subpoenas that have gone out to venture capitalists um recently. Now, one thing to note, um you know, don't let crypto Twitter let a good headline go to waste, right? Like subpoenas, oh my god, it's the end of the world. It's not. They've the SEC's been subpoenaing people in crypto for years. And in most cases, it doesn't really go anywhere. That does not mean that won't be the case this time, but I think it's actually part of a bigger, you know, sort of coordinated effort by the current administration in the White House to try to dismantle the crypto industry

in the United States. So, you know, whether it's regulation by enforcement, it's the utter irony of suing Coinbase, um while also simultaneously using them as a resource for offloading de-banking them, choke point 2.0. Uh so, you've got choke point 2.0, which you Nick was on the on the pod a couple weeks ago talking about that. And then now we've got subpoenas. They're they're So, they not only do they go after the the companies with enforcement actions, not only do they indirectly de-bank anyone that's trying to do anything in crypto, now they're going after investors investing in entrepreneurs.

And these are not like your kind of run-of-the-mill sketchy VC firms. This is A16Z and Union Square Ventures. These are the the elitist of the elite tier one VCs in space with billions of dollars under management, tens of billions of dollars under management. So, if you dig in the details a little bit of those subpoenas, um what's interesting to me uh or the what stands out, I guess, is that it's has to do with Uniswap. Uniswap is a US-based company. And so, it was almost like, you know, this is just me putting on my tin foil hat or or speculating a bit, like I know Chris Dixon over at a16z has been public about really wanting to back

entrepreneurs that want to do something in crypto in the US. Well, this is what is potentially an outcome is the SEC wants to inquire about their involvement in Uniswap and supporting them and there's a token and it's not a registered security broker and all this kind of stuff that the the SEC is potentially going to claim. Um I don't know where this will net out, but if you look at the series of events, it's very difficult for someone to look at the current administration, which Biden is still technically president.

He's still technically president. Um with Harris as VP and now the the, you know, Democrat uh candidate for for president next for the next 4 years, it's pretty clear that they're pretty anti-crypto. And if they were actually going to reset, don't you think they probably would have said, "Hey, let's pump the brakes here a little bit." or just like put the car in park, right? And they're simply not doing that. And I think that recently what we had this call this phone call with, you know, industry leaders, so this is folks from, you know, I think it was the the chief legal officer from Coinbase, it was Anthony Scaramucci from SkyBridge.

Folks that are, you know, Democrat uh leaning if not Democrat donors uh on the on the phone with, you know, the dep- the deputy Treasury Secretary, um Ro Khanna from from California. Folks that are involved in the Financial Services Committee wanting to have a conversation about what can be done and man, you want to talk about uh not reading the room, you know, the dep- the deputy Secretary of the Treasury basically said, "We've done nothing to uh you know, restrict banking access." And I think the Chief Legal Officer over at Coinbase asked everybody on the call if they had had issues getting a bank account. Pretty much everybody raised their hand. So, it it like the long story here is it's hard for me to see that the case

being made that with the with the Ripple lawsuit loss for the for the SEC, the tiny settlement, coupled with these subpoenas and this phone call in the past week, it's hard for me to see any real wood behind the arrow with respect to Kamala Harris's team wanting to do a reset with the crypto industry. Yeah, I mean some of the reporting that came out of that Eleanor Terrett at Fox Business was was the first place I saw it and just reading that documentation about like everyone raising their hand saying pretty much that I've been debanked was rather laughable.

Alex Christy, do you have anything to add on the lawsuit slash Harris campaign reset on crypto companies? My quick take is like I can't it can't I just I kind of have to assume that if if Harris wins it probably can't be any worse than it's been. So, at worst it's probably neutral to slightly positive if you get a Democratic victory in November, but we'll see. We talked about Polymarket last time really showing the odds for Trump winning and then Biden dropped out. Polymarket was slow to catch up to what other polling was showing was that Harris was a way stronger candidate than Joe Biden which is like borderline common sense as far as I'm concerned.

But Polymarket was way wrong on the VP nom. They they thought there it was going to be Josh Shapiro of um in Pennsylvania and then it ended up being Tim Walz. Um so I guess like one we've been talking very positively about Polymarket and these betting odds. We've also seen this I this isn't even in the in the the note that we planned on talking about this, but Elizabeth Warren wrote a letter with a bunch of other Democratic um lawmakers basically saying the CFTC needs to go after anyone trying to make election odds and betting markets on on election campaigns, which is is kind of laughable to me, but I guess does anyone have any comments there real quick on like Polymarket and the fact that things were so wrong? Do we still think the betting markets are

good and Elizabeth Warren trying to just go after another area where crypto feels like it can actually have some sort of staying power. I mean it's a small market Polymarket. I mean at least it's bigger than predicted, but it's it's it's very liquid so um, placing too much emphasis on on where it lies, I think is is mostly noise. Um, unless it's in my favor. Then it's then it's signal. Good good answer. Good answer. So you you bought you bought the odds for Tim Walls to be selected VP, right?

I I didn't even see I didn't see them. No, I didn't see them. I'm not uh, yeah. I've been uh, um, kind of outspoken that I don't particularly like uh, um, yeah. Uh, Harris and and Walls, but that being said, I think it's I think what matters here is prices rather than talking politics and I think the the Trump premium with the washout we just had is gone. So I don't think Kamala Harris winning is bearish. I do think Trump winning would be very bullish.

And that's what matters, I think. That's a much more sound bitey way to say kind of similar to what I was saying before. It's way nicer to say it that way, I guess. agree. Yeah. And then the last thing, MakerDAO is considering off-boarding wBTC with some custodian issues. I mean, Joe, you want to dive into that real quick and then wrap up? Yeah, this is this is relatively recent. So for folks that may not know, wBTC is a wrapped version of Bitcoin that BitGo, which is a custody custody provider, multi-sig custody provider, provides as a service.

They recently are partner announced they're partnering with Justin Sun and are looking to move the custody operations of DB WBTC, I believe, to Singapore and other southeastern Asia southeastern Asian location. The folks at MakerDAO, the folks meaning people involved in governance, which is anybody that holds a Maker token, they put a proposal out there that more or less said, "Hey, let's go ahead and drain WBTC vaults to zero because they don't feel comfortable with with Justin Sun." Mike Belshe came out, the CEO of BitGo, saying like, "This is you know, if you dig into the facts, this is a nothingburger." I don't really have a view on it except that this could

be a potential headwind for Bitcoin. WBTC is not a trivial amount of Bitcoin. It's pretty significant and it's a big moat for BitGo for their business. And if Maker was to if the if the you know, the governance participants for Maker were able to actually get this thing across the line, I do think that there's a potential negative impact price. It's just worth noting that right when you think, you know, "Hey, the Mt. Gox selling is done, the Genesis thing is done, the FTX stuff is done."

There's always something in crypto next and I think that this WBTC thing is likely a nothingburger, but it is something that I think was worth mentioning to keep on people's radar. I to be honest, I barely follow crypto at all in the last week, so yeah. So, you were just trading traditional markets the last week or so? Yeah. Aside from rebalancing into Ethereum. All right, that's it for this week. We went a little over an hour. We talked about a lot. It's very macro heavy. Thank you for joining us, Chris. That was awesome.

Thanks for joining us for this episode of Bits N' Bips. We'll be back in 2 weeks to discuss more about how the worlds of crypto and macro are colliding. Until then. Thank you, guys.