Is the Cycle Over, Portfolio Psychology, & Prediction Market Alpha

thing.

Trump is like, 100% tariffs on China, and the market like sells off a little bit less the second time. Like, sell all the optionality you can, which basically means buy Bitcoin when it, when it pukes because of something that's obviously not going to result in the end of like global commerce, you know?

Yeah.

It feels like a screaming fade. And the only thing that you'd have to believe in order for it not to be is that we're in a 4-year cycle because it's happened 3 times. It's forever now. And, uh, okay, so it's about 4 years. So let me interpret any—

that's the right thing. Every single sign is bullish right now. Yeah, except that we're on year 4 of what is a 4-year cycle.

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All right, guys, it's good to have you. Welcome back to another 1000X alongside Jonah, but also special guest, my boss.

Let's go.

Jason Yanowitz.

Dad.

Daddy. Welcome to the podcast. Let's not— let's cut that part out, Jonah.

Jonah, you're not allowed to call me daddy at 1 PM. That's later. Later.

Yes.

I might never do that.

You know, I'll leave that to Jonah. Jonah. So we were— before we hit record, Jonah's like, yeah, I got to get you on the pod. You got rizz. Only Jonah. Only compared to Jonah do I have rizz. Compared to no one else at Blockworks do I have rizz.

But oh man, Jonah, you're going to take that lying down.

I—

that's what I've been doing lately is taking things lying down. And as the boomer on the podcast, I'm trying to use words like rizz and I sound like the uncle in the room, don't I? Rizz.

No, no, that's how you know, because I actually don't say uncle. I say unc now.

Yeah, we had a guy, I was going to call him kid, but I feel like you're not allowed to call people kid. But you know, we had a mature adult here and he was 22 and he would, or maybe 23, and he'd always be like, yo, yeah, no, he's like, you got movement, man. You got movement. I'd be like, I don't, I don't know what to do right now. I'm just going to keep walking past you.

It's like, do I, do I keep moving?

I say thank you. Do I say like, get back to work? Like, Yes, I got movement.

You got movement. So he just chose to ignore it and he's not, he's not referring to dance moves.

Blew past, blew past that. No, he's not.

Wow.

Well, you know what else has got movement? The crypto markets this morning.

Great transition. Yeah. Yeah.

I, I, I try as I'm practicing that one. Yeah. But it's, it's amazing. And we brought, we brought you on here cuz you have, I think, I think you always have an, an inter, an interesting angle and, and good and good questions. But basically the trade of the last 3 weeks has started to unwind. Gold's down 5%, Bitcoin's up. Kind of crazy.

Yeah. I mean, can we start there? Like, yeah, this is actually the most confused I've seen market participants in, in, in many years in crypto. Like the least consensus, just, you know, in the, in the group chats, which I'm sure you guys are in a lot of these things. It's like, I feel like a lot of the markets the last couple years have moved on these con— big consensus trades. Like, okay, not hot enough, too hot and it was, and I'm not saying markets are ever easy, but like there have been some easy things. This feels tough right now.

Really?

Like this feels, yeah. I, I would say at least the market participants that I talk to on a daily basis are, I think when you see people like Chris Berniski or these like big, you know, quote unquote big names in the industry, Chow and Berniski talking about the cycle being over, you can't help but get a little bit spooked. And so I'd love, I'd love to maybe just hear your guys' take on just where, how you're thinking about right now with like the big overarching topic I think on people's minds is, is, is the cycle over?

I'll start by saying I really respect Chris Burniske. I think he's one of the greatest investors in crypto. He's a phenomenal fundamental investor. I think people are over-indexing a lot on the cycle. When I think back to 2018, it was very different. Obviously the, the composition of market participants were very different. 99% of people in 20, 2018, when the market cycle ended, knew what a 4-year cycle was, right? It was technically only the second coming, but people were talking about the halving cycle that became, it was very cemented in people's minds. Everyone that owned Bitcoin knew about this.

You remember the halving watch parties?

Yeah.

I remember being posted up like poker games, like late night streams. Yeah.

And then 2021 comes around and everyone's like, okay, it's happened twice. It's definitely going to happen a third time. And in 20— and in 2021, I think a lot of people still, probably 80%, maybe 85% of people that owned crypto knew and subscribed to the 4-year cycle theory. They knew about the halving argument. They knew about all this. And so it became a self-fulfilling prophecy. Now, 4 years later, it's happened 3 times in a row, which obviously is a data point that we need to look at. But I don't think the average holder of Bitcoin or crypto, maybe of Bitcoin, people that own crypto probably do, but Bitcoin specifically, they don't know about the four, they don't care about the four-year cycle. They didn't invest because of the halving.

My uncle who bought the BlackRock ETF is not, doesn't know about a four-year cycle. Yeah. He doesn't even know what the halving is. Yeah. He doesn't even know that there's 21 million coins.

He, he bought, he bought Bitcoin because people are like, oh, Bitcoin's a great, It's a, it's a comp to gold and it's going to go up and it's an inflation hedge and all.

Yeah.

There are all these other reasons. I mean, basically what I'm trying to say is I think the 4-year cycle is giving us an amazing opportunity to get in the market.

So here, here, here would be the counter is that there are far bigger sellers than there are buyers. Right. So the big sellers right now are OG whales who are, um, again, again, going back to the group chats, I think you can learn a lot in these group chats. There are guys from 2013, 2014 who are now selling for the first time. They're selling because ETH hits $4K, they're selling because Bitcoin hits $120K, and there's just these big sell orders at some of these all-time high numbers. And I think that's why, like, like, I've never seen Bitcoin's price action do what it's doing now. It, it can't break. It's really struggling to break past the all-time high, and I've never really seen that.

Yeah, it, it's weird. It actually, it violates one of my core principles, which is that when you lose momentum, you should probably get out of get out of Bitcoin, right? Like my, my entire framework was built on this value versus momentum theory where you buy Bitcoin when people view it as a, at a bargain price, or you buy it when it's ripping. And right now we're going sideways, but I do still think that I'm, I'm violating this based on my understanding of what's going on, which is that there are large OGs exiting, but the market is absorbing their sales.

Hmm. Okay.

And we're not, breaking down lower, we're managing to trade sideways. And I think we've traded sideways for a long enough time in New York and selling me to actually be bullish. Me too.

I mean, I think, you know, you said that there are bigger sell orders than there are buy orders. I think the price action might, you know, respectfully, I think the price action suggests otherwise because we are stabilized in a, in a range. So somebody's buying it. And I think, you know, you have OGs who are selling, there are new whales who are buying. Your uncle is part of the big whale called iBit that's buying. There's TradFi buying, there's, you know, the whatever, the $30 to $50 trillion wealth transfer from boomers who are dying to millennials and Gen Z who are inheriting that money. You have a no-coiner generation passing money to a, a very Bitcoin-pilled generation, crypto-pilled. They're buying gradually. And then you have institutions as well. Like, let's not forget that crypto was illegal 6 months ago. And now it's legal. So the rails are all there. You know, I was telling you before the podcast, my, my sort of thesis that crypto has already disrupted TradFi back office and payment rails and the movement of value. Like Avi and I talk about this on the pod all the time. Like if you want to move dollars from me to, to you, I can Zelle you. That's easy. That's been solved. But if I want to move dollars to Somalia or if I want to move a share of like the S&P 500 ETF from me to you, that's like bizarrely difficult, cartoonishly difficult. But like with crypto, it's instantaneous and easy to move like non-pegged, non-stable value around. So like this, this stuff is already disrupting disrupted SWIFT. It's already disrupted back office. It just hasn't been allowed to proliferate.

Did you see Ripple's recent acquisition?

Yes.

This went really under the radar. It, it, they, they bought a company called G-Treasury.

Oh, okay.

Yeah. G, they bought a company called G-Treasury, uh, billion-dollar acquisition. G-Treasury has been around for 45 years. It is an old-school, out-of-Chicago treasury management, uh, and FX management solution for Fortune 500s. Toyota, Subway.

That's kind of smart.

Ripple's doing amazing things with their acquisition.

Yeah. So, I mean, I've been, I've been saying this for a while. I think Ripple's going to buy their way into a real business here. And if you look at what they've done, Hidden Road acquisition, what is Hidden Road so good at? They're a TradFi. They can cross over between TradFi and crypto. Um, and if you look at like, you mentioned sending money to Somalia. Yeah. I don't know how many times you send money to Somalia. Probably not that often.

Hopefully never.

However, what the next big thing in stablecoins is going to be B2B, it's not, it's not you sending money to Somalia, candidly. It's, you know, Toyota sending money to their supplier in China.

Right.

And that's all going to happen with stablecoins. And I think Ripple is going to try to win this game. So anyways, not, not a conversation about Ripple, but it's a conversation about like, yeah, the adoption is really unprecedented right now.

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And that all of that adoption, I guess the point I was trying to make to put a bow on it is that all of that adoption results in inflows. right? Like it's all coming into crypto because it's of these rails proliferating. So there, I think you can think of that as like the new whales, TradFi and the wealth transfer is basically the new whales. And also just, you know, your uncle buying iBit. But the other thing is like, you know, no disrespect to Chris Burniske, I'm, he's probably way better at, at doing this than, than I'll ever be. But like, just because, you know, not talking about him, but in general, an OG, just because you were early to Bitcoin does not make you a good trader. Right? It doesn't even make you a good investor. It means you had a great call on something. And so if those OGs are selling because they're worried about a cycle ending, that doesn't mean that there's a cycle ending. It just means that they're, they're sitting on so much money and it no longer represents the sort of Ayn Randian ideals that maybe they invested for back in 2011 or whatever. That, that doesn't mean there's no opportunity or upside left in Bitcoin. So 100%, I'm kind of dismissing those people. And their views, frankly, because they got in for different—

so if you look at the data, OGs sold a ton of Bitcoin post the BCH fork in 2017, and then also all the way up through Bitcoin going from $3,000 to $10,000, OGs were offloading and offloading.

Well, that's because half the— there was the big, big battle with big— like, I mean, half the industry was on the Bitcoin Cash side. Yeah. People don't like to talk about that, but half—

it's true. Half, half the industry was. In fact, I, I, I still have my qualms over whether we made the right decision there.

Yeah, I think many people do.

No, because I do think that there was, there was some value to the idea of actually speeding up Bitcoin and because decentralization I think is going by the wayside right now anyway. A lot of conglomeration among miners, but putting that point aside, also happened in 2021. OG sold on the way up, like passed the all-time high of $20,000, $30,000 to $40,000, $50,000, you were seeing old coins from like 2011, 2012 start to offload. It doesn't necessarily mean it's the top. It just means that the market needs to digest. Kind of what happened in July of 2021 after a large sell-off, you go sideways at $30,000 for a while, a ton of people get out, people like Su Zhu get short 10,000 BTC and then the market rips up in their face. I mean, to me, I just try to look at the flows. Where, what is the largest pool of capital that's buying Bitcoin? Retail institutions and MicroStrategies of the world. Are they still buying? Yes. Okay.

Yeah.

You know, I'm, I, I'm, I'm sanguine. 2021 was a bit interesting because it almost, I don't know if you guys feel this, but Bitcoin almost feels like mystical in some ways. Like it, like everything sometimes lines up so perfectly. So for example, post-halving at the end of the 4-year cycle, the Fed is like, ah, yeah, by the way guys, inflation's real. Let's, we're going to start raising, raising rates. And that happened like at the exact right time to confirm the 4-year cycle.

Yeah.

So there's like a little bit of mysticism there. It's like, you know, there was this huge exogenous shock that just so happened to confirm the 4-year cycle. We don't have that. We have the opposite happening right now.

Yeah.

So I'm just not as worried about it.

I think this is the easy, I think I take the opposite view of crypto Twitter on this. I think that this recent sell-off, and stabilization or chop or whatever you want to call it is the easiest trade I've seen in crypto in a while. I don't think it's hard at all right now. And I think the reason why is, you know, I have an analog from TradFi markets. So basically when I was the dollar-yen trader way back in the day, dollar-yen used to rip, meaning that the yen would nuke whenever Kim Jong-un would send a, like test a new rocket. He'd be like, I'm threatening Tokyo. And he'd like drop something in the sea of whatever, of Korea or Japan, whatever's over there. And the yen would nuke and then it would slowly grind back up after the world realized that Kim Jong-un was not gonna take out Tokyo. Right. And then he'd do it again and he'd be like, I test bigger nuke. And the market would, the market would go down less. Right. And you would, you know, all the newspapers would have images of like concerned Japanese people looking at like large television screens or concerned South Koreans. But like every time the yen would move less. And then after his like, whatever, 15th missile test, the market was basically just like, ouch. It would be like, show me the fricking nuclear war and I'll sell off again. Right? And as a yen trader, the first time I was like, oh my God, oh my God, the world's over. Like the yen vol exploded. And then after every single one of those, I would just sell options and make money. And it was easy. And crypto is doing the same thing. Trump is like 100% tariffs on China. And the market like sells off a little bit less the second time. Like, sell all the optionality you can, which basically means buy Bitcoin when it, when it pukes because of something that's obviously not going to result in the end of like global commerce, you know?

Yeah.

It feels like a screaming fade. And the only thing that you'd have to believe in order for it not to be is that we're in a 4-year cycle because it's happened 3 times. It's forever now. And okay, so it's about 4 years. So let me interpret any—

That's the right thing. Every single sign is bullish right now.

Yeah.

Except that We're on year 4 of what is a 4-year cycle and we're in Q4, which is the scary time of a 4-year cycle, right? Yeah. And I think it's, by the way, it's not just, it's not just the Berniskis of the world who I think are short. I think there's a psychology that happens with, Avi, when you came into crypto, maybe around the same time as me, like into it in 2015, '16, like really active in 2017 and then like full-time starting 2017, I think. There are a lot of people from like our class who didn't sell in 2017, then they made a bunch of money in '21, and then for the most part, they didn't sell in '21 and they rode it all the way down. And they're like, at this point, they're like, I should be worth way more. I don't know if you guys saw Kobe's recent tweets this week about like, yeah, yeah, money and lack of money and like how I think a lot of— I think a really old Kobe tweet from many years ago was most people overestimate or underestimate Nobody actually knows how wealthy people are on crypto Twitter. They, but they always for certain overestimate by 10x or underestimate by 10x. And I think, I think mostly overestimate and most, and that was, yeah, I, I think mostly it's overestimating. Like I've, you know, there's so many times like, oh yeah, that guy, you know, that guy must worth be worth like $800 million.

Yeah.

Maybe $20 million doing all right, but it's not $800 million. And I think there's a lot of people right now from the, you know, our, our class of 2017 who are just like, I should be worth more than, you know, $10 million at this point. And right now they're trying to lock in some gains.

100%. So it's not just the OG whales, it's like, yeah, just, I, I think there's a lot of PTSD, which, yeah, I mean, thankfully, so not to pat myself, I'm gonna pat myself on the back a little bit. I avoided a lot of that in '21. I think my, my, my greatest call ever that I'm most proud of is, I pegged the change in market dynamic in '21. To the fact that there were larger people in the market. So I didn't, I basically said before when Bitcoin was like $25, $30K, I was like, I don't think we're going to get a blow-off top. I think it's going to be more of a rounded, it's going to take a while for this thing to actually come off. And so the moment Bitcoin lost momentum, I got out of the market. Then actually the Fed raised and I was like, okay, like now, like I'm out fully. And so I think I just personally have a little bit less PTSD. From that. But I do think that there were a lot of people that got zeroed out in FTX, like post. So that people instinctively, when they make a lot of money, they actually want to sell a lot of the time. And what keeps them in the trade is greed and, okay, I don't want to miss out on what's going up. But if you're like up, if you're up a significant amount of money this year, You're, and you've been through 2 cycles where you've already lost it all. You're scared.

Yeah.

You're like, okay, let me, let me get out of this thing. Yeah. Let me, let me just finally not make the same mistake that I made the last 2 times. Let me lock it in. And the greed disappears because they're not making money every day. That's what happens.

Yeah.

Bitcoin goes sideways. Altcoins are going sideways. It's been effectively 3 months of this. You haven't made any real money in 3 months. You're still like kind of near the peak. Okay, let me get out. I think that's a lot of what's happening right now and why we're not going higher.

But I think that once they're out, yeah, you know, crypto's such a tough space because you're making a venture bet on the next decade in an illiquid asset class. Yeah, it's so hard. Like, okay, even, even let's remove Bitcoin. It's like Robinhood. Tell me, tell me what to do with my Robinhood position, right? Because I'm up, you know, bought a bunch of Robinhood. Like, that's, that's my best investment of last year. Bought a bunch of Robinhood, like somewhere between $20 to $30. Now it's at $135.

I got a take on this.

I both think that, that you should take profit when you're up like 6x, and Robinhood is a generational financial brand that— and you guys might disagree with me on this, but I think Robinhood will be, along with Coinbase, one of the largest finance companies in the world one day. It'll overtake Goldman, JP Morgan, all these.

100%. So I think so.

On the short-term side, like, oh, you should probably take profits. Like, maybe market's feeling frothy. AI deals, yada yada, Bitcoin, you know, whatever market froth. But on the other side, I'm like, if I, like, I have the mental fortitude, I think, to stomach a 50% drawdown if that were to happen. Why don't you just keep holding? Never sell your Robinhood and just ride it up. And if it goes down, you just buy some more.

So here's what you should do with your Robinhood. You should sell a little bit, sell 10% and see how you feel.

Give it a week.

And basically, like, the reason why I think Robinhood is going to continue to rip, just gas higher over the years with volatility, right? Like in bull markets, you get crazy drawdowns. Is it speaks to a broader theme of crypto being hard to trade, which you just touched upon. Why is crypto hard to trade? Because the market has changed, right? The, the strategy that, I'm gonna tie this back into Robinhood, the strategy that used to work for making money in crypto was like belong some Bitcoin and then buy hyped shitcoins on rallies because they rally more as the, the momentum and the narrative proliferates, right? That doesn't work anymore. And there's a new, you know, the paradigm has shifted in gold. The paradigm has shifted in crypto. I think we're in a 25-year grind higher for crypto. And so instead of buying hyped shitcoins, that doesn't work anymore. Buy picks and shovels assets like Robinhood that collect fees on people, you know, fooling around in crypto. And I agree with you that it's a generational financial brand and it's, it speaks also to the wealth transfer that we touched upon earlier in the podcast. Like, Gen Z's not trading, you know, by calling up their broker at Schwab. They're, uh, they're trading on Robinhood, right? So Robinhood's just going to continue to accumulate mass both from crypto and from tradfi, and it's kind of marrying the two together with, you know, unified plumbing. So I think like the medium to long-term story for Robinhood is so bullish that you have to hang on to most of your stuff. But like whenever you feel like you've just made a huge profit, you should peel a little bit off and then see how it sits in your gut. And if you're like, ah, that felt great, then you do more. And if it feels, if you feel like stupid or FOMO-y, then just stop and don't touch it.

I think that's a good take. I think one of the best, you know, it was tough. Like a lot of people lost a lot of money in this recent liquidation. Yeah. Flash crash or whatever we're calling that day. It's like, you know what, $10 or $15 or $20 billion of liquidations, whatever the real amount was, it was a lot. The most helpful thing that it did for me was it's a forcing function to look at your portfolio and be like, am I happy holding these coins or these stocks? If everything went down 70%, would I be like, you know what, I'm good. I can hold. One day this stock will go up. And I had some coins and stocks where I was like, oh man, Dump. Absolutely not. Short-term trade. I was trying to catch a momentum thing and then other things where it was like, yeah, you know what, if Robinhood or Coinbase went down 70%, I'm buying more.

Yeah.

So yeah, I think that's good. Good lesson driven. Yeah.

I mean, apart, apart from big macro shifts, I think it's just a fool's errand to try to trade those types of positions where you have large conviction outside of something. Okay. You know, Trump might, you know, in, in April, for example, people got nervous about tariffs. Maybe you want to make a trade around that. Maybe you want to, okay, let me try to protect some positioning, buy in because I think there's a short-term inefficient drawdown. And even then you probably get one of like, you get one or two of those trades a year. Most of the time when you're in these positions, you just kind of have to sit. And I'm a huge fan of Robinhood. It's my third largest position. Wow.

What are your first?

In my—

You share that publicly? Yeah.

Yeah.

I mean, I'm happy to. My first largest position is just NASDAQ. I mean, I'm, I'm talking specifically equities.

Yeah.

Yeah. Uh, my second largest position was, uh, silver miners and gold miners, which I actually just sold out of, uh, literally this morning. So now I guess like Robinhood's my second largest position. Um, well, no, not, not Golf Club. I sold out when they were down. I, I sold off 3% off the highs or 5% off the highs right now. But for something like gold and For something like the gold miners and silver miners, which are actually down more than, I think they're down like 7% today or something like that. But it was unbelievable run. I mean, they basically doubled over the last 3 years.

Why did you buy those instead of just gold?

So catch-up trade?

2 reasons. One, it's like, it's crazy leverage actually on the positions and it's non-liquidatable leverage. 2, if gold goes sideways, they do better because they have cash flows, right? So gold, gold can go sideways or slightly up and then they can be up 13 or 14%. And so it's actually very, it's like basically the reason to not buy them is because they go down way more when gold collapses.

Yeah.

But I was buying gold during a consolidation phase. I wasn't necessarily nervous about gold. Like I bought gold when it was in that triangle of 3,000 to 3,300. That's where I was, that's when I was talking about it. So I wasn't necessarily concerned about a total collapse. So that's why I bought miners instead of buying out. And I was, you know, with most of my positions, I mean, my portfolio basically looks like NASDAQ. I own Tesla, I own Robinhood. I own a bunch of rare earth mineral companies. Like I'm just holding onto these things. I'm not—

You have to. And that's what's the beauty of crypto trading is that it gives you a mindset of thinking big over the long term. And there's this huge arb in publicly traded equities. Like Robinhood, and sometimes in commodities like gold, where even the most euphoric industry analyst, like equity industry analyst who works at like Citibank, right? They're not incentivized to make bold calls. They get fired for those. But if they just are in line with, or maybe on the upper end of the band of the other estimate analyst estimates, they keep their job no matter what. These are very risk-averse people. So the industry anchors itself to industry analysts' estimates. And you as a retail trader who's familiar with crypto mooning over the years, you can have a, you can have a medium to a long-term bull thesis on something like Robinhood that is just reasonable, but still way above the incentive structure of the equity analysis industry. And that's your edge, right? You can be like, Robinhood is an amazing brand. It's going to 10x over the next 10 years. The people that study Robinhood can't even fricking comprehend.

Well, you can't take anything that the research guy says or anything.

But people do.

I know.

That's how the market, right?

Turns my brain off.

Half the time. So like that's your arb.

Yeah. Yeah.

And the other beauty is like, and this is for any inexperienced trader out there, it's very tempting to like buy when the thing's up and sell when the thing's down and just get, you know, finicky and panicky about that. But like if you have a long-term thesis about something, you can cling to that when you're having a drawdown. It's an objective framework that can help you retain confidence when the market's, you know, serving you.

So, you know, one thing about that, just a piece of trading psychology that I've personally worked on that I find very funny looking back at myself and like, I can't believe I acted like this 'cause it was completely irrational. Basically when things are up, your brain naturally sees green and gets filled with dopamine and you feel safe.

Yeah.

And when things are down, your brain's dopamine goes away and you get this fear and you, things feel very unsafe. But the reality could not be further from the truth. It's actually much safer to buy most things when they're down versus buying them when they're up. Like just generally, if you're fundamentally investing, it's actually safer. And so what you need to do is you need to get addicted to buying, like you need your dopamine to be produced when you buy, when something is going against you. Like that's actually, you need to be crazy. You need to train yourself. I call it the, it's the Costanza rule. Right? You do the exact opposite of what your body naturally does. And guess what? You become, and, and the people that trade the best just look at things super analytically, right? No emotion involved with any, with any sort of trading. You go, okay, I like this thing. It's cheaper today. I'm going to buy it. Yeah. That's how you have to think about it. That's how I felt about Bitcoin on the sell-off is I like this thing. Nothing has changed. Yes, there was a liquidation run, but nothing on my 3, 6, 12, or 18-month outlook has changed. So I like it better now. This is better.

Yeah. It's not worse.

Yeah. To buy it at 109 than to buy it at 114, you know, buy it at 125. I still fall prey to this, by the way, sometimes, you know, like not everybody. So I'm as guilty as the next person of still every now and then trying to buy the breakout and then getting to the face. But like, you know, you gotta train your psychology. Here so hard.

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Jonah, do you own anything outside of Bitcoin?

Yes.

Like crypto coin crypto?

Yeah. Yeah. I own Aerodrome and Hyperliquid right now. I just, I just re-bought Hyperliquid around $35 on this crash. 'Cause yeah, it was like the Kim Jong-un nuke story. I saw the market nuke for technical reasons.

Yeah.

Not fundamental reasons. I'm like, okay, this is my chance. I sold Hyperliquid at $45. I feel naked.

I feel short. Feel awful.

When can I get back in?

That's the gut feel. Listen to the gut feel.

Yeah, yeah, yeah, yeah. So like I just felt, yeah, dumb for having sold it all. I, I was like kicking myself when it traded up to $58 and then when it traded down to $35, I'm like, all right, this is my chance. Probably my last chance of getting back in. So I bought Hyperliquid. I've been long Aerodrome for a while because I think that Aerodrome and Hyperliquid are kind of the only two defensible products with attractive tokenomics in crypto that I can wrap my head around. I'm not saying the only two that exist, but like the they're kind of the best two.

Yeah.

And I think every other altcoin for the most part is just a meme.

Yeah.

And I think the meme era is dead for reasons, you know, previously discussed.

Yeah. Yeah. Aerodrome's great. They're just, Aerodrome has taught, Aerodrome's tokenomics have nothing, bad token performance has nothing to do with their tokenomics. It's that they get comped to Uniswap, which is, yeah. Just a, tough. I mean, that, it's just a tough coin.

Yeah. Uniswap has had so many chances, I think, to do amazing things for their world of crypto valuation if they just return some capital. Yeah.

Yeah.

From fees. I mean, you know, we, we don't, I'm, I'm, this horse has kind of been beaten to death, but that's also why I personally, like my portfolio is comprised of things that make money.

Yeah.

And then also return money. So actually we've talked about this on previous podcasts, but I have a good position in Shuffle. Which is an online casino. Yeah. It's actually, they're booming. They're booming. We've been talking about this since 20 cents.

Yeah. Yeah.

It's like, and it's going to keep going. I think it's what, $400, $450 million valuation right now. It's going to keep going. I mean, this thing is printing money like nobody's business and it's actually returning money to investors. I still own Syrup. So I'm very, I'm still very bullish on the institutionalization thesis, which was that you just want to buy things that institutions are involved with because Those are the people.

Aave. Yeah. Maple.

Maple. I don't own any Aave. I view Maple as like my, yeah, yeah, yeah. My, my bet.

Don't bet against Sid Powell.

Yeah, I, I, I agree. I really like Sid. Yeah. I, I do like Aave. I just think that syrup's a better risk reward.

Yeah.

And they have a similar, they're going to, yeah, same.

Yeah. It's kind of same, same.

Yeah.

Yeah. Basically you need, you need good tokenomics because I, I feel like such a dork saying this, but like the retail, universe of shitcoin buyers is tapped out, right? So you need somebody to buy the token, otherwise it's just down only when VCs sell. So why not the token project buying the token? Like what, in the case of Aerodrome, Hyperliquid, and presumably this Shuffle thing, like there's a buyer when, when the online degens are either selling.

You're talking about that? Yeah, exactly.

Like that's what you need. There's no other reason why these coins will create capital to shareholders.

Yeah. Or token holders, not shareholders.

Exactly.

Stage.

Do you guys use prediction markets?

Yeah, I've been getting a lot more active on prediction markets.

I'm so addicted to these things right now.

It's really fun, and there's actually a good amount of edge.

Yeah, yeah, yeah. Really? Did you— did you— Obby, like, is like Googling something, putting into ChatGPT and being like, they don't line up, edge. You're like, uh, no, no, they're— um, if you just had taken the no on all— if you bet, if you bet on or predict or whatever you wanna call it. If you predict all of the Trump markets, like, will Trump say this? And you would just pick no for all of them. It's an average return of, I think, 13%. And if you just picked yes, it's an average loss of 20%. And the market psychology there is if you're going to Polymarket to bet on a market that Trump will say something, you are over-indexed on him saying something.

Wow.

So if you just pick no, I think 71% of Polly Market markets resolve to no. So if you're just betting no on a lot of these markets, huh? The, that's really smart. You will have made money. The, the, the other, there's also, sorry, the la— the last thing I'll just, I, I will give away free, free money right now. There are markets right now where if you use ChatGPT Deep Research or Pro or whatever the, the $200 a month version is called, I forget. And you just plug in the market into that, like it, it, it is, it, it will reanalyze the odds for you and do turn on the like web search so it gets all recent information. It'll, it'll reanalyze it for you.

So, um, yeah, like I know what I'm gonna be doing this after. No, there's, there's a lot of edge. I mean, again, not to give away alpha, but if you speak a different language, there's huge edge. So I speak Hebrew and so anytime anything comes anytime there's a market on Israel, Israel-Hamas ceasefire, the information will always come through Hebrew channels first. And there are not enough people arbing versus poly market.

Oh, wow.

And so for example, I just like subscribe to all these like Hebrew Telegram channels that will get me like 3, 4 minutes before any English channel will report on it, which is plenty of time. You just look at it, you bet, like, for example, will there be a ceasefire? will, will the ceasefire break? Trading at 80%. You buy it because you just got news that to, you know, something happened and yeah, you know, you don't even need to speak Hebrew.

You can just Google translate that stuff.

Well, it's, it's, it's, yeah, it's, it's much easier if you speak a language.

Fair enough.

Of course. 'Cause like, you know, 'cause like new 'cause like you don't know, 'cause like you get 50 headlines a day in these things and you like, don't know, you're not gonna be like copying, you're not gonna like copy. I mean, you could write a bot to do it.

Right. But yeah, it feels like I did a lot of sports betting in college, lost a ton of money, but it— I actually, it's the same feeling. It's, it's just gambling. Yeah. It's instead of— I'm not buying coins that I have conviction in. I'm just gambling. But it is a lot of fun. But I do think unlike sports betting back then, there's, there's some areas of real alpha.

Yeah. I mean, yeah, there's, there is. I think also if you're a subject matter expert.

Yeah.

You know, there's, there's good alpha. And also if you're an insider, which is kind of what these markets are built for, is to allow that information to leak in. Yeah, it's like, that's what, that's what they're good at in many ways.

If you're sports betting, you're up against like real sophisticated sharks.

Yeah. And I guess if you're just like, though, a lot of, so a lot of capital in sports betting is moving from DraftKings and FanDuel to Polymarket and Kalshi.

No way.

And the reason for this is, is a tax bill actually. So in big, big, beautiful bill. So right now, or historically, you could write off 100% of your sports betting losses. And in the big, beautiful bill, they changed that so that you can write off 90% of your tax loss or 90% of your sports losses. So if you could write off 100% of your losses, your odds are like you'll win, let's say, 51% of the time, or excuse me, you'll lose. You'll win 49% of the time, which is still good enough for people, the good guys to make money. But now if you can write off only 90% of your losses, your odds go from like 49-51 to like 44-56. I'm making those numbers up a little bit because I don't know it exactly. Interesting. But the tax bill made it so that it's less profitable to trade on the sports betting platforms. So money is now moving into Polymarket and Kalshi.

I wonder what'll happen to crypto when they institute a wash trading rule like they do in equities. Where like right now you can tax loss harvest to, till the cows come home. You can buy Bitcoin, sorry, sell Bitcoin at a loss and then buy right back. Yeah. Yeah. And you get to report a tax loss, whereas in equities you have to wait 30 days or buy something.

Yeah. Yeah.

Right. I wonder when they close that loophole if that means that crypto will be held differently or longer or whether there'll be less volume.

'Cause I bet, I bet there's, well, there's, what, what, what definitely happens is that there's, there's always been an effect at the end of December. Always.

Yeah.

Where altcoins that are down a lot will go down even more. Like, because that's what people are doing. They're, they're washing it.

Right.

So like a, a large, a large VC, holds Coin A, they're down 30% on the position, they'll offload the position. Everyone will do that. Thing will go down like 15, 20% because there's no liquidity.

And then you buy it back up.

You buy it back up. This is what happened. I mean, this is mostly on years where things are down, but I remember this so vividly because it gave me an entry into Solana. The December 30th, Solana went from $15 to $9. And it was just so clearly like probably the multi-coins of the world, like tax loss harvesting. Because it just, boom, like suddenly, like, you're under that straight line and you're like, oh, that's what's happening right now. Because Solana blew up and people want to harvest their tax loss.

Yeah.

I get it. Right.

Yeah.

So I think that will change, I guess, take away one of those trades.

Well, I guess until it's changed, that gives us good fodder for an altcoin short trade coming into the end of the year, doesn't it?

100%.

Look at what's down.

Look at the things that are down and short them on December 30th, I guess.

Yeah.

WIF, WIF. Oh man, I don't know if the WIF holders are smart enough to be doing that stuff.

All right, when the alt shorts come in, that's when I got to jump. I got to go to a meeting, but thanks for having me on the show, guys.

Great to have you for hopping on the pod.

Yeah.

Thanks.

Enjoy the rest of the pod.

That was awesome. Yeah, you got it.