Surviving Crypto's Summer Chop | 1000x

take July off, just look for alpha. Stop worrying about trying to pick the bottom unless we trade $55, maybe $52. Like, don't, don't worry about going all in, don't worry about lever long in BTC. And then depending on where we are August, mid-August, all right, this shit, this shit's going higher. Uh, so make your shopping, make it, make your shopping list of coins now, and I'll see you at $100K at the end of the year.

See you then.

This episode is brought to you by Perennial Finance, the on-chain DeFi primitive redesigning derivatives for the DeFi native. You'll hear more about Perennial later in the show.

All right. Welcome back to another episode of 1000x. Now we're actually going to be talking about markets. I know you guys missed us last week. We went deep on, we went deep on Arweave. But enough has happened in the markets that I think it's worthwhile talking about. So we sold off pretty aggressively, tagged that 58.5 level, bounced really hard, and now we're sort of just meandering around. I mean, that— this has been like— I actually think that the market was reasonably easy to trade up until the last week, or up until that sell-off. So I don't know about you, Jonah, but I, I bid a lot on that day that we collapsed and then we bounced, and I wasn't really sure if that was the full bottom or not. So I ended up taking off a lot of profit on that initial bounce. And then what ends up happening is that, you know, we're like hitting 62, 62, kind of hard to get through. Um, but I made a bet around, you know, 61.5 that we were going higher. So I end up buying a lot of— just a lot of length, end up lifting all the Solana meme coins. Uh, I grew a rally stash hoping that we'd get to 64, and then the U.S. government starts moving BTC, we sell off we get down to that, uh, you know, $6,800 level, and I just go, oh fuck, did I make a mistake adding, adding a ton of length? End up basically cutting all my positions, getting, getting to flat, selling, you know, BTC against, uh, some of, some of the alts. Um, I ended up getting out of all the, all the SOL and all the, uh, WIF and BONK. And then I wake up today And, uh, an hour later you get this crazy Solana ETF news and everything that I sold is up fucking 20%. That's just the life of a trader, Jonah. That's, that's the life of a trader. You're never, you're never always going to be perfect. I mean, you know, we can pat ourselves on the back for missing the drawdown, but, um, the reality is that it's a— this is— this has been a tough market. I think, I think for a lot of people it's hard to maintain conviction. Because they're like, the camps are so divided right now. It's okay. Well, there's one that says we're at the bottom of the range, we defended it, now we go to the top of the range, now the real rally starts. Bad news isn't sending us lower. But the reality is that there's still— we're still not getting a ton in ETF inflows. You know, Bitcoin's still trading a bit weak. It's kind of hard for it to get through, to get through significant, significant levels. but alts are down 80% across the board. You have some dispersion that's come back in the market, which is really good to see. And ETH and SOL have been trading really well. And we're kind of in this weird spot here where, you know, I think Bitcoin has become the weak asset. Everything else is trading a lot better. And the question is, Well, how do you trade that market environment, right? How do you— if you want to trade it, how do you, how do you trade it? Because one of the things that's, that's scary, right, is whenever you get this dispersion in the market, alts are doing well, Bitcoin's not. If Bitcoin pukes down to $55, these alts are— you're dead. They're probably down 30, 40% on you. Then you're in the hole. So it's like this weird dynamic where it's very easy to get chopped up. It's very easy to to make, to make mistakes, and it's also hard to build conviction. So when you're in this type of market environment, what do you do, Joe?

Well, first of all, I just want to say I appreciate you being a little bit vulnerable on the podcast and saying, hey, you know, I added length, I sold it a bit lower, and then I watched the coins that I sold rally and I wasn't participating. Like, I really admire that you're willing to do that because, you know, even Even me, on, you know, just when I talk about my positions, often I'm inclined to talk about my wins and pretend I never lose. Um, so I think it's important for, for everybody to just be honest with themselves. And, you know, it's nice to hear that, you know, even, even crypto traders who have, you know, made it like you in a major institutional way can, you know, still have these feelings that like even the very beginners have. So You know, it's nice to hear you talk about it. I— what I do in these markets, it's—

what's kind of funny is that, you know, I've traded a lot this month. I've put on, you know, probably more than $100 million worth of volume through on trades this month alone, and I'm flat because of, uh, you know, I, I'm happy I avoided the drawdown, right? But I'm still like basically flat on the month even with all this effort that I put in, which is kind of funny. Uh, you know, sometimes that's just how trading— that's just how trading works. I mean, I'll pat like, you know, you get— I give myself a little pat on the back just because I didn't take a loss.

Yeah, I mean, if you're, if you're trading that much volume, transaction costs are negative and guaranteed. So if you're trading that much volume in and out, like you know, you, you're, you're basically, your process made money and you bled it back on transaction costs is basically what, what happened. Yeah, you know, like, yeah, it's, it's hard to trade that much volume and not lose money. It's, that's a lot of volume to be in and out of. Um, but yeah, I appreciate that you're, you're telling the truth and being, being, you know, honest because it gives all of us license to be honest too. Um, what I do in these markets is nothing. Like, I look at the chart and I just see something that's been ranging since February, since late February. I see the more I zoom out, the more I just see this like flat line. Like, realized 60-day realized volatility in Bitcoin, Avi, is 35%. Okay, like, this is— it's— this, this asset looks like a tradfi asset in terms of how little it's doing. So, you know, like it's very easy to get hyper-involved when it's rallying and then hyper-bearish when it's selling off. Um, I try to remind myself that this thing is going sideways, it is boring, and, um, not to touch the screen. Like, I have like a yellow sticky note on my monitor saying don't overtrade. Uh, that's basically how I deal with these types of ranging sideways markets. I'm a momentum trader by, uh, persuasion. Like, I, I just love momentum trading. That, you know, in commodities, and especially in like the refined product space, you find mean reversion traders who just love selling highs and buying lows. And, you know, if you're a mean reversion trader, this is a great market. Every time it goes up to $68K, you sell. Every time it goes down to $63K, you buy. And you just round trip that again and again. You would have had a really awesome few months. But like, how many of those traders exist in crypto, really? Like, people who tried to fade moves in crypto, uh, all died. Like, you know, $50,000 ago in Bitcoin. They, they got fired or stopped out or rage quit because they lost so much money. So what you're left with is this group of momentum traders like you and me, um, and we struggle during these times when it's ranging. So basically the only way to make money in a market that's ranging this tightly is to have a process, something you can cling to when the market's going down, and something you can use as a framework to decide if you should be adding or selling on rallies. So like if you don't have a process and the market sells off, you start to doubt yourself because you're obviously long. Then if something comes up like the US is moving, you know, tokens to Coinbase kind of thing, then you can panic and sell, which is right, which is the right thing to do. You get out of the way of flows. But then when, when deciding whether or not to rebuy, that's where your process kicks in, um, because you're, you're scared. You've just avoided a steamroller. You don't know what to do next. You have to have some framework. And for me, I don't really have a good systematic framework. Like, the systematic frameworks that I learned at Cumberland are all mid-frequency things that, like, basically with an outlook of minutes or hours that I can't really replicate in my PA because I don't care enough and I don't have time. Um, but like, you know, in terms of this type of, like, longer frequency trades with the horizon of days or weeks, I got nothing systematically. So really the only framework that I cling to right now, Avi, is the idea that I'm, like, ludicrously bullish for Q4. Like, I think by then we'll be, like, really rallying. So all that's the only thing that allows me to psychologically hang on. And if we go, you know, I kind of have this $55,000 level in mind. If we go down there, I'll probably buy more. In the meantime, all I'm doing is fucking around at the meme coin casino, which I don't really consider investment. I like— you're probably trading it as leveraged crypto, right? For me, it's more just like something to have fun with while I'm bored with the benchmarks.

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I think, I think that's a very key point, which is don't overtrade. Don't try to do too much in this market environment. Focus on the alpha. Focus on what actually matters. Directionally punting is tough. I mean, you can have your core allocation if you know you're bullish on crypto, but then with your trading, It's about, okay, well, instead of trying, okay, I'm going to buy a ton here. I think that Bitcoin's going up. Let me try to bet on that. It's just so easy to get shaken out. Speaking from experience that it just doesn't make sense in this particular environment to be very aggressive. Now, like, what, what do I mean by alpha, right? It's things that you genuinely have an edge on, things that you think are going to work. Regardless of if Bitcoin's at $65, if Bitcoin's at $55, you know, and this is a lot of pair trading. I mean, so one trade that I've had on, uh, for a while is just short all of these coins that have massive unlocks coming that are super high FDV. You hold it against ETH and Bitcoin and SOL. Like, you know, maybe you have like $5 million of that long, you have $5 million of those coins short and then over the next month, 2 months, can be pretty confident that that outperforms. You obviously have to be worried about squeezes and whatnot, but most of these things have actually a positive funding, which is wild because I just think there's so much spot selling involved.

I think that's wild too. I still can't believe it.

Yeah.

Why? Who's, who, who's paying funding? Oh, actually, I know exactly who's doing that. It's the people who every time it starts to rally, they they get their, their gambling addiction, like, starts to tickle them, and then they go in on, you know, Bybit and OKX and get long with leverage on these, on these sort of, you know, altcoins or shitcoins depending on the, the token du jour. And, uh, and then as soon as the market sells off, they all get liquidated. Like, this week we had the big— or during that big puke down to $58,500, we had the biggest long liquidations since April. Uh, so clearly there are still people out there who just can't resist getting levered long. Guys, if you— gals, if you're out there getting levered long altcoins right now, paying funding away every day, bleeding, just hoping to catch this next up move in a range, like, the market can stay rangy longer than you can stay solvent. And if it goes down, which is kind of a coin toss in a ranging market, you get liquidated. Don't do it. Like, please stop with the leverage. It makes no sense.

It's, it's, it's really, it's insane to me that people still do that. Like, uh, just taking, taking a step back, looking at the market, where do we think things are going to go? What do we think is going to happen? My personal view is in line with yours, but maybe a little bit earlier. So I think that Q3 can be very good. I think that Q3, basically what's going to happen is over the summer you don't have a lot of decision makers. In the market that are actually making big decisions. Everybody that's allocating real capital is probably fucking off in Europe somewhere. They're in the Hamptons or who God knows. God knows where these people are. And so all the institutions, the people that are buying, that are buying BTC, even retail, they're less engaged during the summer. They're just less engaged. So what tends to happen is that come September, these people come back in the market. And now that we have the ETF vehicles that are going to be live, you're going to probably— I'm 80, 90% sure that the ETH ETF will be live by September 1st. The— after Labor Day, these people are going to come back and they're going to start buying. I think they're going to start— they've made, they've made their decisions, they're going to come back in the market. So what does this mean for us? It means that July is probably going to be tough, but you're probably going to see some front-running mid-August into, into Labor Day, and then we can really start to get that up move. It's possible that we trade $52,000 in July at some point because there's a lack of inflows, because there's a lack of interest. And that's why I'm nervous, uh, and that's why I'm, you know, trying to take a step back. Don't overtrade, don't get chopped up. You know, when you get crazy really in crypto, when it comes to trading directionally, you kind of only want to trade at the extremes, right? When something nuts is happening.

So for example, or you want to— you have to trade when you need to get out of the way of something like a big US Marshals sale or an FTX-like event. Sometimes you just have to like pull your chips off the table before the table immolates itself, right?

But so, you know, sometimes that, that's, that's exactly what went through my mind when I cut all my positions when the US government started moving their coins and then everything went up. I mean, I couldn't have known that VanEck was going to come out with this fake ETF listing, this fake ETF product. I say fake because I don't think it's going to get approved. There are no CME futures on this thing. VanEck is, I think, running a marketing campaign. Off of it. If BlackRock files, it's very, very, very different story. Uh, but I, I don't, I don't believe that VanEck even believes internally that it's going to get approved. I think that they're just doing it to generate, generate some hype because it'd be very— really, if Biden is reelected, zero chance. If Trump is reelected, which, you know, Nate Silver said puts it 65%, then I think there's probably a 20% chance that maybe 30% chance that during— at some point during his administration, the Solana ETF gets approved. But as of right now, as it stands today, I think very unlikely that that happens. That doesn't mean I'm short SOL. It just means that I'm not, you know, I wouldn't put all my chips on the table. I'm not gigalong. You know, it's hard, hard for me to have known that a priori, that selling WIF at you know, $195 or whatever I stopped out at, uh, would it— would have been a— would have been a bad, bad idea.

You did the right thing. You, you got out of the way of the steamroller, which our, our listeners should always do. Like, if something— you know, there's obviously a balance here. Like, if you hear something that's like marginally bearish, you're not supposed to take all your chips off the table. But if there's like a massive amount of government flow about to smack the market and, you know, 9 or 10-figure size imminently, which is what happens when, uh, tokens get sent to a major exchange, like, you get out of the way. Now, something that I'm horrendous at in my oil trading career is I'm very good at getting out of the way of those things, or getting in as they're, like, just before they're happening and profiting. But then what I'm terrible at is taking my position off afterwards, or if I've taken it off, re-adding it. Like, I'm very bad at resetting to the state that preceded my drastic action. And I've lost so many millions of dollars in my oil career over the years. Like, for example, getting long for all the right reasons, uh, ahead of, you know, a very bullish summer in 2018. But then when Trump wavered, uh, Iran sanctions and oil started to puke, um, I, I was in denial. Like, I'd gotten in for the right reasons, but then I didn't realize that the world had changed equally. Like, you know, in, in, in this example, like, you get out of the way of a big steamroller, out of, out of a big selling flow. You and I both know that selling flow doesn't last for months or years, or if it does, it doesn't have an impact on the market. Like, you have to get back in quick, right? And I'm, I'm terrible at that. I'm, I'm terrible at resetting.

I actually, I actually have a psychological trick for you because I also was horrendous at this. I've gotten a lot better by doing this. I mean, let's say let's say you— I'll give you the example. Start without $100. You're long, you're long $100 and you get this news of the government sell and you get out, you sell, right? And then it bounces back and nothing happens. You're like, wait a second. Well, the way that most people's— their brain works is because they sold and it didn't work, they get anchored to the idea that it's bearish and you start, you start looking for reasons why the market is bearish and then you convince yourself that it's bearish and then you never get back in position. And if it rips in your face, you're fucked. And sometimes, by the way, by the way, sometimes that's the right thing to do. Sometimes it actually is bearish, but you in that moment are not looking at it clearly. You're not looking at it clearly. So what do you do? How do you reset your brain? You buy $5 worth, you buy tiny size, you get back in to your original position a little bit, not a huge amount, not the— not what— and then your brain starts to go, well, maybe, you know, if Bitcoin's up, at least I'm up now. So you start to look for the bullish reasons and that, you know, that actually resets your brain a little bit and you're not risking a ton. You're not getting chopped up a huge amount. But what it does is it helps you.

You have skin in the game again.

You have skin in the game again, and it helps you think more clearly.

It's amazing how difficult it is to understand a market without skin in the game, and you have a very solid point. It's like, it's tempting to just be on the sidelines after something's just happened, anchored to that thing, even if it's gone and dissipated. But then you should have skin in the game because then you feel the market a little bit more without, without the 100% risk that you were running previously. That's really smart. I like that. I've done that like inadvertently without realizing I was doing it a couple of times, and now that I reflect on it that was a successful way to maneuver myself back into things. I should just like write that down in my trading journal and do that more often. Thank you, Avi, that's really helpful.

Yeah, I'm, I'm happy you found some value in it. It's amazing how many things about trading are psychological, because even if you're extremely data-driven, which I know we both are, it's— if you're a discretionary trader, at the end of the day even if you're using a lot of quantitative metrics, you still have to make that decision. And what ends up happening in these moments is you end up introducing inertia. So when you get on the sidelines and then that decision to get on the sidelines doesn't seem like it's playing out, your instinct as a human is to just stay there because you don't want to deal with the idea that you were wrong. So the buying it— what buying a tiny bit, what it does is it helps you accept that you might have been wrong. And then you look at it clearly, and then you make a decision. This is, this is the right way to do it.

This is so smart. And also, what's so beautiful about this idea is it dovetails absolutely perfectly with our earlier conversation and something that I really— a point I really wanted to make, which is that you said all the big hitters are, you know, off to, you know, wherever, wherever hitters go for the summer. I don't know, Stade, uh, St. Moritz. No, that's the winter. Anyway, I don't know. Yeah, it's a winter.

Are you even a socialite?

Obviously not. People go to Mykonos, whatever. The point is, the hitters are— the hitters are hitting. They're not— they're not at— or sorry, they're not hitting. They're at the, um, they're, they're at the, uh, the beach club. But you know who else is not playing right now? All the people who just got burned on this chop. All the momentum traders in crypto who have been momentum trading for years, and there's now an hour in a range. They've gotten chopped up. They're pissed off. They've taken their chips off the table and they're not doing an AVI. There's not like 5% of the chips back on. They're just out, out. And what happens in those markets is, uh, like, like in— this happens in oil too, especially during the summer. Like you said, you know, if it's a summer where everybody's super dialed in, like the summer of Ukraine, then whatever. But, uh, this summer people are going to dial out. The crowd that's gotten chopped up and lost a bunch of money is out. So, well, like, who's providing liquidity? Moves get gappy in these environments. Like, sell-offs, they go lower than they would have otherwise if there are a bunch of people like aggressively clicking and buying because of whatever reason. Uh, rallies tend to get extended to the upside, and you end up with these like kind of random noise, Brownian motion, high amplitude, hard to analyze markets. So like, not overtrading this is key. Things can get violent. Um, and a lot of people from the institutional players to the, uh, you know, the day-to-day traders who would be trading but like are sidelined right now for the reasons we just discussed. All that liquidity is out. So who's left? Like, who's left? There's— it feels like the initial spat of institutions coming in to get like kind of, uh, structurally long via the ETF, it feels like that flow's died off. But the ETF inflows and outflows are massive, Avi. Like, there was You know, I think there is a streak of like $1.2 billion worth of outflows that just got broken this week. And what's happening there is I think there are institutions that are playing basis, so not all of it is like directional flow, it's just, you know, people getting in and out of the ETF against CME futures. But that also drives sentiment, so people see ETF outflows and they freak out and sell. So ultimately what you're left with is these like CTA-like um, kind of momentum players in a ranging market, it's a real recipe for losses. So what I'm doing is I'm— maybe I should, maybe I should be— I'm long, but I'm not like trying to trade this range. I'm long with a plan to add if it, if it really shanks, because like you, I think, uh, I think we're gonna be in for quite a rally later this year. Every halving in the past has preceded one. I don't think this times any different.

Maybe, maybe it's as simple as selling short-dated vol, buying long-dated vol, you know, just trying to find places where the view that you express, you actually have high conviction in. Like if you decide to go buy a ton of vol right now or you decide to go long BTC or you decide to go long ETH, what's your actual conviction level on that? Right.

Like, it's like, it's, it's one thing if—

I mean, I'll give you an example, right? You're super bullish on ETH, um, you think that ETH is, ETH is going up, but if ETH trades $3,300, then you stop out of the position. How convicted are you actually, right? Like, what, what is the, what is the actual trade that you're putting on? This is really important to, to, to, to recognize, to stop yourself from getting chopped up. And the way that you can think about is like, okay, well, I buy here, I wake up tomorrow, Bitcoin's at $60K. What am I doing? Do I have more money to buy? Am I stopping out of my position? If you're stopping out, you're probably not supposed to be buying.

Yeah, you get in thinking you're an 8 out of 10 convicted and then you get out 2 days later with a— you're like basically a 2 out of 10 convicted. So you're not understanding your own psychology. One way to play this really well, though, is with options. Like I do this in oil all the time in ranging markets because commodities range when the price goes too high. People just stop buying it and the price goes back down. It's not quite like Bitcoin where there's an everyday physical consumption component to it. So anyway, like when, when we're in a ranging market and I'm in low conviction mode, but I have like a structural long-term, let's say long position that I think will matter in 2 to 8 months, I don't know when. So let's say the market rallies a little bit, I'll sell some live calls. Uh, why? Because if the market suddenly proves me right way earlier than expected, I'm still happy. If the market— and then when the market inevitably pukes back down, I sell some live puts at a strike where I'm kind of happy to be adding to my position if the market were to puke through my strike, right? And get— that's like strikes where I'm willing to get longer. Like, so the equivalent in Bitcoin would be, hey, we just traded up to $68K, I'm, I'm hodling, I'm bullish Bitcoin for a decade, so I'm happy to sell some $73,000 short-dated calls. Then we trade back down to $62,000, I'll sell some $60,000 calls, and if it trades through my level, uh, I just got longer at $60,000. Great, I'm happy. Then it goes back up, sell some more calls. You leg into a strangle that way by selling live calls in either direction, uh, obviously in sizes that you can tolerate, uh, you know, to the downside getting longer, to the upside getting taken out of your position. And I think that's a really elegant way to sell vol as opposed to just like trying to trade live, or sorry, hedge strangles and delta hedge. Like, to me it's simpler just to sell the live options on as, as the market ranges.

I, I actually, I really, I really like that. What I would probably do in this particular scenario, because I'm very bullish on ETH/BTC, is I'd express the, you know, I, I, I'd basically express the upside with ETH and downside with, with BTC. I mean, if there's, if there's a, if there's a I think one, one way to, one way to do this is basically you're, you know, you can sell BTC calls to buy ETH calls even though the vol on ETH is obviously elevated. I think that that's, I think that the spread is still underpriced based on the way that people are pricing in this ETF. I think on every one of our markets podcasts I've been super bearish on the ETH ETF, and now that we've sold out a lot, I mean, it was bearish higher. And now that we're lower, my view is that a lot of the ETF is basically being priced as that nothing is going to happen. It might actually be negative at this point.

So now that we're on the lows of the range, you could sell ETH puts, and then when we go back to the highs of the range at some point, you sell Bitcoin calls. That's one way to do it. Yeah, right.

And that's— yeah, that, that's effectively what I'm thinking about. Right here is that I think that the ETH ETF is now— we're probably fairly priced. If ETH trades $3,100, then you're probably supposed to be buying as much ETH as you could possibly get your hands on. Yeah, because I think that, that at $3,100, it's priced so the ETF is going to hurt ETH.

Yeah, that has the same— like, that $3,100 ETH in this environment has the same feel as like sub-$1,000 ETH did in 2022, where you're just like, I know things are not the greatest they could be, but fuck, like, this is— it's time, you know, got to get in.

Yes, 100%, 100% agree with that. What's been, you know, really interesting to me is that even as Bitcoin has sold off, alts have done okay ever since Bitcoin— basically ever since $64K Bitcoin. Obviously alts had a massive drawdown. I think they've just washed out a lot of the sellers. And so what I see is even if Bitcoin goes sideways, there might be some opportunities for, for alts, for alts to outperform. And if Bitcoin trades lower, that's probably an opportunity for you to buy, buy alts. I mean, one thing that I've learned is sell the weak asset, right? You want to sell whatever is actually weak at the time. So what I noticed and I've made this mistake, I'll probably continue to make this mistake. I see a lot of people make this mistake. Okay, Bitcoin is— there's a lot of movement from the government or from German— Germany or whatever. Right. A lot of supply of Bitcoin hitting the market and people go, well, if I short Bitcoin, then maybe it only goes down 5%, but I can short a bunch of alts. And if Bitcoin's down 5%, then it'll go down, you know, 15, 20%. That's only true if there's no catalyst for Bitcoin going down.

Yeah.

Or if there's exuberance in the alt market, alts are high relative to BTC at any given moment. If the reason that the market is going down is Bitcoin supply, sell Bitcoin, right? Don't, don't try to short. If you try to short AVAX, you'd be down. If you try to short ETH, you're down. Short Bitcoin, you're basically flat from when that news came out, right? So sell the asset that's actually being impacted by the news. There's a lot of what I, you know, there's a lot of beta chasing in crypto. There's a lot of, okay, well, if ETH gets an ETF, then I'm going to go buy all of the ETH beta. And I generally think that's a losing trade. Generally, I think that it's almost always better to just buy the thing that's actually getting the flows. Because everything else is just being bid by traders, which means that you need to, you need to get in and get out and you need to be better than everyone else trading that asset.

Yeah, like meme coin style, uh, in and out.

It's, it's tough.

I, you know, it's very difficult. I mean, I have a slightly— I don't know if I disagree with what you just said. Like, I agree with some of it but not all of it. Basically, the way that I think about alts in this market You are right, for the past week, alts have been rallying versus Bitcoin, and it hasn't been like a, like a, they, like a, they stopped selling off and moved up in a little bit kind of rally. It's been like kind of sharp, um, but I still think if you zoom out and look at the broader altcoin charts versus Bitcoin, it's been pretty much down only for the entire year, and only in the last week have they perked up meaningfully. So I don't know whether this altcoin strength that you refer to is part of the, you know, downtrend, just like a little bit of a, you know, one of those like rallies as that's part of a much bigger downtrend, or whether it's like a turn. And I, I'm, I think I'm much more bearish altcoins than you. Like, I think that this time is in fact different. I do not think that the alts, like in a proper Bitcoin and ETH rally, that the altcoin space as a whole. Not saying that, like, there will always be certain alts that just gas higher, and you know, you, you know how to find those alts, you do your, you do your research, you can pick them. But like, the altcoin space as a whole, um, I think is going to underperform a rally this time for a very specific reason, which is that I think retail has been too burned on alts. And I think after two cycles, 2017 and 2021, of everybody and their grandmother and their dentist talking about about, you know, Tezos or, you know, some random, some random altcoin. Like, now at this point, crypto is mature enough that the participant base has dissociated itself from the idea that an altcoin associated with an interesting computational product, uh, but with actually no underlying value transfer mechanism is going to you know, moon anymore. Like, I think Luna was kind of the end of that perception. And so I think this will be a very institutional benchmark-led rally this year. I think that especially if Trump wins, uh, the market is not pricing the, you know, 10 out of 10 bearish to 8 out of 10 bullish flip-flop that the SEC is gonna do, uh, after he installs his people in there. And I think that that will I think that you basically see that translate to L1s and Bitcoin first, and then you'll get an altcoin rally later when there's a securities framework for those things to actually like pass through genuine economic activity to token holders. But until then, if you're buying like, like even, even our favorite one, if you're buying Ondo, like what are you hoping for? Like, oh, people will bid governance tokens? Like, no, I think, I think the retail community is just done getting burned on those things. Maybe, maybe this is a mid-curve take, but I don't know.

I think it's mid-curve for one reason. No offense, Jonah.

Yeah, bring it on.

But it's, it's, uh, I don't know if these things are going up. Well, first of all, everybody's still bidding meme coins. Meme coins are the best performers off the bottom. Uh, people are still bidding WIF, they're still bidding BONK.

Oh, I'm not talking about memes, by the way. When I say alts, I'm not referring to memes. I'm referring to like tokens associated with projects that are actually trying to do something.

Yeah, I think governance tokens in general, agreed. Like the, like the Lidos of the world that don't pass back cash. I will say that Maker and Aave have been doing very well over the last week. Unfortunately, Maker going up is normally a sign of impending doom. Maybe that's, maybe that's different. Maybe that's different this time. But I do generally agree that that sector of the market will underperform until there's a framework to pass back cash to holders.

Yeah, like the, oh, let me buy the Curve token because Curve is a cool product era is over. That's all I'm saying.

100%. And that's kind of two reasons. One is that retail this time genuinely feels less sophisticated, like the market participants that are coming in this cycle seem stupider and less sophisticated than the market participants that came in in 2021. I know that sounds crazy, but you can just see it by where they put their money and what they talk about and what they do. If you remember the CT timeline in 2021, everybody was talking about the crazy new DeFi primitives, new products, like weird ways of structuring things. Everybody was talking about complicated stuff. There are all these like long tweet threads explaining how you know, bribes on butterfly work. I mean, how can you redirect yield to certain pools?

You know, how, how to play the game of DeFi, how Balancer is better for this or that than Curve, right? I remember it all like it was, it was more sophisticated.

And today all you have is you have people that are like, I'm going to for the next 10 days tweet out the 10 meme coins that I'm going to buy.

Well, let me debate you on this. I don't think it's that crypto participants are less sophisticated than they were last time. I think it's that none of that sophistication made anybody any money. Everybody bought all the sophisticated stuff and it went down 99%. I'll tell you, at Goldman Sachs, when I was an oil trader, my business was market making. I was screaming all day. I had two phones standing up. I was the loudest guy on the floor. 5th floor of Goldman Sachs because oil was so busy. And I remember during that time, I, I, you know, fine, I was in my mid-20s, first making money, and there was a little bit of a testosterone and ego high associated with that. But like, I thought that fundamentals didn't matter. I thought that fundamentals didn't drive the price of oil. And I was pretty arrogant about that, right? And I was like, fundamentals don't matter, what matters is the flows, because that's how I made my money. Every time I tried to learn about West African differentials or some storage tank in, in, uh, you know, Rotterdam, and it didn't impact my P&L, so I ignored it because the money came from people trading with me. And I think the same thing is going on right now in crypto where people are like, you know what, no matter how deep I dive into the, um, you know, in, into this, into the microeconomics of Near's AI ecosystem, like none of it like, like we just said, the regulatory framework isn't there. None of that computational genius creates value that passes through to token holders. All they're getting is a governance token that's adjacent but not connected to the actual tech that they're going to try and analyze. So much like me thinking fundamentals didn't matter, the current market like kind of accepts like, hey, that's not what's driving my, my, the size of, of the WOD in my wallet right now. What's driving the size of my wallet is like, are other people, other, are greater fools going to lift my bonk at a higher price than I paid for my bonk?

Stock.

And that's fine. I think that's economically, like, rational behavior.

If—

when, when securities legislation arrives such that we can connect the complex tech and the fundamentals to the token price, I think all that sophistication will make people money, and it'll come right back onto the timeline. What do you think?

So basically what I'm hearing from you— I mean, I agree with you actually 100%. It didn't make anybody money. I mean, all of this sophistication, it took a lot more brainpower, it took a lot more effort, and at the end of the day, you actually got similar returns to meme coins, both to the upside and the downside. So all the fundamentals behind these things didn't make sense any, any way. Like, why would you, why would you spend time trying to figure out what the fundamentals of an asset are if it doesn't matter? So that's fair. Uh, what I'll say is that we're— I think we're closer to that securities regulation than people think. I mean, if Trump gets elected, then we're there. I'm going to make a bet that if, you know, we get to October and it looks like Trump is about to win, then you probably want to buy a lot of AAVE, a lot of Maker, a lot of the fundamental assets, because I think that that rate, it's going to be easier for— it's going to be a much better regulatory environment.

Yeah, you're front-running the projects that will rally when the eventual regulatory pass-through stuff happens.

Correct. And just lift, lift all the ondos and pendles of the world if that, if that looks like it's going to be the case, because yeah, there could be a return to fundamentals. I mean, the way that you described it, you talked a lot about retail. Retail, you're right, they aren't buying that because it doesn't matter. But then also the institutions aren't buying it because when they look at it, there's no real reason to buy these things. And so the things that tend to perform the best are, you know, general narrative plays. So for example, AI, probably going to have another echo bubble for, or have another bubble for that at some point. You probably want some exposure there. Like if things start to sell off, you want to lift AI. I'm definitely going to be lifting RWA because I'm making that bet as like a Trump bet that that's going to do well. But I mean, in the meantime, really the only like great trade that I see is just shorting the high FDV alts against the majors. And that's, that's, it's been, it's been a great trade. I think it will continue to be a great trade. I mean, some of these things like Worldcoin have $19 million a day on the horizon coming out. I don't know who's buying that. I think AltLayer has an unlock that's $123 million on a market cap of $2 billion, which is nuts. So that's alpha. But yeah, I mean, directionally punting BTC and ETH, not so much. And so, you know, talking to you for these last 40 minutes, what's kind of interesting to me is that we don't— we have a lot of ideas that are far out. We have a lot of ideas for how to make money in like 3 months, but not too many ideas for right now.

I mean, selling alts versus the majors is an idea that we've talked about on this podcast for months now. And that is, that is, with the exception of the last week, it's been, it's been quite a smooth trend. So maybe this little pop is a chance to get into that trade or, or add to that trade.

I'll clarify, I don't know if it's selling—

it's not just selling alts, it's selling the things that are high FTV unlocks and no roadmap.

Yeah, exactly right. I mean, what I— there, there are pockets that are showing strength. I mean, for some reason AVAX refuses to sell off. I don't know what's going on there. Kind of an interesting one. Another one that's been amazing, which is actually a core holding of mine, is TON. TON has— I mean, I think people are sleeping on it, especially in the West.

800 million users.

Yeah, 800 million users. The games on TON, if you've played Hamster, are going nuts. I mean, it's getting real usage. And I genuinely think that in a year, in 2 years, this is going to be one of the major blockchains that people use. And if you look at Solana, I mean, like, Solana is great, love Solana, but TON has the users, TON has all the users, which is why Bitcoin's down 10% and TON's up. Because I think people are starting to catch on to this. A lot of that, a lot of people are starting to reposition because they're like, oh wow, this thing could easily, this thing could easily trade $100 billion in the right, in the right market environment.

Let me just quickly check the market cap. I mean, TON is the It is the— it is in the top 10. It is the 9th largest coin sandwiched between Dogecoin, which is number 10, and XRP, which is number 8.

I'm actually pretty high confidence it goes to $100 at some point. So if you want to just own that for the next year.

Yeah, I like that trade.

I like that. Like, it's actually— the thing is, it's never had an ecosystem before. It's been around for a while. Over the last 3 to 6 months, there's been a lot of building on TON. There have been a lot of new projects that are coming out, actual DeFi that's, that's being built. It's going to take some time to mature, but the reality is it's being used and it will continue to be used. And unless Telegram dies as an application, I think over time you just chip away and a lot of these people on Telegram, they just end up using this is how they're going to onboard onto crypto. This is probably— I mean, TON could easily turn into the Venmo, right? PayPal. You're just sending USDT on TON.

Yeah, they're going to make their wallet opt out instead of opt in, unless you're in the US, of course.

But it's a good—

you know, what's this hamster game? Describe it. Is it like— is it fun? Is it like a super high fidelity, like Halo-like game? Do you turn your phone sideways for it?

No, no, it's a, it's a, it's a game. It's a game within the, within the Telegram app. It's like a click-to-play.

So it's a shitty game. All right, all right. So this, this fits perfectly with my thesis. Like everybody said that Web3 gaming, the AAA games, everyone was talking about that in 2022. They're like, that's what's going to save crypto, like Axie Infinity, but Call of Duty fun, fun levels and, and like, uh, you know, graphics and stuff. And what's funny is they were right. Gaming kind of did save crypto, but the game was a meme coin casino on Solana where you buy like mother and wiff and Ansem puts it on the sphere. A very different kind of game, more like, uh, like for people that, people that are as old as I am, like the kinds of games that you would have played in Microsoft DOS, uh, you know, rather than something that you would play on the late, like a PS5. Right. So I think, I think that may be the kind of like weird gambling addict type crypto game that attracts users. And, you know, not surprised it's happening on Telegram. Those guys are doing everything they can to bridge Web2 users into Web3. And by the way, they have the slickest user experience of any app on my phone. Like Telegram is awesome. I love the little dopamine kick you get when you can like put an emoji on a, on a message and like little things fly around and, you know, it's cool. Telegram might actually be the channel to onboard more users. I love it.

You literally just click the hamster, buddy. It's not that complicated. It kind of sucks.

Somebody should make a meme of this, Avi. All that stuff that I just spewed about Telegram is the mid-curve take.

Just fucking click the hamster.

The 60 IQ take is just click the hamster and the 150 IQ take is just click the hamster.

You know, just fucking click the hamster, bro. Stop, stop it. All this. Hey, I mean, it's shit. I mean, yes, fucking hamster combat. But I mean, look, the bottom line is that there is this thing that exists on Telegram that you can play. Play is kind of a, you know, what if clicking, if you consider that playing, it's no, whatever. But it's like the beginnings of something, you know, it's a beginning.

Just because it's dumb doesn't mean that it's not going to turn into, you know, billions of dollars of FTV. Like, my friggin 13-year-old cousin, when Pokémon Go came out, he was like— he became real-life Pac-Man and spent his days chasing like weird little apparitions around abandoned lots. Like, people spend their time on like low-fidelity games as well as high-fidelity games. So why, why not hamster And why not the meme coin casino? But yeah, I think you're right. I think you got to, you got to dismiss some of these governance tokens and altcoins like Lido and Aave. And but those are the ones you want to— and Ondo— until like Trump's about to get an SEC in there that, that links these things through to the real businesses underneath. And then they're going to literally just gallop upwards, it feels like.

I'm, I'm here, I'm here for it, Jonas. So just to recap, take July off, just look for alpha, stop worrying about trying to pick the bottom unless we trade 55, maybe 52. Like, don't, don't worry about going all in, don't worry about lever long in BTC, just look for alpha, take a little bit of a, you know, take a little bit of a break, and then depending on where we are, August, mid-August, all right. This shit's going higher. So make your shopping list of coins now. All the alts that we've talked about, all the things that we've gone back and forth on. Write down some of the lessons that you've learned, how to psychologically prepare yourself to trade this type of market. And I'll see you at $100K at the end of the year.

See you then. Obviously, none of this is financial advice. We don't know anything, especially me. I couldn't even read the fully diluted valuation of Telegram coin off of CoinGecko. Don't listen to anything we say. Just click the hamster and work on your process. Like Avi said, click the hamster. Well, you keep racking up hamster coin, right?

Look at that.

Look at that. Every time you click, it goes up by one.

God, just think, I need to employ somebody to click this for me. My hand's getting kind of tired.

I think it's useful activity. Like, you could be spending that time doing something useless, like reading the news. Or studying, studying crypto. Imagine that you're getting Hamster Coin by clicking it. Like what? That you're actually getting value out of this.

Literally could not imagine reading the news when I could be clicking a hamster. The crazy thing is this doesn't even have a coin, so I'm not really sure. Like there's kind of nothing to do with it other than click the hamster. Does it have a coin?

So while Avi, Avi's clicking the hamster, one thing I did want to say about it sounds like a sexual euphemism. Just click the hamster, bro.

You're not clicking the hamster, right?

I feel disgusting. Um, one of the things that I did want to say, like, yeah, okay, fine. So there's a lot of crazy complex tech out there in crypto, and I don't want to be dismissive of it. I just think that those conversations about MEV extraction and the benefits of this clob versus that dex have kind of gone off of crypto Twitter and into private circles, like my boys at Ergonia or some of the on-chain trading shops, like They're busy making money off of Jupiter and, you know, all these other like on-chain exchanges. Like there's money in there and the technical stuff does translate to value for some people, but it's like a very quanty, like kind of dark world. It's not going to be consumable by most of the retail users on crypto Twitter anymore. Most of the retail users on crypto Twitter, I agree with you. Like I think the sophisticated ones are watching. And waiting. But like, most of the money right now is made by clicking the hamster, not by, um, spinning up MEV bots.

Look, you have to be really goddamn good to make money on MEV at this point. Like, you have to be really, really, really good. And I mean, I would wager that all those threads about MEV, people like, yeah, you can— nobody actually did it except for 0.1% of the people because it's hard.

But those people crushed it.

And there's people out— yeah, those people actually—

maybe it's not MEV right now. I think it's like, there's basically, there's latency arbitrage between on-chain activity and, um, centralized exchanges that you can, you can scoop up. There are pennies there to be, to be vacuumed.

That's fair. I'll let you vacuum the pennies. I will stick to my—

I'm not smart enough.

If anybody out there on the 1000x podcast is smart enough, give me a shout.

Yeah, I'll be, uh, I'll be with you, Avi. Um, just trying to spend some time away from the screen and, uh, waiting to buy a dip. And if it doesn't happen, happy days.

I'll enjoy the summer, everybody. We'll catch you on the next 1000x.

Great, great talking to you, Avi.

Thanks a lot as always, Jonah. That was a good one. You crushed it.