Transcription
And so that's why I believe that the $80,000 dip on Bitcoin recently is the bottom. And now we're going to have a supportive liquidity situation, at least marginally on the dollar. And we're bottom here and can go higher.
What's up everybody? It's LG Ducat here and welcome to the Milk Road Show, the daily crypto show that brings on the only man alive who can call the Fed chair a towel boy, predict a market wipeout, and still sleep like a baby. Arthur Hayes is here. Today is November 27th, 2025. for recording on the afternoon of the 26th and magically Bitcoin is back above 90K, but who knows for how long.
Last week, Arthur dropped a monster essay titled Snow Forecast, where he basically told us that the dollar liquidity is falling. Bitcoin is reacting as exactly as it should. And yes, 80K is in play, which happened a few days after he called it. And he also called for a nice rip to 2 to 250K. And I want to know what his timeline is on that. And I want to know what the hell's going on, man. Cuz a lot a lot has happened since he came on the show a month ago.
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Arthur, you're back, dude. What is going on, man?
>> I'm feeling good.
>> You're feeling good. You called that 80k and you are proud of that. I bet.
>> Absolutely.
>> U Okay. Well, listen, you you had a fantastic essay last week that that had a it was a snow forecast and we didn't know the snow forecast for was for a couple days from then. some some some magic November snow, which is always very nice for for people that care about skiing like you do. Um, what what has flipped for you, let's say, even since your last appearance a month ago or even before the crash, uh, the October crash, what has flipped for you in the liquidity picture that the market is kind of maybe getting wise to you now?
>> Well, I think the if you take a look at I have an index on Bloommer if clients have access to that. uh it's a the US dollar liquidity index and it's essentially a combination of um certain indicators on the Fed's balance sheet which was published every week and then certain indicators from the uh US commercial banking system and the reason why at least in 2025 I've been really focused on the United States is the other three large money printed protagonists the EU Japan and China haven't really been doing all that much and it's really been about the United States and everyone's reaction to what the United States has done and so that's why I've really focused on um that this particular economic plot for you know the whole year and when we talk about the the dollar liquidity you know my chart basically showed that you know year to date there's been an actual reduction a net reduction in the amount of dollars circulating at least by my index that I look at and I use to guide my investing um over the year but what we saw from sort of April 9th until you know October was Bitcoin hitting an all-time high. And this was driven by, I think, people misunderstanding what's going on in the ETF space, especially the the IBIT ETF, the Black Rockck Bitcoin ETF, the largest um ETF out there that tracks Bitcoin, and the digital asset treasury company space, the DAT space, and the the issuance of debt and stock to purchase Bitcoin. And these two things essentially added the impression that there's this big institutional bid for Bitcoin and therefore people the the Bitcoin sort of ignored the fact that the about a trillion dollars was removed from the dollar liquidity markets from at least from July until the present. And basically once the ETF inflows switched to net outflows and DAT companies went from trading at premiums to trading at par if not a slight discount then Bitcoin basically fell down to where it should have been based on the dollar liquidity situation.
>> Right. So, you're saying that once that those kind of I don't want to call them vanity metrics, but maybe you can tell me how to label them, but things like the ETFs and the DATs, DATs, once those got exposed by weaker price action that basically they quickly kind of cascaded down. Is that is that kind of what you're telling me?
>> Uh, kind of. I mean take the ETF for example because I mean this is one of the most shown charts that influence every day on you know X and other social media platforms and people say hey look Wall Street you know retail they're they're piling into these ETFs and yes that is true but as traders and investors we care about who is the marginal buyer and seller of a particular asset what are the flows and so you know I have my trust trusty bloomer chart up here you put up an HDS um the largest holders of the IBIT ETF on Bloomberg uh or whatever platform you use, you'll see and I'll name them here. Reverend Howard, Goldman Sachs, Millennium, Avenue, Jane Street are the largest five um traders of this thing, right? There's a chart in my recent essay.
>> That's right. And you know if if you understand anything about what these businesses are, they're either you know, multistrat pod shops um who trade hedge funds. They're global investment banks and one of them is a family office for the founder of Hobby Avenue. And so these entities are not um places where they're just going to go long Bitcoin. Like Izzy doesn't give a [ __ ] about Bitcoin. Ellen Howard loves Bitcoin, but it's not like the key thing in his Brevin Howard asset management company where he manages clients money. What they're in the business of doing is borrowing money and finding great ways to deploy that with, you know, high sharp ratios and that would be a basis trade. So what are these guys doing? They're taking the IBIT ETF, they buy it, they pledge it with their broker, then they sell a futures contract on the CI against it and they were making let's call it 7 to 10% um peranom on that trade. They fund at Fed funds at what is it fourish% and they lever it up and that's a great um you know leveraged return for these type of investors. Now as that funding rate declines and it has declined um in September and October then these traders unwind this position by selling the ETF and buying back their futures contracts. So during the summer, we saw massive net inflows driven marginally by these large players. And then as soon as that basis fell, especially after after October 10th and the massive liquidation event, then you see net outflows. And so the retail thinks, oh no, institutions love Bitcoin in the summer and now they hate it in the fall. Therefore, I need to get rid of my exposure as well, not understanding what was driving those flows in the first place. And then on the DAT space, if you have a, you know, low MNAV or even at a discount, it's very difficult to issue corporate securities and purchase Bitcoin in a net positive accretive manner for your stock. And therefore, either you stop doing it altogether, you slow down, or you start selling Bitcoin and buying back your shares if you're trading at a discount, which again removes this impression that there's this new cohort of assets of capital that is coming into the Bitcoin space. So when we remove those two things and then I post that, you know, you posted my chart of the difference between the price performance of Bitcoin and the percentage change in the dollar liquidity, then Bitcoin says, "Okay, I'm going to react to where I should have been absent the the shimmer of these flows." And that's the move from 125,000 to 80,000.
>> Okay, that that that is really well explained. Um, I have a question about those those funds though, the ones that you you noted were the biggest holders of IBIT and they were basically profiting off the the the funding uh percentage. What else do they do with their money? And why why is this like the best place for them to get a 7 to 10%? Like is it they so they only come in when there's this kind of opportunity and then they they just go back to stables?
>> No, they have again >> there's a pod and and a pod has a funding strategy mandate, right? These guys do equity long shirt. They have all sorts of different strategies. There's a portfolio manager and their team will put on these types of funding trades. Um could be bond RV. This is, you know, it's a basis trade. It's a very standard trade, you know, across all different types of ETFs that you can do. I buy the ETF and I short a future on the underlying and I trade the difference. And this is like I used to do this as a career um back in the day as well. So, it's very easy trade especially when you can fund very cheaply at Fed funds. And then essentially you double the interest rates that you receive and you look like a hero because again you're just trying to have you're trying to make 10%. If you make 10% for Izzy you're making 50 bucks a year. So this is what you need to do >> right. Yeah. So, and that and that funding rate goes down why I you said that already but I just want to I just want to understand that >> as the price declines then the funding rate collapses.
>> Okay. Okay. Okay. So it's a so the price action that affects that and then people say see out negative out or outflows and then people freak out retail freaks out or whoever the the other next you know um participants are and then and then you have like a further cascade of of price basically.
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So, those those ETF flows, I think that this is a really interesting topic is that, you know, clearly they're misunderstood. What percentage of the ETF like inflows and outflows are these types of funds? And I guess I guess what's the what's the other percentage?
>> I mean I don't I don't know I don't know the percentage. I don't know the percentage but just judging by the type of firms that are in the top five. I know that they're not long only investors of crypto. This isn't like it's Texas Teachers or you know XYZ or Ontario Teachers Pension Fund buying Bitcoin if they're number one holder. Right? If that was the case then my argument would not be valid. But when you have Brevin Howard, Goldman Sachs and Millennium as the top three holders, they're not in the business of taking um just going long Bitcoin. That's not their business. their businesses doing these types of trades.
>> Okay, I got it. Nice shout out Ontario Pension Teachers Fund, former owners of the Toronto Maple Leafs. Arthur, what I really wanted to ask you too, um, and in this article, you were telling, you're kind of telling a story that something similar happened, you know, towards the end of the last bare market and that there, um, we're looking at a similar setup in the second half of 2025 as we saw in the second half of 2023. Can you maybe explain that to me a little bit more because you you were kind of making a point about the TGA and how that works in terms of liquidity. I think I just want to understand that a little bit better.
>> So in 2023 and in 2025 there is a you know political theatrical fight about the the debt ceiling in the United States where both you know in 2023 it was the Democrats in charge in 2025 it was the Republicans in charge. Same issue. One side wanted to spend a bunch of money and raise the ceiling. The other side tried to feain like they give a [ __ ] about fiscal responsibility and so they fought the they fought the opponent and then at the end of the day of course the government's not going to go bankrupt itself by not paying out. So they raise the ceiling but all the while that this debate this fight goes on the Treasury has to spend down its checking account and when the true US Treasury or any Treasury Department for that matter spends down their checking account they're adding fiat liquidity to the system. And so this is um helps the the markets but as soon as a ceiling is raised now the treasury needs to refill its bank account and by doing that they issue debt and instead of spending that money that they raise from the market they keep it in the bank and that extracts liquidity. So in 2023 and in 2025, it was June in 2023 and July in 2025, you know, you had in the order of, you know, half a billion to half a trillion to a trillion dollars that needed to be raised by the the US Treasury. And so as they start to do this, then the dollar liquidity contracts and this has an adverse effect on all types of risky assets, Bitcoin um Bitcoin and stocks um predominantly. Now, in 2023, you know, this led to sort of a 20% sell-off um pretty quickly in the S&P. The 10-year yield was rising almost close to 5%. And again, the the goal of every administration in the United States and every government around the world is to keep the stock market high because they earn taxes and makes the rich people feel good and all these sorts of things. So, Janet Yellen had to find a way to juice the markets. Now, back in 2023, there was this facility at the Federal Reserve called the reverse repo program, and it had $2 and half trillion dollars of funds basically left over from the co stimulus era that was sat inert on the Fed's balance sheet. So what Janet Yellen did was said, "Okay, I'm going to issue more Treasury bills, short-term Treasury debt, less than one year maturity, and such a quantity that the yield is going to rise so much so above the reverse repo yield that it'll entice those funds to take that money out of the Fed's um bank account and put it into the financial markets by lending it to the US government, which then goes and spends spends this money." And so from 2023, third quarter until um essentially January 2025, Jellen's Treasury injected $2 and half trillion dollars of liquidity into the US dollar money markets. And that is essentially the reason why everything across the world ripped Bitcoin stocks, gold, housing, what have you, right? That is the reason for the that that bull market and that sort of ended uh early 2025. That's important because when US Treasury Secretary Scott Besson under President Trump in the United States did the same thing starting July 4th when the debt ceiling was raised, he had to, you know, raise a trillion dollars to refill the the Treasury's general account. He didn't have this reverse repo program with $2.5 trillion sitting in it to tap to basically nullify this negative liquidity effect. And so between that and the Fed's program of quantitative tightening where they basically are reducing the size of their balance sheet, we're talking about close to a trillion dollars was taken out of the dollar money markets from July to the present moment. And that is essentially the negative drag from a liquidity perspective on Bitcoin and other um risky assets. Now, in the stock perspective, it's really the AI hype and bubble that's kept the stock market elevated. And in Bitcoin's case, it was the ETF flows and this DAT flows that we just spoke about that literally um counteracted this negative liquidity effect.
>> Okay. So, and isn't that TGA amount rebuilt now? Don't they have a trillion dollars now ready to deploy or is that or is that incorrect?
>> Yes. So, now it's um essentially re about a trillion dollars. No, well, at the time of this recording, they haven't released their their most recent uh weekly updates. I don't know where it is now, but last week it was about 900 billion coming down slowly. So the TJ will probably go to something around 850 billion, which is the target that the Treasury set for how much they're going to keep at the Fed. But more importantly, especially for this time around, it's the cessation of quantitative tightening at the Fed. So this program that the Fed started running in uh 20202 of reducing their balance sheet is over. Uh now the balance sheet will be kept constant and obviously most analysts believe that the Fed is going to restart quantitative easing at some point for whatever justification that they give. It doesn't really matter. All we know is that we have essentially bottomed on the the liquidity uh chart and the direction in the in the future is higher. And so that's why I believe that the $80,000 dip on Bitcoin recently is the bottom. And now we're going to have a supportive liquidity situation, at least marginally, on the dollar, and we're bottom here and can go higher.
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Doesn't everybody know this though? Like this is this what I'm curious about is that you know if even again you you're very sharp, right? So it's like you calling 80k before I saw other people call it. Like that's good. Of course that's that's what you do. But something like this like the TGA you can't hide like a near trillion dollars, right? Right. And especially if that's like something that had an obvious positive effect last time on the market and that's getting ready to be deployed and quantitative tightening is ending. Why why are we still sitting at 90K?
Well, I mean, I guess it's it's about the we still don't know how they're going to create another 10 trillion dollars, right? It's still a question. Oh, is the Fed just going to sit on their hands? Are they going to not, you know, not raise rates? What's the Trump administration going to do? there's question marks about how effective Trump can be to increase the amount of credit within the system. Now, he said a lot of things, right? You know, and he said, "Oh, the banks are going to lend money to all of these projects, building weapons, nuclear, semiconductors, what have you, right? Um he said that he's going to, you know, get a new Fed chairman in and they're going to reduce the price of money and they'll support the markets with liquidity. He said he's going to pump the housing market, right? He's a politician. He says a lot of things. Whether or not he's actually able to do them, that's the question that the market has. Once we actually start to see things actually happen, then we'll start to see people price a bigger forward on where this dollar liquidity situation is and risk assets like Bitcoin will accelerate their rise in price.
So, so how does so does he have any options other than to print money to to create that? Like is are there any because I feel like there's things being done in the economy in the macro that it's like these are like reserved for rare instances that are being done all the time now. What other options they have besides just inflate more?
I mean, they always print money. The question is how they do it. Now, we've been talking about the Federal Reserve.
>> I also monitor the commercial banking system and know starting in November, the the um thing that I monitor is other deposits and liabilities and the amount of securities that the commercial banking system holds in the United States that sort of bottomed and we're starting to see an uptick in in bank lending. And that makes sense if you read the headlines. You know, JP Morgan's talking about one and a half trillion dollars of lending they're going to do to the industrial sector. The US government's talking about industrial policy where they'll guarantee a certain amount of um purchasing power of rare earth semiconductors what have you to inspire entrepreneurs to build things and get a bank loan to do that. So if this you know industrial revolution financed by the banks, this is what Besson and Trump campaigned on, this is what they want to do. they still haven't been able to really start actualizing that, but I think in 2026 we're going to see more evidence of that, then we're going to see more credit creation coming from the banking system rather than the Federal Federal Reserve. Um, but the fact that quantitative tightening is ending is very important because at least we don't have this drag of the Fed removing something somewhere to the close of I think two or three trillion dollars from from the system from 2023 2022 onwards.
>> Got it. Okay. So you think that once these uh I guess elements start to happen that we're going to see a like pretty sharp reversal especially for risk assets like Bitcoin.
>> Correct.
>> To the tune of 250k by the end of the year even this year still. Do you think that's still like there's what are we it's November 26th man you're talking days.
>> I'm going to I'm going to stick with it. You know if I'm wrong it doesn't matter. That's the >> best.
>> If we hit an all time if if we hit an all-time high by the end of the year, would you would you feel that you were right?
>> No. I mean, if it's either 20 to 50 or not, like, but I don't really care. I'm long, right? I'm still happy either way. So, I that's wild. I love that. I love I love the admission, man. 2x the all-time high on a, you know, $3 trillion asset. That's good. Yeah, we're ready for it, man. Uh, I love that. U Okay. Well, speaking of speaking, let's let's let's circle back to crypto man because I think that's you know we're a crypto show and we want to know you know what's going on with your crypto and most importantly I think this has been a pretty hectic period right fear and greed that's I don't know why we still look at this fear and greed little gas meter every day but we do low it's in the single digits or it was the other day people saying this is worse than co this is worse than tariffs what the hell's going on in these times Arthur like from the October 10th crash to today what are some of biggest lessons that you think crypto traders are still learning or still haven't learned.
>> I don't think people have understand the amount of effort that it takes to be a leverage trader. I think people see, oh, I I can get 100x leverage or whatever trading crypto versus I can get, you know, two or three trading stocks or some leverage ETF. This is great. I'm going to make a lot of money. But they're not willing to put in the effort to be a professional trader. But that would mean like 24/7 on your phone. like you live and breathe these crypto markets. People think that I'm going to get off of work and trade leverage crypto for a few hours and I'm going to some somehow make money. No, you're going to get liquidated. Um, and if you're just trading crypto a few hours a day, you're not reading, you know, what is an automatically leveraging event, how do exchanges mark your positions and you don't understand these idiosyncratic idiosyncratic things about the micro market structure that you should as a proper professional trader if you put all your effort into this. And that's where most people got wrecked in 20 in October 10th. It wasn't some conspiracy by CZ and Binance and the market makers to like, you know, take away your money. It was you were lazy. You didn't read that the documents that have been up for years. I mean, I invented this [ __ ] 10 years ago. Like, we wrote about it. It's you should have no excuse not to know what this stuff is and how it works. And if you didn't agree with the exchange policy, you should never been trading it. Uh, so I have no sympathy for people who lost money in on October 10th, except for people who had API issues on Binance.
>> This is no there's no excuse. If you are a proper trader, you should not get liquidated. Period. And the steroid.
>> If people were were heavy in per, do you think it's because of a lack of other um more fun things to trade this cycle perhaps? There's no NFTs this time. The memecoin trade has been kind of dead for like a year. Is it is this just a bunch of people who are like, listen, I got nothing left. I still I still can't I can't I'm not winning on poly market. I'm going to go leverage something 10x.
>> It just is the m maturation of the market. There's market people trading these things. Um, there's more newcomers. They haven't, again, they haven't decided what they want to be. They're a hobbyist. I get off of work. I trade crypto. I think that I can grind the chart and I'm going to make however much money I'm going to make and it's going to change my life, which it could if you're very, very lucky. But if you don't put in the effort like I described, then you will get wrecked, period. You're not reading the documents, you don't understand the flows, you don't understand how these products work, you don't understand the math, yet you think that somehow you're going to make money in this. And so I think that it's a mis um alignment of expectations versus effort that people want to put into this to this thing. Being a professional trader is a job and if you approach it like that and dedicate yourself to it, then you can be successful.
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Yeah. Well, it's very Yeah, definitely very difficult for some people, I think, to uh to resist. Uh let's put it that way. Um last time you came on the show when we were speaking with Jay, you said that um a lot of the highquality altcoins, I don't know if high quality is exactly what you said, but a lot of the altcoins, the the slightly better ones, let's say, would probably never revisit some of the lows from 1010. And I think actually some of them have. uh has this like at what point do you think maybe your view on the liquidation of those alts like changed from you know right after 1010 to now and uh have there been any surprises in terms of which ones have cratered the most?
I mean, I was very thankful that, you know, I know people tracked some of my smaller wallets that some of these coins did revisit those lows because I basically when I changed my view as to, you know, constructive on on market risk a few days ago, I was able to go in and pick up things at prices that I haven't seen since, you know, April of this year or before then, right? And I look at the charts like, okay, this is the this is the low that it's ever reached. Great. I'll buy some Pendle. I'll buy some Athena. Uh, I'll buy some EtherFi. Great prices. um because people sort of got, you know, smoked on 1010 and these are projects that have buybacks. These are projects that are profitable. These are projects with users and they're trading at great prices. So, I'm very thankful that, you know, they did revisit those prices because I was able to buy things at what I think are very affordable and cheap prices relative to where they should be given, you know, the fundamentals of the cash flow that these things generate.
>> Are you buying ETH?
>> Uh I am not buying ETH right now. I I mean I have a big ETH bag of ETH. I think these will outperform ETH in the short term.
>> You think the alts will outperform ETH?
>> Yeah.
>> Okay. Which like some of the ones you mentioned like ENA and stuff like that?
>> Yeah, exactly.
>> Okay. Okay. Do you you still you still think ETH can get to 10K? Because actually I have to tell you something about Milk Road. When you go to our YouTube as a returning user, the clip that opens is literally you and Jay a month ago saying, "Yeah, ETH can go to 10K."
>> Yeah, it absolutely can go to >> It absolutely can go to 10K. I think that the Tom Lees of the world he's spitting a great narrative for his user base which are trady Aliceet allocators and you know heavy retail traders in the western markets and his thesis is okay banks all of a sudden now want to do web 3 the most secure chain to do web 3 on is Ethereum and therefore either they'll use build their own L2 or use L2s that are out there or use the Ethereum mainet in and of itself and this is going to drive um usage of the chain and that's going to be the institutional DeFi narrative. And I like that narrative. Whether or not it's true is kind of irrelevant. Um I think it makes sense to the people that he's selling it to. And coupled with a supportive macro environment, this will be what generates ETH to the 10 to $20,000 um I think price by the end of the cycle.
>> Who's going to be happiest when that happens? Or who's who's going to be most who's going to be saddest when ETH hits 10K?
>> The Ethereum Foundation. Can they keep dumping [ __ ] That's one of the longest crypto questions is the the meme of eat the 10k. So, we always got to ask. Um, okay, Arthur, we uh we actually asked our our Milk Road Pro community if they had any questions for you, right? And you're very popular. Um, and people people wrote some essays, so I'm going to try and keep it pretty short. Um, people like wrote things. I'm like, man, you're you're pay attention and and we have our our community is fantastic. So, uh, we'll get to a question from Damian. He said on a very recent coin bureau podcast, Arthur mentioned that Pump is one of his worst investments, down over 50% at this point, could be even more after the recent draw down. Ask him if he is still bullish on Pumpfun and the memecoin narrative.
>> I mean, I got smoked so hard. I'll probably haven't looked at the charts since I sold it, took my L, so I have no freaking idea.
>> Oh my god. What do you think happened? What do you think happened to Pump Fund? cuz that was God what a darling through the end of the summer but that got it got absolutely destroyed.
>> So again I don't know if they've rectified this but the the assumption was that they were going to use this revenue that they make to buy back the token. I don't know if they're doing that or not. Um obviously they weren't doing it at the beginning when the the token just launched. Uh it was basically max extraction and so you know I got smoked and you know I took my L sold it and moved on and haven't thought about it since. Uh speaking out of another recent uh pre-sale which I saw you were tweeting about. Uh are you uh are you bullish or bearish on on Monad these days? The big one from the first the first token on the Coinbase launchpad. Uh that's not a question from the community but just a similar story of a pretty large pre-sale but now up I think a 2x from the from their pre-sale price.
>> So I didn't buy it in the pre-sale. I bought it um I bought a bit I bought a bit of it in the secondary once it launched. I think I sold it a few hours ago. Okay. Uh, again, as if you read my axe, you can see that I have no belief that this is actually a legitimate blockchain. I think it's a probably another piece of [ __ ] high FTV, low float, you know, dog [ __ ] chain that'll never have any real users. I don't think it's going to be able to compete with Ethereum and and Solana. But again, I think it's going to make a lot of money for the founders and the VCs that are able to dump everybody once things unlock. And, you know, I was going to say there's a lot of hype around it. It every token gets a pump. So,
>> right.
>> Um, it had a good pump. I wasn't really feeling the chart and the energy. I didn't feel energized when I looked at that chart that it could really do more. Maybe it will. And I sold too early. Whatever. I made, you know, a decent return for a day and a half of risk and I took my W and I'm going to go off into greener pastures.
>> Dude, congrats to you, man. You know, you see this is what you're going to you're going to inspire some dgens here because you're just saying like, "Hey, I just hold your ETH bag, whatever." And then at the same time, you're like, "I just did a, you know, a quick flip on on some random L1." I like he's this man is not allergic to making quick money either, despite despite the long-term view. Um, okay. Another question from dazed and confused. Ask Arthur what he thinks will happen with the January 15th MSCI decision? Uh, Jamie Don and the JP has said uh JP Morgan has warned that exclusion from MSCI indices alone could lead to 2.8 billion in forced outflows with potential um with potential total outflows reaching up to 8.8 billion if other index providers follow suit. Man, I like he went and got the quote. My concern is the avalanche of BTC selling then of course alts causing long-term damage. He's a bull. I'm assuming he's referring to you. It would be great to get his perspective as in you. I don't know what indices that MCR is included in because they didn't make it to the S&P, right? Um I'm not sure if they're in the Russell or not. I think a lot of these large index indices have sort of is poo pooed them and sort of not really added MSTR for whatever reasons. They have they have their reasons, some good, some bad. I'm not really I think this is sort of a nothing burger thing, this Msei um exclusion or inclusion. I'm not sure whether they're in or not. I don't know if maybe JP Morgan's portfolio trading desk probably has a massive rebal position on the stock and he's just trying to jabbo them into putting them in because they're going to make a [ __ ] ton of money if they get included. I put that more as probable than anything else rather on like why is Jamie Diamond opining on like micro strategy? This man runs a [ __ ] trillions of dollars of like treasury positions and massive interest rate swap positions. He's talking about MSTR like doesn't make any [ __ ] sense. I think he's probably got a position or some one of his desks does on this on so and he's talking his book.
>> Okay, so not a big deal. Not and Arthur's book is not a very big deal. Okay, got it. Okay, and this is from TPAN. What's a simple framework? This is this is much broader. What's a simple framework he and his team use to evaluate an investment opportunity that's applicable for retail?
Um, so I think retail probably is more concerned about liquid trading and I think you really have to have a belief in in what you're trading because belief and use no leverage. It's just hard. Like obviously we trade in the early stage stuff but again we get access to the best deals and we get the best prices because of who we are and even still we lose money on stuff. So I think if you're a retail person, focus on liquid altcoins that you know have real organic demand because their product or service is useful and trade those. Again, if you are not a professional shipcoin trader and you aren't in the Discord on X understanding the sentiment behind these things, can discern whether what someone says in a white paper is [ __ ] or not. Just don't get involved cuz you're going to get burned.
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Okay, great. Thank you for that. That's a very I think all a lot of it what I'm learning from you Arthur is that unless you have time to do this 24/7 and be the absolute master don't do it just just just DCA or whatever you know just be bullish on the long term and that's about it. Um, one last question for you, Arthur, and this is unrelated to, this is not from community, it's not really from crypto, um, but I would love, you know, we talked about the economy, we talked about more money printing, uh, the larger macro picture. How how is AI playing into all this because it's something that we haven't touched on, but obviously it's is a massive part of the S&P and the MAG 7 are, you know, they they prop up so much. So, I'd love to get your kind of general general view there.
the US economy marginally is a is a bet on you know seven companies and their ability to create this new utopia or whatever you want to call it and so when the max 7 falters and now they're even issuing debt right so now we've gotten into they're going to be integral into the corporate debt markets which in one sense is bad in one sense it's good for us because we know that when there is a wobble then the authorities are going to rush to the rescue whether that's executive orders about creating some massive nuclear what boondoggle or semiconductor fabs or lending or what have you. But again, I do not invest in the AI stocks because I think this is the railroad business and you know investing in railroads is very very difficult. I think investors they want to understand you know what this could look like is take a look at if you invested in the things that China was investing in in terms of industrial buildout from the '90s until the the 2010s. I think a lot of investors feel comfort that the US government is behind them, whether that's through loans or through grants or through just a job building that Trump is constantly inviting these folks into the White House and, you know, breaking bread with them. They say, "Oh, great. I'm investing alongside the government." Well, look what happens when an investor invested alongside the government in China. The government has political concerns over monetary concerns. Trump is more concerned about winning elections and jobs than he is about whether Nvidia is a $5 trillion or 20 trillion company. obviously like it to go up, but if that came at the expense of a particular representative losing their seat in the Senate or the House because some project didn't hire enough workers, well then he's going to support that. And so your your interests as an investor are going to be a backseat to the political minations of the government. And so, you know, equity investors in China have made no money over the last 20, 30 years. You're flat except for, you know, specific stocks if you're a stock picker. Take that as sort of a a road map for what could happen in AI. AI could be wildly successful and lead to some amazing things that people and entrepreneurs create, but you as a railroad equity investor in the early stages could get absolutely wrecked. In the same way that people got wrecked in Cisco and the fiber optic build out in 2001 got wrecked in railroads in 1907. Um, every major reload of technology entices all this capital that usually doesn't make a good return. It's who invests afterwards to crash, the first crash who does well. So I say avoid AI, you know, not not to say use the products. They're great. Wait for some entrepreneur to create the new Google of the, you know, applied LLM model space, whatever that is, but I would be hardressed to invest in in Nvidia and some of these stocks. Not that I would short them. I guess don't even play the game.
>> What's your favorite AI product?
>> Um, I'm actually liking Gemini right now. I've been trying that out more. I was I more of a Plexity guy, but I've been really getting into the Gemini models. I want to try out the Claude stuff, the Excel models and and all that stuff. So, yeah, it's it's awesome. These are great tools. Like, I love the productivity that they bring, but how these [ __ ] guys going to make any money, I don't [ __ ] know.
>> Right on. Oh, Arthur, you're a legend, man. Thank you for coming on the show. Always great to get your your point of view. Um, and we'd love to have you back in the new year. Even if you join us uh from a snowy mountain top in Japan, uh you're always welcome back on Milk Road.
>> Thanks for having me.
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