Transcription
So yeah, I think ETH can go to 10,000 easily by the end of the year. Tom Lee is doing, you know, Satoshi's work going out there and proitizing the unwashed masses about the the bright future of Ethereum as held by the Bit Mine digital asset treasury company. So, you know, he's red pilling an entire cohort of investors, which is great. I hope they they keep buying stuff.
Um, but at the end of the day, right, the ETH story, ETH is still massively underperformed given where a lot of other layer ones have been uh this cycle and I think they're it's going to play catch-up. I still like the price chart and fundamentals of Ethereum doing, you know, 10,000 by the year.
GM, good morning. Welcome to the Milkroach Show, the daily crypto show, which is the only place where one tweet from Trump wipes out more value than a recession. I'm your host, Jay Hamilton. It's Wednesday, October the 15th. Can anyone make sense of this market? Well, if anyone can, it's the one and only Arthur Hayes, who is in the studio joining us today with his predictions for Bitcoin and Ethereum for the rest of this year and so much more. He's the CIO of Maelstrom. He's the co-founder of BitMax and he's even has a pardon from the president.
Before we jump in and bring up Arthur, this week the Milkro team is doubling down and want to show you how much belief we have that we are still in a bull market. We know that this past weekend was really tough for everyone. If you got liquidated, I'm so sorry. Give you some love. I know it's been rough out there because things got real messy. But we launched a campaign last week where we said that we believed ETH was ready to break out and then Trump tweeted, market dived. We didn't obviously see that coming, but we want to show you that we still believe. So, we are so confident that ETH will hit a new time, new all-time high by the end of the year, that if you sign up for Milkro Pro right now, not only will you get 20% off, but you will also have the opportunity to get a full refund. If we do not reach new all-time highs on ETH by the end of the year, we will give you a full re refund. That is how convicted we are in the market and where we are headed. And Arthur is most likely going to agree with me, but you're going to have to listen to find out.
Today's episode is brought to you by Nexo, the platform that grows your crypto without locking it away. It's also brought to you by Figure Markets. Grow your capital like a bank. No lockups, just real returns.
With that, Arthur, welcome back to the show.
Thanks for having me. Pleasure to have you, my man. Great to see you. Looking good as always. Okay, let's just start. Uh h how are you feeling right now? We're sitting here, you know, mid-October. What happened obviously last week would was not on my bingo card for this conversation this week. H has has your view changed at all in terms of the market and the setup going into Q4? I know you've been bullish. Did did what happened last week with tariffs and Trump and the trade war did that change your view at all?
Didn't change my view at all. If if anything confirmed my view of what's going to happen in terms of a an extended period of time of up only for crypto. Obviously, people were taken aback by the Trump threat of 100% tariffs, which was preceded by China announcing some new RRE uh rare earth restrictions. Obviously, both of these things come into effect after like early November when Trump and you know, US President Trump and Chinese President Xi are supposed to meet on the sidelines of I forgot which I think APEC conference um in South Korea, something like that. and they're supposed to come up with some grand new bargain, right? And what do you do before you sit down and negotiate? You try to push the limits, right? So that when you come in below that, you it's seen as a success. So obviously China goes full, oh no, any product coming out of China with our earth, we can sort of interdict and that would essentially destroy the American economy because there is no America without China. And then Trump says, "Oh no, we're going to put 100% shariffs on China as like because that's the only tool they really have and that's really going to hurt the Chinese economy and employment is going to go down and the exports are going to go down. They're going to really feel it." And so both sides are so, you know, rattling their domestic markets with these very um aggressive demands of the other side. And then obviously when they come and sit down and they come to whatever agreement they come to, even if it's a sham and it's just purely optics, it's going to look good for both people because you know they both asked for something ridiculous, they both came back and can sell it to the domestic population that they got something um pretty good and that's it and that's all there is to it.
Uh I think people and then obviously the crypto reaction was very much a issue with how exchanges work and just goes to the fact that no one actually knows what the [ __ ] they're doing. Um, they haven't read the documents like I've been doing this for you know almost uh I don't know 12 13 years. I wrote most of these documents that everyone else copied. No one reading this [ __ ] They didn't read it when I wrote it the first time. The exchanges barely read it when they copied it. And so now they don't [ __ ] know what they're doing. Yeah. more talking about the the customers who don't understand what it is they're actually trading and they find out unfortunately at a time like this when you know everything collapses into one moment and then uh unfortunately people lose a lot of money which is really sad.
Can you I I I agree with what you're saying that most people don't understand I myself don't even know if I fully understand I'm willing to admit my ignorance here. Can you can you give us a little bit of lesson? I don't we don't need to dive super deep into the technicals but at at a basic level what did happen last week and what can crypto investors learn from that so maybe they protect themselves in the future?
Yeah, so I guess the big issue was cross collateral margining. This is a very difficult system to design and implement and you have to make a lot of choices and policy choices about how you're going to mark different assets depending on the situation and obviously as a 24/7 exchange. It operates 365. You have to put these in, you know, put it in a technical spec and then just run with it and then something happens and you adjust. And obviously, we've seen that Binance and some of the other large exchanges, they made some decisions about how they're going to mark certain types of collateral. Obviously, there was the issue with um taking a last price from your own order book, which is less liquid than the global order book, which is what happened with Athena US, right? there did not dep something like a 100 million I for how much money was dumped into the USD market uh it traded below a dollar but if you looked on curve it barely moved which is where most of the liquidity is unfortunately Binance marks collateral in USD based on its own order book which is much less liquid than the global order book and that started the whole thing um uh the whole sort of if you had that collateral then now you have to sell all these other things because you're underwater and that just sort of leads to the the cascade. So that's that's one issue is how does an exchange mark an asset that it uses to collateralize another position because obviously Bitcoin only went down what like 20 grand like 10 15%. Not that big of a deal. We've we've done worse I've experienced much worse in terms of you know draw downs in Bitcoin over a very short time period. But it was a fact that people were using other forms of collateral to back up their Bitcoin and Ethereum positions that that collateral was marked at a at an adversely bad price for them. The exchange didn't do anything wrong. This is all laid out in their specifications. Just no one took the time to read it. Um, and maybe, you know, the person in charge of the exchange team didn't particularly understand the ramification of their the decisions they were making in terms of the policy choices, but whatever, right? It was all there written down. you just had to read it and understand it.
And then the second issue was um automatic deleveraging ADL. Um and especially for traders who like to trade basis positions, meaning they have a we call a delta neutral position, they have no exposure up or down uh on the market, but they aim to capture the spread. If on one leg of the trade where you're short, you're supposed to be making money, and on the other side of the trade where you're long, you're losing money. Now the the problem with an ADL is when that happens basically the exchange is trying to protect itself and it's saying that hey I know there's some people who have profit there are people who have losses the people who have losses don't have enough collateral or capital to make good on their losses and so because it's a sum zero system what is one user's loss is another user's gain we're going to take from those who have profit to make sure that the exchange is flat and so that buys sells and P&L uh equals zero. So that means if you have a long short position on the short side, you make less than you should, then all of a sudden you're underwater on your position and you've lost money because now you've lost your hedge. And you know, couple that with API issues because of um overloads on Binance and some of the other exchanges and now you have traders who cannot log in to see the positions, don't know if they've been auto leveraged or not, can't add back on new risk because they can't contact the exchange quick enough. and all of a sudden the market gaps down especially on some of these more liquid tokens all the market makers pull their liquidity they're trying to protect yourself and that's how a bunch of delta neutral traders blow up because they don't understand how automatic deleveraging works in this sort of adverse scenario.
Now these two things basically led to you know the gargantuan losses and liquidations and you know all the 20 billion whatever the number is the billions of capital and open interest that was essentially evaporated and obviously Binance thought that they could have think done things better and so They launched some I300 million $400 million fund to give people back some money, but obviously that's not really going to make good on everyone else who got smoked because they didn't understand what the [ __ ] they were doing. But those are the two real issues. This is a very idiosyncratic crypto thing. has very much to do with how do you structure a highly leveraged trading platform where the exchange does not uh face uh risk of loss due to customer highly leveraged trades and understanding how these margin systems work and understanding that sometimes under high low the APIs don't work and then this is the exact perfect moment when you know people blow up and so yeah it's very unfortunate I hope people learned what ADL actually means how the ranking systems work um who was eligible for ADL and who was not.
Now, obviously there's been some a bit of a controversy around uh Athena. They were in their own defense and obviously I'm an adviser and I'm I stumped for them. They did what they should do. They negotiated with the exchanges to not be ADL. I don't know what the terms of those agreements were, but Athena was able to capture the full P&L on the way down to make sure that USD was fully capitalized at all points along that uh curve when the prices were falling. That is what they should be doing. Now, whether or not the exchange should have offered them that protection over and above other users, that's a question client should ask of Binance and By and all these other exchanges, and that's up to them to make that decision. But from Athe's perspective, they did exactly what they should do. And yes, the US price and Binance specifically was out of line, but they remained over collateralized throughout the whole incident. So again, understanding what an ADL is, understanding how socialized loss works, understanding the situations where the insurance fund kicks in or doesn't kick in. These are all things that you need to understand as a leverage trader. And I don't think many traders understood these things. they just pull up a chart, do some TA, slap on a high leverage, and and hope that they're going to make money um every every day of the week. So, again, unfortunate. I wish a lot of people hadn't had to learn this lesson, you know, with billions of dollars of losses, but again, this is another lesson of understand what the [ __ ] you're trading.
So, let's talk about the outcome for a minute because you put out a tweet uh and you said, um, lots of alts got smoked on the move down. we won't be seeing those levels anytime soon on many highquality alts. What does that mean?
So I consider a high quality uh shitcoin real users paying real money i.e. not the token in which of the platform. So they're spending you know stables or bitcoin or eth whatever right it's real money on a product or service and then that token project takes that profit and does buybacks or emissions or some way gives that money back to the token holders. So obviously examples would be Pendle examples Etherfi, Athena. Obviously these are all things that I own and size in our portfolio. But again I believe these are high quality shitcoins. These are real use cases. It's not that the exchange or the project has some agreement with the market maker and that's literally the only organic demand for this thing. And then they quote a, you know, a nice little chart and then when [ __ ] hits the fan they're gone and there goes any liquidity in your token, right? So every I think there's some interesting posts about people saying yes, we did some true price discovery this this weekend because only high quality shitcoins where there was actually a real reason for these things to exist was there actually any liquidity because all the people who were paid to be there were protecting their own ass. So that's the true price of that shitcoin down 75 90% whatever it is right so I think that you know for high quality shitcoins you're not going to see these levels again that was an amazing opportunity for those who had the ability to um deploy capital into those liquidation wicks and that'll be a you know cycle defining moment in the same way that April 2025 was a cycle defining moment you know most people if you got in at those lows you know April 9th or whatever it is you're still up today on most of the majors. Um, and as you know, subsequent to this, right, if you got in at pendle $2 or I think uh Athena got down to like 10 cents or 15 cent, something like that, right? You're already up like 2 3x over those prices, right? So those are you're not coming back to those levels. This was a very um perfect storm for how uh a bunch of people could get liquidated. There's going to be some changes in policies. traders are going to reassess what it is they're trading, the amount of capital they're deploying, the leverage they're using, and selecting exchanges where the policies on ADL, insurance fund, all these sorts of things make sense with their own trading strategy.
So, I I want to get on to your macro overview and uh the market, but just one more question on this theme. My mind goes to the fact that this was started by a one single post from Trump and that is a possibility for the next three years. Do we need to be prepared for these types of events or is the solution more what you're talking about of changes in policies and changes happening behind the scenes that make these types of liquidations not as possible? We don't need to worry as an investor. H how do you plan for the possibility of one tweet leading to a market crash?
I mean, if you're using leverage, then one one tweet could lead to a market. What if Xiinping said, "All bets are off. I'm invading Taiwan today." There's one tweet. Goodbye. See you later. Right? So again, it's not just Trump. It's any politician around the world can say something and that could be a market reaction, right? So, anything can happen. And so, if you're using leverage, that's the game. You have to be prepared for that and uh understand and how you're going to deal with these situations where, you know, you're not paying attention or whatever it's going on in your life or your business and all of a sudden something happens, market reacts, what do you do? That's the game. Welcome to it, right?
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Let's move on from that. Uh what's your what's your view right now? Let's start wide and then and I want to narrow in on some specific topics, but talk to us about your macro overview, your thesis right now.
So I just finished writing an essay called what was it called? The four cycle lone the king. Yeah. And it was on the the four-year cycle and why I don't believe we're in a partic this cycle is not four years. Zooming out, if you listen to the politicians and the bankers, they want to do more things. They don't want to raise taxes. They don't want to cut spending. They want to do stuff. They want goodies to everybody. Everybody's everybody gets a prize. Nobody pays more taxes. We don't cut spending. We can do everything with the government. And so that's not changing. If you read the newspaper, pick your country, it's all the same sort of thing. They obviously are targeting different groups depending on their own political backdrop, but the message is the same goodies for this constituency and doesn't cost you anything. And so, because the whole world is doing this, there's going to be more fiat created. It's going to accelerate in pace because you have to pay back the old debt with new debt to fund new spending and the old spending. And so exponentially we go higher in terms of the amount of fiat created and therefore I'm very bullish on on crypto. I think I posted a tweet overnight. The Jerome Powell I was this was not on my bingo card. I forgot what what he was speaking and he basically said they're going to be stopping quantitative tightening quantitative tightening soon. Uh, and you had Timaros from the Wall Street Journal, which is essentially the mouthpiece of Powell when he can't actually say he wants to say, telling the world that quantitative tightening is dead, which basically means it's over. So, I'd imagine, you know, o, you know, one of the next three meetings they stop quantitative tightening and you can bet that quantitative easing is right around the corner because, you know, Buffalo Bill Besson has got a lot of debt he's got to term out and, you know, even 4% on the 10ear is not low enough. They need it lower. They need mortgage rates lower. You know, Trump says it's we're in a housing crisis in the United States. Yep. Right. You know, house prices are over the 2008 levels, but it's a housing crisis, don't you know. And so, uh, got to print more money and quantitative easing is coming back. And so, you know, this was came out of nowhere. I don't know what the why he even got on this topic, but if this is what he's saying without any sort of prompting, imagine what they're really planning on on doing once, you know, they really get things going. And Trump's only been in office for a year and he doesn't have all of his appointees and all the positions. Like the chess pieces are not all align yet, but starting in next year, we're going to see an acceleration of money printing at least out of the out of the United States. You know, QT is over. quantity quantity of ease is coming back. You're going they're going to be releasing trillions of dollars into the mortgage markets. However they do it, I don't really know these various theories. It'll get done. Rates are coming down and so the environment is ripe for appreciation of assets. And you looked at gold, gold and silver, right after the, you know, back and forth between uh Trump and she, you know, over the weekend Friday close, gold was up, held its, you know, 4100 or level, whatever it is now. Silver touched $52, right? So obviously they're not really in this sort of like, you know, MAG7 tech correlation thing. They're really being purely valued on fiat debasement, whereas Bitcoin and crypto still have this connection to to US big tech, which I think they'll shed at some point. But in any event, we know which way the world is going. It's more fiat debasement. Those who have the foresight, who are looking what's going on, they are voting with their money and they're saying, "I want gold. I want Bitcoin. I want silver. Um, whatever. I want stocks." Russell 2000 new alltime high. Right? It's the same trade. We're all trying the same thing. I just think that crypto is the fastest force. Uh does clearly I think everybody understands that Bitcoin ties to the currency debasement trade and I think the whole world is catching on to the currency debasement trade. I mean even your everyday banker is talking about it. So I think I assume everybody's talking about it now.
But so I think that everybody can understand that that will the Bitcoin eventually will will tie more to gold and silver to use that example as well. Does the rep rest of crypto also go that way because of the scarcity or is it only Bitcoin that has the potential to to to benefit from the currency to basement trade?
Well, I mean any cash cash flow, right? Obvious unfortunately most shitcoins have no cash flow and have no future of cash flow. If I have an if I have an infinite cash flow stream and I lower the discount rate the terminal value goes up period. That's a true for an equity and it's true for a shitcoin project. So to the extent that your decentralized application generates real revenue you plan to buy it back buy back your token or put emissions out there for token holders that cash flow stream becomes more valuable the lower um the discount rate goes period. So just the same as equities. So yes, there will be certain shitcoins that do very very well. The majority will not do very well because I think that 10 years on in this experiment of decentralized applications, investors are finally at the point of demanding to get actually some money from these things. And so the majority of these projects have no future of ever generating any cash flow, which is fine. That's that's what this game is all about. But yeah, altcoin season, you know, you just throw some money out there and all of a sudden your altcoin goes up 100x. That [ __ ] ain't happening. You're going to have to be a lot more discerning in what you invest in to generate returns better than Bitcoin, better than ETH.
I I want to be clear for a second that you keep using the term shitcoins, and that's that's your term for altcoins, correct? Like, just to be clear, you're not actually talking about like the shittiest of the shitty coins, right? We're all in the same basket. If you're not if it's not Bitcoin, it's just Bitcoin. Yeah. Yeah. Exactly. Ex. Okay. Thank you. That's Yeah. Yeah. Okay. So, just so everybody's on on page with with Arthur's language because you have your own unique language. So, uh Okay.
So, macro looks really good. Let's talk about what does that mean for for Bitcoin rest this year? And let's let's talk actually first this year. what do you expect to see for the rest of 2025? And then I want to talk about uh what you think beyond this year.
So obviously the thing everyone wants to know is what is a deal that Trump and she are going to get involved in. I don't know what it's going to be. Both sides will spin it as it was a positive development to their own domestic audiences and then it'll be back to the status quo which is China printing ever larger export surpluses. Right? the last last month was another record high in terms of uh China's export earnings. So the situation globally is not really changing that much. But if you think about the American voters, they don't want a trade war. They're not happy about paying more for, you know, [ __ ] at Walmart. That's not really going to help Trump win an election. What's going to help Trump win an election is putting more brown people in jail using ICE, right? Americans love that [ __ ] Um so he'll keep doing that. Uh and then uh Canada I mean sorry not Canada but China again they're going to spin this as you know we stood up tall for the Chinese people d and you know we're doing good for China right and again status quo so I don't think anything is really going to change but once we get over that sort of early November hump then it's just it's smooth sailing right because both sides have done a deal and so now they can both forget about it and you all the bad things because of these imbalances that are created in both economies can sort of be swept under the rug being like, "Yeah, I dealt with that. You know, we met. We have a deal, whatever that is." And so, let's move on.
And so, moving on is what happens if a deal doesn't happen in November. Then, I mean, I think at the end of the day, the same thing will happen as what happened in April this year, right? Trump talked tough and he had a taco because at the end of the day the the financial position of America doesn't lend itself to being super aggressive in in these sorts of things and he'll you know he's a master at sort of PR he'll revert to status quo and however he does that and however Jedi mind tricks his base that is that the status quo is different than you know what it actually is fine that's he's a true politician he can do that um and again the same China still prints massive export surpluses They still selectively restrict who gets rare earths. The US pretends like everyone needs Nvidia chips and there that's their crutch. And then we all continue to play the same game.
Okay. So the the show goes on no matter what. Correct. What does that mean for Bitcoin end of year? Where do you think that takes Bitcoin?
I'm I'm still $250,000 Bitcoin. That's my end of year target. End of year. End of year. You know, I said 240 at the beginning of the year. So you and I are actually we're in the same boat here. Uh and do you still feel like that's that's likely like you know we're time is ticking here. You know can we really get there by the end of the year? What would be your probability on that?
I mean 50/50 as much as any prediction that I make. At least you're honest. At least it's directionally correct, right? If we get there we get there. the money is going to be printed there. Every day there's another article which confirms, you know, there will be more credit created whether that's in the United States, in Japan, in China, in the European Union. They're all doing the same stuff. They're all tackling different issues uh in their respective economies, but the solution is always print more money. And so if Bitcoin can Bitcoin double or more than double in, you know, two months, absolutely. We've done it before, right? And you know, if you're a believer of this, there's only so much Bitcoin on the exchanges and you know, once the whoever wakes up and starts buying, it's guess one of these charts because there's no available supply. Whatever, whatever you want to believe, you know. So, it's definitely possible. So, we could definitely double in under three months.
All coins, not all coins go up. So, like obviously if Bitcoin goes to 250, then all coins are going to do well. That's there's no doubt about that. What's what's your thoughts on let's say ETH first and then the rest of the altcoins?
So yeah, I think ETH can go to 10,000 easily by the end of the year. I think uh Tom Lee is doing, you know, Satoshi's work going out there and proitizing the unwashed masses about the the bright future of Ethereum as held by the Bitmine digital asset treasury company. So, you know, he's red pilling an entire cohort of investors, which is great. I hope they they keep buying stuff. Um, but at the end of the day, right, the E story, it is still massively underperformed given where a lot of other layer ones have been uh this cycle, and I think they're it's going to play catch-up. I still like the price chart and fundamentals of Ethereum doing, you know, 10,000 by the end of the year.
I also like the sounds of that. Now, what's hard is right now there is loud voices on both sides because and a big reason there's loud voices on both sides is the four-year cycle which doesn't have a ton of cycles to make it necessarily signi statistically significant. But for better or for worse, everybody in crypto loves to talk about the four-year cycle. If that played out, then we would peak in Q4. some people saying we've already the top is already in. What's your thoughts on the four-year cycle? So, you think we we're going to do well through this this year, but how do you think the rest of this cycle plays out and how any view on how long it goes and when you might be able to see the top? I know the top is very difficult to predict, but are you believing that it goes into late 2026, 2027 even? What's your thoughts?
Yes. So every four year cycle and there's been three right since Bitcoin has been created have coincided with a change in uh price of money quantity of money in the US and China and that's was a chart study that I did in my long live the king essay. So if we come to this particular situation and we were if we were adherence to the four-year cycle then we would say okay well this cycle is essentially a derivative of the the um depletion of the reserve reverse repo program at the Fed which is $2.5 trillion started with Bad Girl Yellen in 2022 ending with Buffalo Bill Bessant basically now it's basically at zero and so if you were in this four-year cycle they go okay cool like there's no more liquidity that's empty where are they going to get all this new to to pump up the markets. What let's let's examine what is happening right now. So the Fed is cutting rates. Impala said last night they have more cuts to come, right? And this is while inflation is above their target. The US is printing 3 plus% real GDP. Employment unemployment is at historic lows for the United States at a postw World War II scenario. Yet they're cutting rates. Okay, they should find my ass. Uh, and then he said, "Oh, I'm quantitative tightening is done." [ __ ] you printed $5 trillion over the last five years, and you've reduced maybe the balance sheet by what, two trillion, something like that. I don't know what that number is, not five. So, what are we talking about here? It is not time for quantity. Your balance sheet should be zero. Talk to you when you're at zero, not when you're at whatever it is, 4 trillion, 5 trillion, whatever the Fed balance sheet is. So again, stopping quantitative tightening, quantitative easing is is right around the corner.
On the bank credit side, this is something that Besson has been badgering on about that take away money creation from the Fed, put it in the hands of the commercial banks. JP Morgan announced recently a $1.5 trillion initiative. Most of that one trillion is based on we will lend more to American industry. Basically, let's help Trump drop more bombs. So we're going to build build some more bombs. We're going to help you build more bombs by lending some more money. Right? So if Jamie Diamond's doing it, then Bank of America is going to do it. Wells Fargo is going to do it. City Bank's going to do it because they're all lmings. Jamie Diamond is a leader of all the large US banks. So they're going to create more credit. So when So we have the Fed and the banking system forecasted to create credit. We have Trump talking about a housing emergency. Wants to unlock I think there's something like 10 trillion of home equity uh based on post price appreciation in the US. You know what is he going to Who's going to convince the American public to spend their housing credit card on more gadgets is essentially the game. So they feel good about themselves. Cool. Whatever. Again, more money printing, more nominal GDP growth, more inflation. And if we move over to China, what's the message from China? It's, you know, a reflationary story. They think that they want to be able to do it in a better way, not go crazy by 2008 and 2015. We'll see how she does that. But at the end of the day, they're signaling support for the housing market needs to be tepid support um support for social programs uh and essentially reducing supply of goods, rationalizing supplies to get prices to go up. Again, this is reflationary. This is more credit being created in China. So, the two major parts of the world forecasted to create more credit. This is what's coming out of the bankers and the politicians mouths. We move over to Japan. I can't pronounce her name correctly, but the, you know, new prime minister and waiting is an abnomics fanatic. She wants to print more money, tell the BOJ, stop hiking rates. Um, and that's how she's going to combat inflation. You're just going to hand out checks to people. Again, doesn't work. Doesn't matter. More yen being created. And then if we move over to the European Union, if we take a look at how uh I forgot his name, the prime minister who was who left then was reappointed to get his budget through. He essentially had to throw out the pension reforms that Macron almost died on a cross political cross of a few years ago with a gilelejan um pseudo revolution. He said, "Oh no, no more uh we're going to scrap those age restrictions. I forgot what it was. I think they reduced it by two years or something like that." So printing more money and this is France. They're they're so [ __ ] wrote an essay called Bastile Day about how [ __ ] their finances are and they're going back on previous promises to sort of rectify the situation because nobody wants to go into austerity. Everyone wants to print more money. So we talk about the four largest economic blocks in the world. The politicians are telling us they're going to print more money. The banks are telling us they're going to lend more money to whatever it is the industries are that the politicians want them to lend to. This is inflationary. This is not like the other three cycles where you had credit contracting, you had the price of money rising, you had people talking about, you know, inflationary problems. So again, this is why I think the four-year cycle is not applicable in this particular situation.
How long do I think it going? I think we top somewhere in 200 and then 27. And you know the catalyst for that is the the rhetoric coming from team blue Democrat in the United States and any opposition party around the world basically like oh we have to do something about this inflation. Now they're never going to do anything about it but they're politicians. They have to campaign on the other side and get people to vote for them. And so the other position to take is oh they're printing all this money. That's why your your grocery bill is up 30% but your wages are only up 10. You know all valid points. And that's what's going to scare investors. Oh maybe they're serious about it this time. Maybe they are going to do austerity. Maybe they are going to try to rectify, you know, this fiat debasefit scheme. And that doubt will lead to a correction in the markets in 2027. That's my that's my mental model. Uh I'll update it as frequently as I words come out of my mouth, but that's why I'm looking at it. Yeah. Yeah. Yeah. Of course.
What What worries you?
Global warming. I think it is. How how worried are you about the current status of of the
Well, I mean, there's nothing I can do about it. There's nothing I can do about it. So, you know, you know that the risk exists. You know, if I need to go Mad Max and start killing [ __ ] to survive, I'm ready. But I hope I don't have to get there.
Everybody listening is like, I hope I don't end up in the same room as Arthur if it's not. You better hope so, because I'm going to eat. Don't worry about that. Oh, everybody is now terrified. Uh, so, so here here's the thing. Global war, like that feels like, like you said, out of your control, right? And I guess anything that worries you is going to be out of your control. anything. I think the thing that everybody sits in the back of every investor's mind is, you know, the the classic uh I don't want to ride into the next bare market, right? I don't want to round trip. A lot of people in the space have round trip before. They don't want to round trip again. But then at the same time, impossible to predict predict the top. Do we let's say your thesis plays out. Do we have another bare market similar to the past where we have big big drop offs? What is what is the next bare market? Is are we in a totally different regime where the bare market could last longer? Are you how do you think about the the next bare market whenever that does come and does thinking about that help you prep or is it more just like you're like ah it's so far away I don't even need to plan for it right now.
So obviously I operate a a barbell portfolio construction strategy. So to ass you need to have the best brakes on your investment car. And so I know I've talked a lot about there's a fund that I invest in run by this guy named David Dredge called Convex Asia. It's probably you know the smartest derivatives trader I've ever met. And not to say that you should invest in this fund. I'm just putting this out there as how I conceptualize this. Right? So what is the trade that everyone whether you're in trady, whether you're in crypto, we're all in the same trade. The trade is politicians do not want to inflict austerity pain on their populace. Therefore, any sign of recession or any wobble in the financial markets and these fractionalized leverage financial markets and every single country runs the same system regardless where they're communist or capitalist or whatever. They're going to print money. And because I believe they're going to print money, I want to own government bonds, stocks, real estate, crypto, whatever, right? Depending on your own worldview and how you've been educated and you you believe in one of these or you know, a combination of these of these asset classes. So, we're all in the same trade. We all believe the same thing. We're just choosing a different horse to ride into the future. Now, what is the thing that would obiate this trade or would cause this hypothesis to be false? If politicians said, "Okay, we're going to allow credit destruction." If you're overlevered and you can't service your debts because the cash flows are not there, bank, financial institution, industrial company, and you got to fire half your workforce, you got to hand over the keys to the creditors, and you no longer produce enough of cars or bullets or whatever, I don't care. Free markets, creative destruction, all that kind of stuff. Like 1930s style situation, Great Depression. we allow credit to contract 50 60% whatever we you know remove all this waste out of the the global economy then I would say okay well then I've got a problem right because crypto gold all this stuff's going to go down in value and fiat terms um because of all the credit destroyed right the denominator is going to get smaller right so what do I own on the other side of my portfolio that benefits from the systemic collapse and them not printing money and that's essentially what I own in this other hedge fund are esoteric volatility bets that I can never do myself because, you know, I don't have access to these things. This is what they do. The fund loses money pretty much every year, but I don't care because I'm making so much money on my other side. So because I'm protected on this riskoff scenario austerity and how much money I'm going to make on over here, I don't have to worry about I just go, you know, as back up the [ __ ] truck, buy all the crypto, buy all the gold, buy all the equities, buy all the bonds, whatever the [ __ ] you want to buy because I know that if the politicians do the thing I never thought they'd ever do, which is austerity, then all these other things that I'm buying over here are going to go up 10x and I'll make back the money that I've lost on on this other side of the portfolio. Now, unfortunately, the crypto's gone up so much that I can't buy enough of this other fund with the available cash that I have, but I'm not whatever. I I'm not worried. Yeah. Yeah. Yeah. Yeah.
So So even though you don't believe any politician could ever do austerity, you are prepared for the possibility that that could happen by investing in this fund. Is this a private fund? Could anybody invest in this fund?
Uh I think you I think it's a minimum $100,000 check or I don't I don't know. There's a minimum. It's it's a professional investors and all that kind of stuff because they invest in some very funky stuff. Interesting. Very interesting. But again, as a as a regular investor, you could buy they're very expensive. You know, puts on the S&P, puts on whatever, you know, your favorite uh indicy are if you don't have the capital for that. Then you just have to be a little bit very very thoughtful like, okay, listen to what the politicians and the bankers are telling you. And usually at the top of every cycle, their tune changes. They start being coming in worrying about inflation or, you know, whatever it is. And then it's like okay well the the zeicist is changing therefore I should change my portfolio and you know find something else to own. So you have to listen to what they're saying. There is no such thing as a safe investment. Set it and forget it. All this kind of stuff right it's your capital. You should take responsibility for it. That's the whole point of this journey and you know be cognizant of that and make adjustments.
So so well said. I I'm gonna end it there because that is just the perfect line to end on is yeah take responsibility for your own success and your own failure and and for your own investments because there's just no other way to do it and that's why you got to keep tuning in to us Arthur. Always a pleasure to get you on. Thanks for joining us today.
Thanks for having me. Thanks for listening in everybody. Got to remind you as always financial advice. This episode is forformational information educational purposes only. And as I said at the beginning, we have so much conviction that ETH is going to be at all-time highs by the end of the year, December 31st specifically. And if it isn't, if you join Macro Pro today, then we will give you a refund if it doesn't hit all-time highs. So check it out. Link is in the show notes. Have an awesome day, everybody. We'll see you back again tomorrow. We're sending Kyle Reedhead, our head of research, to the UK's largest web 3 summit. I'm talking about Zebu Live happening October 21st. and 22nd in London. Want to join? Use our code milk to get 20% off your tickets. Hit the link in the show notes and say hi to Kyle for us. Want insights on what's moving crypto markets and how we're trading each event. Subscribe to our channel and join the Milkro Daily and Pro newsletters and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.