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ALTCOINS DEAD? | SEC BOMBSHELL DOCS | Macro Week #CryptoTownHall
Recorded: June 12, 2023 Duration: 1:24:31Space Recording
Short Summary
The crypto industry is facing significant challenges, including regulatory pressures in the U.S., leading to a decline in developer activity and market sentiment. However, there are emerging trends such as the integration of AI with crypto and shifts towards more favorable regulatory environments in regions like Hong Kong and the UK. Key legal battles, particularly between the SEC and Coinbase, are seen as pivotal for the industry's future.
Full Transcription
Yo, can you hear me guys?
Yep, just getting all my...
Oh shit, I'm muted you by accident bro.
I'm just co-hosting you now.
I've sent an invite to RAN.
I've also sent out the invites to the speakers.
We'll kick this off in a few minutes.
Today I'm testing doing the space.
Scott, is my odd you're fine?
Because I'm testing doing the space from biohacking, from my clinic.
You sound good. It's hard to speak through that mask you have on your face.
No, bro, I don't have the mask. Nice jab.
But either, oh, just fine or no?
It's, no, you sound good. You sound good. You sound well biohacked.
So what are you doing right now? Are you, like, freezing your lower extremity?
No, no, I'm in the sauna now. And then outside the sauna, there's Gorov sitting on a call.
So I hope you can't hear Gorov either.
He's about to go into a cold bath.
But, uh...
Yeah, man, it's going to be... I did a space yesterday. Did you listen to yesterday's space?
I caught a bit of it. I was in and out, obviously. Sunday nights are tough, but pretty intense. Huge audience.
Yeah, man. And I'm listening. Also, Brian Armstrong did an interview yesterday. I was listening to it.
I think yesterday on the Wall Street Journal talking about his efforts to, he couldn't even get a meeting with Gensler, despite many attempts.
Instead of flying out to try to meet him, never got a face-to-face meeting, which is pretty unusual.
Yeah, we've said this quite a few times. SBF had no problem getting meetings, by the way.
He had face-to-face meetings with Gensler.
Yeah, a number of them.
Face to face, not over Zoom, yeah?
I can't confirm whether they were face-to-face or over Zoom,
but Brian Armstrong's not getting a Zoom meeting either.
No, he got a Zoom meeting.
He did get a Zoom meeting directly with Gensler.
Only one, though.
So obviously, incomparable to FTX.
But he did get a Zoom meeting according to the Wall Street Journal interview,
but didn't get any others.
Isn't Zoom the same is in person in 2020?
Yeah.
No, bro, you gotta shake that hand.
You gotta hug, you gotta build that relationship.
Do meetings are easy to just end.
Face to face, you gotta get a coffee, they tend to take longer.
It's just more personal.
Gendler not taking that meeting face.
I'm not a conspiracy theorist.
Scott, you're the king of conspiracy.
I'm joking, but yeah, I'm like, I'm more balanced when it comes to everything,
from Gensler to Sam to to Coinbase, Binance, etc.
But yeah, just things do look a bit off.
Sam met Gensler twice
and Gensler under his
in his congressional hearing he said
that they said
how many times did you meet Sam and his answer was
my public calendar
indicates twice which to me
sounds like exactly a BESE
lawyer answer that you meet
they say he met him more than twice
and you want to he says my public calendar
says twice so we know he met at least
twice and we have public
information on some of that
meeting. We know that Gensler's former employee and former counsel to the office of the chair
when he was at CFTC became Sam's general counsel. And then his old buddy Sam is there. And then his
old buddy Sam's girlfriend, who was Gary's student, was there. So it was like a big old family reunion with the guy who
was the second largest donor to the politician who appointed Gary and then his pals there.
So that's how you get access apparently in D.C.
I think that our anger towards Gary may be a little bit misguided.
I'll tell you why I think that I covered it today on the show, but I'll walk you through it.
So I on the show, I said, you know, like, Gary in this case is like, you know, like every
company has one of those like health and safety guys, you know, like, and their job is to make
sure all they do is they look around and they say, you know, can people get hurt?
Can people get burnt?
And then they put up those irritating rules that say, you know, you've got to do this and
you've got to do that.
And as people that work in the company, you all think like, like,
Like, what an idiot, you know, like, who is this guy?
What does he do it?
But his mandate is just to make sure that people don't get hurt and people don't get burned, right?
That's his whole mandate.
Now, I think that that's Gary.
And if you compare that to like a company, you say, look, if the fire hydrant guy, the guy, the risky fire guy, he's not thinking about whether the company remains competitive in the global landscape.
He's just thinking, can people...
get hurt if there's a fire and that's gary gensler in this case and i think if you want to see change
i think if you want to see change hold in a second hold on a second i think if you want to see change
the CEO has to drive a mandate to say this is a priority for us and until the
gansler is sending people gonzler is the health and safety guy who's telling you who's putting up
fire hydrants at the office and telling you to light yourself on fire at home so you don't get hurt at work
Yeah, he's walling off the building so that he's turning the building into concrete with no exit and entrances so that it can't catch on fire.
Now, listen, I'll give you the pro-Gary argument is that there's no legislation.
This is devil's advocate.
There's no legislation in place.
So when your only tool is a hammer, everything looks like a nail.
But I can get that.
And I can see that even in his warped, twisted Mr. Burns looking mind, that perhaps he
believes that he's doing good.
But objectively, nobody has been protected.
And the people who are who have.
who have access to this asset class right now are getting absolutely destroyed but what's happening.
Nobody's being protected. People are only being hurt. So even if that is the nature of his job,
he's doing it poorly.
I don't know if I agree with you.
Like I think we, I know, I know, I know Crypto Bros.
It's an easy.
It's an easy.
I think, I think, look, I was more, I was less skeptical of Gensler.
I was more, you know, less critical of Gensler a few months ago.
But I think, you know, Ryan, like, just the fact that he hasn't, you didn't meet Brian face.
You know, Brian's been trying to do the right thing.
We all agree on that.
So, like, just a basic question.
Why didn't you meet the guy face to face?
Why didn't you offer some clarity early on?
because his job is to make sure that that crypto stops hurting people he only has one
tool he doesn't have a set of rules the only rule he has is is is that the the the
what's the name the highway test that's all he has that's like the only thing yes he only
has one hammer that's it and so he has to now that that's not use this hammer and that's not true
That is not true. There has been, it's been for five years, Commissioner Perce, and frankly, I'm on public record of doing the same thing in February of 18. For five years, it was pointed out that the information that token project investors should need,
aren't available for them to put onto an SEC website if they register, and they're not allowed to register
because their corporate structures and type of investment do not fit within the SEC guidelines.
So the reality is if he actually had a concern of helping investors, he would solicit or could have at any point in five years,
solicit feedback of how to amend his own rules,
If he believes there's securities for how to put tokenomics, for how to put scarcity and supply schedules into.
Yeah, sorry, Dave.
I think you dropped out.
Sorry, I interrupted you by accident.
But I'll continue with the interruption, Dave, since you've been here for a while and you know that I interrupted a lot.
Dave, I wanted to kind of pivot the conversation to before going to today's news, what I wanted to do is pivot the conversation from Gensler and whether he's in the right or the wrong to the market's response to what we've seen over the last few days.
Now, we've covered this at length.
But I just want Vinny to touch on it because Vinny, you used to be a regular on our shows back in the FTX days, and I know you're a regular on Rand and Scott's shows.
But I haven't answered you that question.
We haven't spoken since the SEC lawsuits and the DOJ leaks.
and then the crash in the out coins a couple of days ago.
What's your stance today?
How bullish are you?
Do you think the market's reacting the right way?
Do you think without speculating, can you speculate whether we're at the bottom?
Just give us a brief overview of where you're at mentally.
Yeah, so I think it's just, this is all bunch of probabilistic outcomes that we, you know, no one actually knows where we're going to go.
So let's just be frank.
Like, it's all, you can be bullish or bearish at this point, but it's not, it's not certain that the end result is going to be one way or another.
And one thing is clear.
And I think...
There's definitely a divide between East and West right now.
And, you know, so there's a question I have around, does wealth transfer over the long term to the East?
Hong Kong just made crypto trading legal for a large number of cryptos.
It seems like the East is gearing up to get more behind crypto.
And obviously we have an East and West sort of political drama playing out on top of all this as well.
So that's the first thing.
I think the second issue we've got is that there is no real legal precedent in the U.S.
for what's happening in crypto.
I mean, you had the SEC go to court a couple of times, win a couple of cases, lose a couple of cases.
But the battle between the SEC and Coinbase will probably be the most...
you know, definitive battle we're going to see in our industry and the outcome of that will determine which way we go with this.
And I think that Coinbase versus SEC is the only legal battle that we should care about and we need to focus on.
And, you know, when I say legal precedent, like, I want to judge to actually say this, here's my ruling based upon these facts and
After that, then the law I see the change or whatever, or new agency created, whatever the case is.
But this is the battle of the Titans, really.
But what do you think?
So, Vinnie, the more direct question on, go ahead, Ryan.
Let me ask my question quickly, Rand.
I'll give you the mic.
I'll shut up for a while.
Just one question, Vinnie.
The ambiguity on whether all these talks will be considered securities,
and I know this will be a prolonged legal battle.
What do you think that uncertainty will do?
We'll start up simply, as Bruce said, will they just move outside the US?
The world doesn't revolve around the US?
Or could that really take a hit on a few of these protocols and on startups
and further hit on VC funding in the ecosystem?
Yeah.
Yeah, I mean, that's already happening.
A lot of founders are moving out of the U.S.
or starting companies outside of the U.S.,
so that's really happening.
I think people need to appreciate that
a lot of the Lotto comes from the U.S.
It's a world's largest economy, and if...
You know, we as sort of crypto investors, you can't, don't want to buy, you know, it's going to impact the valuations and the prices.
So crypto prices and valuations will probably come down if the, I mean, look, if the SEC wins their battle against Coinbase, the market's going to shit the bed.
It's as simple as that.
If Coinbase wins, it's going to pump.
That's basically the, that's in years.
That's in years away, right?
That's in five, six years.
No, I know. I know.
So this is, like, this is a, we're kind of in, in, in, in, in, in a lot of it's going to take a long time.
So what happens, what happens in purgatory?
Well, actually, so the real question, this is like, what happens with the next administration, you know, who is in the next administration?
Because.
Yeah, it's very clear that the current administration is anti-crypto after FTC collapse, right?
So, so I'm not going to go to the reasons, but I think we all know some of the speculation out there, they're very anti-crypto.
And if it stays the same administration for the next four years, yeah, we're going to be in...
for a tough ride for a couple of years.
The counterbalancing point is that the East could just say, we don't care.
And Bitcoin goes to the habit next year and crypto is legalized more and more in maybe China or wherever else, Russia.
But it's not only the East, Vinya, it's not only the East.
If you saw And Dresen, I spoke about it today on my show and I said, look, you know,
if you look at a U.S. election and there's an election coming out next year,
I think the last election was won 5149 by the Dems, right?
Yeah.
And if you look at some of the, if you look at some of the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the ones, for example, for example, the Republicans. So, the one party was ahead of the other party by eight thousand votes, for example, you know, that, that, um, that, um, that, um, that, um, that, um, um, you know, you don't need a lot of votes. You need a small amount of votes to actually change an election. Now, what does it do to the U.
when they read articles like Andresen,
Andresen, which is, I would say the bedrock of VCs in the bedrock of cities or Silicon Valley,
which is effectively created the economy of the United States for the last 20 years in terms of technology.
And these guys are now saying, look, you know, we're actually opening our first office outside the United States.
And it's not only them, Sequoia is doing pretty much the same thing.
Going into an election year, do you not think that the Democrats have to tone this down?
No, I don't think they have to tone it down at all.
I think they think that's a popular pitch.
Go ahead, Vinnie.
No, no, I actually think Ron has a pointer.
I think that if, guys, it all depends who the candidates are in November, right?
So, and what platform they're running on and what their sense is towards crypto.
So, like, I don't think we should underestimate the...
the impact of political pressure on this process and what the SEC does and who's running the SEC and whatever else.
So let's see how it plays out.
I think it's a factor, but I don't think we can bank on it.
I mean, I think in crypto, we should have hunk it down and basically this is just like, you know, hold, maybe accumulate,
maybe take some chips on the table if you need to.
This is not the time to sort of sell your house and buy anything.
We're not in that season right now.
Vinny, you sound, you sound scared, you sound scared, much more scared and much less optimistic than I've heard you.
Right, I'm very concerned.
There's a spectrum of outcomes here, which are unpredictable.
Like, we don't know.
So I think it's, it's just being prudent right now in this, in this particular.
Is this the most scared that you've been, is this the most scared that you've been in your crypto life?
Be honest.
Um...
Name one time for me.
No, 2009.
2019 was worse.
Okay, Bruce, Bruce, I know you're a speaker here as well.
Is this the most scared that you've been in your, is this the biggest battle
that crypto's ever had to fight?
Is this the most terrified that you've been?
No, I'm not, I'm not that worried about, especially about Bitcoin.
I think it's showing, you know, Bitcoin's strength.
I'm less worried about Bitcoin being...
destroyed. I think looking at the environment of and what's happened over the last, you know,
recent history with the U.S., I think it's clear to me that the U.S. just can't stop Bitcoin.
I mean, they, they, I think that they are trying to stop Bitcoin. I think it's naive to think
that they're just, that these people who hate Bitcoin, Gansler, Warren, these kind of people
who are pulling the strings, they hate Bitcoin. They've never owned Bitcoin. They don't believe
in Bitcoin. They don't see the value. When they say crypto, they're not talking about all coins. They're talking about
everything including Bitcoin and they hate Bitcoin.
And if you had a mandate a year or two ago,
if you're Gensler or Warren or whatever and you create a mandate that says we want to get rid of Bitcoin,
you'd look at it and you'd talk to your lawyers and you realize that that's very difficult
because Bitcoin is ultimately speech. It's code given away for free and published and that's
protected under our First Amendment, which is one of the hardest things to fight in the U.S.
So if you wanted to attack it, you'd attack everything around it, you'd attack the on ramps,
you'd attack the off ramps, you'd start doing money transmission things, you'd do exactly
what they're doing now. And what you'd do is you would try and boil the frog in the water
with increasing...
legal maneuvers, you know, I'll predict one thing now.
If I was trying to attack Bitcoin in the United States government, the next thing I would do is I would attack one of the forks like Bitcoin Cash or especially B.SV.
Because nobody is going to defend BSV.
They could write up anything they want and every clown in this space, go government.
They could write up a thing that says, you know,
We are suing BSV and Craig Wright and Calvin Air because proof of work coins are a security and this coin is a security and everything else.
And every idiot in this space would be cheering for it because it's extremely unpopular.
That's how you attack speech.
You attack, like if you want to attack free speech, you attack like somebody who's saying something horribly offensive because nobody wants to defend that person.
Right.
But if I was trying to attack Bitcoin, that's what I would do.
I would attack a very unpopular chain like that.
And then use that precedent, win the case.
And then you go later and you attack something like money transmission or something like that, you know, adjacent to Bitcoin.
You go into a judge and say, look, Your Honor, in this federal court, we won this judgment that acknowledged that proof of work coins such as BSV and therefore Bitcoin are problematic for this, this, this.
That's how they do it. That's exactly what they're doing. They're trying to get more and more, you know, legal,
ammo that they can use in other cases because Bitcoin is very hard to stop, but make no mistake, they are trying to stop it for sure.
But having said that, I'm not that worried globally about it.
Yeah, but Bruce, for a very long time, XRP had that same sort of polarization.
And I think sort of a negative connotation for anyone in the market who wasn't a huge supporter.
And it's interesting to see most people galvanizing behind the
Ripple now because they just want to see any win against the regulator and against the SEC.
So I wouldn't even put it past the community to get behind PSV to some degree.
I hope.
I used to hate Ripple and I, it was interesting.
I think it might have been, I think it, honestly, I think it might have been somebody clever
who was trying to turn the XRP people against me because they like,
day, like three days after I announced I was running for office last year, I said something critical.
I said something.
No, I know what the tweet was.
I tweeted a tweet and I said, SEC ought to be shut down.
The entire building should be shut down, auctioned off to the money given to the public and Gary Gensler sent home.
So you would think that would be a positive expectation.
XRP thing, right? Ron. Somebody, somebody put out the word that I was anti-ripple. They found out a
four and a half year old tweet that I had made criticizing them for appointing Ben Loskey. And I had the
entire XRP ripple army on me. I mean, it's, it's people have spoken about this before. It's crazy
when you have the whole, when you have thousands and thousands of posts like hating you, it was, I mean,
it was, it was nuts.
Right.
But it was crazy because I'm like, we should all be allies.
Like me saying I want to get rid of Gensler should be something that everybody should be, you know, the XRP people should be in favor of.
Can everybody hear?
I lost sound.
I don't know if it's just me or everyone else.
I hear you.
Okay.
Yeah.
I didn't hear anything there for about 15, 20 seconds.
Yeah, I didn't hear anything either.
I think you broke the Internet, Scott.
Yeah.
Wasn't me, it was you, Yusco.
You're the Internet breaker.
Hey, can I just add?
I just want to add one little quick thing because I got a short window here that we had an interesting
discussion, Pomp Jason and I, we do our Monday, I sees.
And I have to give credit to Jason on this one.
It's a very nuanced view that I kind of think is right.
in that he said, look, this is actually not a big giant attack on Bitcoin that we all, you know, kind of think it is.
It's, it may, may or may not.
But his point was that this is really an attack on crypto broadly and the rails that fed now and ultimately CBDC want to maintain.
So they're basically like, okay, all of you competitors for our primary rails, we're going to shut down and we're going to use all the ways we can, you know, enforcement through or, you know, regulation through enforcement.
And you think about BTC and ETH have really been kind of cordoned off and not really specifically addressed.
I just think that's a very nuanced and probably correct view that this is really more about preserving the integrity of the Fed control of the primary money rails.
I thought that was interesting.
Go ahead, Bill.
Yeah, I was just going to follow up on what Vinny was saying in terms of the game theory.
Maybe a more nuanced view of where we are and how this is likely to play out over the next two years.
I think the biggest challenge right now is everybody's so emotional because, you know, honestly,
Fear of price, right? I mean, obviously narrative follows price and a lot of people think it's the other way around
But the reality is is the SEC has been on their soapbox for over over a year, right?
Just a lot of the actions just started started now
Maybe enabled by FTX, but but the reality is is that this narrative that everybody's
You know espousing which is fear driven is is a function of price mostly and fear that it could go lower
I actually think that the economy itself is falling off a cliff right now and
oil is plummeting. I think you're going to see a big drop in employment numbers. I think the CPI numbers are going to plummet further. I think a lot of that has been priced into the stock market over the last
year and I don't think this I think the lows of are long in for stocks and the perception is is going to be that the Fed is going to lower rates sooner than everybody thinks because they always get it wrong 100% of the time their guidance is always wrong so so now let's assume that that's somewhat right you know I realize it could be wrong but let's assume that's somewhat right and we do see a spike in in liquidity
Right. I do think you're going to see a, you know, you might see a capitulation move in crypto, but save that, I do think we're going to see a higher crypto this year than where we're at now.
You know, we could we could hit 20. I have no idea. But, but I think I'm I'm reasonably convinced that the liquidity is going to come in droves and that's going to have an outsized impact on crypto as it always does.
And the question in my mind is, okay, well, if narrative follows price, what's the narrative that's going to follow price?
Well, there's a couple of things that are interesting to me right now, right? What's the hottest topic in all of tech by far? Clearly AI.
AI, right? Exactly. So how does that impact the narrative as it relates to crypto? Well, I've been thinking about this a lot. And I think the most interesting...
probably non-discussed topic is the integration of crypto and AI.
And what's the most likely integration point for the two, right?
Why would Andresen Harowitz move or create a subsidiary to invest out of the UK?
Well, I think you're going to see an explosion, sorry for the maybe Freudian slip,
but an explosion in Daos that are actually AI-based that use token economics,
similar to the way we had, you know, smart contract-based NFTs and, you know,
Dow's and, you know, algorithmic stable coins, et cetera, et cetera,
but start to show the power of how you can use autonomous smart contracts
in an AI-driven environments, which I actually think is going to have,
show an explosion in venture funding, you know,
I don't know what you want to call them new token offerings, whatever.
And, you know, the message is going to be, okay, regulators, come shut us off, right?
Come find us.
You know, I don't know if you ever saw a jumping jack flash when Whoopi Goldberg was in the phone booth
and trying to call for help for dear life and the operator came on the line and said,
please insert a quarter.
And she said, you come find me in New York for this damn quarter.
And, well, that's going to be this down model.
Right? The question is going to be, how are you going to shut them off? And the answer is going to be, well, you come find us because there's nobody to shut off. And I do think that this environment is perfect for creating the mentality that we need to create hardened, decentralized solutions. And I think AI is perfect for that because if you want truly autonomous, artificial,
intelligence, I think integrating that with next-gen token economics is a huge idea and completely
untapped. Anyway, so I think, and I have other ideas about how this is going to play out,
but I think if narrative follows price, and we are falling off a cliff, which I think we are, and I think
the public...
grossly underestimates how fast this economy is falling into a recession.
It may be V-B-shaped.
That's fine.
But the reality is the Fed's always a lagging indicator.
And they're going to basically look at this in a political environment where they don't want the Republicans,
they are going to basically be flooding this economy with money any way they can.
Call it QE.
Call it lower rates.
It doesn't matter.
They're going to be flooding the economy with cash, in my opinion.
I think a lot of people here probably agree with that.
I just want to give a quick reset to the room.
We never even really did an introduction.
Everyone, obviously, this is the Cryptotown Hall.
We do this every day at 10, 15 a.m. Eastern Standard Time.
We even did it this weekend after saying that we wouldn't.
because apparently we are psychopaths who hate free time in our life.
But to give you a very quick market update, everything pretty much seemingly flat today.
Stocks very much flat.
Bitcoin up 0.29% from yesterday.
But giving a market update on Monday after what happened Friday or Saturday is a bit disingenuous
because I think we all know that there was an absolute slaughterhouse.
bloodbath in the alt coin market. We saw coins specifically that were named in the multiple
suits and those then that were being delisted from Robin Hood drop upwards of 25% at a certain time
and now sort of dead cap bouncing. I think that that's the topic that we need to probably
hone in on. Right before we do that though, and I ask everyone's opinion, I just want to say
how absolutely important this week is.
on so many levels.
I don't know that we've ever really had a week like this.
I mean, in macro alone, and that's not even necessarily what we're talking about here,
we have CPI Tuesday, FOMC meeting Tuesday and Wednesday, PPI Wednesday, FOMC rate decision on Wednesday.
That's not even crypto.
Crypto, today we have a deadline for Binance and Binance US to respond to the SEC's application for temporary restraining order.
Then tomorrow alone, massive.
SEC ordered to respond to Coinbase's rulemaking requests.
District court in D.C. to hold 2 p.m. hearing on SEC's temporary restraining order request against Binance U.S.,
Internal SEC documents and communications regarding Bill Hidman's 2018 speech on Ethereum
Decentralization expected to be unsealed finally after all these years in the Ripple case,
revealing further reasoning behind Ethereum not being considered a security.
House Financial Services Committee to hold a 2 p.m. hearing titled The Future of Digital Assets,
public comment period closing for SEC's proposed change to exchange.
That's all tomorrow.
And in the next 24 hours or to 30 hours, we're going to get all of that, guys.
I mean, absolutely never seen, I don't think, as intense a news cycle here when it comes to regulation.
But let's talk more about this bloodbath this weekend because I think it was pretty astounding and shocking for a lot of people here.
Anyone who'd like to jump in and give their opinion, Rand, I see you lifted your mic.
Go ahead.
Maybe not.
This is not a bloodbath.
This isn't even close to a bloodbath, guys.
Come on.
How, Bill, how is it a bloodbath?
25% drop in a day.
And we're pretty low levels already.
Yeah, but you're talking about 25% drop in all coins that are not very liquid in the first place, right?
So if you look at Bitcoin Ethereum, which is the vast majority of crypto, right, you're talking about a, what, a 3.5% weighted average drop across those two?
Yeah, but that's not what I mean.
They were not considered securities, so they're not counted in the bloodbath.
Okay, okay, fine.
I mean, but still, alt coins have shown 25% gains in a day, 25% drops in a day over time.
You know, tread carefully with all coins because, as I've said, for years, you run a significant risk of,
losing a lot or all of your money when you're speculating in all coins.
The thing that excites me about all coins is not the price volatility.
I realize there's a lot of traders on here looking to figure out when they can pump back in.
I'm interested in this methodical march towards global decentralization.
And a lot of these projects are important for that.
A lot of them will fail.
So be it.
That's the nature of tech.
95% of startups fail.
The only difference with these projects versus startups are,
is that these tokens are publicly tradable, whereas most startup equity is not.
I'm not saying that any of these are securities.
I think the SEC got the definition of securities wrong here, but that's not the point.
That actually doesn't matter to me.
What really matters to me is how are these projects affecting the methodical march towards decentralization?
And in that sense, startups are hugely volatile.
Projects, whether they're decentralized or centralized, are very volatile, right?
And that's going to be the nature of these things as we figure out or as the software industry figures out the winners and losers, which is going to play itself out over the next five to ten years.
And we don't know what the use cases are going to be.
And you should expect more of this volatility.
Some of it regulatory driven.
Some of it market driven.
Some of it use case driven.
As projects fail, as projects succeed, et cetera, et cetera.
It's not going to stop.
Mike, before you go, Mike and then Brett, just for the audience, like, do you think we're over-exaggerating when we put in the title, are Outcoins dead?
Or do you guys agree, like, is there people in the audience that think that Outcoins?
I think it's, I mean, look, it's your space.
You can call it what you want, but I think it's ridiculous, to be honest.
Yeah.
I agree with you.
I'm still holding my bags, but we've got to get people into the space.
I grew up listening to Howard Stern.
So I understand sensationalism, and I actually enjoy it.
I still listen on occasion.
I admit it.
But you ask a question, and it's ridiculous.
So that's your answer.
Or just before Steve, Brett thinks it's ridiculous.
Ridiculous of the word.
Go ahead,
that are worth highlighting from what was just said.
The first is that,
remember that BTC and EF make up at least 60% of all the volume in global crypto.
And it's higher when you include derivatives,
especially in the U.S.
if you're looking at the U.S. market alone.
So if you think about, you know, is crypto dead?
The obvious answer is no.
What we are going to see probably in the short term is a push to
higher trading volumes on the regulated platforms that are protected by the CFDC.
That's what we're going to see in the short term.
And in the meantime, I think companies are going to hunker down while we sort of wait for
something to change from the regulatory side. I mean, obviously, these litigations are going to take
years. So we're not going to get clarity from there in the meantime. There's at least some promising
movement with regards to legislation, but that's going to take a long time. So what is it going to be?
Is it going to be an administration change? Is it going to be the influence of large, you know,
companies in the U.S. like...
A16Z, for example, it's going to help push back and change the narrative.
I'm not sure, but in the meantime, people are going to hang around and weather that storm.
They always have, you sort of see cycles like this with virtually every new technology and every new asset class.
I don't think we're going to see anything different here.
The second is,
A very interesting point that there is a very big difference between, you know, BTC and ETH and sort of name your average altcoin.
And that it is sort of like a view into the highly volatile private market.
I mean, think about all the startups out there, not crypto startups, just normal sort of software, you know, equity based startups.
And if you were able to sort of see a secondary market, a liquid secondary market in those
private startups at all time, what would you see?
You probably would see similar volatility, you know, 5%, 10%, 20% moves during sort of particularly
volatile points or particular news relating to the regulation for those companies.
And that's something that we don't appreciate and don't get to see normally in these kinds
of markets because we are only used to public markets where these companies have been around
for many years.
They're very established, very predictable.
And so, you know, you don't get the same kind of volatile events.
So I think it's important when we are looking at these sorts of products to not sort of freak out and say something is terribly wrong here, understand that these things are highly sensitive to news and not necessarily representative of the larger crypto industry.
Yeah, I mean, this is something I literally tweet.
I just want to say I pin this tweet above because it's something Dave and Mike and I talked about quite a bit on YouTube before.
Just sort of to echo that point, total crypto market cap is $1.05 trillion right now.
Bitcoin and Eath together is $710 billion of that.
People talk about Bitcoin dominance, but when you now add stable coins, which weren't really there before.
And in past cycles, you had to exit through Bitcoin.
You don't anymore.
That's $126 billion left.
There's only $214 billion of literally everything else.
So you're talking about 20% of the entire market cap of crypto is every single coin that's not Bitcoin, Ethereum, or a stable coin.
Scott, I would add, I mean, just talking about...
Your odd, your audience...
Yeah, JJ's your odd, you're not sure if you can fix it.
Yeah, no, it's very, very echoy, a bit far from the mic.
So maybe, I'll let you fix it.
Yeah, I'll let you...
I'll do you like maybe a minute to fix it, James.
And Mike, I know you're trying to unmute earlier,
so I'd love to get your thoughts on the narrative around Alkcoins.
How's that?
Yeah.
Yeah, James. We'll go to Mike and then back to you, James. Mike.
Oh, okay. James and I have a tendency to do that. Yeah, I think what Bill said makes a lot of sense.
This is a resumption of a bear market. We just have to face it. And there's really good reasons for it.
It's going to be a minimal of a year to really have something to get past this. We
We have an election coming up.
It's very likely to happen during a severe recession
and very likely to tilt towards a young Republican
if they can get the right candidate.
That's just facts of the way cycles work.
As far as...
The thing I've been, as far to me, always in this space,
is just the massive amounts of silly, massive speculation in bogus coins.
Now, that's just going to need to be purged.
We all knew what's going to happen.
And I think the way to look at it is we've had it bear market last year.
It's bounced.
That's the way all bare markets work.
And we're probably supposed to go back down and take out those old lows.
That's just life.
But it's also the macro is so overwhelming.
And remember, cryptos were part of it.
in the big pump and liquidity now the liquidity is still bumping dumping dumping that's the
bottom line figure in the macro the liquidity is still dumping the fed is not easy the central
bank of Canada's hiking then ECB is still hiking so that's the macro but I look at it from we all know
those 25,000 cryptos and coin market cap need to be purged maybe there's a hundred hundred that matter
But it's Bitcoin, I think, is being differentiated.
Certainly, Ethereum.
And one thing I'll want to make...
And one thing I want to find...
I'll end with this and go ahead.
On the show we did with Scott and...
on Macro Monday, he did point out about crypto dollars.
People call them stable calls, I call them crypto dollars.
Right now, they're 11% of the total.
In 2018, they were 1%.
And that's the thing I always like to publish
to make sure the US government's aware of
and make sure strategists who are bearers that are aware of
is when people say the US dominance of wills decline,
it's not.
it's actually increased and just ask any central bank who's tightened in the last year,
why are they doing it?
Because one reason, the most significant central bank in the world is still hiking.
So the dominance of the dollar in the U.S. is actually increasing,
particularly with this war going on.
With that, back to you.
Mike, one more question to you, Mike, before we go to James.
One last question for you is how long do you think this process will take?
Are we, you know, could we expect a crypto ice age, as some have named it?
Well, exactly.
I'm expecting the worst recession, global economic reset of our lifetimes.
Now, I'm 58.
This is something the cycles are all there.
The last thing to drop is the stock market.
So this could last along.
I think Bitcoin's going to come hot eventually.
Gold's going to come hot eventually.
Deflations get a kick in.
If I'm wrong, yes, go ahead, tilt him and blame him.
But I'll point out this morning, people are talking about the crash in Bitcoin.
in cryptos over the weekend, crude oil is down 5, 4%.
That is the most significant commodity
has been trading for 100 years, and it's collapsing.
Why? Because the world's tilting towards recession,
and central banks are still tight.
Now we're also having this whammy of the US regulation.
Now, it's going to take at least a year
to have to get past that election to tilt.
Maybe we'll win a case.
eventually. I don't, you know, eventually that's going to happen. But for now,
and here's one thing I want to end with. Those of us who are in futures and been around for a while,
we've been there, done that with Gary Kanceller when he was ahead of CFDC. We all got past it.
I just remember people at Goldman Sachs privately said some very nasty things about him because he really
crushed their business to create swaps on commodities. But what he did was eliminate some of that,
just added some restrictions. Maybe they were misdiscides.
you know, missed, didn't really do what they're supposed to, but it all worked out.
People moved on and were okay.
But it just added that regulation space to commodities.
Now he's doing it in crypto.
So this is meant he's just that kind of guy.
You got to deal with it.
Mike, don't you think that the markets have already priced in a recession and are now going to need to price in the massive amounts of liquidity that need to be injected, which actually could point a significant spike in risk on assets?
There's a key thing that's changed. That's the big thing that Mr. Powell said he's changed. All things, even our chief economist, Anang, has changed. The Fed will never ease with the ease of the past.
So you have to focus on, you're focusing on what they've done every single time the stock market down,
went down 20% since 87 crash, with the exception of the big financial crisis.
They always threw liquidity at it.
Right now they're looking at owners equivalent, the highest ever.
Employment cost index, you know, personal consumption expenditure is very high.
They're looking at lagging indicators and they are expecting paying.
They expect unemployment to go up.
up. And so you have to bet on that. But again, we need a long and variable lag to a significant
period of easing for risk gases that typically bought them. And the fact that most people are still
looking for a soft landing, including the Fed,
And the markets are up.
The stock market is our chief of strategist.
Gina Martin Adam said, it's a bull market.
I'm like, okay, well, good luck with that one.
That's what they said in 1930.
And it's just sometimes you have to look back to yourself
and say, be careful following the masses who did not realize
that I'll end with this, the things have changed.
So why is crude oil right now $67 a barrel when a year ago,
virtually every stratage in the street said it's going to be $150 or over $100?
They were completely wrong because they missed what changed in the world.
the US and Canada,
produce about much crude oil as OPEC does.
They have a massive surplus.
Why? Because the technology.
Part of that technology is cryptos.
I agree with it.
It's adopted the dollar.
I agree with it.
But we're in the flush stage.
It's a bear market.
I look at it as you look for, in bare markets,
you're supposed to look for opportunities to sell rather than opportunities to buy.
And that's to me the bottom line here is we have good reasons for this to end until liquidity pump gets turned on.
And I think it's not going to happen until the stock market makes it go on.
It means it's got to go down.
So I'll end with this.
I actually think it's already started.
I mean, I think your comments on the macro state around oil falling and the reasons for it are all correct.
But I actually think people don't realize on the margins liquidity is shit, but it's already turned.
And people are just looking at this like, oh, the banks aren't lending.
It's getting worse.
And I actually don't think it has.
I actually think liquidity is improving.
Just on the margins, it feels terrible.
And you have to look at global liquidity, not just U.S. liquidity.
And from a global perspective, it does feel...
like we've troughed and I don't know I just I I do feel like the Fed has to figure out
very quickly over the next 18 months how to lower rates because if they don't the entire
system is going to break we cannot sustain these rates with the debt levels we have when no
one wants our debt anymore it just the two don't reconcile and I do feel like people are
underestimating the degree to which
we are actually seeing improvements in global liquidity.
I don't know.
I just, I think I could get it wrong, but, you know, after 30 years of looking at this,
it just feels like this time is not as different as everybody would have us believe.
I don't know.
Bill, you're absolutely right.
I mean, the playbook of the Fed is to knee jerk on the way up, so they wait too long before
raising rates whilst facing inflation.
and they wait too late to cut rates. And I think this time it's going to be no different at all.
The Fed will carry on marching on despite the damage that's already happened to the US economy and
globally. I don't think we should expect any difference. I mean, I actually think last month's
rate hype was a policy error. They probably won't do one this month, but probably next once
will carry on and it will be equally as damaging. If you look at
the US banking sector, over 40%,
so that's 40% of US banks,
have a credit default swap of over 100 at the moment.
That's a really worrying situation.
So I do think there's still a big risk of a Minsky moment.
And this is not like,
factoring in some of the problems in other sectors.
So if you look at the first rate hike and how long it takes to have an effect on CPI,
so we're getting the results through tomorrow, obviously.
But it generally takes about 18 months after the first rate hike for it to have a material
effect on inflation.
And I think a lot of people are being lulled into this full sense of security,
that everything in the US is getting better looking at the payrolls numbers when
You know, these rising rates have not hit the US economy yet at all.
You only have to look at, say, the UK and Europe,
I'm not saying monetary policy is any better,
but they haven't been anywhere near as aggressive.
But then again, inflation is not so good.
But onto the old coins side of things,
I think you have to look at altcoins like small cap companies.
They are the canaries in the coal mine.
When the economy starts to deteriorate,
one of the first things to go,
And what's cool about crypto is you can measure the success of these in quite alternate ways.
So we've been looking at GitHub data.
We've scraped about four terabytes of data looking at 5,000 different cryptos, 500,000 different ecosystems and aggregating them.
And, you know, if you take a theorem, it's over the last 180 days, it's seen a hundred and eight, sorry, 38% decline in active devs.
But then you take some alt coins, you know, ever scale, you know, the active devs has fallen 84% polygons, 62%, gravity decks, 65% decline.
So what is evident in this data in these 5,000 different ecosystems is,
is it's alt-coins then getting killed from a developer perspective.
They're all leaving those small cryptos.
And I think they must feel economically it's just not worth their time.
Wait, wait.
James, where are they going?
Is this like one of those, hey, everybody's leaving crypto for AI things?
Or is it they're packing their bags, taking their ball and going home?
Because that's the first time that I've heard anything fundamentally wrong at these projects
outside of O Price is dumping because of the SEC.
My analysis is sophisticated enough to say whether these individuals are shifting their focus just onto the larger cryptocurrencies.
I mean, there are some...
altcoins that are doing very well like tonic labs has seen a massive increase in active devs you know
4,700 what was that called tonic labs i've literally never heard of that and i'm yeah you got
got blocks getting at work i mean some of these are quite small but you know there's 389 devs in tonic
lab which you know compared to something like polygon which has got 241 it's not
that irrelevant but um you know a lot how many what but sorry to interrupt james i just got to
dig into this so is ethereum developer activity increasing or decreasing
It has been decreasing, but not as much.
So it's got, you know, Ethereum, if you include the other components such as the consensus
and the execution layers, it's probably got about 3,000 active devs and it's down about 30, 40%
over the last 180 days.
You know, this is really varied in terms of what's doing well and what's doing badly, you know, like
Like, if you look at the near protocol, it's down 54%.
But generally, most of them are just down.
And I think there's a lot of fluff in there.
A lot of devs were thinking, no, I don't really want to be involved in this anymore.
And they won't really doing much anyway.
Okay, but we've talked about James.
Sorry to interrupt again because this is fascinating to me.
We always talk about like the Bitcoin mining floor, right?
Where all of a sudden they become not profitable.
They turn off their monitors.
Is this effectively a similar thing where at a certain problem?
price for the coin the incentive is not enough for them to continue because this isn't as bad as it
was even a few months ago so there has to be something else going on here this is the first time i've
heard this and i'm really really really shaken by that because that is a very different thing than
prices down that means that the developers are losing belief in this market and are leaving and that there's
I don't think it's quite as horrific as you might think.
So you can look at another,
you can look at on GitHub,
you can look at active devs,
something called pull requests and then commits.
And commit can be any kind of changing code.
So you can you could put some parentheses in some code.
And that would be it.
That's hardly any kind of change.
And if you look at poor requests,
that's a bit more substantive.
So that is when code is actioned and enabled onto the into the,
into the kind of the blockchain.
And what you find there is actually poor requests
have not declined that much at all,
which is telling you,
I think,
those core sets of devs that around now
are doing just as much development workers at,
And a lot of those devs that have fallen by the wayside weren't doing much anyway.
I think there was a kind of a bit of a rush in 2020, 2021 and 2020 where devs were just thinking,
hey, let's get involved in this, but they weren't really doing much.
Okay, James James, the next natural question, and Mario, you're going to like this.
Is that because they're using AI and all of these devs are 10x developers now and can code way better and there's less work forever?
No, it's because the grifters are gone.
The grifters are gone and it's just like the dot-com crash equivalent.
The dot-com crash gave us Google, Facebook, and a whole bunch of, you know, next-gen internet economy companies with staying power.
And I think that's exactly what's going to happen here.
right so the quick buck developer artists you know in the dot com area was bmw's as as bonuses here it's
people you know releasing token projects before there's any use cases and the market for that is
as has dried up and and and those people who hearts are in it or not in it for the right reasons
or in it for the wrong reasons are gone and and good riddance right so
We've seen this before and we'll see it again.
And I think that it's the quality of the developer output to the point about what you see in GitHub that I think is super, super exciting, not just the sheer numbers.
and I do think you're going to see the emergence of just some absolutely killer use cases over the next couple of years because the people who are in it are, you know that their hearts are in the right place because they're clearly not in it for the quick buck.
But what if that trend continues, I agree with you, by the way, but what if that trend continues down massively?
Well, look, I can tell you I sat in VC meetings when I was an investor, you know, pre-9-11 when the sentiment was, okay, you know, software is dead.
It's not coming back.
Get used to the new norm.
And then what happened?
Right. We had the biggest bull market in history, which was basically a function of massive amounts of capital, low-cost capital that flooded the system, which enabled a level of software-based entrepreneurship, which led to this whole software as eating the world, mantra, the likes of which we've never seen.
So then that begs the question, well, is this time different?
And honestly, I think in that regard, I don't think it is.
And time will tell us if I'm wrong.
I think the industry is being stripped down.
I think it's being stripped down to the bare bones.
You've got, you know,
exactly.
You definitely weren't really doing much.
And he was just now getting to this kind of a base where all the quality core developers,
where, yeah, they're committed to actually working at this.
That's exactly.
And what we saw was just a load of fluff in 2020 and 2021.
That's funny because of real voice.
If you have a choice between AI and crypto, go ahead.
If you have a choice between AI and crypto and you choose crypto, your heart is in it.
right?
Yeah, that's absolutely true.
Yeah, yeah, that's it.
It's as simple as that.
I just wanted to point out really quick,
because Vinnie before, I think it was Rand
that was asking everybody, well,
is this the most fearful?
Is this the most pain?
Is this the worst situation you've ever seen in this market?
Is this when you have the most doubt you've ever had?
Everybody sorted to port it to 2019. Vinny certainly did and said that was worse.
And the reason I think for a lot of people that 2019 was worse for anyone who was there was because it was just endless.
Right? You had just apathy, nothing happening, nothing to talk about, prices slowly drifting down or going sideways, and just nothing happening.
And that sort of what you're talking about now indicates that might be what's coming.
apathy, right? Apathy and just nothing happening for a while, and that would make this whole situation way worse as we contend with the SEC and regulators, et cetera.
I would love your guys' thoughts on that.
If you're a trader, it makes it worse. If you're a builder and you have a five-year vision,
I think your apathy is towards the traders.
But you need to have a five-year bill.
You have to have a five-year runway as well because you have a five-year vision.
And how many companies really have a five-year runway?
And we're actually really counting on this kind of thing happening.
Now, you know what I can only go by what I know.
I can only go by what I know.
And when I look at dot com,
and everybody said venture is dead and it's not coming back.
And, you know,
we saw a level of entrepreneurship,
the likes of which we hadn't seen in over a decade.
And so,
yeah,
I do think there's pain to come.
I don't think that we've seen the last of the failures on the corporate side
or even on the decentralized project side.
But that's just the way of things,
right?
We don't accept the fact that, you know, 90 plus percent of new technology projects fail.
And that's always going to be true.
I just, I think this, again, narrative follows price.
And everybody is basically being driven by the fear right now, that it's just a trend that's going to continue.
And it never does, right?
Right, but how many of these developers could potentially be leaving because they don't think that there's a future for it if they're in, say, the United States and you're seeing these nasty listings.
Many.
Because that doesn't necessarily make them grifters.
That makes them maybe pragmatic and fearful that they just want to have a job.
I think for most developers, AI is a better bet right now.
And I think for the people who stay in crypto, it's going to be because they have an absolutely killer idea in their mind and their hearts are going to be in the right place.
And there's nothing wrong with that.
Unless if you look at the overall dev scene, you look at this 5,000 different cryptos that we track.
It's down 50,000.
Why so few, James?
Why so few, man?
We get 5,000.
Yeah, I mean, there were 100,000 deaths 180 days ago.
There's now 50,000 depths.
In six months, we've lost half.
Yeah.
Well, wait a minute.
So GitHub is seasonal.
So you have to look at it on a seasonally adjusted basis as well,
meaning GitHub usage dramatically slows from June to late August.
So I don't know if you're taking that into account.
I'm sure the numbers are.
Yeah, my numbers are end of April.
I would be highly skeptical.
The big seasonals.
Talking about the health of companies or projects
by the number of PR submitted or unique users of GitHub.
I think like it just for anyone here who has like
a great company before, I think that is like that it's sort of like an
anti-metric, just want to throw that in there.
What then is the best metric for defining the health?
I mean, I think it's sort of difficult to think of it on a, on a, it's difficult to lump every kind of company out there into one bucket. I mean, you have infrastructure companies, you have protocol developers, you have security companies, you have security audit companies, you have, you know, different sort of decentralized networks.
I think it's, I'm definitely not going to be the one to try to come up with like the single silver bullet that's going to tell you sort of the full health of the kind of the future crypto market.
I think it's as much as sort of current sentiment as anything else.
Yeah, I guess I was just trying to understand if developer activity, price, et cetera, are not the key metrics for determining what's happening with an individual project or protocol.
How do we then determine their health?
Anyone can answer that, but Dave, I see you have your hand up if you don't want to. Go ahead, James.
There's definitely some link between price and dev activity, but what leads what?
You know, just when the price tanking, do devs leave or price tanking because devs are leaving?
I mean, I think it's the former, I think.
James, let me ask you another question, if you don't mind.
How does this compare?
How do these metrics compare?
Anyone could take this, Dave, James, anyone.
How does this compare to 2018?
Yeah.
Yeah, just looking at 2018, we saw a decline.
Now, I would say just eyeballing it, I don't know exact numbers,
I'd say we saw about a 30% decline peak to trough.
Whereas this time it's more dramatic. In fact, if you look at the overall dev numbers, they're lower than they were in 2017 at the moment.
We're at a seasonally funny point, though, because what I see in the numbers is that over Christmas time and just after there's a big drop in devs.
And my data only stops, it only ends up, it finishes at the 30th of April this year.
I'm just updating June numbers right now.
changes you said hold on you said dev numbers are lower than they were in 2017 yeah and so i've
seen many other people look at that Scott ran did you guys know that no i didn't and that's i'm sorry
i find that astounding maybe maybe i'm not looking at it right Travis i saw you lift your mic
well there's a lot of you obviously want to jump in here go ahead you look at you
I'll just finish here. You look at Masari data and it will show you that active devs are still well above the 2017 levels.
But we're taking like a very, very broad spectrum of ecosystems.
Everything that electric capital provides in terms of all ecosystems, we're aggregating it all.
And I don't think some of the other data providers are doing the same thing.
So that's why our data looks a little bit more bearish than others.
I think I like more bearish.
Yeah.
Did you, Ryan, did you know, or not, before we give the mic to Travis or David,
Rand, did you know the numbers that Jane just mentioned?
The number of deaths is lower than it was in 2017.
I must say, I don't believe that.
Like, I can't argue because I don't have the road data in front of me, but I've seen a lot of studies.
That's how I feel, Rand.
Yeah, my knee-jerk reaction is that there's something about that data that's just not,
accurately portraying what's actually going on on a project by project basis,
which is, that was kind of what Brett was alluding to as well.
Yeah, I mean, Travis and I have been here since back then.
I mean, we've been here.
And you can't even, you can't even compare the number of active developers.
Yeah, it's not even comparable.
You've been to the hacker houses.
We've been to the hackathons.
You've been to all these things that, you can't even compare.
But is there a number, David, before you jump in, is there any number or any study that says otherwise, other than anecdotal?
Yeah, of course.
I'm actually trying to find something now.
Okay.
I'm trying to find something, but there's many.
Look at the electric capital data.
Yeah.
Look, I jump in with a slightly different perspective.
I think we're all missing and maybe, you know, it's just because what I did the most
of, in 2017-2018, was the 22 billion invested into the ICO market when everyone on
their LinkedIn page was running an ICO, had businesses, developers, and everything
blowing up, and that facilitated the bull run for those years.
I mean, we can't ignore.
I think someone said before the grifters are gone this time, but I can't help as an outsider
for what I'm definitely on the opposite side of most people who are speaking here, but I can't
help but feel like I'm hearing the same things I heard in 2017, 2018, we're first going
to see the killer use cases, we're first going to see this, we're first going to see that.
I mean, what fueled the market in 2718 and 2018 was the ICO investments when everyone was having
the first round of true FOMO.
And that FOMO is, I think what we're describing now, we're in the opposite when we call
it apathy.
We are having complete apathy right now because people are turning around and people are
saying, oh my God, you know.
Who should we trust?
Who, what's going on?
Even if you don't believe in what Gary Gensler is,
and obviously here, almost everyone is against what Gary Gensler is doing,
there's the opposite of FOMO right now for people in institutional money
who do want to liquefy the markets,
who do want to buy while blood is on the street,
although I don't personally believe we're in a moment where blood is actually on the street.
I think we're still in a, we're still in the upswell.
David, some...
Blood isn't blood drying on the street? It's been on the street since FTX?
Well, I mean, for people who've been around since, you know, 2015, 2016, to say blood's on the street because we're off our peaks, I think there are a lot of people who would say the peaks were artificially inflated.
I don't think we're in the blood on the street from FTX.
I mean, we're still above FTX lows.
I mean, FTX lows were about in November, I think, and guys, I'm out of trader.
We're somewhere around $18,000 Bitcoin.
16, yeah, 16,000.
Yeah, so I don't think we're in that blood in the street moment because if there was truly blood on the streets with what happened with Coinbase and Binance, and look, I was one of the guys who said when this happened to Binance and the off ramp on Binance internationally got struck, I would have thought in my life, I would have bet my kids who I genuinely like that the price of Bitcoin would have dropped drastically below the bottoms of FTX.
So I do think it's important that we're not in that critical crisis moment yet.
We're in, I do agree, I do like the word apathy.
I do think people don't know what to do right now because they don't see the five-year runway.
The other big point I think that's worth mentioning again is, I think Bruce brought this up a little bit earlier, about BSV.
The narrative on all coins, if I was the government, I would be focusing on the all coins and taking out the weaker links.
They don't want to be SEC, especially when they do enforcement through litigation.
They don't pick the strongest enemies.
They pick some of the weaker enemies to go after.
And I do think they're going to go after some of the weaker entities in the coming days, weeks, and months.
I do think that's why they pick some of the projects who they named as securities, because a lot of those projects, they don't have the legal wherewithal to fight back.
And we're going to see some capitulation.
And when we see that capitulation, I do think it's going to show, it's going to be exactly what we were talking about, a fight for...
you know, who the weakest links are and who can't fight.
And then we'll see the SEC take a bow when some of these weaker projects fail,
which I think we all believe they are some of the weak.
But they're going after the biggest players in the space now, David.
No, they're going after the biggest exchanges.
Yeah, okay.
Can you clarify that?
I don't understand what you're saying aligned with let's go after Coinbase.
Okay.
So the exchanges and the off-rams, that's attacking the financial system.
And when they're attacking Coinbase and Binance, they're attacking the way the money is centralized and who can handle that centralization.
So whereas going after individual projects like Ripple is very different than going after the centralized exchanges.
Right, but since Ripple and the library, they've been very passive-aggressive about that, just naming them in these other suits and sort of saying, see, their securities without ever going out of them individually.
So is your claim we're just going to see like a widespread sort of enforcement action against a hundred of these smaller projects and they're obviously going to have to settle because they can't afford to fight?
Exactly is where I'm going with this.
On the security side, it's very different where we're going to see the attack on the alt coins and the attack on what's the security and what's not versus an attack on the centralized exchanges.
Will they go after Ethereum?
That's the question that matters.
I am dying like everyone else to see what the internal paperwork from the SEC says from
him in from back in the day.
I can't see personally how they go after ether Bitcoin at this point because I don't
think they have the ability to unwind the clock.
And I think that's their biggest problem right now.
They can't go for Ethan for Ethan Bitcoin because there's too much water under the bridge
here.
So now they've adopted a new strategy of going for the tokens via the exchanges.
Exactly. So they control the exchanges, and that's what the litigation's about. I think Scaramucci a couple of days ago made a really good point. Where is the $70 billion in lobbying going? The $70 billion in lobbying isn't going on to the all coins. It's going on to from the legacy financial banks and the Goldman Sachs to control what the legislation is going to look like for the centralized exchange.
and who can operate them and who can control them.
That's where the money is going.
And that's why I think right now, we're too early into it right now to see what the real
endgame is here.
But I think what we have to be looking at is what the two differentiate between going
after the exchanges and the money and going after what's the security on the all coins.
I think they're going to end up taking a lot of shots at these smaller altcoins.
So is the all coin market dead?
No, but we're going to see a lot of action getting a lot of the smaller ones blown up and killed.
I think, I mean, Dave, with respect, I think they may be saying that you're missing here.
And I'll tell you what I think you're missing.
And then maybe because you see it from a legal point of view, then you can give me how you see it.
I said on this basis on Saturday that the way I see it, what they've done is they've actually banned old coin trading in the United States.
And the way they did it is as follows.
They issued two actions against two of the biggest exchanges, right?
In those two actions, they issued two separate lists of coins, which were securities, right?
And some of them were the same and some of them were completely different.
There's like a common subset between them, but effectively there's different coins between them.
I think what they did there was they issued a very strong message to anybody who wants to trade
old coins in the United States and said the following.
You never know when we're going to come for you.
When we come for you, you never know which tokens we're going to deem securities.
But if you are trading a token that we deem a security, even though we have never told you
security before, we could hit you with a lawsuit.
Now, what does that do?
It gets every single compliance officer and every single exchange to consider whether they
want to be hit with a SEC action and...
Probably a lot of them are going to just have to just delist altcoins because it's either that or lose your entire business.
And so what I think that they've done here is they've actually they've taken another step towards banning old coins without going to Congress.
Could I tie that to the point that was being made before on developers?
Because one of the most important points here isn't the exchanges.
It's if you're a developer or frankly, you know, a founder or whatever.
But if you're a developer and you want to understand.
whether or not your time is going to be compensated.
If you're in the United States right now, your time has just suffered massively in terms of whether or not you're going to be compensated because you might think that you're going to get rewarded with tokens for the work you've done and you won't be able to sell it.
Meanwhile, if you're sitting in Dubai, if you're sitting in Hong Kong, if you're sitting in Europe, your time might very well get rewarded.
and therefore you're going to be more willing.
So the trend of developers decreasing is completely unsurprising
because we've had this great sucking sound of people thinking,
well, I'm not able to get at this.
The entire reason for tokenomics in many respects is to prop up the network and incentivized developers.
And so they're going at that critical underpinning, which literally is the exact opposite of, not to Jazz Brousa, but is literally the exact opposite of what the SEC's mission is to do.
But that is exactly what they're doing.
So it's it and we talked about, people talked a lot about the internet bubble.
I was nodding crazily. I mean, I was on the trading desk at the time.
And the difference is in the aftermath of the internet bubble, we did not see people cracking down on companies.
We did not see the FCC going crazy.
Oh, you use the internet for this.
You did this wrong.
We didn't see that.
We did not see a massive regulatory push in the aftermath of the internet bubble, period.
And that's really important because basically that's why Google, Facebook and all the ones you guys talked about were able to grow.
Now we're in the situation where the U.S. is actually doing the opposite of what it did back then, and the rest of the world is doing what the U.S. did back then.
And I think you need to understand what that actually means.
Rand, do you want to get Timur into Hidman here?
Okay, go ahead.
Just before we go into him, and Dave, I just want to hear your views here, like around what I said.
Do you think that every exchange now in the United States is seriously evaluating whether or not they want to be listing any kind of old coins?
Or do you think I'm being a bit dramatic?
No, you're not dramatic at all.
Robin Hood proves you're right.
I mean, the difference is is Coinbase basically is, I mean, look, they're eight, nine months pregnant, whatever.
I mean, you know, at this point, they're not going to do anything.
They need to defend their process.
They say they reject 90% of their applications,
and I'm pretty sure they're going to stick to their guns
until they get a path towards a settlement,
which is what will happen because no company,
well, I shouldn't say that will happen.
Maybe they will try to stick it out.
But the fact is, is the SEC virtually never goes to court.
The amount of times the percentage is really small.
Generally, it ends up in settlements.
And so I think you're going to see some of that.
The problem is...
uh there's no they will go to court with coinbase right they are going to go to court with
coin base is not there's no there's no way coinbase is not going to settle because settling would
be in all nasty listings they're going to go to right so coinbase is definitely
coinbase is definitely going to settle so the come on 90 90 statistics statistically they're
going to settle to me i would say that but ran yeah i mean but but but but ran i mean i think to your
point and what you are suing coin base a lot right david i mean
you. I am. I've got over 150 cases against Coinbase myself. But going to Rand's question,
Rand, I think another thing, and this is not my area of expertise, but
But we have to talk about the fact that Coinbase can't necessarily pivot because they need revenue.
And everything they delist is less revenue to them.
So they're not just going to roll over, which is when they say they're going to fight.
I do think they're going to fight because they have to, as Dave was saying.
They have to say that our process was solid and we tried to play by the rules.
I think that was their game plan from the beginning.
and as long as their game plan maintains,
we're going to say we were running a legitimate business
and we're legitimate.
And we only need you to tell us how to run a license exchange that is compliant.
We're going to keep doing what we're doing.
And until that happens, that's the settlement I think they're going to look for, for them to get legal compliance.
Because that is the – and I think Vinny was talking about this before.
We could say about everyone leaving the United States.
I'm not as a big believer that A-16 going to London is a big deal.
London is basically –
Yeah, it's a 54th day.
They're opening an office.
Who cares?
Exactly. So the only thing that matters is that the U.S. is the end of the rainbow.
And I do think Coinbase is going to fight till they solidify their position.
You both say, you both say that it's nothing. I think you're missing the big picture here.
Yes, it is nothing in terms of capital flows. Yes, it is nothing in terms of an office.
But I want to just highlight a few things for you. Number one, this is the first
office outside the United States that these guys have opened. Number two, Chris Dixon says in
his blog and anything, it says, crypto is still in the early endings and needs clear regulations
to provide an open pathway for startups to build constructive solutions while protecting consumer
and stamping out harmful. Casino culture has developed, the UK is on the right path and eventually
they had to leave the US because the US stifles their innovation and their growth. That's what he says
in the blog post. Then,
And I think the part that maybe you both missed you is the last U.S. election was won by the Democrats with less votes and because they got 51 versus 49.
In the next election, in order to swing the difference between swinging one state or one or one, um,
a seat is just a few passionate investors.
Now, headlines like Andresen leaving the US and any smart investors reading this and going,
we're losing our VCs to the UK.
It may not be factually 100% correct, but it's these kind of headlines which are going to sway
the voters in already what is a very tight potential election.
Have people cared when they've seen Brian?
Maybe the answer maybe yes, but I mean, we've seen this from...
Novagrats, Galaxy is as big as Andresen Horowitz to some degree.
They said their opening offices elsewhere are moving offshore.
Come on.
Are you really comparing, are you really comparing Galaxy Digital to Andreessen Horowitz?
I'm just saying they're the same headlines.
These are the same headlines.
It's not the same headlines.
I mean, Galaxy is listed in Canada, isn't it?
Whereas, whereas Sequoia and Andreson are the darlings that built Silicon Valley.
I think to back around on this, I think what could happen is what you're not going to see publicly, which is that what are the conversations going to happen now with all the LPs in Andresden? Because how many major...
universities, state pensions,
government like, sovereign wealth funds
are invested in A16Z.
And if they're making this move and they're asking the question,
why, and are they going to be able to get the best investment
given the current US regulatory environment on that firm?
I think that could be where the influence really happens
versus just the headline.
I agree, the headline of their opening an office in UK,
who cares?
Every company has offices in five different countries.
Yeah, but I think, again, I think it's just you have to sway a couple of voters.
You don't have to swear a lot of voters to win the election year.
You have to sway a couple of voters here.
And I think that, you know, we're what?
We're one year and three, four months, what, November?
So it's one year and five months away from the election.
So I think as we get closer to elections, I think it's going to, I think they're going to have to tone down the argument here.
Bear in mind that.
We're not a lot of voters in the United States, but we're very, very, very, very passionate voters.
Yeah, I don't know.
Listen, I agree with you.
So I would just want to play devil's advocate for the sake of conversation.
I think most people that we are giving credit for being passionate about crypto actually kind of hated at this point.
Go ahead.
I think that most people are down massively do not have a positive view of this market and are unhappy and are not going to vote on this.
And I think we're a very, very vocal minority, which is great.
We're passionate and say we're one issue voters and care about this.
And that's how I view myself.
But I think the majority of retail in the United States will have major fatigue against crypto and will not view it as a key component of their election strategy.
I agree with that.
Well, one thing, one thing to take into mind is the fact that it's basically seven states that are, that will decide the election because of the electoral college.
And it's typically the...
big cities in those states.
So Las Vegas, Atlanta, Philadelphia,
these are areas that the crypto industry can mobilize
and that the Republican Party,
who's going to be the ones who are fighting,
you know, sort of on the pro-crypto side,
depending on who gets in, of course,
I mean, if it's...
RFK, obviously, it'll be less so, but assuming that it's Biden versus Trump or Biden versus DeSantis.
And if it's DeSantis in particular, I think that there's a very strong chance that forces could mobilize in those areas.
I mean, Las Vegas is a very, you know, kind of easy.
It's pretty...
you know, dominated by like, you know, one newspaper, you know, owner that's got the, you know, morning and an evening and all the TV stations are owned by the same group.
And, you know, Atlanta's got a decent blockchain presence and same with Philadelphia.
Yeah, I agree that the city that loves gambling is probably going to be on board with pushing crypto.
I do.
I don't disagree.
Like I said, I'm playing devil's advocate for the sake of conversation.
But I do think that it's important in general to step out of like the people we necessarily follow on Twitter and our own echo chambers to see what's really going on out there because...
There are much bigger problems that are going to drive this election than our opinion on Doge.
Now, Scott, I do have a couple of points to make because I've been listening here.
This is going back to the miners.
We're still at an all-time high for hash rate and historically over the past 10 years.
Price usually does lag.
behind the hash rate.
And the miners are investing, you know,
billions of dollars collectively
into, you know, long-term infrastructure.
So they're in it for the long haul.
Another point I need to make is it's still profitable
to mine Bitcoin.
The last number we got back in April 30th is
it cost $17,000 to mine one BTC.
So I don't think of it as so grim.
It's something that people have been saying for a long time.
What if the miners drop off?
well Bitcoin has a difficulty algorithm that retargets so it's self-healing in nature but yeah sorry that's not the point I was making I was just saying that we always have the narrative of minor capitulation sort of at the bottom and I was making a comparison to the developer activity that James was talking about dropping off got it just want to make that point cool I think we've covered everything guys
Any final thoughts for the audience?
Scott, Ryan, by the way, for the audience members,
we forgot to tell you all.
We do go through the comments, get your thoughts.
And it seems...
You know, Ryan Scott, you know my shows have kind of gone beyond just crypto,
and I'm starting to get more exposure outside our crypto bubble for the last year since FGX has collapsed.
And I could tell you this, the sentiment, the amount of hate I get because I still have a punk and probably not for long,
is just increasing month by month.
And this week hasn't been the best.
So I don't think voters give a shit.
I know there's the argument of like, hey, freedom, freedom.
Well, the restrict act, and people are talking about it.
and we covered the crypto aspect, which I thought was one of the more important aspects of it.
The response we got from people is like, hey, we don't care about crypto.
That's not the concern we have.
We care about people's freedom, et cetera.
So, yeah, the sentiment has changed massively.
And, you know, I think we've got to keep that in mind because we're still in our little bubble at the moment.
I mean, but, Mario, I just want to point out that I agree with you 100%.
I just think that'll...
If we're going to be honest, that drastically changes with price.
If we see some ripping bull market between now and the election,
all of a sudden people will care about crypto again.
If we see prices remain at the price, we're going to see that.
But for...
For price to go up, we need people to come in.
And they'll need to see a sustained price.
Look how long it took us for the bull run after the 28 collapse, 2018 collapse.
And if we're going to keep getting bad news with regulators,
I just don't see them.
And we're going to see something targeting the UST or we could see more pain with Binance with the DOJ.
Yeah.
with your DOJ finding that I just don't see things getting any better.
We need some sort of good news.
Now, will AI help that?
Will Apple's headset, whatever Apple Vision Pro, help the Metaverse projects in the ecosystem,
Web3 Metaverses, and that would help NFTs and digital ownership?
I don't know, but it's just not looking like it.
We didn't even get the fabled Metaverse coin irrational pump on the Apple announcement that you would have expected when this market always...
Yeah, actually, yeah, I didn't check.
Was there anything that pumped?
Like Chat, Chat, GPT released and all of a sudden, you know, 50 alt coins that have nothing to do with AI all pop off.
We've seen this in the past.
When Meta rebranded from Facebook to meta, we saw all these Metaverse projects go crazy.
We saw nothing on this Apple pop.
We're really, I mean, which, by the way...
The more apathetic and disgusting and ugly this bear market gets,
the closer we are to truly be in the bottom and rising out of it.
I want to read you something just before we go.
I want to read you something from Andresen Horowitz's letter around expanding to the UK,
because I know you guys brushed it up and said, it's just headlines,
but I really want to read something to you.
It says over the last year it has become clear that blockchains and software movements around them,
usually called crypto Web3, can only succeed in a clear regulatory regime that provides an open pathway for status
while also protecting consumers from foreign manipulation.
This regulation should be aimed at stamping out the casino culture that has developed around crypto while also allying for constructive applications to reach their full potential.
A common question we hear is, what is the problem that blockchain solved?
Services built on blockchain sold the same problem that other digital services solve, but with better outcomes.
They can connect people in social networks while empowering users over corporate interests.
They can underpin marketplaces and payment systems that facilitate commerce, but with persistently lower take rates.
They can enable new forms of monetizable media, interoperable and immersive digital worlds and artificial intelligence that compensate rather than cannibalize creators and communities.
Technology takes decades to develop.
We are now seeing the mainstream application of AI
after 80 years of development.
We're in the early endings of crypto.
Today, there are tens of thousands of crypto developers,
but the numbers are growing fast.
Sorry, today there are tens of thousands of crypto developers,
but the numbers are growing fast
and we expect to see one million developers by 2030.
The infrastructure will improve
increasing performance and lowering freeze,
and many more applications will be built
across the wide range of categories.
And this is how they justify moving to the UK.
So I don't know if that...
I don't understand why they don't just move to Dubai.
Like, why the UK then?
Yeah, yeah.
All right, guys, so just for the audience,
if you do, we're going to start doing pitches soon
like we've done on the other shows.
So if you want to pitch your project,
we're still active.
You want to work with us at Incubator.
DM Scott, Ryan or myself.
Otherwise, we'll see you again tomorrow.
Bye, guys.
See you later.
