Time To Buy The Dip?

Avi Felman

I see all the bearishness. I see all the calling for fricking thirty k. And the only thing that I can think of is that everybody was so Giga bullish at 70, and nobody could conceptualize the idea that this thing would draw down. I mean, really not that much. 20%.

And now that it's down 20% off the highs that we're entering into levels that we've been eyeing for a very long time, everybody decides to get fucking bearish. I think the world has to get ready for over the next three months. There's going to be a little bit of a shift in the market. There are going to be a lot of hated assets that probably do well in the next two months. And I think it's, you know, I think it's time to have some, you know, fucking balls.

And vice, you know? This episode is brought to you by perennial finance, the on chain defi primitive, redesigning derivatives for the Defi native. You'll hear more about perennial later in the show.

We're live. Welcome back to another. To another thousand x, boys. We are so close to my target. I felt like I was.

I felt like I was going crazy, Jonah. So I've been telling everyone since 70k that we're going to reach 55, and now we're at 57 and everybody. The funniest part is everybody's claiming that you've been bearish since forever. You are. No, I feel bearish at 70k.

Now. We're at 57, and now I'm telling you, it's time to be bullish. So let it. Let it, you know, let it be known that I'm not always a bear. I just happened to be a bear for, like, the last two months.

But this is, this is not. This is not my natural state of being. I'm obviously a bull. Like, I'm a natural bull. I want shit to go up.

I want things to. You. You absolutely nailed it. Like, you got. You got bearish on the dead ball highs.

Jonah Breslau

From the sounds of things, it sounds like you actually acted on it. Like you sold a fair amount of crypto, which I didn't have. I tried to get everyone else to sell crypto, too. It's like, guys, listen. Very, very rarely in my entire life have I seen bitcoin go sideways for so long in a bull market and then have that be not distribution.

Avi Felman

I mean, it's like almost every time, right? I mean, the way that. I mean, what was gave me pause was like, I was concerned because last summer we chopped around 40k for, like, three months. And if you lightened up there hoping for a dip down to 20k, you wouldn't have gotten it. You would have missed this whole two xing.

Jonah Breslau

So I was afraid of missing a parabolic rally. You mean 30k? Not forty k? Thirty k. Apologies.

Sorry. Misspoke. I mean, yeah, we chopped around. We chopped around 30 for a while, but that was. That was very different because that was, that wasn't after a parabolic rally.

Avi Felman

It wasn't after we broke all time highs. It was after a giga long bear market. This is different. I mean, the way that I think about it, it's always just in risk reward terms and value in momentum terms. So at 70k, most people's targets were 100, which isn't that far away.

It's actually pretty close. It's a 50% move. So what are you looking for? You're looking for a 50% move higher. And where do you stop out 50k, basically?

I don't think bitcoin was enticing enough at get a bunch of people to come plow into it with because a lot of people only had that 100k target, so it needed to go to an area where people felt like there was value. So, I mean, there are really only two ways to, for bitcoin to run is that you just have crazy momentum and crazy fomo, and people just keep piling in. And that's how, you know, we get, we get these all time highs. But once you get to all time highs, if the momentum doesn't stick and you start to go sideways, people start to get a little bit more rational and fearful in their allocation. They kind of wait.

They're like, okay, well, if we're going sideways and I don't need to fomo in right now, and so a lot of the FOMo buyers drop out, and then you have to say, okay, well, if it's only a 50% higher move to your target, then that's not super attractive. But now, okay, we're 57, maybe 55. That's almost a two x to your target. And so I think that that is a very good. Like, these are much better levels for value buyers to step in.

And so when momentum's gone, the only thing that saves you is value. And we're getting. We're getting pretty close. You know, even ETH, you know, I'm buying here. You know, I'd definitely be buying here.

I'm buying ETH here. Buying BTC. I think. I think you can buy some memes again. I actually really like, arweave it's a good one.

Jonah Breslau

Why are we. Because they're going live with a lot of stuff like their AO token is going to be their first major project launched on the Arweave network, which is kind of interesting. They're sort of pivoting away from just being a file storage solution to having a broad based network that's more like an ethereum that you can actually go build things on top of. And then I also, just looking around, things like arbitrum are like, today ETH is down 4%. Our return is down 70 bps, and it has collapsed by, you know, 60, 70% from the dead highs, actually, I think from the dead high.

Avi Felman

It's down, yeah, it's down 58%. It's like, okay, no, there's, there's certain things that are starting to actually look sort of appetizing, that now is not the time to be fearful, now is the time to accumulate. That's my, that's my personal view. Be greedy when others are fearful, said great investor Avi Feldman. So the way that I've looked at it, you know, I'm not as active as you, as we all know.

Jonah Breslau

So I try to kind of avoid over trading. I try to avoid chopping in and out of stuff because, you know, frankly, I'm just not as good as you at that. However, I am not fully allocated to crypto. I'm not ten out of ten max long. So basically, the way that I view this pullback is for those of you out there who are in my shoes and you still have some cash available that you could deploy to crypto.

These are the types of levels where it might make sense to buy and where you don't have to feel bad about not having top ticked it like Avi did. You can kind of say, all right, bust out the shopping bags, start nibbling on interesting stuff, maybe diversify into some new tokens. And one of the things that you learn on a trading floor is you don't really learn how to trade something without skin in the game. So I like the idea of buying some of these forgotten tokens like arweave and arbitrum, that haven't gotten a lot of love recently amidst this boom in l one performant tokens. So to me, that's a very good idea, Avi.

I mean, as you can see, I'm kind of chilling right now. Touching a bit of grass. Are you touching that grass? Shona, where are you right now? I can't quite reach it from here.

I'm in LA. But, you know, you have a nice Hollywood view in the background. It's outdoor office. I think that I'm trying to. I'm trying to.

New York is great. I'm trying to kind of stay cool throughout this sell off and not puke anything, which when you're not fully allocated is extremely easy. But what I read on crypto, Twitter is just this, like, overwhelming doom scroll of panic and fear and vomiting of tokens. And I, you know, personally, I can't really identify with that because I don't really trade on leverage. I'm not, as we recommend again and again on this podcast, like, don't invest more than you can afford to lose.

It seems like people really invest more than they can afford to lose because on what should be a fairly routine bull market pullback, it seems like the community is just getting rinsed and that's not good. So friendly reminder to the community, don't invest more than you can afford to lose because there's nothing out of the ordinary about this. During the 2021 bull market, the thing pulled back like 70%. So this is. This is nothing compared to that.

Avi Felman

Yeah, I mean, I think people just got really complacent, Jonah. And no, now is not the time to be complacent anymore. Now is the time to go hunting. In my personal opinion. I think that there are a lot of very good trades out there.

I mean, you look at ETH, I'm. Doing more studying of crypto. I've got it a long time. That's good. What are you, what are you, what are you studying?

Jonah Breslau

I'm studying some of the newer. The newer chains that are like, obviously I'm not. You know, I like your idea of revisiting arweave. And, you know, we talked a little bit offline about blur, some of the ones that have been out for a while. I'm.

I'm kind of trying to get myself a little bit more, you know, up to speed on Bara chain. The drama around Eigen lair, what telegram is doing with ton, you know, some of these, some of these newer, newer projects. Like, for the longest time, it was just like bear market down only, and then bitcoin, like best risk reward by a mile. Now we're starting to enter the phase of what I still think is the bull market, where it's getting dicey. We could go down a lot or up a lot from here, Ed, you're going to start to see real dispersion between the shit and the amazing stuff.

And I think that, like, alts are starting to look tasty for the first time. Since maybe 2000, late 2020. What do you think? Like, every alt, I guess meme coins, like, ripped like a thousand x in the last. I don't consider meme coins five months.

I consider. How about this? I consider the meme coin space as a whole to be an alt, like an alternative use case for crypto, which is this on chain casino that Solana kind of nailed, right? Solana kind of dominated. I don't really view, like, whiff as an alt.

I view it as like a. Like a chip in that casino, you know? Yeah, I guess that's. I guess that's fair. So, I mean, really, really what you're saying is, like, the alts, like, the actual projects that are building, are starting to look tasty to you right now because you think in the second leg of this, of this move, maybe something like a blur, which instead of, you know, basically keeping pace with BTC and ETH radically outperforms in the.

Avi Felman

In the second half as people try to actually bid value. I could see that. I could see that happening. I mean, look, there are all sorts of things that happen in this type of market that make it, you know, that that makes sense to try to look at. I'll give an example of one.

Ethi is back, I think, to a 27, 28% discount, which is crazy if youre bullish ETH BTC at all. I think the best way to express this is just to buy ETH. Its a bit of an election play, because I think if Trump gets elected, then we almost 100% get ETH ETF. And if Biden gets elected, then its a little bit more dicey. But I still think that just given the fact that basically the same arguments apply for ETH that apply for BTC, it doesn't seem like anyone's really supportive of the SEC's mission to try to classify ETH as a security.

I think it makes sense to allocate. So that's an interesting trade right there that I'm definitely looking at. And honestly, I see all the despair, I see all the bearishness. I see all the calling for fricking thirty k. And the only thing that I can think of is that everybody was so giga bullish at 70, and nobody could conceptualize the idea that this thing would draw down.

I mean, really not that much. 20%. And now that it's down 20% off the highs that we're entering into levels that, you know, we've been eyeing for a very long time, everybody decides to get fucking bearish. And not only that, ETH BGC is up, you know, 1.93%. I think the world has to get ready for.

Over the next three months. There's going to be a little bit of a shift in the market. We're going to get things that are, you know, look at, look at what's outperforming right now in this dump. They're going to be things that start to do well that we're doing very poorly before. They're going to be a lot of hated assets that probably do well in the next, in the next two months.

And I think it's, you know, I think it's time to have some fucking balls and buys, you know. This episode is brought to you by perennial finance. Perennial is quickly becoming one of the go to derivatives platforms and liquidity layers for all of Defi. So let me tell you a little bit about them. There are kind of three things you need right when you're thinking about a place and a platform to trade on.

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Jonah Breslau

The entire Ethereum ecosystem. Like you and I had that protracted debate about Solana and Ethereum. I really continue to believe that the Ethereum ecosystem is gonna perform. And I see a lot of fud on Twitter about ETH, like, hey, what is name one thing that ETH does better than any of the other blockchains out there. I think that's kind of a stupid argument, and I want to debunk it right now.

Like, bitcoin doesn't do anything better than any other ecosystem anyway. Like, you could, you can move money around faster on, you know, on pretty much any alternative l one than you can on bitcoin. But that doesn't mean that bitcoin's irrelevant, right? Like, I think that. I think that when you're talking about tradable software, that's ultimately very complicated and difficult for most people to understand and difficult for even experts to trust.

Right?

Battle tested code is a moat, right? And bitcoin is battle tested. Ethereum is battle tested. These are like. And even Solana.

Solana is becoming battle tested. But sort of the picotop in Solana, the meme coin boom, coincided with congestion issues that led to a little bit of doubt about the performance of that chain, and ultimately a sell off ensued. I'm not saying that the two are related. It was like more of a broader market sell off. But my point is that, like, ETH, for what it's worth, is a decentralized computer that hasn't broken yet.

And that's really important to a lot of people that don't necessarily need their transactions settled in seconds, or, sorry, in milliseconds, maybe they need it settled in seconds. Like financial applications, everybody goes back to Larry Fink and Blackrock. But, like, let's take fidelity, another large institution. If they want to settle something on chain, they probably don't mind if it's on ETH or l two on ETH instead of solana, because they're just, you know, they don't require speed, transaction settlement speeds to be faster than that, faster than the speed of ETH. So ultimately, like, what matters to them is security.

Knowing that their transactions will show up on the blockchain the way that they're supposed to, and knowing that there won't be some sort of interference from hackers or just like, breakdown of the code. And to me, that's why I think we can start to expect a longer tail of applications getting deployed on ethereum, especially financial applications in the near future, which should lead to a bull run or outperformance of that chain just because of the moat that it does have, which is the fact that it's battle tested. Does that kind of make sense to you? I tend to agree with you because I think that there's a lot of value in ETH. Being the number two, the biggest number two for a very long time.

Avi Felman

But the reality is that the reason that I was so bearish for such a long time, up until this moment, at least in the short term, is because it's like crypto natives don't care about this. And crypto natives have really drove the market besides for BTC, right? So you had all the. You basically had the boomers living in Ohio buying a bunch of bitcoin and their brokerage accounts, and then the crypto native people doing everything else. That's why I really don't think it's going to change much until you get more institutional access to Ethereum specifically.

But in the short term, what I've realized is that the market also trades on narratives. And so bitcoin had the having moment. It had its narrative. It had, you know, runes. It tried a few things.

Bitcoin, you know, stacks. Stacks had its Nakamoto upgrade. All these things happened for BTC. And now they're over. There's really nothing else on the horizon for bitcoin that can get people super excited about it.

But there are certain things for ETH that will get people very excited for it. I mean, we can talk Eigen layer. I think that they messed up their airdrop. I still think it creates a bit of a wealth effect. And I also do think that, look, at the end of the day, it's a new primitive.

Jonah Breslau

Just quickly, before we go to Eigen layer, I do want to say I think there's geopolitical. There's one point on what you said. Sorry to interrupt. I do think there are major geopolitical catalysts for bitcoin in the short run, but there's no like blockchain native catalyst. I agree with you there.

I just wanted to make that very quick distinction. Go on. Yeah, I would agree with that. There definitely are geopolitical catalysts. I mean, hopefully we don't experience them, but there are, and you can see it in gold.

Avi Felman

I think there's been a pretty large dispersion between bitcoin and gold. But I think, as if the world heats up, that that correlation will come back eventually, which was strong previously. But I think that within the actual world of crypto, the only thing that has any meaningful narrative or meaningful drivers for liquidity flows is Ethan and ecosystems and then meme coins. That's really it at the end of the day right now. And so my take is that it's probably time for people to start rotating from ETH to BTC.

And I also think that the relative strength of ETH in the downturn is going to draw people back into it. I genuinely think that the reason that ETH is going down less than BTC is very simple. BTC went up more than ETH, and so there are less sellers of ETH. But I think that psychologically what that does is it primes new buyers. Oh, wow.

Look, it's outperforming to the downside. Maybe it'll outperform to the upside. Even if that, you know, there, it's probably not because there's a substantial amount of buyers of Ethereum. It's probably more because there's a lack of sellers relative to BTC. There are a lot more people willing to sell BTC than ETH right now.

Jonah Breslau

Because imagine it does outperform to the upside. Let's say bitcoin goes back to 100k. That's like 70%. And let's say ETH BTC rallies back to like, you've got a, got a quick little two bagger there. If you buy some ETH right now, you know, without that much risk.

Avi Felman

And if you buy Ethy, probably even more. Yeah, Ethy, I think, is the trade. Couldn't agree with you more there. I mean, it's like we just saw this grayscale trade play out in bitcoin. Like, why on earth wouldn't it play out in ETH?

Jonah Breslau

And you can do this from your brokerage account. You don't need to be like, you don't need to be like three layers of abstraction into some restaking protocol to capture this. Yeah, it is kind of amazing how the market will just give you the same opportunity over and over and over again and you kind of just have. To take it with the same fucking narrative, too. It's like, oh, oh.

But Gary Gensler denial, blah, blah. Come on, we've seen this movie already. We literally just saw this movie. It had the same, and it wasn't even, like, with different movie stars. You had the same movie stars in the same movie.

Avi Felman

I know. And, yeah, like, genuinely discount right now. I don't have my Bloomberg in front of me. It's like 25%. Last I looked, I think it was.

27 when I looked. Let's see. But it's, look, it's just funny. Yeah, I guess 2020, 5% right now. But it's funny because it was, no, it was 8% two months ago.

Now it's widened back out. And if you're bullish on ETH, like, what a, what a great way to allocate, I do think also I was super bearish on l two s, but just watching their relative strength during. During this drawdown and then realizing that, wow, these things have just been absolutely nuked. Like, they've been nuked to just everything. If ETH, BTC goes up 10%, then these things are probably up 30.

I think you could obviously just buy more ETH and that's more liquid. But I am noticing that I think a lot of these coins, because they didn't go up that much in the run relative to BTC and ETH, there's not that many people left to sell them, right? Yeah, I mean, arbitrum had, like, a little. It had. It had a pop, and then it went straight back down.

And now it's trading where it was literally 2023, right in, like, the summer of 23. It's back. It's basically back below the highs of summer of 23. Like, actually far below. It's, like, back in that range.

So, I mean, think about this. BTC doubled in a time span where a lot of these things are flat. And I think that just means there's just really not that many people left to sell. You have a great point there. And it dovetails with something that I heard when I was working at Cumberland that I wanted to share.

Jonah Breslau

So one thing that used to frustrate me when I first got into crypto is that failed projects don't go to zero.

Polkadot like, in my mind, these things should be worthless crap, but they aren't, right? They're still worth billions. And let's say that some worthless project or seemingly worthless project were to go to zero, or very close to it, just a few tens or single digit millions in market cap. And then there was some sort of promising development on the roadmap for that project. Your risk reward would be outstanding.

Buying it at such a. Buying something that's already sort of proven and had a past at a low valuation, close to zero. But I found myself unable to do that with these tokens that, like you just mentioned. Okay, maybe they're not worthless, but they've flatlined and underperformed, but they're still worth billions or tens, or even in certain cases, more than 100 billion. So I was talking to Don Wilson about this, my former boss, who, he's the CEO and founder of DRW, and I was expressing frustration about the fact that I wanted to buy sort of like rebound narratives in the altcoin space, but I couldn't justify the existing valuation.

And he just looked at me and he was like, jonah, tokens don't file for bankruptcy. Okay. These things aren't going to go to zero. They just sort of find equilibrium and stabilize when, when all of the sellers with liquid supply are out. And what you have to, you know, sort of assess is whether, whether there's going to be this ongoing supply just whacking the market as maybe the foundation structured in a way where it's just long.

A ton of tokens in escrow and they keep getting unlocked on some schedule or vc unlocks or whatever. He's like, just be careful, avoid the freight trains. But in certain instances where there isn't an avalanche of tokens that's about to hit the market, no pun intended, you can feel comfortable getting long stabilized. Old stories at what seems like high valuations, and then they'll pump again. When the narrative comes back to me, that's just a light bulb went off, I'm like, oh God, I've been in trad five for too long.

This makes sense. You can step in at what seems like a decent valuation for something that's been underperforming. It's not going to go to zero. Tokens don't file for bankruptcy. As long as the future looks bright and there isn't a big vc bag about to get dumped on your face, you're kind of good to go.

And you make a good point about arbitrum. That might be one of those, like, maybe not polygon, but arbitrum yet, I. Don'T know because I haven't spent enough time digging into their future plans. But I can tell you one thing, the team's still working, right? And if the team, if the team is still doing things, I think they all, they had massive, massive, massive unlocks of supply.

Avi Felman

So once supply runs out and you have an actual team that's dedicated to a project, if you spy an adjacent narrative like ETH BTC going up. Okay, well, maybe you should start looking for things like optimism on Arb. I mean, maybe Lido. I'm a little bit nervous about that one still, just because I think the supply issues are still pretty prevalent there. I do think that overall, what we're probably going to see is that new coins were good in the first part of this cycle, but new coins probably start to be bad soon.

The reason that new coins start to be bad soon is because there is a crazy, crazy, crazy amount of supply that's coming online for a lot of these, because they were good, because they launched with a low float. And now that that is coming to an end and unlocks are starting to happen over the summer VC's are starting to.

Basically what's happening is VC's are going to start to dump, the early investors are going to start to dump. I think that a lot of these quote unquote new coins are probably going to be in trouble. Huh. And by new coins, you're not just referring to like shit coins that people mint on pump fun. No, I'm talking of like the Suis, the sais, the, all of these, you know, the tias of the world, the app tie or like that.

Yeah, like these things. Maybe they're good projects, maybe they're not. It actually doesnt really matter. What matters is that they have very, very very low float and that its going to be very difficult for people to get out of these positions. Theres just going to be a ton of supply that hits the market.

And these are probably very good shorts. So one thing you might be able to do is go long things that dont have supply issues. Go long a Solana, go short an apdos or short Asui run that paratrade. Right. That's actually kind of interesting to me.

Right. And I think what you're looking for is you're just looking for things that already have, that don't really have supply issues and you're trying to find the massive, the massive unlocks and over the. Next little bit has the opposite of a supply issue. It has like a deficit of tokens because FTX swallowed up so much of the liquid supply that people thought they had. Now it's recycled in the form of like multi year locked Solana that people want to hold on to for long term reasons anyway.

Jonah Breslau

Like in terms of like bag reloading at current levels, like you're just, you're just rebuying stuff that you sold higher. So you'd be bag reloading. For me it's just like bag adding, I would say Ethi Solana or locked Solana if you can get it. And, you know, I'd say a few ethereum ecosystem plays and some meme coins that have staying power that's already starting to look like a pretty decent little nugget that you might be able to earn a decent return on. Yeah, I would agree with that wholeheartedly.

Avi Felman

I mean, what was kind of interesting about the Solana deal is that it's a great deal because you can hedge out some of it through perps, but also, let's say you buy salon, I think it cleared at what, $64 and then it's trading at 123. You're actually getting double the yield on your capital committed. So if Solana yields 7% you're getting 14% yield. If Solana goes to 600 in a crazy world you're getting 70% on yield. Because even though these tokens are locked you can still stake them, you still get emissions.

And that's one of the secrets of VC's and these locked deals is that you're really just, you lower the cost basis. There, there are like a lot of people will run these deals sort of behind the scenes. You know maybe I shouldn't be voicing this too publicly. I hope the VC's don't send any hitman after me. But like you know you'll have your big l one s go to somebody and they'll say hey, we'll sell you like $50 million of this token or $20 million of this token at a 70% discount.

But then you get to stake it and then you get all of the yield from the staking it and so it really reduces your cost basis even more. And the reason that they do that is basically just to get funnel more cash in and then you distribute on your average person that doesn't know that this is happening. So if you're an average person who isn't really in the smoke filled back room one thing that you can do to avoid some of the deleterious impact of this on your, on your net worth is stake your tokens, right? Like don't just hold spot, stake your tokens. And the reason why is like one thing that we used to say Cumberland, is that staking tokens isn't really earning yield, it's just avoiding, it's like avoiding the inflation that you would experience if you didn't stake, right?

Jonah Breslau

It's like a form of inflation avoidance. Not like some sort of. It's not like. Well you get it. I mean the point, my point here is like the other thing I'd say.

Avi Felman

Is that if you want to, if you, if you really want to avoid it, you know, be very wary of high yields from, from l one s. And then also make sure that the l one s that you're looking at don't have super, super concentrated nodes. Because don't just stake thoughtlessly. If there's a high yield, there's a catch. But equally like if there's a normal yield in sort of like the five to 10% range, if you're not staking you're getting diluted.

Jonah Breslau

And if you're staking then you're just sort of treading water. And ultimately I think what's important about staking as well is that it prevents you from over trading. Right. Like, it makes you think twice, but it adds an extra layer of complication before you go and churn in and out of tokens again, unless you're Abhi Felman, active trading is really hard at best. Like, really wasteful at work.

So I like staking because it makes me just think a little bit more before I go and do something.

Avi Felman

I think that's, I think that's good. I think that's very reasonable. Jonah, I have a question for you. So when you look at, when you look at, when you look at the market today, obviously crypto is doing poorly. But it's not just crypto that's doing poorly.

The traditional markets are also doing poorly. Right. And Im curious, does a general market pullback, does that seem likely in the future? Are you worried about that? Are you worried about the Fed?

The Fed fucking things up right now. What the Fed has done to fuck things up is already priced in. I'm not worried about them. Like, hiking war. So that would be a real fuckery and I'm not worried about that.

Jonah Breslau

But, yeah, this is yet again, a sell in May and go away type scenario where everything from oil to bitcoin to the S and P to Nasdaq has come decently off the highs. And I think what worries me the most about markets right now is the threat of a supply fly side inflationary shock. Right? The threat of some sort of, like, let's say that, well, there's two things, right? There's the, there's the threat that you get a geopolitical event that spikes oil and gas similar to like 2022, the Ukraine war.

Alternatively, there's like a chance that, let's say that Trump decides, let's say that Trump's way ahead in the polls, and he starts announcing stuff like, I'm going to, you know, I'm going to forcibly have the army deport 15 million people from the labor force, right? Or I'm going to hike tariffs on China by 30%, right? Then suddenly, like, you know, you become supply constrained. There's inflation and labor costs, inflation in the, you know, unfinished and finished goods that we import from, from China. And then suddenly, like, the Fed has to start reacting and hiking rates, and then the economy gets all gunped up equally.

I'm worried about a demand side inflationary shock where Biden is ahead in the polls and says, hey, capital gains tax is going to be hikes to 45%. So if you live in a high tax state or city or area, your all in is going to be like 60% on capital gains. So then markets nuke ultimately. Like, I'm worried that there's going to be some sort of shock to the system coming out of, like, policy, not the actual economy. Like, absent.

Absent our geriatric leadership, which I find personally frustrating on both the left and the right doing unpredictable, like, kind of stupid things. The economy looks good to me. Like, I think the effect of AI as a tool, like these chat bots, is, like, massively deflationary structurally. Commodity markets are very healthy, robust supply, robust demand growth. You don't.

There's nothing, like, there's nothing, like, really structural about the world economy to be worried about except for humans. Like, erratic old motherfuckers doing stupid shit. Right? And forgive my language, that's literally what's stressing me out right now is that we're in this peaceful time, and then some, you know, obese guy in a dictatorship somewhere is going to wake up and start, like, firing artillery at South Korea. You know, like, it's.

It's just. It's just people, man. People are crazy. And that is. That is definitely a take, jonah.

Avi Felman

People are. People are for sure crazy. Yeah. I don't know. That's what worries me is erratic political and policy behavior.

Jonah Breslau

Does that make sense? Yeah, I understand that. I do. I do. I do understand that deeply.

Avi Felman

I do think, though, that it's possible that we get stuck in the trap of if, like, let's say. Let's say. Let's say, for example, the Fed starts to cut and inflation comes back. I think people right now, they're worried about hot prints already. And if the Fed starts to cut too soon and inflation does start creeping up again, then people start to worry that we're stuck in a cycle of how do we control this thing?

I'm not really sure how else to.

I'm not really sure how else to take the fact that the market is coming off now, because everything else looks strong, companies look strong, earnings looks strong, everything else looks okay. I think you're supposed to be long everything in most markets into this dip. It's hard to close your eyes and catch the falling knife. But I think across all markets, that is the right trade. If you look at it through a commodities lens, the world is growing quickly.

Jonah Breslau

We're in the midst of a boom. And the big question mark is, will one of the relevant geopolitical actors do something horrendous to fuck it up, kind of like Vlad did in 2022? And I think the answer is no. I think you have to underwrite that possibility and sell that put and, you know, buy your bitcoin with confidence and your, your Nvidia stock and your ethereum l two s and your Solana and your Joe Bowden. Not financial advice with confidence.

And in a size where you aren't like doom scrolling and doom posting on Twitter, if you're down 20%, maybe this isn't a time to be levered up. Maybe it's a time to just nibble with spot or smart plays like Ethi. I think the nibbling makes sense. Look, I'm bullish. I like these levels.

Avi Felman

I think they're good. However, I am cognizant that these sell offs tend to end in a bang. They don't tend to end in a grind. So they tend to end in a down ten, down 15% day. They don't tend to just, okay, we're down 5%, 5%, 5%, 5%.

And then suddenly we're going back up. And so despite the fact that I like these levels, I think that in a year from now, if you buy here, you're probably quite happy. I do caution that you should probably wait for something crazy to happen. Like, if you really want to blow the nut right now, you should probably be waiting for something crazy to happen and then stepping in when you see all those liquidations. And then what you're doing is you're supposed to be buying all the things that you think are going to, that you think are going to have a narrative over the next six months and then concentrating your positions.

That's how I'm trading this market right now. So some people do that with limit order. I think that's very smart. And I think that some people do that with limit orders. I don't like doing that.

Jonah Breslau

I don't like sticking. I don't like adding risk with a limit order that's passive. I think that a limit order is a great way to reduce risk, like take profit. I haven't done this because I'm lazy, but I should happily submit some 150k limit orders in bitcoin. But if you put a passive limit order in to buy, you're like, okay, hey, I think that if BTC trades 42k, I'd like to be getting hit there.

Right? I think that that's kind of, I think that that's kind of a bad idea, because adding risk involves more thought and nuance than reducing risk. And there is a scenario where you can be delighted to add risk at 42k on, like a crazy fat finger style crash that rebounds very quickly. Equally, if it's trading 42k because there was a 51% attack that was successful, you're kicking yourself. Right.

And I'm just using extreme examples to illustrate my point. I don't actually expect that to happen, but I think that what you just said, avi, is definitely correct. You should wait for a crash to add, but you shouldn't be passive about it. You should be like, this is the time to be checking Twitter frequently, using. Actually, I found that Grok on Twitter is a great tool for getting smart on protocols, because it's really.

Yes. How do you. How do you actually use Grok? I did for the first time recently because I was, like, frustrated that I love the way that chatbots explain complex topics to me in ways that I can understand without having to. In ways you can grok it easily.

Funny, that. Yeah. But the problem with, like, your GPT four s and Claude opus threes of the world is that they. You know, they don't. That they're not really up to date.

Right. They're not. Like, they don't drink from the Twitter firehose. So if you use Grok, like, the model is shittier, and you can tell that you're getting. You're talking to, like, a GPT-2 level intelligence, or somewhere between two and three, but at least you're getting, like, synthesized, spoon fed english paragraphs about the latest and greatest in crypto.

It references the tweets, if you want to go and do further research on your own. And I find that that's much better than digging through mountains of docks and logs, frankly. So now is the time to be doing shit like that. Maybe Grok is. Is a good hack for studying, like, all coins in its market.

Avi Felman

I got to start trying this out. I mean, this. I will say that the market has really just moved so fast these days. It's actually quite difficult to keep up with everything. And, you know, you'll see.

You'll see something new basically every 30. You know, you'll still see something new every 30 seconds. And I used to be able to go deep, and now I go broad, and so maybe this is a faster way to go deep. This is kind of interesting. I'm actually looking at this.

Give me the latest on this layered social consensus versus abs security. Look, the issue is. I don't know if this is true, but, I mean, at least I can see the. I can see all the tweets or references, too. This is pretty good.

There's actually. Yeah, that's the point I was struggling with, just like I was like, I can't keep up with crypto, this is way too hard. I need little shortcuts and hacks. And what Grock gave me, shout out to Elon Musk, is that there's an incredible source of information in news and Twitter. The funny thing about it is, with GPT four, when you ask it questions about Eigen layer, it's clearly hallucinating.

Jonah Breslau

But when you ask rock questions about Eigen layer, you know that it's referencing the latest news about Eigen layer. It cogently explained, coherently explained to me. Like, Eigen layer is a protocol where you put in staked ETH and it restakes in other sort of applications and protocols across the Ethereum ecosystem and uses steep or the other types of locked ETH as collateral. And here's why. There was a problem recently.

There was some kerfuffle about people trying to withdraw their steep and getting charged large fees because whatever restaking was going on had some sort of penalty for early withdrawal, plus gas and all these hidden little ways that people got dinged for pulling their steep and their other staked collateral off of Eigen layer. Like, oh, that's a coherently explained. I did a bad job paraphrasing it. Like, a quick paragraph or two on what's going on there. It's way faster than like, trying to dig into, you know, what the devs are saying about it and complaining at each other.

And the great thing about great thing about Grok is that Twitter is so real time that you don't really know if it's all true anyway. But you kind of have a gut feel for what to trust and what not to trust. And that sort of like, perception, that sort of, like, that chasm between, like, what you know is ground truth and what you sort of see on Twitter. It persists across Grok. So you still, you can evaluate what you're reading with the same framework as how you evaluate tweets.

And it makes sense. I like it. I'm going to start using this. We should create like a repository of all the things that we use to look at the market and share with our thousand x guys. What do you think?

Avi Felman

Actually, that would be. Yeah, that'd be kind of fun. Maybe. Maybe we can do a show and tell, go back to kindergarten. And I feel like, hey, look at, so this is how I use this.

We should do.

Jonah Breslau

What if we took the transcripts of all of our podcasts and then had an AI agent create, like, talk about the markets like in our voices using. Wait, so what you're saying is that we wouldn't actually have to podcast anymore? We wouldn't have to do anything? Yeah, exactly. I mean, honestly, that sounds pretty nice.

Avi Felman

I mean, these podcasts are great because we just show up here with zero preparation and just kind of shit post with each other. So I can't really, you know, I can't really say. It's like, I can't really say. It's like, quite difficult to do so, but it could be kind of fun to try. We could also get AI to create the videos.

Jonah Breslau

You know, it's funny. We say it's not difficult to do. We're both, you know, seasoned trading veterans. I love talking markets with you. I don't like talking markets with a lot of people.

And I find, you know, it's funny, I watch certain podcasts where two, you know, people kind of like us, try to have a conversation like what we're having, and it kind of goes in one ear and out the other. Like, oftentimes two traders talking to each other just sucks. But, like, occasionally you just find your mojo with, with somebody when you, when you shoot the shit in talk markets and, yeah, I'm glad I found you, Avi. This is that. This is definitely, this is definitely a valuable dialogue for me.

Avi Felman

Hope it is for sure. It's for sure entertaining. I don't know. You can leave, you can leave a comment telling us if you actually find this valuable or not, or you just listen to us for the banter of which, you know, every now and then, there is some. Oh, no.

What else, what else you want to talk about? I was going to say, you know, one of the things that I experienced early in my career at Lehman Brothers, you get banter on trading floors. A lot of noise, not a lot of signal. But there was this one guy, not going to name him, but he was just basically the best trader in my product on the floor. Best credit trader.

You fucking worked at Lehman? Crazy. Yeah, I know. So long ago and back, basically, the way the phone systems worked at a bank back then, I don't know how they work anymore, is everybody would have this giant, like, kind of high tech phone with like 64 different phone lines on it. And people could have conversations that they could basically, like, make private.

Jonah Breslau

So if you tried to click into somebody's line, you wouldn't be able to hear it. Or they could make it public where you could literally just click on, you could see that the light was lit up. You click on the button, pick up your headset and you could hear what the person was saying and who they were talking to, you just listening on their phone conversation. And this guy, this amazing credit trader, he now works at Citadel, he's a legend. He used to talk to this guy at Fortress every day about markets, about macro, about credit.

And one of the fastest ways that I was able to educate myself when I was, you know, 21 years old on a trading floor was I would just listen to his line. He would leave it public on purpose to try and, you know, get other people involved in the conversation. And it's funny, that was like an early form of podcasting, right? No, podcasts didn't exist back then. So if you wanted to get smart on trading and how to think about markets, like listening in on somebody's phone conversation about a market was basically the best you could do.

And avi, I feel like you and I, like, I kind of recreated that, but thanks to, you know, blockworks and streaming, we can, we can share with more people than just a couple of other randos on our trading floor. Yeah, that's fair. That's. I think that's actually, it's good. I mean, that's why I like being on this trading, you know, that's why I like being on a trading desk in general is that you just get to hear things that you wouldn't necessarily hear otherwise.

Avi Felman

You just hear snippets of information. You hear people screaming at each other about a trade that they're trying to get done or a deal or some flow or whatever it is. You get snippets of information that you can use to make money. And I think that's very. Yeah, this is why I've never worked at a hedge fund.

Jonah Breslau

I've never worked at a hedge fund. I work at Onyx now. I've worked at Goldman Sachs, worked at VTOL, Cumberland DRW, like you say. Right now, for example, when I'm on my trading floor and I hear an explosion of noise going on behind me based on the location of the noise, I'm like, oh, something's happening in naphtha, which is a product that you use to make plastic, right? Okay, so the petrochemical space is kicking off for some reason.

Or at VTOL when there'd be like a big kerfuffle down the floor, like, oh, you know, that's, those are the fuel guys. Like, I wonder what's going on. Then you dig into it and you're like, oh, shit, like some freight lane just got shut off by a bunch of rebels, right? Like oh, interesting. And same at, same at Cumberland.

But, like, I don't understand how people work at these hedge funds that are. And they just sit in cubicles with no information flow or shouting or business or anything, and they just make money happen out of thin air. I'm personally better at monetizing information flow than I am at, like, just doing, like, super rigorously structured analysis. I do that, too, but it's nice to have that trading floor vibe. And podcasts give you a little bit of it, you know?

That's why crypto is a little bit more of a democratic asset class than oil, because you can download a lot of information from the Internet about what's going on in crypto, but you really can't. Our quote unquote, trading floor is crypto Twitter, you know. Yeah, it's kind of. You just got to curate your feed so you don't have too many. There's too much nonsense, but, yeah.

Avi Felman

Anyway, Jonah, you got a grok. Shit. Got a grok. Shit. That was good, Jonah, as always, I love talking to you.

Jonah Breslau

Likewise, avi. We'll do it. We'll do it again in. Do it again in two weeks. Speak to you soon, buddy.

Avi Felman

Speak to you soon, buddy.

Jonah Breslau

Speak to you soon, buddy.

Time To Buy The Dip? | 1000x

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1: Market Analysis

2: Investment Strategies

3: Political and Economic Influences

4: Long-term Market Predictions

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