Replies

--> YouTube-Generated Transcript <--
0:00 · All right. So, Tom, you you've heard
0:01 · what Steve had to say. This is, by the
0:04 · way, not unusual for Nvidia, is it?
0:07 · Nvidia, the good folks at Bespoke, your
0:09 · team, you've recognized that Nvidia will
0:12 · often have these kind of wild swings
0:14 · following earnings, but what is your
0:16 · take right now on these markets?
0:20 · Uh, well, I think I'm I'm going to kind
0:22 · of add to what Steve said. You know, I
0:24 · think the crypto market has been limping
0:27 · along since October 10th because on that
0:30 · date was a negative shock. I mean,
0:33 · today's stock market looks a lot like an
0:35 · echo of what happened October 10th. But
0:37 · on October 10th, that liquidation was so
0:40 · big, Brian, it really crippled market
0:43 · makers. And now market makers are
0:45 · critical in crypto because they provide
0:47 · liquidity. I mean, they act almost as
0:49 · the central bank in crypto. and if
0:51 · they've got a hole in their balance
0:53 · sheet that they need to raise capital
0:55 · for, they need to reflexively reduce
0:58 · their balance sheet, reduce trading. Um,
1:02 · and if prices fall, they've got to then
1:04 · do more selling. So, I think that this
1:06 · drip that's been taking place for the
1:09 · last few weeks in crypto reflects this
1:12 · market maker crippling. And so, in 2022,
1:15 · it took eight weeks uh for that to
1:18 · really get flushed out. We're only 6
1:20 · weeks into it. So, I I I kind of concur.
1:23 · I think crypto, Bitcoin, and Ethereum
1:26 · are in some ways a leading indicator for
1:28 · equities because of that unwind and now
1:31 · this sort of limping and and weakened
1:33 · liquidity.
1:34 · Well, that and that was the that was the
1:36 · point that my my very very smart team
1:38 · behind me, we put together for the top
1:41 · of the show, which was showing that that
1:43 · Bitcoin turned down today before the
1:45 · market did. All right, take us back. So
1:48 · October 6th, I think it was October 6th
1:51 · or 7th,
1:52 · Bitcoin hit 125,000. Yeah. A couple days
1:55 · later, it was still around 120,000.
1:59 · Now, obviously, Bitcoin's at 86 and
2:01 · change. So, what specifically occurred
2:04 · on or around October 10th that would
2:06 · lead us to where we are now on what,
2:09 · November 20th?
2:11 · Yeah. Well, Steve actually pointed this
2:14 · out. There's a lot of what they call
2:15 · automated processes in crypto. One of
2:18 · them is called ADL, okay? And that's an
2:21 · automatic liquidation feature that would
2:24 · take place if someone's account or their
2:26 · collateral drops in price. It's
2:29 · essentially like a margin call. Um, on a
2:32 · specific exchange, a stable coin's price
2:36 · varied from other exchanges. It actually
2:38 · stable coin should stay at a dollar. It
2:40 · dropped to 65, but that only happened
2:42 · within the exchange quotes within this
2:45 · exchange because of liquidity. That
2:47 · triggered an ADL, an automatic
2:49 · liquidation across many accounts. It
2:51 · wiped out as that spread across other
2:54 · exchanges, right? Because liquidations
2:56 · cascade, almost two million crypto
2:58 · accounts got wiped out even though
3:01 · minutes before they were actually
3:02 · profitable accounts.
3:04 · So, who who is behind this? Like who's
3:06 · the they in the market makers and they
3:10 · got hit? Who's the they?
3:13 · Well, you know, Brian, I'm I I am aware
3:16 · of names, but because uh you know, I'm
3:19 · not someone who wants to name names. Uh
3:22 · I think what you should keep in mind is
3:23 · that the this error is actually
3:25 · essentially a bug you know a code error
3:28 · because they I think in retrospect they
3:30 · would have pulled pricing from across
3:32 · exchanges to set the price for that
3:34 · stable coin rather than rely on internal
3:36 · quotes. Um so but this has resulted in a
3:40 · lot of market makers and traders having
3:43 · less capital and as you know as crypto
3:45 · prices drift lower because trading
3:48 · volumes drop they need to then have more
3:51 · capital available which means they
3:52 · shrink their balance sheet further. So
3:54 · this is then that reflexive okay
3:56 · weakening.
3:57 · Um
3:58 · I hate let me let me go I want to go
4:00 · back to this point Tom. I hate the term
4:01 · glitch. I can't stand the term glitch
4:03 · because you know things go down at the
4:05 · airport and they say, "Well, a glitch
4:06 · cause your flight to not take off."
4:07 · Guess that's not a glitch. That's more
4:09 · than a glitch. It's a word that is used
4:11 · to describe pretty serious automation
4:13 · issues, software problems, crashes for
4:17 · some reason that they try to minimize.
4:19 · Is this some kind of a a software bug
4:24 · that's causing part of this? I'm trying
4:26 · to follow exactly what you're hinting
4:28 · around about.
4:30 · Uh yeah, I mean Brian it is. I mean uh
4:32 · for instance in 1987
4:35 · portfolio insurance was the quote glitch
4:38 · and that triggered the cascade in 1987
4:41 · and so the industry learned uh and then
4:45 · never offered that again. You know in
4:47 · 2009
4:49 · it was really that the collateral wasn't
4:53 · secure in real estate in these package
4:55 · subprime mortgages. Now, the industry
4:58 · learned and they recoded that. I'm
5:00 · talking about Wall Street. But then
5:01 · regulators came in and like
5:02 · overregulated. That's that was the
5:04 · negative effect of that. In crypto, this
5:08 · code of ADL and the way they pull prices
5:11 · never going to happen again. The good
5:13 · news is we're not going to have
5:14 · overregulation in crypto. But, but now
5:17 · we have to deal with that liquidation
5:18 · effect. 2022 was a big liquidation and
5:22 · it took 8 weeks. Um but it it that is
5:25 · not kind of you're right it is the
5:27 · nature of DeFi where there is going to
5:29 · be code and there's going to be an error
5:31 · found and you said it leverage is what's
5:34 · dangerous and so investors should not be
5:36 · using excess leverage in crypto. Um but
5:41 · but you applied it in 2022. In 2022,
5:46 · we had what you would call a six-w
5:47 · weekek wash out. Maybe because of this,
5:52 · again, not using the word glitch, this
5:54 · software or coding problem or mistake.
5:58 · Six weeks later, we know what happened.
6:00 · If you bought then you made a lot of
6:03 · money. Do you still think we are in a
6:05 · wash out period in an overall bull
6:10 · market?
6:11 · Uh, yeah. I mean, I I can tell you a few
6:14 · things. Whether we're talking to macro
6:17 · funds or to crypto funds, they are
6:20 · sitting on piles of cash. People are
6:23 · sitting on their hands because they know
6:24 · there are these plumbing problems and
6:26 · these crippled market makers. They're
6:29 · not going to try to be heroes and step
6:30 · in here. So, when we look at those prior
6:33 · corrections, even Bitcoin in the last
6:35 · few years, Bitcoin last year had some
6:38 · really ugly corrections. each of them
6:41 · had the recovery, right? The rise from
6:43 · the low was faster than the than the
6:46 · drip to the bottom. So if if we've been
6:49 · suffering through six weeks of Bitcoin
6:51 · falling from 125 to 88 and maybe it goes
6:56 · to 77,
6:58 · right? Maybe that's the low and Ethereum
7:00 · bottoms at 2500. The recovery from there
7:04 · to all-time highs will be faster than
7:06 · the decline. That's what happened in
7:08 · every crypto decline because what what
7:10 · you have is all this spooled up energy.
7:12 · People are sitting and waiting and
7:14 · there's panic selling forced sellers but
7:18 · the buyers are being patient. Um that's
7:22 · what will happen. And again you guys
7:24 · kind of hit it on the head. Micro
7:25 · strategy is probably the most important
7:27 · stock to watch right now because that is
7:30 · the Bitcoin proxy. It's the most liquid
7:32 · name. I I it seems to me that when in
7:35 · the crypto world when they're trying to
7:38 · hedge their longs in Bitcoin and
7:39 · Ethereum,
7:40 · they can't find any other way to hedge
7:42 · it except shorting the liquid stocks
7:46 · that have been. So that's the Micro
7:48 · Strategies. Thi this is one of if not
7:50 · the most important interviews I've done
7:52 · this year and that's respectfully to
7:54 · every other guest we've had on this fine
7:57 · network and fine show because I want to
7:58 · dive in a little bit deeper to what
8:00 · you're saying that basically there's
8:02 · some kind of a a software coding problem
8:05 · that's causing a lot of this. Let's
8:06 · bring up guys if we can MSTR that is the
8:09 · company formerly known as Micro Strategy
8:10 · now just known as Strategy. The stock's
8:13 · down 50% in three months, Tom. It's down
8:15 · about 65% from its highs in the middle
8:18 · of July. Is Micro Strategy down because
8:23 · Bitcoin is down or is Bitcoin falling in
8:27 · part because the strategies of the
8:28 · world, the Michael Sailors of the world
8:30 · have to sell the crypto because their
8:34 · equity is going down. What's the
8:36 · chicken? What's the egg?
8:39 · Yeah. Well, uh again, you know, uh
8:43 · because of my world in research and in
8:45 · on Bitine, we are really plugged into
8:48 · all the trading desks and all the
8:50 · clients that trade. Anybody who has a
8:53 · sizable Bitcoin long position, okay,
8:55 · let's say it's more than a billion,
8:58 · they have very limited ability to hedge
9:00 · it in crypto derivatives like calls the
9:05 · chain. You know, the max they can do is
9:07 · maybe 5% of their holdings. And then if
9:10 · you go to traditional CME exchanges,
9:13 · their contract sizes prevent someone
9:16 · from hedging a billion dollar portfolio.
9:19 · However, someone can use Micro
9:22 · Strategy's options chain, which is so
9:24 · liquid, to hedge all of their crypto.
9:26 · So, Micro Strategy is essentially
9:29 · absorbing all the hedging pressure that
9:32 · the crypto industry is trying to do to
9:33 · protect their Bitcoin longs. So the
9:36 · reason Micro Strategy is a leading
9:37 · indicator, it's actually the only
9:39 · convenient way to hedge someone's long
9:41 · is to short Micro Strategy or buy puts.
9:44 · That's what we're seeing today.
9:45 · This this is the kind of stuff, Tom.
9:47 · It's one of the main reasons that we
9:48 · bring you on because you understand what
9:51 · I would consider the engine oil of the
9:53 · stock market, right? We know how the
9:55 · engine works or people think they do.
9:57 · But inside that engine, there are gears,
10:00 · there are pistons, there are things that
10:01 · are occurring that for 99.9% of our
10:04 · audience, they don't do this for a
10:06 · living. We get it. This is a really
10:08 · important interview. I'm going to let
10:09 · you go, Tom. Um, we are watching Micro
10:11 · Strategy or Strategy watching Bitcoin
10:14 · and we're watching possibly 77,000
10:17 · which you think might be kind of a wash
10:19 · out period. Correct.
10:21 · Yeah, that's right. Tom Demar who is an
10:23 · adviser to Bitmine very well
10:25 · really giving us a lot of insights.
10:27 · Yeah. Uh he's watching that
10:29 · actually micro strategy at this level
10:31 · here probably is when you want to
10:33 · ratchet into the longs. Um and Bitcoin
10:36 · maybe just a few thousand lower.
10:39 · So we might we might be at a bottom for
10:41 · for strategy.
10:43 · Yeah. Looking at maybe the Demar
10:46 · indicators named after Mr. Tom Demar.
10:49 · It's a technical indicator watched by a
10:51 · lot of hitters on Wall Street. Tom Lee
10:54 · of Fun Strat. Appreciate your time.
10:56 · Really super smart interview as always,
10:57 · Tom. Have a great day. Thank you.
11:00 · Thank you.
11:00 · All right.

--> YouTube-Generated Transcript <--
0:00	·	All right. So, Tom, you you've heard
0:01	·	what Steve had to say. This is, by the
0:04	·	way, not unusual for Nvidia, is it?
0:07	·	Nvidia, the good folks at Bespoke, your
0:09	·	team, you've recognized that Nvidia will
0:12	·	often have these kind of wild swings
0:14	·	following earnings, but what is your
0:16	·	take right now on these markets?
0:20	·	Uh, well, I think I'm I'm going to kind
0:22	·	of add to what Steve said. You know, I
0:24	·	think the crypto market has been limping
0:27	·	along since October 10th because on that
0:30	·	date was a negative shock. I mean,
0:33	·	today's stock market looks a lot like an
0:35	·	echo of what happened October 10th. But
0:37	·	on October 10th, that liquidation was so
0:40	·	big, Brian, it really crippled market
0:43	·	makers. And now market makers are
0:45	·	critical in crypto because they provide
0:47	·	liquidity. I mean, they act almost as
0:49	·	the central bank in crypto. and if
0:51	·	they've got a hole in their balance
0:53	·	sheet that they need to raise capital
0:55	·	for, they need to reflexively reduce
0:58	·	their balance sheet, reduce trading. Um,
1:02	·	and if prices fall, they've got to then
1:04	·	do more selling. So, I think that this
1:06	·	drip that's been taking place for the
1:09	·	last few weeks in crypto reflects this
1:12	·	market maker crippling. And so, in 2022,
1:15	·	it took eight weeks uh for that to
1:18	·	really get flushed out. We're only 6
1:20	·	weeks into it. So, I I I kind of concur.
1:23	·	I think crypto, Bitcoin, and Ethereum
1:26	·	are in some ways a leading indicator for
1:28	·	equities because of that unwind and now
1:31	·	this sort of limping and and weakened
1:33	·	liquidity.
1:34	·	Well, that and that was the that was the
1:36	·	point that my my very very smart team
1:38	·	behind me, we put together for the top
1:41	·	of the show, which was showing that that
1:43	·	Bitcoin turned down today before the
1:45	·	market did. All right, take us back. So
1:48	·	October 6th, I think it was October 6th
1:51	·	or 7th,
1:52	·	Bitcoin hit 125,000. Yeah. A couple days
1:55	·	later, it was still around 120,000.
1:59	·	Now, obviously, Bitcoin's at 86 and
2:01	·	change. So, what specifically occurred
2:04	·	on or around October 10th that would
2:06	·	lead us to where we are now on what,
2:09	·	November 20th?
2:11	·	Yeah. Well, Steve actually pointed this
2:14	·	out. There's a lot of what they call
2:15	·	automated processes in crypto. One of
2:18	·	them is called ADL, okay? And that's an
2:21	·	automatic liquidation feature that would
2:24	·	take place if someone's account or their
2:26	·	collateral drops in price. It's
2:29	·	essentially like a margin call. Um, on a
2:32	·	specific exchange, a stable coin's price
2:36	·	varied from other exchanges. It actually
2:38	·	stable coin should stay at a dollar. It
2:40	·	dropped to 65, but that only happened
2:42	·	within the exchange quotes within this
2:45	·	exchange because of liquidity. That
2:47	·	triggered an ADL, an automatic
2:49	·	liquidation across many accounts. It
2:51	·	wiped out as that spread across other
2:54	·	exchanges, right? Because liquidations
2:56	·	cascade, almost two million crypto
2:58	·	accounts got wiped out even though
3:01	·	minutes before they were actually
3:02	·	profitable accounts.
3:04	·	So, who who is behind this? Like who's
3:06	·	the they in the market makers and they
3:10	·	got hit? Who's the they?
3:13	·	Well, you know, Brian, I'm I I am aware
3:16	·	of names, but because uh you know, I'm
3:19	·	not someone who wants to name names. Uh
3:22	·	I think what you should keep in mind is
3:23	·	that the this error is actually
3:25	·	essentially a bug you know a code error
3:28	·	because they I think in retrospect they
3:30	·	would have pulled pricing from across
3:32	·	exchanges to set the price for that
3:34	·	stable coin rather than rely on internal
3:36	·	quotes. Um so but this has resulted in a
3:40	·	lot of market makers and traders having
3:43	·	less capital and as you know as crypto
3:45	·	prices drift lower because trading
3:48	·	volumes drop they need to then have more
3:51	·	capital available which means they
3:52	·	shrink their balance sheet further. So
3:54	·	this is then that reflexive okay
3:56	·	weakening.
3:57	·	Um
3:58	·	I hate let me let me go I want to go
4:00	·	back to this point Tom. I hate the term
4:01	·	glitch. I can't stand the term glitch
4:03	·	because you know things go down at the
4:05	·	airport and they say, "Well, a glitch
4:06	·	cause your flight to not take off."
4:07	·	Guess that's not a glitch. That's more
4:09	·	than a glitch. It's a word that is used
4:11	·	to describe pretty serious automation
4:13	·	issues, software problems, crashes for
4:17	·	some reason that they try to minimize.
4:19	·	Is this some kind of a a software bug
4:24	·	that's causing part of this? I'm trying
4:26	·	to follow exactly what you're hinting
4:28	·	around about.
4:30	·	Uh yeah, I mean Brian it is. I mean uh
4:32	·	for instance in 1987
4:35	·	portfolio insurance was the quote glitch
4:38	·	and that triggered the cascade in 1987
4:41	·	and so the industry learned uh and then
4:45	·	never offered that again. You know in
4:47	·	2009
4:49	·	it was really that the collateral wasn't
4:53	·	secure in real estate in these package
4:55	·	subprime mortgages. Now, the industry
4:58	·	learned and they recoded that. I'm
5:00	·	talking about Wall Street. But then
5:01	·	regulators came in and like
5:02	·	overregulated. That's that was the
5:04	·	negative effect of that. In crypto, this
5:08	·	code of ADL and the way they pull prices
5:11	·	never going to happen again. The good
5:13	·	news is we're not going to have
5:14	·	overregulation in crypto. But, but now
5:17	·	we have to deal with that liquidation
5:18	·	effect. 2022 was a big liquidation and
5:22	·	it took 8 weeks. Um but it it that is
5:25	·	not kind of you're right it is the
5:27	·	nature of DeFi where there is going to
5:29	·	be code and there's going to be an error
5:31	·	found and you said it leverage is what's
5:34	·	dangerous and so investors should not be
5:36	·	using excess leverage in crypto. Um but
5:41	·	but you applied it in 2022. In 2022,
5:46	·	we had what you would call a six-w
5:47	·	weekek wash out. Maybe because of this,
5:52	·	again, not using the word glitch, this
5:54	·	software or coding problem or mistake.
5:58	·	Six weeks later, we know what happened.
6:00	·	If you bought then you made a lot of
6:03	·	money. Do you still think we are in a
6:05	·	wash out period in an overall bull
6:10	·	market?
6:11	·	Uh, yeah. I mean, I I can tell you a few
6:14	·	things. Whether we're talking to macro
6:17	·	funds or to crypto funds, they are
6:20	·	sitting on piles of cash. People are
6:23	·	sitting on their hands because they know
6:24	·	there are these plumbing problems and
6:26	·	these crippled market makers. They're
6:29	·	not going to try to be heroes and step
6:30	·	in here. So, when we look at those prior
6:33	·	corrections, even Bitcoin in the last
6:35	·	few years, Bitcoin last year had some
6:38	·	really ugly corrections. each of them
6:41	·	had the recovery, right? The rise from
6:43	·	the low was faster than the than the
6:46	·	drip to the bottom. So if if we've been
6:49	·	suffering through six weeks of Bitcoin
6:51	·	falling from 125 to 88 and maybe it goes
6:56	·	to 77,
6:58	·	right? Maybe that's the low and Ethereum
7:00	·	bottoms at 2500. The recovery from there
7:04	·	to all-time highs will be faster than
7:06	·	the decline. That's what happened in
7:08	·	every crypto decline because what what
7:10	·	you have is all this spooled up energy.
7:12	·	People are sitting and waiting and
7:14	·	there's panic selling forced sellers but
7:18	·	the buyers are being patient. Um that's
7:22	·	what will happen. And again you guys
7:24	·	kind of hit it on the head. Micro
7:25	·	strategy is probably the most important
7:27	·	stock to watch right now because that is
7:30	·	the Bitcoin proxy. It's the most liquid
7:32	·	name. I I it seems to me that when in
7:35	·	the crypto world when they're trying to
7:38	·	hedge their longs in Bitcoin and
7:39	·	Ethereum,
7:40	·	they can't find any other way to hedge
7:42	·	it except shorting the liquid stocks
7:46	·	that have been. So that's the Micro
7:48	·	Strategies. Thi this is one of if not
7:50	·	the most important interviews I've done
7:52	·	this year and that's respectfully to
7:54	·	every other guest we've had on this fine
7:57	·	network and fine show because I want to
7:58	·	dive in a little bit deeper to what
8:00	·	you're saying that basically there's
8:02	·	some kind of a a software coding problem
8:05	·	that's causing a lot of this. Let's
8:06	·	bring up guys if we can MSTR that is the
8:09	·	company formerly known as Micro Strategy
8:10	·	now just known as Strategy. The stock's
8:13	·	down 50% in three months, Tom. It's down
8:15	·	about 65% from its highs in the middle
8:18	·	of July. Is Micro Strategy down because
8:23	·	Bitcoin is down or is Bitcoin falling in
8:27	·	part because the strategies of the
8:28	·	world, the Michael Sailors of the world
8:30	·	have to sell the crypto because their
8:34	·	equity is going down. What's the
8:36	·	chicken? What's the egg?
8:39	·	Yeah. Well, uh again, you know, uh
8:43	·	because of my world in research and in
8:45	·	on Bitine, we are really plugged into
8:48	·	all the trading desks and all the
8:50	·	clients that trade. Anybody who has a
8:53	·	sizable Bitcoin long position, okay,
8:55	·	let's say it's more than a billion,
8:58	·	they have very limited ability to hedge
9:00	·	it in crypto derivatives like calls the
9:05	·	chain. You know, the max they can do is
9:07	·	maybe 5% of their holdings. And then if
9:10	·	you go to traditional CME exchanges,
9:13	·	their contract sizes prevent someone
9:16	·	from hedging a billion dollar portfolio.
9:19	·	However, someone can use Micro
9:22	·	Strategy's options chain, which is so
9:24	·	liquid, to hedge all of their crypto.
9:26	·	So, Micro Strategy is essentially
9:29	·	absorbing all the hedging pressure that
9:32	·	the crypto industry is trying to do to
9:33	·	protect their Bitcoin longs. So the
9:36	·	reason Micro Strategy is a leading
9:37	·	indicator, it's actually the only
9:39	·	convenient way to hedge someone's long
9:41	·	is to short Micro Strategy or buy puts.
9:44	·	That's what we're seeing today.
9:45	·	This this is the kind of stuff, Tom.
9:47	·	It's one of the main reasons that we
9:48	·	bring you on because you understand what
9:51	·	I would consider the engine oil of the
9:53	·	stock market, right? We know how the
9:55	·	engine works or people think they do.
9:57	·	But inside that engine, there are gears,
10:00	·	there are pistons, there are things that
10:01	·	are occurring that for 99.9% of our
10:04	·	audience, they don't do this for a
10:06	·	living. We get it. This is a really
10:08	·	important interview. I'm going to let
10:09	·	you go, Tom. Um, we are watching Micro
10:11	·	Strategy or Strategy watching Bitcoin
10:14	·	and we're watching possibly 77,000
10:17	·	which you think might be kind of a wash
10:19	·	out period. Correct.
10:21	·	Yeah, that's right. Tom Demar who is an
10:23	·	adviser to Bitmine very well
10:25	·	really giving us a lot of insights.
10:27	·	Yeah. Uh he's watching that
10:29	·	actually micro strategy at this level
10:31	·	here probably is when you want to
10:33	·	ratchet into the longs. Um and Bitcoin
10:36	·	maybe just a few thousand lower.
10:39	·	So we might we might be at a bottom for
10:41	·	for strategy.
10:43	·	Yeah. Looking at maybe the Demar
10:46	·	indicators named after Mr. Tom Demar.
10:49	·	It's a technical indicator watched by a
10:51	·	lot of hitters on Wall Street. Tom Lee
10:54	·	of Fun Strat. Appreciate your time.
10:56	·	Really super smart interview as always,
10:57	·	Tom. Have a great day. Thank you.
11:00	·	Thank you.
11:00	·	All right.