that that's the interesting thing they were talking about on Bloomberg one minute after the dot plot came out shows that it was not that exciting of a –

I mean I think the things that really mattered were he acknowledged the fact that inflation is still above target and people feel inflation when they go to the gas pump, et cetera, and that there is a need to get inflation lower and that the Fed is committed to its inflation target and its dual mandate, period.

He reiterated that.

Which is ultimately hawkish in this environment.

Hawkish.

But at the same time, did he acknowledge the fact that interest tight or higher interest rate policy has impacted financial markets and has had a feed through? Absolutely.

He specifically talked about, you know, credit spreads, right, that had moved wider since the last meeting, you know, particularly AI related credit spreads.

And

Yeah

... correct.

And so you're within spitting distance of what I think is, you know, like the four-year cycle bottom, right? And so, you know, maybe your fill's at 82 or maybe your fill's at 75.

But, you know, I feel more confident than ever that, you know, we're entering a new cycle where you will hit, um, you know, fresh all-time highs, uh, in the coming years.

And so if you're thinking about it in that lens, you know, the difference between 82K, 80K, 85K or 75K or 70K, like, is a little, like, meaningless.

Now, you know, in terms of like short term tactically here, like, open interest is, is pretty low on BTC.

You've had healthy flush out in the alts.

Lord.

Where are we now in your mind with Bitcoin?

Yeah, so I think the move that you've seen in the last 24 hours is a function of kind of leverage getting taken out, late longs kind of getting hosed.

If you looked at kind of the liquidation maps going into today's move, it looked like all the shorts have basically already gotten liquidated and liquidated.

who's left to liquidate now, it's the longs.

Yeah, so there's not that gas from liquidating shorts to drive it up higher.

Correct.

And some of the moves you had in alts were just breathtaking.

Yeah.

What was the sort of drama around this meeting today?

I wouldn't describe it as like drama per se.

I would more describe it as kind of tension.

In a way, I think the tension lies in the fact that the back end of the bond curve has sold off a ton, right? Ten years at 5%, basically, right? Yeah, and 30s are north of 530.

So you are at the highs in the back end of the fixed income curve.

oils on a hundred dollars you've got you know almost four hikes baked into well now i guess it's three because we just hiked once yeah um you know and you've got global fixed income that's sold off like crazy and you have a fiscal impulse that hasn't really never been bigger um and not just domestically but abroad and so to hike interest rates into this kind of tension in broader markets was probably not that difficult of a decision because the market already put it in.

But ultimately, you have to think about what a hike signifies.

Yeah, so where they think it will go over, what, several quarters out.

doing it's not that would be printing money for sure

but effectively it is in a way because when the fed issues uh... more T-bills has to get absorbed into the market.

And as you know, like a couple months ago, the Fed had to, more than a couple months ago, but the Fed had to start buying back T-bills to inject reserves back into the system because SOFR started blowing out.

So if you look at a chart of the Fed's balance sheet, it's actually started to move higher again.

So we are technically in a period where the Fed's balance sheet is actively expanding, and I would define that as QE, but there might be some debate around that because the Fed doesn't want you to think about it as QE, but it is QE.

Anyway, and so the realization that you know, the government was willing to step in if yields got to some level was a big catalyst because it kind of, like, what's the value of money if you could just, like, print it all the time? And if you don't like a price, like, you just adjust it.

And so, and there was, like, a bit of disillusionment because of some of the tension between what Warsh has said previously and what Besson wants.

It's doubled the price.

ever.

Literally.

And so there's excitement around crypto again.

And what we've been talking about through the depths of this bear market is people have been building.

Today, there was a headline out saying JP Morgan was considering launching its own stablecoin.

Again, the stablecoin rails, the tokenized equity rails, and tokenized asset rails, that has become a pretty dominant... kind of narrative, but not only narrative, but it's being put to practice by the largest institutions in the world.

And so that's really hard to ignore.

For

I see.

And in theory, like, the, the way the markets work is that you-- if you wanna control the, the bond market and make it artificial in a way, uh, your currency will bear the brunt of that impact.

Because effectively, you know, what's happening is the Treasury's buying back these longer dated paper, um, and they're gonna issue bills.

Oh, look, the Fed is currently in a bill buying program to, you know, make sure that there's ample liquidity in, in the front end of the system.

Um, that's all to say that the Fed is actively doing QE right now.

Um, and the Treasury [chuckles] is, is doing stuff to, to keep the back end kind of controlled, and so you have massive, you know, balance sheet manipulation happening.

Uh, it is QE because by definition the, the Fed balance sheet is, is expanding currently.

Mm-hmm.

In response to this, what is the initial market reaction been to the CPI number and the read-through to PCE?

Yeah, so you've seen US two-year yields like drop by like two basis points.

And so I think that speaks to kind of, like, the core PCE stuff, the implications, right? Because on headline, it printed inline maybe a little bit higher than expected, but ultimately, like, what really matters...

is kind of that that core pc number but again it's like it's really hard to like understand what matters like i can't tell you the amount of confusion there is over warsh's uh response function like what does he care about and it seems like there's differences of opinion like amongst the committee like there is still consensus and you only had like two dissenters but it's really unclear to the market, like how he's actually thinking about this stuff because, okay, well, let's say CPI came in hot today.

Like there's one version of the world where he's using the, the Dallas trim mean, uh, like inflation figure, which is like shows us lower, right? There's, you know, his views about, you know, productivity and AI, right? Like, are they big kind of are they near term things or are they like longer term things? Like, and then how do you think about it in the context of treasury policy? Like the backend of the U S curve is, is that 19 year highs, right? And we're printing deficits like crazy.

And so we're going to just, you know, jack up the point in the curve where the U S issues the most, like 22% of all like treasuries are like in bills.

Like I said, there's like all these like dynamic, like, kind of factors.

Setting aside the absolute fact and question of whether we have bottomed, what is it that makes you constructive on Bitcoin right now?

really couldn't

get below 58, not really.

And so the market's starting to look a lot more constructive.

I think over the medium term, you're probably meant to like start accumulating if that is your kind of view.

Correct.

Right.

And I generally, you know, I think even without clarity passing, there's been so much good stuff that's happened broadly in terms of adoption of stable coins with prominent financial institutions, more products, like better kind of understanding of the space, et cetera, tokenized assets, custody solutions.

Is that over? I think

50 would be on the upper end of the index

drawdown.

So, you know...

No, absolutely.

And I think it's also worth noting, like just highlighting the impact that the Bitcoin price action is having on a bunch of other crypto assets.

You know, mainly ETH is breaking down.

You're back to like the 60K low levels effectively.

Did people think it was going to transition, go up, up, up on a risk basis, and then everyone would immediately change to using it as a store of value? I think that road is rocky to that place, and maybe this is part of that story.