Fed Crypto Rescue Soon?🚨Crypto Market Update

Episode Transcript
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Speaker 1 (00:00):
Could the FED bail out the markets today? We'll break
it down for you, get into some details. You don't
want to miss it. Let's just jump right in. I
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(00:41):
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Let's get into a couple of points I want to
touch on. First. Of course, the market is down again,
wipe down from the crypto market another one hundred and
forty bill just in the past four hours. We continue

(01:02):
to see these kind of radical swings coming in and out.
It's always happening on these weekends, and of course this
happened over Thanksgiving Black Friday weekend. Three three point five
billion bitcoin ETFs now exiting in November. This is the
US spot bitcoin ETF shedding over three point five billion.
This is the highest monthly outflow that we've seen since February,

(01:25):
so pretty significant overall, and there are some scenarios I
think that play out for how the market could respond
to this. The real question is whether or not bitcoin
is going to stop at the eightyk mark. Do we
see this all the way down to seventy two or there?
I say, is this the beginning of a bull market

(01:46):
and we could see a much lower bitcoin You guys
let me know what your thoughts are comment in the
comments below. Let's get into this right here, because this
is where Eric Balshoun has kind of hit on this
and says, wait a minute, I just read the City
analyst say that for every billion from the bitcoin ETF
equals to around three point four percent drop in bitcoin price,
So by that logic, since the ETFs have taken almost

(02:09):
twenty two billion in inflows, we should be up to
seventy seven percent. Now. The only thing I would argue
on that, I'm not sure that that even Eric is
revealing the full report here by city, because the response
on city might be that if you look at the
math is and the way you would do is go
look back at that twenty two billion in inflows and

(02:29):
just say, well what did that do? Average it out
and sale for every billion, Maybe it's one point five
you know, in the market in terms of percentage, and
that would be up like thirty percent. So I don't know,
maybe there's more behind that, analyst. The point is is
that the ETFs are having an impact on the market.
I think that's the bigger picture here, and you can
see it right here as we continue to see a

(02:51):
market cap dropping to under three trillion. This of course
will continue for a while. I think, guys, maybe going
into the end of this year, unless us we get
a big market turnaround. I'm going to reveal something to
you that Tom Lee said that might reveal that that
could be waiting in the wings. The interesting thing though,
that I want you to pay attention to is this

(03:12):
fear and greed you would think or feel. I look
at it this way. Bitcoin dipping under ninety again, starting
to press eighty five, and our fear and greed is
holding at the top level of extreme fear at twenty.
Remember a week ago, ten days ago, we were at
a ten. So is the market actually responding to this?

(03:33):
And we've got a twenty five on an all coin season.
I'm not buying that one either. Other things that, of
course people are looking at is this eight PM meeting
and this of course's pale talking about what's happening today,
and we all know what that is. December first, quantitative
tightening ends. The question is is will QUE begin right now?
The poll says possibly announced tonight. This, of course would

(03:57):
be a striking difference. Of course, if we get an
announcement like that, that would be a significant market indicator
for QE. And of course if QE comps. The printers
come on and guys, we're getting ready to jump into
another run. President Trump says he's decided who's going to
be the next FED chair and he's going to announce
it soon. All eyes though, are on Kevin Hassett as

(04:20):
the potential leader right now at seventy two percent, you
can kind of see and a big leap forward here
just over the past few days. Obviously, some of that
came from President Trump on Air Force One where he
was kind of smiling about Kevin Hassett's name. Also, could
Trump be trying to throw a curveball against this. You've
got to be looking at all possibilities. I guess the

(04:42):
good thing, if any, is that at least Kevin Hasset
has been a very pro crypto position in general. We'll
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(05:05):
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(05:47):
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(06:11):
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(06:33):
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(06:54):
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(07:17):
You can forget about the market volatility stake once earn
every day. Now, there are some other things that are
affecting the markets. If you look in the SMP, you
look at gold, you look at silver, all of those
markets are pretty much up and to the right. The
one that is a trigger for all of this is AI.
I want to go to a clip here because this
we'll look at nowly the Fed's next move, but how

(07:38):
the AI trade may be played.

Speaker 2 (07:40):
Take a look, I.

Speaker 3 (07:41):
Actually have been encouraged because I think that AI trade
has become more differentiated. People have understood that vertical integration matters.
They have understood that multiple sources of revenues matter. So
we're starting to see AI being much more fundamentally driven
than hype driving.

Speaker 4 (07:58):
Explain that I don't get that because it's like every
time there's a deal of both companies tend.

Speaker 5 (08:03):
To go up.

Speaker 4 (08:03):
Whatever two deals, whatever two companies are there. How are
we differentiating between what works and what does?

Speaker 3 (08:08):
So let's start with Gemini. I think Gemini three was
a significant change in the landscape. I think it made
people realize that if you are going to be a
winner in this arms race, because it is an arms race,
you have to have certain attributes that not all the
companies have. Now you're starting to see much more consideration
of how are you funding yourself? Are you funding yourself

(08:30):
mainly from revenue or are you funding yourself from circle
of financing. That's all good because you didn't want the
bubble phase to get carried away too much, because otherwise
there would have been a lot more damage than there
would be otherwise.

Speaker 4 (08:41):
So what are you watching outside of this AI trade
Obviously that's leading the market has been for a while,
but there's a lot of other things that are happening
Federal Reserve and beyond is that.

Speaker 3 (08:51):
We need to pay more attention to the supply side.
We are captivated right now, understandably by two things, will
they cut this month or not? And who will be
the next FED chair? As important is how will this
FED be reformed? This FED went to sleep. We have
got to be better at the supply side, and most importantly,
the compliance culture has to improve. So there's a lot

(09:13):
of things that we have to focus on on the
FED because it's so central to our economic wellbeing.

Speaker 1 (09:19):
All right, So you can see there are different opinions
right there on how this plays out. And you guys
will remember Michael Burry exiting the market some of where
he said, I just don't understand this market because it
has been up and to the right, and most of
the narrative has been centered around in Nvidia, and that
of course gets into the broader picture of technology. It's

(09:40):
why we're seeing the S and P move at the
rate we have seen here recently. But at the same time,
you've got global macro positions that are really starting to
maybe reposition the entire planet. Some of the things you
got to look at is Japan's ten year government bond
yield that's just hit a one point eight percent, almost
at one point nine highest yield since t one thousand

(10:00):
and eight. We all know what happened back then. That
was a huge economic crisis. Remember, Japan was the anchor
zero rates, infinity liquidity, that was the scenario. The anchor
is now breaking. A couple of points within this tweet
right here, Japanese institutions hold approximately key point here one
point one trillion in US treasure securities. This gets bent
into the scenario of the reverse carry trade. What that

(10:22):
might mean for US securities if this happens precisely as
the Federal serve terminates QT, precisely as the US Treasury
requires record issuance, which is going to be about one
point eight trillion. So you've got a lot of happening
right now between what's going on from a big scenario

(10:43):
around Japan and what we're dealing with here in the
United States. So, when the world's creditor nations stopped funding
the world's debtor nations at artificially suppressed rates, the entire
post two thousand and eight. Financial architecture must reprice, So
that's something that you have to look at. Maybe these
are some of the underlying pressure points that are really

(11:03):
driving into crypto when you look at those markets. It
has been interesting. At the very least. This is in
July of twenty twenty four, of the FED cut rates
while the BOJ raised rates, leading to unwind of the
carry trade. Bitcoin capitulated into it. We found a new
low that week. Good chances could happen again around December tenth,

(11:24):
because we all know what that means. That is the
FED now. This could push the FED now because of
what's happening with and in Japan, to possibly be a
little bit more cagey around pausing. And that's the question.
Do we get the pause? With all of this happening
from a global economic position? What do you guys think.
Do you think we're gonna have FED rate cut or

(11:44):
do you think Chair Pale will hold the line and
try to position the US for another pause. Bitcoin and
eth have fully decorrelated. And this is the point I'm
getting to. Bitcoin and eth have fully decorrelated from the markets.
If you look at gold, the S and P five
hundred all times right there. You can see those charts
boom boom, but Bitcoin right here absolutely just getting cratered.

(12:06):
Same thing with ethereum. These are the kind of factors
that I think a lot of people are looking at
right now, and many people saying, hey, maybe the exit
was one twenty six, maybe the exit was around four
K on eight, and this could be the entry of
a new bull or bear market going forward. Now Tom
Lee doesn't believe that, which you know, we know Tom Lee,

(12:28):
he doesn't believe that at all. In fact, he's calling
for a year in rally.

Speaker 2 (12:32):
Take a look. But you still bullish on crypto and
stocks going into year.

Speaker 1 (12:37):
In I am.

Speaker 5 (12:40):
I think the biggest tailwind that's going to emerge in
the next couple of weeks is around the central Bank.
The FED is set to cut in December, but also
today is the day that quantitative tightening ends. And as
you know, the Fed's been shrinking its balance sheets since
April twenty twenty two. It's it's been a pretty big
headwind for market liquidity. The last time we had an

(13:04):
end to QT quantitative tightening was September twenty nineteen, and
if you look back at that period, the markets really
responded well, I think within three weeks rallied more than
seventeen percent.

Speaker 4 (13:17):
Here's what concerned me about a couple of weeks ago
Tom with the market's behavior, and that was watching all
of the AI high flyers dip and drop and pretty
precipitously in some cases, because it looked like the FED
wasn't going to cut That raised questions about what was
happening in the private markets, and it made me start
to wonder, Okay, are we looking at a lot of

(13:38):
business models that don't work if the FED doesn't continue
to cut rates.

Speaker 5 (13:42):
Yeah. I think there was a lot a bit of
soul searching Becky in November because we know leverage rose,
and we know there was deleveraging in some markets like crypto,
and we know margin that's high. And I think that
there was essentially a reset in November because the market
had a six percent decline, but the AI stocks and

(14:03):
the meme names and a lot of other names fell
even more.

Speaker 3 (14:06):
So.

Speaker 5 (14:06):
I think that that position reset has been healthy, and
I think many fund managers we talked to in November
in the midst of all that kind of threw in
the towel. I thought the rest of the year was
sort of a write off, and now if December is strong,
there's can be a bit of performance chasing, and I
think that's what you should typically expect in the final
weeks of the year.

Speaker 1 (14:26):
All right, So that's interesting his statement around performance chasing.
I'm looking at Nvidia right now, which has been down
from it's high at two oh seven. It's trading out
about one seventy nine. Then you've got Meta, which had
a pretty big drop coming off it's high back in August,
which was around seven ninety, dropping all the way down
to six forty where we are right now. Pal Andeer

(14:47):
also another drop coming in from two oh seven down
to where it's trading today at one sixty seven. So
I don't know, but I see Becky kind of pushing
back on it sometimes within these major shows, I always
won if there's like a good cop, bad cop kind
of scenario. So this is getting into a lot of
things which are really targeted around bitcoin. This is an
interesting analysis right here. Micro strategy creates one point four

(15:10):
billion dollar cash reserve. This gets into a lot of
scenarios that do and change. I think a little bit
of how people look at strategy and if you look
at Strategy as a stock it has continued. Let's go
over and take a look real quick, just to go
on to Master. Right here is Strategy's stock price coming
off that high four point fifty seven to where it's

(15:31):
trading right now one to sixty five.

Speaker 2 (15:33):
So this is a.

Speaker 1 (15:33):
Significant turn of events for micro Strategy, especially with where
we are around bitcoin. But the point being is when
you look at this breakdown, this of course looked at
the company holding six hundred and fifty thousand bitcoin. This
is about three percent of Bitcoin's supply that will ever exist.
And now the new reserve covers twenty one months of
dividend payments. So this is all being done through a

(15:55):
variety of instruments that Sailor has been building for some
time and he can used to do. Then Peter Schiff
came on the offensive saying today is the beginning of
the end for Master. Sailor is forced to sell stock,
not to buy bitcoin, but to buy US dollars merely
to fund Master's interest and dividend obligations that we just outlined,
and the stock is broken. The business model is a fraud.

(16:16):
Sailor is a bad guy and was one of the
biggest out there on Wall Street, So I don't know.
The point is is that right now Michael Sailor is
defending the position. The real question is is can bitcoin
pull out of this because it could bring the entire
crypto market with it, or also bring the entire crypto
market with it in a downward spend if we see

(16:37):
an under seventy k Bitcoin come back. The other thing
that's at risk in the market is Tether just dropped
their latest reserves report and the numbers are not looking
good here if everyone tried to redream redeem USDT at
the same time. Right now, Tether is short by about
thirty four billion in instant liquidity. Now you look at
that Tether, you know, in on paper or it could

(17:00):
be a problem because this is looking at assets of
one hundred and eighty one billion versus liabilities one hundred
and seventy four billion, but they're not fully liquid, so
they run pretty much a fractional reserve model like traditional
banks to This is not good for stable coins, guys,
and it's also one of the reasons that we haven't
seen Tether make its way into the US, at least
not with USDT. My question is does this put more

(17:23):
pressure on tether and create an opportunity for stable coins
like pyusd RL, USD Circle obviously with USDC and possibly
a handful of other bank tokens that might be coming
in in the future. And of course this all gets
into stable coin yields and how that potentially could impact

(17:44):
the market. Coming up soon more FUD, though tether FUD
usually has mark bottoms. This is something to be on
the lookout and the watch for right now. Question is,
do you guys think that we are entering a bear market?
Or have we been in one since a one hundred
and twenty six K bitcoin and people just missed it.
That's the real question that everybody's asking right now. Remember, guys,

(18:07):
we put this in and that was that Sony Group
plans to issue US dollar link stable coin. This is
going to be payments within the Sony ecosystem. I know
a lot of you probably said, wait a minute, didn't
you guys talk about that?

Speaker 6 (18:20):
Yes, we did.

Speaker 1 (18:21):
We talked about that over a year ago, that eventually
this would happen, and of course that is where we are.
And remember we also talked about aster over a year
ago of where those markets would start to move. Sony
stable coin now getting ready to move into the Market's
a little slow there for Sony. I think, will the
polymarket US go live in twenty twenty five? Yep. Poly

(18:41):
Market is now live in the United States, So get ready, guys.
This is going to cause a lot of impact, I
think in general around the betting community. But more important,
I think it's going to probably change the dynamic of
some of the market leaders out there. And one of
the things you got to look at is how much
growth polymarket could have because this could get into a

(19:01):
lot of other things, could be like an Nvidia stock
if they do go public. And when they do go public,
people will start watching it. Here's Shane Copeland breaking down
how many people are going to be using this in
just five years.

Speaker 2 (19:12):
Take a look and how accurate is it.

Speaker 6 (19:15):
It's the most accurate thing we have as mankind right
now until someone else creates some sort of super crystal ball.

Speaker 2 (19:21):
It is not a poll. That's not the function of polymarket, correct.

Speaker 6 (19:25):
Pally market is trying to predict the outcome. The percentage
of people who are going to vote for a candidate
is not the same as who's likely to win. And
you would look at polymerk and who would say seventy
thirty for Trump, and people are like, no way, it's
going to be seventy thirty. But he could win by
one point. But he's seventy percent likely to win.

Speaker 2 (19:42):
Which is a different question than pollsters are as exactly.

Speaker 6 (19:45):
So, the fact that polymerker was able to be the
signal through the noise, there was our first step on
the scene of mainstream politics.

Speaker 2 (19:52):
How many people use polymarket today?

Speaker 6 (19:54):
I mean there's tens of millions of people who are
looking at the odds and it's mid hundreds of thousands
of people we're trading.

Speaker 2 (20:00):
But for you, the goal is a billion people. Yeah,
So will polymarket reach a billion people in five years? Yes?

Speaker 6 (20:07):
Or not?

Speaker 2 (20:08):
It's a great question. What are the odds on it?
I love it.

Speaker 6 (20:13):
A billion people is a lot. There's going to be
a lot that we have to get right. The thing
that drives me is that there are billions of people
who could find value in this, which means until those
people have poly market are getting value from poly market.

Speaker 2 (20:26):
Job's not done.

Speaker 1 (20:29):
All right, So you can kind of see and he
mentioned the success and I think we've touted this as
well as this is pretty much the I think it
has killed the pole industry, because polymarket pretty much reset
the whole standard of how politics are being done. The
other area that's going to reset the standard on is sports. Here,
of course, is poly market in the sports category right

(20:50):
now coming up to number one, much faster than I
even thought FanDuel holding number two. Then you get into DraftKings,
et cetera. And even if you look at the powerful
esp in who had formerly known as ESPN's bet now
I think it's called something else. But the point is
that's number twenty two in sports. This continues to show
the power of where polymarket could go. All of this

(21:12):
built around crypto, all of this built around the blockchain.
This is why I think we're going to continue to
see advancement in technology in that. Speaking of advancement into
more institutions, well you got to look at this one.
Bit Wise now files their avax ETF. This is going
to also include you guessed that staking yields are coming
in with this as well. This will be good for avalanche,

(21:33):
but I think it's good for the market in general.
It puts more people aware of other assets and how
you can earn yields on those assets. When you're inside
an ETF more power to where these ETFs are moving.
But don't forget historically, when November turns red for bitcoin,
December almost always follows red too. So I don't know
if this is going to line up well for Tom

(21:55):
Lee's analysis of a reversal in December, because it's only
happened a handful of times over the years, and the
question will be how does it do it? Can it
do it? Right here? This will be the last time
we saw it in twenty seventeen, well in actually twenty
twenty three, not a bad year. But for the most
part we're kind of ledging our hedging toward a red

(22:16):
month coming up. We did a poll real quick after
three years of FED three years, will the FED finally
n QT today? That's the question. Everybody is also coming
in Yes, new incoming high. I kind of thought it
would be yes, but a lower high could be up
for bitcoin. And of course, if this will all depend
on what Palell does tonight. If he comes in with

(22:38):
nothing on the meeting, this could send markets barreling down
further waiting for the December tenth date, So be on
the lookout. December tenth real critical right now? All right,
So let's not forget this right here, because this is
a big factor right here. The average ETF investor right
now is now at a loss as bitcoin price cantin

(23:00):
and needs to slide. This could get pretty ugly if
we continue to see Bitcoin push downward, because the real
question this is a different kind of investor than what
we typically see, and in many cases if it's an institutional,
they'll take their losses and move. They're watching what's going
on with gold, They're watching what's going on with the
S and P with silver. Now, all of this pertains

(23:22):
to how this market reaction will move. This is a
critical critical line in the sand as we get into
around eighty three K that could push bitcoin into a
bad position overall. As we are filming, let's take a
look at bitcoin holding at the eighty four to eight
after the big liquidation event overnight, and of course you
can kind of see it right there even ethereum same scenario,

(23:45):
we're holding at twenty seven hundred, many others out there
XRP defending the two dollars mark. Again, this is the
kind of scenario, guys, that we have to be watchful
for of how this plays out into the markets. So
let me know what you guys think always drops some comments.
We always love to have that. If you're not in
our Private member group, you should be. It's absolutely free

(24:06):
to join. Just click the link down below. Follow me
out there on X at Paul Baron. We'll catch you
next time right here on the Paul Baron Show.

Speaker 2 (24:13):
Thank you,

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