Fed Sparks Rally?📈Crypto Market Update🔥

Episode Transcript
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Speaker 1 (00:00):
Did the FED spark a market pump today. We'll break
it down for you. Don't want to miss it, let's
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(01:06):
to trade crypto. Let's go over to a couple other
points I want to hit on, and this, of course
is kobec hitting on bitcoins on track for its biggest
daily gain since May of twenty twenty five, nearing ninety
one k as timer recording, we had just clipped over
ninety two thousand. We'll show you guys the charts here
in a minute. In the last sixty minutes, one hundred
and forty million shorts have been liquidated. We're starting to

(01:28):
see market maneuvers happening after Chair Powell's announcement last night.
I'll break that down, but there are a few things
that could be causing some of this retlacement, and this
is happening across all the all coins as well. I
want to go to a clip real quick because this
will break down ken stocks rally to the year end.
Take a look.

Speaker 2 (01:46):
I was talking to somebody last week about what's like
the most obvious thing that you think is going to
happen that people still aren't expecting, even though it's obvious,
like kind of joking around and the end. But the
truth is they're going to buy these seven stocks. And
I know how badly people want there to be a
new narrative. I know how sick and tired people are

(02:07):
seeing the same ten stocks at the top of the
leaderboard quarter after quarter.

Speaker 3 (02:13):
Year after year.

Speaker 2 (02:14):
And I understand how people went overweight healthcare and energy
and staples and some of the other areas that started
to rally in late November as the AI story started
to get a little bit shakier. But like in the end,
these are the biggest, most liquid stocks, and contra the
bubble narrative, you're not even expensive. Meta is a twenty

(02:37):
two times forward pe. Like, what are we talking about?
You're gonna tell me Costco at forty five is cheaper.
In Nvidia is the second cheapest stock in the mag seven.
It's got a forward pe now at twenty four. And
I understand all the stories about competition, et cetera, et cetera.

(02:57):
Not dismissing that, but again, this is the best company
on earth and it's twenty four times forward earnings a
multiple you have never been able to pay for a
name with execution at this level all right.

Speaker 1 (03:11):
One thing to think about, guys. I wanted to go
back to the late nineties and I want you to
just go do a little history tour, because he is
exactly right. There were a lot of stocks that many
people were saying, Hey, the bubble is here. This is
prior to two thousand when we did see the dot
bomb occur and saw almost eight trillion come off the
market cap of these stocks. But the point being is

(03:32):
that there were a lot of companies that came out
on the other side. And I think that's the real
question is what winners are going to come out on
the other side of the AI narrative. But also some
of these mags seven because some of these are going
to win, some of them are going to lose. I
don't know which ones. But the point he's getting at
this is still early, whether we like it or not.
McKenzie also came out with a big report here and

(03:55):
there were some interesting points that they hit on that
I think you need to pay attention to. First, is
this right here, here's the last twenty years. I've seen
a radical reshuffling. This is my point. Look at back
in two thousand and five, you had Microsoft at number three,
look at that, you don't even recognize any of these
companies other than Walmart. Bank of America was in there,
Johnson and Johnson, HSBC now number one in Nvidia, Apple, Microsoft, Alphabet, Amazon, Broadcom, Aramco, Meta, Tesla,

(04:23):
and TSMC. That's the difference that we've seen in this
market in a very short period of time. If you
look further into their chart, which I thought was interesting,
is the positioning ranking that started to move, including a
lot of companies in twenty twenty three around revenue share
and market share of revenue. You got new players in
there like Huawei, Jaumi, etc. That are playing a huge

(04:46):
role in how technology is moving up. Further in this point,
a report that I thought was also interesting is the
investment by big tech players that escalate a near forty fold.
So I don't know if this is the dot bomb
era or not. What I do know is has a
lot of similarities of new industries being birthed overnight and

(05:07):
starting to ramp up quickly. And what I'm talking about there,
of course, is crypto and AI. Those are the two
categories that you've got to watch going forward.

Speaker 4 (05:15):
Here.

Speaker 1 (05:15):
For sure, there are some effects though that the market
is starting to hit on crypto. One of them, course,
is the Vanguard effect. Here's Balshun is talking about this.
Bitcoin jumps six percent right around the US open on
first day after the Bitcoin ETF ban was lifted. Coincidence,
not necessarily. Vanguard, of course seems to have a little
bit of a dj in in them, and of course

(05:37):
that is what we're seeing right now. Do you think
that is the case here? I don't know. Vanguard has
not been a big proponent of bitcoin in the past.
Now all of a sudden, guess what they are now
on the bitcoin boat. So let me know what you
guys think. Is Wall Street really the key here to
putting the nail into the market to maybe get it

(05:57):
to this next level or is this just a short pump?
It was Hunter Horsley of bit Wise, now eighteen ETF's
publicly traded funds in the US. I mean, this is
crazy to have this many ETFs out there. In terms
of open markets, diversified single asset equity options are coming,
all these kind of things. This is a very interesting

(06:19):
time because we were talking about Walmart, or excuse me,
we're talking about Wall Street that is reshuffling the entire
way that they're doing business and of course companies like
Big Wise leading the pack there. Black Rock also hitting
full steam ahead, with bitcoin ETF volumes surpassing one point
eight billion in the first two hours two hours of

(06:39):
trading today, so activity very active again on bitcoin. President
Trump is course calling for the Federal Reserve to cut
interest rates. What's new You've got? Diamond said that Powell
should reduce rates. Now, that's an interesting new statement coming
from Jamie Diamond. But I think what many people are
looking at is the announcement that we saw last night

(07:00):
by Chair Powell, and that was that Chair Palell didn't
do anything. One thing though, that is coming, is this
announcement right here. Trump says he's going to deliver a
major announcement today. As we're recording, it has not been delivered,
but my anticipation is probably something around the Fed assignment,
whether that is Hassett or if he's got something else
up asleep. You got it. With Trump, he comes out

(07:22):
with these no kind of no win announcements and then
he hits one out of the park. So you don't
know what you're going to get. We'll see, hopefully later
this afternoon. Other thing you've got of courses Chairpal did
not comment on the economy. You've got all of the
world waiting at bated breath of what you're about to say,
and he doesn't even talk about the economy. I don't

(07:44):
know if he's trolling or if that was just something
they're setting up for December the tenth. But one thing
is for sure. They confirmed quantitative tightening is ended. And
I think the fact that the market is pumping and saying, well, okay,
he didn't hurt the market and tightening has ended, we
have that confirmation. Where does easing begin? I mean people

(08:04):
look to January as the possibility where easing could begin.
You look at this right here in terms of poll
we put out, was the Fed announcement of flop? What
might trigger the next major moving crypto? Right now, regulatory
process holding up very slightly at twenty eight percent, rate
cut number two at twenty six percent, So people are
really pushing the rate cut and the regulatory process, And

(08:28):
of course I've talked to two analysts out of DC
over the last thirty days. Everybody is still pointing at
twenty twenty six. And the concern is whether or not
it actually gets done in the first few months, because
you Remember, the government shutdown could happen again in January.
You also have to have this huge defense bill that's
going to be going through Congress. All of this could
take a lot of power out of Congress and push

(08:52):
what we will see in terms of the next crypto
bill maybe down the road. And that's the concern that
everybody has. Will Bitcoin hit one hundred and fifty? If
you look at this December thirty first chart on poly market,
we kind of zoom in on the graph right here.
Look at the way that this kind of zoom in
on that for you guys. Look at the way this
is performed. It was almost forty percent just a couple

(09:13):
of months ago. Look at the failure in this market now.
People definitely not saying that that is the case for
a December one fifty number, And that is the kind
of scenario that we are seeing in the market now.
Many people would say, well, maybe that is the time
in which a market could actually spring forward. Some points
right here would say, all right, if that's not the case,

(09:36):
maybe all coins are on the move and many people
leave that's the case that we could see all coin
off season rally again into new highs in December. Let
me know what you guys think, is that where you
stand on this poll? Drop some comments down below. If
you're not subscribed to the show, take some time get
that subscription button right there. We do appreciate it. And

(09:57):
there's a lot of you that are brand new viewers,
and I know you're coming in from maybe stocks and
bonds and maybe the traditional market real estate, a lot
of investment guys that are starting to look at crypto
in a different way. Well, welcome in. Let me go
to a quick clip here, because this is where Bloomberg
is talking about the market capacity for more pain. Take
a look.

Speaker 3 (10:18):
I don't think the pain is over for crypto overall.
Part of the reason that I have been negative, or
the main reason I've been negative on crypto over the
past five weeks and hence worried about the volatility seeping
into the broader market, is the whole digital asset treasury
company dynamic that with all the atfs and the leverage
that is built around that, they are now a multiplier

(10:39):
on the way down in the same way they're a
multiplayer on the way up, so they amplify the moves
in both directions, and many of them are turning into
a negative kind of death spiral that as the stock
price trades below their crypto holdings, the only logical move
is to start selling down their crypto holdings to exacerbate
the moves and the downside. Now most these companies have
kind of chased it and are related to the trade.

(11:00):
Micro strategy is the big one, and it's really important,
and that's why their statement yesterday is a big relief.
We know the seasonals are generally good. People chase your
own trades. They talk about the Santa Rally. There's this
idea that this is the time to kind of position.
If you think we're going to make fresh records, why
would you not get bullishnaire I am more worried about that.
I think that we're probably going to get a hawkish
cut from the Fed next week, which is going to

(11:21):
be problematic in the margin, and I think that the
crypto sector is going to have more and more downside
and that's going to hurt the retail sector. When we've
already got a K shaped economy pressuring through the cost
of living and rising on employment at the lower end
of the income spectrum. I think that's going to prectic
pressure investor sentiment across the spectrum, which is going to
add to volatility and make it harder in the short term.

Speaker 1 (11:41):
All right, So a couple of points he hit on there.
One was the statement he talked about where Pal's going
to have a hawkish cut. I don't know that I
would agree with that in its entirety. The point that
I would look at with palell is that he is
holding on to this two percent target by the Fed
in terms of inflation. Remember, a lot of you don't
realize inflation is accumulative, so it continues to go up

(12:04):
no matter. What the key is is what percentage does
it go up? And what's acceptable for the American economy
what's not acceptable right now? And I think this is
where Powell is trying to fade the heat on. It
is the job's position that we're in right now. If
he comes in with a cut, which I think he
will in December, I think the next steps moving forward

(12:25):
is going to be forcing his hand because of the
replacement that's going to be coming in right behind him
that whether that is Hassett or someone else, the likelihood
it's going to be a pro Trump administrative selection, and
it's going to start. They are going to start cutting
at will. We could see a full one point cut
in the FED fund rate, and I think this will

(12:45):
start to move the markets forward. Now whether that comes
in March, April or May is the big question, because
this is how the market will play into it. I
want to go to a clip here from Brad Gersner,
who's coming in from Altimeter, And you got to remember
Brad is a one of the biggest vcs out there
in Silicon Valley. He's been around forever, very tech oriented guy,

(13:09):
and he made some interesting statements here. I want you
to listen to take a look.

Speaker 5 (13:12):
As a hedge fund, we run very limited leverage. We
certainly would not be levered bitcoin, and in fact, I
commented on Twitter about it with respect to micro strategy.
It works incredibly well on the way up, but I said,
I didn't understand the strategy. And when I can't understand
something that somebody explains, you know, time after time after time,
that's a warning sign to me. And I think you're

(13:33):
seeing kind of some of the unlevering that is occurring.
Bitcoin this year is down ten percent, Gold is up
fifty or sixty percent. I hope we can dispel the
myth right one is a risk asset and one is
not right. And so it doesn't mean that you should
know own bitcoin. I own some bitcoin, and I might
might be buying a little bit more, you know, as
it comes down. But it is a speculative asset that

(13:55):
over time will have more and more utility. But we
have to be honest with what it is today, all right.

Speaker 1 (14:02):
So I think a lot of people do understand that.
I think most people will follow our channel understand Yes,
it's a speculative asset, and with these speculators of asset
you have these wide swaths. I think the real question
was how much will bitcoin come down? And I think
the factor that we're going to see in terms of
unwinding in the market is going to be triggered by
a lot of these digital asset treasuries. To the point

(14:23):
that Gershner is talking about, which is micro strategy going forward.
Now with that, you've got to consider one other one,
and of course that is BMNR. The leader of bm
and R is Tom Lee. Tom Lee is predicting bitcoin
win a new all time high before the end of
January still and he's not given up on that because listen,

(14:44):
they're not blinking on eth either eith just fell in
their thirty percent, the treasury slid fourteen billion down to
nine point seven billion, the stock is down twenty five percent,
and they bought another one hundred thousand ethereum and now
hold three percent of all ethereum and openly are chasing
the five percent mark, which would be a huge amount

(15:04):
of accumulation. And remember we've got the Fusaka upgrade. We
just had Drake on to talk about that and what
this might mean around not only the upgrade of what
we'll see with eth a FED pivot possibly in play.
Could the January shareholder meeting get dicey for mister tom Lee.
I don't know. And again, some of this just may

(15:26):
be playing into the cycle of where this market is
going now for the market in general. This is Paul Atkins,
new CC chair confirms crypto Innovation Exemption is launching in January.
So that's a positive thing. We'll continue to see the
SEC being pro crypto, which is all very good. Projects
can now launch tokens and products fast without full SEC

(15:46):
registration for the first time ever. That in itself will
be a positive thing. But he was asked specifically around
the issue of what could happen if we don't see
Clarity go through. And what I'm talking about is the
Clarity Act. What is the SEC do to deal with that?
Let me go to this clip right here. Take a look.

Speaker 4 (16:04):
Can you do what needs to be done with crypto
without legislation?

Speaker 1 (16:10):
And do you think that that can happen before the
end of the year.

Speaker 4 (16:13):
But you know, we'll see. I can't prognosticate that, but
we have enough authority to drive forward. I'm looking forward
to having an innovation exemption that we've been talking about.
Now we'll be able to get that out in a
month or so, is what I'm hoping. We were impeded
a bit by the government shutdown, obviously we couldn't work

(16:34):
on things during that time. That we're on track and
we will be able to forge forward with a crypto area,
all right.

Speaker 1 (16:44):
So one thing to consider here, because the SEC has
been in this position before where they're forward thinking or
forward looking, both on a anti crypto position and now
on a pro crypto position. If Atkins is saying what
he means, and that is that the innovation exemption would
essentially open the market up to no action, because that's

(17:07):
the big concern everybody has is I'm not going to
get accent on by the SEC until clarity can match
up to it. Then this still may be a good
enough kind of scenario playing into next year of where
a lot of major companies could move quick because I
think a lot of people are starting to realize if
we don't move now, we miss the next major wave.
So it's very possible. You can see even banks coming

(17:29):
into this area. You could see major companies coming into
this area because of the innovation carve out that they're
talking about, and if it works, that could be all
we need going forward. Now let me go to another thing,
because this is getting into a clip from Raul Powell
that talks about this cycle, because this is what everybody's asking,
isn't this cycle not matched up with the previous cycle, etc.

(17:51):
And I know everybody's a cycle person out there, but
listen to what Raoul had to say about this. Take
a look.

Speaker 6 (17:57):
Remember we've always said it's the business cycle stupid, is
always the business cycle stupid. But basically it's following the
ism and rates have been following the same pattern. You see,
rates should have come lower. They need to come lower
because we need to roll the debt we've talked about this.
That's part of the everything code fundamental part an ism.

(18:18):
Because rates are so high has meant that main Street
has been screwed while Wall streets made money from debasement
earnings versus scarce assets. This is the issue that they
need to solve and they need to get rates lower.
Why do we have an elongated business cycle that looks
like virtually no other real other time? Is that in

(18:38):
twenty twenty one to twenty two that actually extended the
maturity of the debt from four years to five years,
So that extension of the maturity of debt has pushed
out the business cycle a year. The four year cycle
this time around is a five year cycle. We don't
know what the next one will be until we see
where they all get end up getting refinanced when it
comes back to four because they mustice to get some

(18:59):
stuff the long end, or whether they shorten it because
everything's in the short end. We don't know yet. But
this one is a five year cycle, and this is
what it looks like. Five point four year sign curve.
Five point four year is the exact average weighted maturity
of the debt. The ism should peak by twenty twenty six.

Speaker 1 (19:18):
Okay, two points sit on that. One is what he
stated there in terms of the last debt cycle where
it was elongated in terms of to basically place the
debt into position, and what they're talking about is exactly right. Ism.
If you go back here to this chart, this is
twenty twenty to around twenty twenty two, and when it's
above fifty, which is what we're zooming into right there,

(19:41):
you can kind of see where we are today versus
where we were back then. If it's above fifty, this
of course indicates that the market is in alignment with
it outside of the tech sectors, so everything butt tech,
all this is basically going into what Roll's talking about,
this business cycle, and we're not. So if he does

(20:02):
think that this is happening, then seeing this going into
the next cycle, and I'll throw out twenty twenty because
that's the big COVID dip that we saw right there.
But if you go back here even to twenty sixteen,
there's the run up right there, small dip and then
a boom in the ism moving on into what we
saw in twenty seventeen eighteen. Of course that was when

(20:22):
crypto was very young, but the point was the markets,
of course, saw some big movements at that same time.
So it's possible that he could be correct on this
around business cycles because of the debt structure and the
way it was done, and we don't know yet how
it's going to be restructured. Because we're dealing with high
interest rates, which is why we need lower interest rates.
All of that plays into a thesis that could be

(20:44):
going forward to what Raoul was talking about. And one
thing that does play into the thesis is this right here.
This surprised me, but Bank of America now is officially
recommending clients to put up to four percent of their
portfolio into bitcoin and crypto. Now this is a conservative,
major conservative bank. If a conservative bank is pushing to

(21:06):
four percent, imagine what a private office is doing. What
we're seeing around family groups, trusts, and then going in
to manage capital. All of that could now be pushing
into above the five percent, into maybe close to ten.
That's where we are leading right now, and unlocking capital
is a big trigger going forward. This is something I

(21:26):
talked about with an analyst here recently. Is the capital unlock.
I want you to think about this for a second.
The amount of assets that are going onto RWA tokenized
assets over the next eighteen months, compared to what we
have assets available that are tokenized right now to what
they will be in eighteen months, is dwarfed in where

(21:47):
that market is going. What I mean by that is, imagine,
if you're an old school investor, you've never had the
ability to sweep accounts go out into DeFi do all
sorts of yield farming on stable coins, et cetera that
was available prior to now. Now if you look at
the amount of market that is out there in terms
of liquidity that could have access to that, those are

(22:09):
the other things that could cycle into what Raul is
talking about, which is liquidity flooding the market because of
its ability to move so much faster in these new
instruments that are being launched by Wall Street. So think
about that. A lot happening in the market out there.
We're going to continue to cover this because there is
a lot happening right now. Bitcoin, of course on a
huge run for the day, We're holding it about six

(22:30):
point nine percent up on the day. Look at where
we are on Salana also a ten percent move right here.
Suy made a monster move almost twenty percent up on
the chart right now, even link chain Link moving up
eleven percent, XRP up seven percent, back up to twenty
almost and of course as we get to get into
some of the other assets, onto up some pengu one

(22:53):
of the meme coins that we think still has an opportunity,
up twenty five percent. Let me know what you guys
are doing out there. Are you trading this cycle right
now or are you looking for a retracement for Bitcoin
to lead the way? Hit the comments down below. Make
sure and join our own private member group as well.
If you haven't done that, take some time. It's a
free group. All you have to do is click the

(23:14):
link down below. It gets you into the Baron Market
Edge and you get free insights from us. And the
best of things to do is, of course, follow me
out there on x at Paul Baron. We'll catch you
next time right here on the Paul Baron Show

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Episode Transcript

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