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Insilico Terminal Podcast Episode 20 - Fofty
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In this episode, Fofty shares his unconventional path into markets - from the euro crisis and the Wirecard collapse to crypto mining, ICOs, and eventually macro-driven trading across options, perps, and traditional markets. We explore how event-driven thinking, convexity, and seasonality shape his approach, why options offer a better way to express macro views, and how liquidity - not narratives - ultimately drives markets. The conversation dives deep into misunderstood macro dynamics, government liquidity hacks, Bitcoin’s struggle with credibility, CT culture, and why constant scamming undermines long-term adoption. We close with thoughts on the future of markets, Bitcoin’s role as digital gold, and the need for traders to think bigger than short-term extraction.
00:00 Intro, Fofty’s background, origin of the name, early Twitter and CT beginnings
02:59 Rebirth group, daily macro writeups, building credibility as a macro-focused reply guy
06:56 Wirecard scandal, discovering markets via shorting fraud, Twitter as a real-time news edge
15:32 First macro “click”, euro crisis, Greek bonds, studying finance and early convictions
19:47 Mining, Dash masternodes, Bitmain, ICO cycle, getting wiped in 2017–18
23:24 Trading philosophy, event-driven macro, convexity, why options beat linear perps
34:45 Why macro is misunderstood, liquidity vs textbooks, Treasury issuance and cycle prolongation
54:12 Bitcoin, gold, narratives, scams, generational belief, rant and closing thoughts
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Transcript
Introduction and Guest Background
00:00:03
Speaker
you
00:00:12
Speaker
Welcome to a new episode of the In Silico Terminal podcast. Today my guest is Fofti. Is that how you pronounce your name? I've never asked before of but yeah.
00:00:27
Speaker
And I guess ah many of you already know him but how do you introduce yourself to people that don't know you already? Who are you? What do you do? Yeah. tell us Thanks for having me.
00:00:39
Speaker
Pleasure to be on. My name is Fofty. um i don't know. um
00:00:47
Speaker
where you might know me or could have known me but um my handle on twitter is Fofti. The
Twitter Beginnings and Strategies
00:00:56
Speaker
name Fofti is from a meme ah from back in the days where 50 cent and some millionaire were arguing about money that the millionaire owned 50, owed 50 cent and that's how the Fofti meme was created and that's why I took this name in the beginning of 2020 around. And yeah, I started off with another account, which also was called Fofty. I started off to tweet in German. um
00:01:28
Speaker
I'm from Germany. um I started to tweet or I started off to tweet in German ah for the first half of the year. And then I got banned for insulting someone as a retard. Yeah. Really? Yeah, I mean but back back then back then Twitter was not owned by Elon and especially in Germany they got or they had this very very conservative or leftist or whatever you want to call that ah very strict policies you couldn't you couldn't tell other people retort. So I got banned with this account, created another account with the same name basically Started off though to tweet in English or gave it a try in English.
00:02:10
Speaker
um We're grinding along as a reply guy as we all started off. um But my strategy back then was like guerrilla gurilla marketing. So I went under like bigger accounts and been like basically a fucking cunt. correcting them in all sorts of macro takes, been arguing with a bunch of people. But in the end of the day, we somehow became our friends and um they saw basically that ah what I've been saying was like more or less correct.
Community Engagement and Recognition
00:02:47
Speaker
So I wasn't like and spreading fake news or whatever, or being just but um I still was a cunt that had I was a cunt with, how do you call them, smart ass. Those smart asses, they try to correct people for no reason. So this was my strategy ah to get some attention.
00:03:06
Speaker
Then um at some point I joined Rebirth. um Rebirth, I think it was a Discord oh it was a discord back then, an invite-only Discord, and I joined with Just Asking, and then they had basically a premium, or not a premium, it it was called, I believe, Alpha.
00:03:30
Speaker
ah section and like the plebeian channel where those people that couldn't get into alpha were just chatting to each other and you actually had to apply to get an alpha role which I never got right so what I did in the end or what I started to do ah that's probably why most people um connect me to macro or mainly macro is I started um to write summaries.
00:03:59
Speaker
Every day i went there and wrote like a four pager or three pager summary of all macro data, right, about all charts or all markets or not all markets but the major markets, some analysis, some own opinion and so on and so forth. So I did it like for months. I did it probably like for half a year.
00:04:20
Speaker
i was there I couldn't make it into the Alpha channel, so I started to post my four pages or three pages every day at the end of the ah or at the end of the day at Market Close into Rebirth. And at some point, I believe it was RanaXBT back then,
00:04:37
Speaker
he um started to notice me and he started to DM me and was like, yeah, well, we can't take you into Alpha. ah We got to do voting and whatnot. And with time, basically, ah more people got aware of me. ah All the same basically for Twitter, but RanaXBT, shout out to him. was basically the first guy that took me and ah went into public and was like, yeah, this this guy is actually pretty smart in regards to macro and thread file markets. So um it's been now, I believe,
00:05:16
Speaker
four years, around four, yeah, four years. um I made it into Rebirth, not in the Discord channel because it died off at some point and it went over to um Telegram. So in the end of the day, I got invited, i got my invite, I made it. um And that's how I cruised along for the remaining of the time, until now, basically.
00:05:40
Speaker
is Is that like a special group chat or how can you imagine? Well, ah it started off with GCR looking for talent. right So back then he wanted to create a group with a bunch of alpha guys. Alpha guys ah meant basically people that were good or very successful in poker for instance or were good at coding, were good at ah whatever niche, right? So everyone had to apply or submit their application for an alpha role. At the end of the day they just added a bunch of influencers and then it kind of got slower.
00:06:24
Speaker
um So I never actually got into the Discord alpha group, so I can't say much about that. um I came into the Telegram group um way later, so at some point they switched into Telegram, asked me to come. I think it was because of Moudinio back then.
00:06:42
Speaker
so And this is how like I got more attention and everything. Basically, I started off as ah um as a reply guy in English and before that I ah purely was writing all my stuff in German.
00:06:59
Speaker
So you you were a reply guy on CTE. How did you discover CTE back then? How did you first come across it?
Market Influences and Trading Journey
00:07:06
Speaker
o I don't actually know how or what was the reason for me to go on Twitter, but i was um ah it was back in 2020 when in Germany the Wirecard scandal happened. Wirecard was basically ah financial institution that was um doing financial transactions, right? They basically did all these gray area financial transactions of porn, casinos and everything. And that's how they actually got into the DAX.
00:07:47
Speaker
Most of you know, DAX are the 30 biggest companies in Germany. And they basically got added into the ducks and at some point there were rumors or you always had like a bunch of short sellers warning about fraud and whatnot.
00:08:03
Speaker
um And it went to a point where the ah regulation or regulators in Germany banned short selling because there was so much, so much thought about them, about dodgy investments or dodgy businesses in Indonesia, dodgy businesses in Asia and whatnot.
00:08:21
Speaker
ah which was a fair point, right? But it was back then, it was like the darling of the German government as well, right? Many investors got in there, right? It was like this fintech company back then in Germany and everyone, or everybody loved it, right? And at some point, there were like rumors about ah this dodgy COO, I believe, Jan Marsalek, And this is, I believe, how I joined Twitter because I wanted to short it. So this was basically also the first time I got back into the markets after the 2018 crash in crypto where I got rug pulled and went broke. This was the first time when I came back actually into the market ah by all
00:09:10
Speaker
with the attention to short this Wirecard thing to zero. So I went on Twitter and Twitter was also back then basically the best source or the fastest source of news. Or you could get news very um very summarized, right? You could get news from independent sources. So you didn't need to rely on the um media outlets or the mainstream media outlet where it still got like praised into the heavens but under the underneath the hood shit was already like on fire, right? So at some point then um Ernest & Young, their auditor went out and and said basically there's two billion euros missing. We don't know where it is. We can't we can't give you an attestation. right So the chart plummeted and still then, right basically still then, everyone was defending them. right So the main auditor bailed and still then there was hope. right People have been buying the dip and I was like, this this shit is nuts then. How is this possible? So I went out and um this was basically me getting into the markets.
00:10:22
Speaker
Back then we didn't have many sort of options on it. right So you got to you had to phone up the broker or your bank. They were calling you retarded for doing that. The spreads were very, very shitty, especially in Germany on the ducks. So this was the first time. yeah I believe this was the actual reason for me joining Twitter and then obviously also tweeting a German, um getting more into politics discussions and all that noise back then.
00:10:52
Speaker
ah COVID started, right? Everything went bananas. So it was a good time or it was probably the best a platform to be around on to grasp Alpha.
00:11:04
Speaker
ah Before that, I believe, or the 17 and 18 cycle, I was on Facebook. There was this bigger group. I can't remember how it was called, CoinTrader, something with CoinTrader, it was a group of 100,000 people in 17 and 18.
00:11:20
Speaker
ah But um I believe Wirecard in ah summer 2020 was the point where I joined, ah not CT, but yeah, Twitter.
00:11:34
Speaker
Did you like get the timing right of the trade? That must have been a pretty good one, right? ah It went to zero, right? So at some point, I mean, I would have lost money if it just went slowly to zero, right? Because these spreads were fucked up. IV went through the roof. But i back then, I didn't have much of a clue about that. I was like, ah some retard that wanted to short it to zero. And I was lucky basically, right?
00:12:01
Speaker
Because um after EY came out and presented these rumors, they still had some time to present um or to get the 2 billion euros missing, right? But at that time, what ah what has happened is the CEO, this Jan Marsalek guy, he just basically took a private plane, fucked off to Russia and the CEO got arrested. So and this is how everything collapsed and yeah, the rest is history. history
00:12:35
Speaker
I don't really know too much about it. I guess like I know mostly from like TikTok edits and stuff, but I think it's like the biggest fraud in like financial fraud in German history or something. so Well, back then back then, two billion was a large amount of money, right? Now it's like, yeah, whatever, two billion is just an investment in some fucking random AI company with just the white paper. But back then it was like a massive scandal because not only it got edited to the docs,
00:13:04
Speaker
But also it was like every everyone's, all the normies' favorite, because they praised it as fintech,
Investment Insights and Mistakes
00:13:12
Speaker
right? Basically as the Germans' paypal, right?
00:13:19
Speaker
And the Germans are already like so resistant to like stock investing and stuff like that. Or even like, maybe it changed a bit now, but like back then, like I feel the the older generation, especially they see it as risky and stuff like that. So they, they don't really like doing that. So it was like a huge scandal basically that like,
00:13:36
Speaker
gave like a little bit of hope when it was going well, but then kind of like destroyed all of that when it blew up. There is a saying and um the same happened basically with those mortgage-backed securities in 2008. So there's a saying basically that the Germans or the Europeans basically hold always the bag. So there's a very, ah very large history of um those big and investment banks, right? Putting all shitty junk together and selling them to German banks as a safe haven. And this ah this is usually a signal to sell everything as soon as Germans go on, you just sell and and call it a day. So we've got like a history of making bad investment decisions.
00:14:27
Speaker
Well, I don't know who in the end, it was probably some americans but American banks for to sell all that junk. But it happened a lot of time. It happened with and in the 08 crash. It happened with Wirecard. There was the most surprising part. So there was BaFin, the financial regulator of Germany. They were like, nah, this is all food. Don't believe the food is out of London. We are going to ban short selling.
00:14:59
Speaker
ah yeah theres There's a history in Germans doing um FOMO decision and getting wrecked on. So if you see either of us like buying anything, you should just like sell immediately. That's basically the moral of of the story. Yeah, usually usually it's safe banks, right? It's like regional banks that get those packages sold and sell them then to their customers. But yeah, if you if you see like Allianz or all the big German and whatever ah regional bank ah banks buying those bonds or packages, then yeah, get off.
00:15:37
Speaker
So is that like what made you get more properly into Macro? ah No, that was back in time. So i I'm doxing myself now as a millennial.
00:15:48
Speaker
ah That was actually back during the Euro crisis around 2010. So what happened there, and this this was like an like a click moment for me, is Greece went tits up. um And I was working at my chat job in some warehouse. Back then it was like six euros an hour they paid us, but it was still, back then it was good money. ah
00:16:19
Speaker
if If you worked like a 400 euro job, as we called it, now it's like 500, I think. But back then it was a 400-Euro job. You had to work 70 hours for 400 Euros at the end of the month. You could do these jobs tax-free
00:16:35
Speaker
while doing college or while doing high school. So I was underage there and Greece went tits up. I didn't know what basically happened. And what I saw were Greek bonds or the yield on Greek bonds. They've been rising on a weekly basis.
00:16:51
Speaker
right And back then I thought, man, they're not going to let Europe down. right Greece is the is the motherland of democracy. right It doesn't serve us any purpose in the eu ah European Union, but it's like this symbolic country. right we it's It's a democracy. of That's what people claim. Democracy was founded in Greece. So I was like, there's no way they are going to ah leave it, right, or drop it. So I saw the bonds or the 10-year of Greece going 15%, 20%. At some point, I believe the the highest point of the Greek 10-year was 30%.
00:17:34
Speaker
And that's when I went home and did some digging, some research and I was like 15 or 20% is amazing if they get bailed out. Well, you got 20% yield on your money.
00:17:48
Speaker
So this is how i basically got into macro. And in the end of the day where things clicked was, in the end of the day, the same as 2008, banks get always bailed out and the public is always paying for it this is this This was basically the lection for when I was 17 around.
00:18:11
Speaker
Underaged, I went to my mother, said, Mom, we got to buy Greek bonds. They are going to yield us good income.
00:18:19
Speaker
Well, it didn't work out as I planned, right? Because back then, but the same as with Wirecard, you still had to go to your bank or to your broker or whatever. There were no apps at that time, right? As we got now. So you still had to do it like manually and everyone was basically thinking, well, what the fuck are you doing? That was the moment, that's when I decided to go and study ah finance after my um after high school.
00:18:47
Speaker
Went to high school, studied finance, um went or some some friend of mine phoned me up at some point um when I was about to finish college or my bachelor degree. He brought me then into crypto. ah Back then it was mining.
00:19:07
Speaker
so um Bitmain released a batch of X11 miners, um which is which was mining Dashcoin.
00:19:20
Speaker
So he showed me this profitability chart and everything. He said, if we invest $5,000 into a Dash miner, the return of invest would basically be a week. So we buy this shit miner out of China without warranty, without nothing, and just plug it into our homes. To be fair, they were quite um economic. So they didn't use a lot of energy as these S9 Bitcoin miners back then or these SHA miners. So we ordered these miners from China and what happened there was basically the first rock pool in crypto. So the difficulty and these miners were brand new, right? With ah yeah the power or the power of these miners were kind of new. so The difficulty was still quite low ah with these miners, so you could actually reach this return of invest in a couple of weeks. What we didn't know is that like obviously Bitmain ah was plugging the miners in themselves. ah Their excuse was warranty, right so they wanted to test them, but in the end of the day they used to mine ah Dash for free at that time. so
00:20:36
Speaker
and They got released or production started and these miners got released and the difficulty went so high within a week because all the miners clap got plugged in at once. The return of In West was not a week or something anymore. It was like months now. so And it still took us like a couple of weeks until it shipped and everything. So it was still quite profitable, but not as what we expected into getting rich quick. right This is how I got hooked into crypto, finished my studies, went to Commerzbank, worked there in M&A. But always did like this crypto thing on site. Back then it was big with ICOs. So everyone was sending an ETH for, I don't know what, supermarket on the blockchain or whatever ICOs.
00:21:26
Speaker
Totally scam. But back then we believed in something, right? We believed in yeah in the future. We believe that everything is on the blockchain soon. Transactions. ah You could buy fucking coffee in Colombia. directly at the farmer pay him with some coins and he sends you the coffee here and so on and so on so we believed in that shit we did that um i't what was 17 18
00:21:55
Speaker
cycle and at some point I went into...
Crypto Experiences and Challenges
00:22:00
Speaker
um What were they called? Masternodes. So privacy, masternodes, Dash had also some masternodes, got rock pulled with that, lost a bunch of money, all mining, got unprofitable because that was Trump's first term ah back then also.
00:22:20
Speaker
And he what he did first was starting war with Iran. All oil went up, energy went up, mining went unprofitable and we went like with we we we we got left with basically a bunch of debt.
00:22:33
Speaker
ah Went back to uni. um My parents were fucking disappointed in me. Had to go back to uni, do my master's degree and well, and then COVID happened, this 2020 crash happened.
00:22:48
Speaker
ah crash happened um Wirecard happened. like It happened basically all at once.
Full-time Trading and Strategies
00:22:54
Speaker
So this got me then back into doing markets full-time, but more on the traditional side, right more with options. That's also when Robinhood launched in 2022. The first Zero DTEs launched for ah on a retail basis. Everything got more liquid. So I went ah into that full-time.
00:23:22
Speaker
And you've always like looked at the market more through like a micro lens instead of learning technical analysis or like after becoming less delusional from the early crypto days and not investing in fundamental fundamentals or something like that?
00:23:34
Speaker
Well...
00:23:38
Speaker
I always started off as, ah I always seen myself as an event-driven trader. So whether it's macro, whether it's some rumor, whether it's some news, whether it's some earnings, whether it's um whatever, ah that always fascinated fascinated me, the um convexity or velocity of things that move fast into a direction and you being right on it. And this is also why options ah nowadays fascinate me more than let's say perps because perps is more linear, right? You bet on a trend, whereas with options you bet on convexity. You've got the opinion or you've got the possibility to um to trade your opinion, right? Basically the same as sports betting. You you don't bet on Real Madrid versus Barcelona. Or you're not only able to trade a directional on each team, but now you can trade on Robert Lewandowski scoring a goal, something like that. So options always gave you not only more convexity, but they let you formulate your opinion or trade your ah opinion, not only on a trend. What exactly does ah convexity mean here?
00:24:59
Speaker
Convexity is, or convexity or velocity is the movement or volatility. It basically means ah you can bet on an outcome, let's say on earnings, and you get paid or your option value increases by the movement by or by...
00:25:21
Speaker
how fast a name moves. right So you that's what I see sometimes on Twitter. They say, who the fuck is trading gold for 1% or for a few pips, right? But in the end of the day, if you pick up ah some, let's say 20 Delta calls or puts or whatever, um And you are right, this one percentage move, especially in like low volatile or with low IV names like gold, they pay you royally, right? You can get in the s SPX as well ah with zero DTEs. That's why they are probably nowadays so popular. you triple your money right within an hour.
00:26:00
Speaker
um The same basically, like I think in crypto terms, this best comparison is Solana trenches. I believe that's also why they got popular because people are not betting now on a linear outcome. like Let's say you trade perhaps in Bitcoin or you trade some, I don't know, ah large caps.
00:26:22
Speaker
um You go out and you pull a lottery ticket, let's say you invest one Solana, it's $150 or whatever the price is, and you don't bet on 10%, right? Or you don't bet on 15%. You bet on 2X or on a 5X or whatever.
00:26:39
Speaker
ah This is why I think they got popular. And the same is pretty much with options.
00:26:46
Speaker
So you prefer options as an non instrument compared to perps? I do everything. so i like There's always this discussion which I kind of find confusing on CT.
00:27:01
Speaker
It seems sometimes like everyone is fighting for some crumbs. um It's not, perhaps in general, it's always hype if versus Aster.
00:27:12
Speaker
It's hype versus lighter. It's this versus this. It's this project is shit. This is better. Right? It's not really a community. It's just fighting each other.
00:27:23
Speaker
um From my perspective, what ah how I see things is um All assets in ah on the planet are $500 trillion dollars today.
00:27:37
Speaker
And they're not only $500 trillion they grew from $400 trillion last year. they being or they grew from four hundred trillion last year or a year ago. So there is nothing like this is better or this is worse. This is this and this is I just I just try to use everything for my personal um for my personal use. So nowadays I use perps for news trading, for instance.
00:28:06
Speaker
I use it with a terminal or with ah with a custom terminal that is only for news, right? And then I use options, let's say, for time windows I want to trade. um nowa the The best example is now we are in a phase which is historically very, very bullish. If you look at seasonality, then ah this seasonality basically means a bunch of rebalancing is happening back to the market, a bunch of re-leveraging is happening back to the market. um
00:28:38
Speaker
or Some people call it Santa really. It's basically big funds, pension funds, other institutional funds that don't take profits. ah But they always re-leverage or reinvest their paper profits. right If a market, let's say the S&P is up 15% on a year and it's 50 trillion, I don't know the exact number, is probably around 40 to 50 trillion, but let's take 50 trillion. If the S&P 500 is 50 trillion, you got it, it's trillion dollars in paper wealth. So this paper wealth always gets rebalanced or re-leveraged into the market. So what I like to use options here for is to trade these windows. right So now ah basically my this expression is I go out and see okay which assets basically. This is also what options gives you its depth.
00:29:37
Speaker
Their assets, they are not correlating
Macro Trading and Economic Theories
00:29:39
Speaker
to each other. In Bitcoin or in crypto, in perps, with perps, everything is correlated to each other. ah Options skipped gives you more depth. So you've got a variety. You can trade metals, you could trade small caps, um you could trade large caps. They are usually not really correlated or you can trade a bunch of stuff which is not really correlated to each other.
00:29:59
Speaker
what i use now options for ah what i like to do with options the most is i try to express my opinion on these little windows now we came out of uh christmas out of holidays a very very volatility compression is happening during these um days especially if they're falling onto weekdays. So now all these funds, they got less days to re-leverage back their paper profits into the market. So if you want to express your view on that, you can buy spreads, right? You can buy call spreads and whatever. um Now with all these Trump shenanigans, you go and you can make use of silver spreads, gold spreads or whatever. So what I or what i typically could do with um options is I express my view over a certain period of time, right, or these little seasonality windows.
00:30:53
Speaker
Obviously, I gamble on earnings, right, but it's a very, very tiny part of my my trade.
00:31:03
Speaker
So how how exactly would a trade, for example, if you can go into that a bit, look like? Like if you bet on this rebalancing happening now at the start of the year, do you just like buy calls on like some ticker that you think will benefit from that? or how would that work?
00:31:20
Speaker
it doesn't work It doesn't work every time because obviously if the market is down on the year, then the rebalancing effect goes negative. People start to sell. We saw it going into the end of the last year where people started to tax loss harvest. right ah So you got to go and got to see, okay, which market gives you probably the best upside and how are things correlated? Now I went basically with small caps because in my opinion, small caps, um or we have like ah come some cooling in the AI sector, right? There was still this cloud thing and everything hyped up. But um for instance, yesterday Mark Zuckerberg came out with selling cloud, right? What does that mean if Zuckerberg sells cloud? It means they got no demand for it, right? So they got to sell it to someone else. So the theme of the last couple of months where AI is kind of tired, right? And there is a bunch of long and short funds that trade um or that look then at real realized volatility, at historical volatility, take a long side, take a short side. And they typically use small caps on the short side to finance their calls in the large caps. So whenever large caps start to range around, they get squeezed out also ah on their short side. So I went with short caps.
00:32:44
Speaker
They did, I believe, 8% now year-to-date and over a window now until the 20th of February. So this is how I express it now.
00:32:55
Speaker
I've got some gold spreads which I start to lose money now because they got up too fast. But usually, yes, ah you don't only trade or need to trade direction. This is the big misconception um I see often on crypto Twitter because people got used to two dimensions, right? It's either up or it's either down.
00:33:17
Speaker
But if you take options, there's also a third dimension, which is time. Maybe a fourth dimension, which is velocity or which is volatility.
00:33:29
Speaker
So options, in my opinion, they give you a more comfortable or a better way to express your view on time. You don't only say, well, this is going up. I believe this is going up.
00:33:42
Speaker
Then you could also use very well perps. But these options are very, very cheap. um you could express it in certain in in in all sorts of ways. You can buy spreads, right you can also trade directional, you could sell another asset to finance your cause and so on and so forth.
00:34:03
Speaker
Why do you think that macro is like so misunderstood, it feels like to me at least? First of all, like on CT itself, but then I also feel like there's a huge Fin twit world or whatever, where it's also a lot of... like i like Macro is very often associated with this doomerism that like if someone is really into macro, then they're just like, yeah, debasement, everything is going to zero, we're going to crash and recession this and that. and Like for me, to be honest, like I, when I, when like a macro thing happens, I often look to your Twitter account because I'm retarded and it feels like you kind of understand things to a decent level. And this is how it feels to me. So why do you think that is ah the case that people are so in like, how they get it so wrong, like how how they, or how they like get this doomerism from it instead of like using it for their actual benefit in some way?
00:34:55
Speaker
I believe, um, we are like in my opinion we are early in the cycle right now right but um typically or if you look at business cycles these doomers they were actually right because from a business cycle perspective ah a central bank has to fight inflation to cause um equality again.
00:35:23
Speaker
right this is the This is what they have been teached in books. And this is why I believe those doomers get macro wrong because they see macro as a static thing. right They see what did I learn in books right or what did I learn in whatever in uni or whatever. But you can't apply it to the environment right now.
00:35:47
Speaker
Simply because at some point it was a late 23. um We had a correction in October 23. This correction went on for 10%. And at some point the market um is, well, the market generally is the biggest provider of liquidity. it's not the fed it's not the government it's the market itself so paper profits right market is running on debt on leverage it's the biggest liquidity generator itself you got more collateral you got more profits you go and buy and spend money easy as that or this is the simplification of it right so
00:36:27
Speaker
At some point, this market threatened to trigger systematic selling. So there's trend traders, they are called CTAs, in especially the s SPX and the big indexes. And these trend traders, as the name says, they get triggered by thresholds. So if you trigger this threshold, this happened basically with tariffs. This was the reason we went down so much. Because at some point you trigger them and they are not humans, they are algorithms. They start to dump into any liquidity possible. right This is this their strategy.
00:37:01
Speaker
So in 2023, October 2023, we got threatened to trigger not only their um short-term triggers, but also their medium-term triggers. And they were overloaded. They're overloaders now. They hold hundreds and billions of assets.
00:37:16
Speaker
And as I said, if you trigger them, they just sell. And liquidity, as you sometimes see, is very, very shitty, especially going into the end of the year. So they got threatened to trigger and what the government did then or back then was a little hack which was changing the composition of debt or how they issue debt. Usually the guidelines of what they did before was 60% long end bonds and 40% team builds.
00:37:48
Speaker
T-Bills is very, very good for liquidity. T-Bills is picked up by Tether, by money markets, right? it's it's use or It's seen as dollar equal collateral.
00:37:59
Speaker
So you issue bunch of T-Bills, it's a bit like most liquid, the biggest market in the world. There's also a misconception I see every time Tether could dump all their T-Bills and it would create... No, if Tether dumped...
00:38:14
Speaker
all their t-builds in one clip nothing would happen right so liquid is the market so there is enormous demand for t-builds right uh you buy a t-build you can use it as collateral it's cash equal and it yields to five percent so it's money out of firm air for the rich On the other hand side, you got long end bonds, right? 10 year, 20 year, 30 year.
00:38:38
Speaker
These are all credit is based on their yield, right? Credit is not based on what the Fed does. the fed doesn't control um The Fed doesn't control the long end. The long end controls rates, mortgage rates, all loans, you want to get a card and so yada, yada, is controlled by the long end. So if you start to issue long end, it's supply.
00:39:01
Speaker
And the market is supply and demand. If you issue a bunch of supply of long end, that needs demand and these long end bonds, they are influenced by the market, right? The market sets the yield, not the Fed. If inflation if inflation is high, these yields are staying high, mortgages are staying high and so on and so forth.
00:39:22
Speaker
So usually they do a composition of 60 and 40, 60 long end, 40 T-Bills. What they did is in the QRA, on the last QRA in 2023, we are going now into an election year, into a populist election year.
00:39:36
Speaker
What they did is they changed the composition. They fluted the market with 60% T-Bills and left the long end with 40%. Very, very less supply oh ah very very less supply of ah treasuries. So what that means is yields go down in long end, mortgages get cheaper, right ah loans get cheaper, money gets cheaper, and they issue at the same time they issue T-bills, which increases liquidity.
00:40:03
Speaker
right So from a back to our business cycle, sorry about being so ah so ah going so out of the curve. But back to our business cycle. So the business cycle didn't end. It should have ended.
00:40:17
Speaker
right The central bank has to fight inflation. right The central central bank stayed tight. Powell stayed on his course. But he had an op opponent, which was Janet Yellen. And this 20% in or this 20% more T-bills and less bonds,
00:40:32
Speaker
is more powerful than what the Fed did in the whole time. right So you had the Fed fighting against the treasury. So what they did is they prolonged the cycle, they gave the junkie more heroin or the patient more oxygen and kept this whole thing afloat.
00:40:51
Speaker
This doesn't reduce any inflation. We are still at 3% inflation. right The central bank is basically without weapons. They could stay as tight as they want, but it increases liquidity and liquidity drives markets. Easy as that. So all the doomers, back to the doomers, they were right, but they didn't catch the um they didn't catch this part of the distribution where the government went into protectionism or protecting the market, protecting liquidity. Because as I said, if the market goes down for 20%, it destroys 10 trillion in collateral, only in the S&P.
00:41:35
Speaker
If housing now goes down, which is or bonds go down, it's a far larger market. So it not only impacts ah our portfolios, but it impacts in the end of the day the whole economy. So the economy, if the market draws down too much,
00:41:51
Speaker
it enters real recession. So many people say the market sees a recession, right? It's the opposite. The market often causes a recession. If you look at April, for instance, tariffs, fears, the market draw down for what, 20%? And you saw it in retail sales, you saw it in the GDP, you saw it in every aspect of the economy.
00:42:13
Speaker
So what these governments decided to do is protect the top spender and we stop caring about those impacted by inflation. Now they created this famous K-shaped economy where the bottom part of the economy or the bottom 40% that has no assets is fighting inflation right and has to get their wages increased. And then the top part, which is responsible for 50% of the spending.
00:42:42
Speaker
So basically where we are at now is we protect the market at all costs. We run as hot. We don't care about the bottom part right as long as they are not revolting. We even encourage, right we even now hire ICE and whatnot to keep everything, protests and whatnot, um calm.
00:43:02
Speaker
right This is where most people didn't get it or didn't ah still can't believe it because it's unprecedented. There is a precedent in the 70s, but usually that's not how things work, right? Usually you want to have equality. But this is since the election in 24 and now.
00:43:20
Speaker
and now Well, Trump came into office, that's how he got voted for, right? He said, we got to stop. We do, we support Main Street now. Wall Street had good years. We support Main Street now. Very populist.
00:43:33
Speaker
What did they do? The opposite. right They are now pro-market, pro-liquidity, pro-run it hot. They don't care about the rest themselves.
Bitcoin's Market Performance Issues
00:43:43
Speaker
So as long as we get liquidity provided it or some sort of liquidity, whether from the government, the Fed did it with 40 billion of buybacks and T-bills, take supply off the market. right People call it not QE, but if you take 40 billion supply of T-bills, Those people that would have bought these T-Bills go and buy some two-year, three-year, right? It's very, very bullish and adds liquidity to the market.
00:44:09
Speaker
So the cycle just got prolonged, basically.
00:44:15
Speaker
Do you think like what what is ah what would be a way to get out of this again? Is it something like 2008 style crash or will we just like be in a regime where the market has to be propped up and like metals will keep rising because ah the inflation stays high and also why do you think it's like Bitcoin?
00:44:32
Speaker
not really responding to that or didn't really like do much maybe because it's like not part of the the government bailout where people like know if it goes on it like the government will do stuff to make it go back up but like why did bitcoin underperform so much well i believe it is of ah First of all, I believe like the last or since October 10th, as I said, everything that is down year to day sees a lot of selling pressure in October. In October, ah the financial year for some funds already ends. right You see it always in earnings. Some earnings are very late for Nvidia, for instance. right Some got their fiscal year, also the government, ending in October. So you see tax loss harvesting already starting in October.
00:45:26
Speaker
Then there's a little pause and then it starts again in December. So all these big funds or all these ETFs holders or whatever, they saw their portfolio being down year to date.
00:45:36
Speaker
I mean, they go and harvest tax losses, right? They go and rotate, right? They rotate in the S&P or whatever is green today. But I believe that the correlation...
00:45:52
Speaker
correlation It went down as soon as we went down ah red on the year. Another thing ah which is more important to me is Bitcoin was always about um independence right or whatever you want. to ah it's It's safe from any government, right? You can't confiscate it or whatever um narrative there was.
00:46:14
Speaker
um What we saw on the 10th of October was no government. it was some funny Chinese centralized exchange owner that fucked up his APIs and showed everyone in the fucking world you don't even need a government because one guy or the system of ah the whole um environment or the whole space is still tied to these players.
00:46:44
Speaker
right um This is the other thing, right? You can't just crash everything for 90% or 20% in Bitcoin at a random Friday evening.
00:46:58
Speaker
Some boomers like they're not this risk of risk right some boomers would probably go and decide to sell yeah um and under the hood another hood it was worse than FTX it was worse than Luna it was worse than any other liquidation cascade out there it wasn't caused by any bankruptcy there was no reason really it was like some bug and well I believe we got to lick or
00:47:31
Speaker
the Bitcoin space, the crypto space, which I'm being part of, obviously, right? I think we got to lick some wounds, which we usually have to do, right? To chop around and then everything turns out to be normal again.
00:47:45
Speaker
The other issue is, well, Trump family... um really It's like a grey market still, right? So you can do all sorts of shenanigans and as long as you don't piss off boomers or steal money from pension funds or 401ks, if you don't destroy wealth of the wealthy, if you only ah take from some idiots, um which they did with their Wilfie or whatever Trump coin, Melania coin, right? There was no real boomers affected by that, right? It was just yeah it was just like some on crypto guys, right? So it's still a gray zone.
00:48:23
Speaker
They might have just used it for a quick scam. I don't know. Because they've been really, really silent recently about that. While being very, very vocal about, let's say, energy or let's say whatever AI or i don't know.
00:48:38
Speaker
Maybe it's part of that. Because nowadays, if you run things hot with limited liquidity, then it's usually more of ah momentum.
00:48:52
Speaker
right uh what has momentum uh yeah that makes sense and it's been also for me right uh it's not been only sunny days because for instance in october they went like all this goes on nuclear on uh what are the other sector what is the other sector called quantum compute and so on right all shit went bananas and died off for 70 the next month So it's a very, very quick rotation in the newest and hottest thing, right? Over and over and over again, right? You got gold and silver and metals, they went steady up or in ah in in a parabola. But for the rest of the market, if you look at the S&P, 40% of the S&P is down year-to-date as well, right?
00:49:38
Speaker
So it's not only all the issues with tax loss harvesting, with Trump and whatnot, but also it has no momentum, right? Yeah. We need momentum and momentum nowadays is very, very powerful, right? So there's no real reason to do anything and extraordinary or be super bullish if there's other things which got obviously a lot of more momentum.
00:50:04
Speaker
Do you see these conditions changing this year as we go into the midterms as also as power is like leaving as the fat chair and getting replaced?
00:50:14
Speaker
Not just in crypto, but it like in general for the market? Well, it I said it a couple of days or a week ago.
00:50:25
Speaker
It depends. I believe this month is going to be a good gauge for the future, right? Not only because of power, we will see the first earnings, right? We will see banks today reporting, which will give us a ah some outlook of how rates, right? Banks, they lose also their biggest cash cow if rates decline, right? It's not only
Speculative Narratives and Economic Future
00:50:52
Speaker
circle. So how banks do, right? How AI is doing, if is AI scalable? But all of this,
00:50:58
Speaker
ah not only all of this is then going to be um is going to be finding their grande finale with the new Federal ah Reserve Chair. It's the institution with the money printer, head if you want to call it very simple. And my um my my motto, is it called motto? in English as well.
00:51:22
Speaker
Or my team i guess so my theme of this year is basically, are we going to enter Banana Republic or are we not going to enter Banana Republic? right What is a Banana Republic? A Banana Republic is, if you look over to Africa, there is like one dictator. Basically, he controls all the institutions, right? People get um arrested for no reason. This is a Banana Republic. It has usually a very high inflation and a very, very stagnating economy. right which is good for metals this is what is gold doing right it's called yeah it's it is it is giving us or it's telling us we enter into stagflation uh an economy where where only the top the rich earn winners get picked losers as well right by the government so and now we have this
00:52:11
Speaker
supposedly um independent institution, which is the Federal Reserve, ah which we either capture as well or not. So there's two things coming up, which is the Lisa Koch hearing. She's a board member and they try to bully her out to get a second seat in the Fed.
00:52:28
Speaker
ah For now, Trump has only Miran in the Fed, who is doing his... corrupt bullshit always dissenting for 50 bps rate cuts and whatnot um but it's not having an impact on the general committee because it's always a voting right it's not only one guy the federal reserve chair it's not doing ah policies alone you need the whole board and also the presidents or some of the presidents to vote So if they are able to bully Lisa Cook out, if they get the Supreme Court to agree with them, they got now a second one. And they already got some puppets in the Fed, which are not obviously puppets, but which agree with Trump, watch which which fall in line.
00:53:10
Speaker
So this is going to be seen how this evolves. And then obviously, yeah, um there's three candidates. My favorite is Waller. This would avoid some sort of banana republic, right?
00:53:22
Speaker
And then there's those two ah Kevins which are both fucking idiots but lead. ah One with 40, one with 30 and something percentage, i I believe today.
00:53:33
Speaker
So these two are Banana Republic, obviously, right? And now they got ah they want Powell also no not to stay on the board. So Powell is leaving as a Fetcher, but he still stays on the Federal Reserve Board pretty much. So he is still voting, right? Now they're trying to get rid of some of them which don't fall in line.
00:53:55
Speaker
And if they're successful, they control the Federal Reserve. And this is how we enter in these 70s, right? In this one president we had with Arthur Burns. um It took 10 years and an inflation of 12% or 13% until they thought, well, now it's enough. right So this could go over for longer than people believe.
00:54:18
Speaker
but Is that bullish for Bitcoin though?
00:54:22
Speaker
um look That's what all the listeners want to know. Look, from a very, very naive standpoint, what gives gold ah the value it has? what gives ah who says gold is an ounce of gold is worth It's a You need to... like gold is stored. 90% of gold is stored. It doesn't yield you anything.
00:54:51
Speaker
It even costs you to insure it, to store it, to whatever. right Gold is not yielding you anything. Gold is seen historically as a safe haven. This is what people give it. This is what people perceive it as value.
00:55:07
Speaker
So now to Bitcoin. You need or this is the chance to convince Bitcoin the next generation of Zoomers that potentially it's the same.
00:55:19
Speaker
So gold is go is held by boomers. Silver is a thing, right? It's not what people claim it to be with AI. The same people that pump Bitcoin are now pumping silver. SLV has an implied volatility of 65. It's the same IV as MicroStrategy, I believe. so It's the retail crowd pumping these, right? It has yeah probably fundamentals, but you need to convince, in the end of the day, you need to convince people to believe in something, right? If you go out, though, and scam them nonstop,
00:55:58
Speaker
It's been the same thing basically over each cycle and I believe this is how CT is or people in crypto talk about cycles. It's basically when a cycle for them is probably or in their mind cycle is probably how long does it take until new retards grow up that we can scam again.
00:56:22
Speaker
Until they don't hate us anymore, basically. And then a new generation of people grew grow up, believe in something, and they got nothing better to do than to scam them.
00:56:32
Speaker
Straight
Crypto Community Critique and Optimism
00:56:33
Speaker
away. Right? They don't wait. They go into scamming ah straight away. You've got to believe or you've got to make those people believe in something, right? In this goat narrative.
00:56:47
Speaker
Again, gold, who gives it the value? It broke out, right? It's now in um above all highs, right? It's now... Who who who who who says or who who who who makes it or who calls it top, for instance, right? Who's giving it value? It's not used as much in the industry. It's stored, right? It's not traded, really.
00:57:09
Speaker
So, well...
00:57:14
Speaker
people right and the same is basically for any other assets um everything is a scam you just got to sell it good right and not be like this greedy whatever and go and we're not doing the best job yeah So from, and I'm considering my myself already almost a boomer, right? i'm i'm just I'm just sitting here and watching the whole space and I believe like, man, do you want to do you want people actually believing in this shit or are you just here to make quick money? And I'm always getting to the conclusion you are here for the big for the quick money. You're not here for the tech. You're not here for the debasement trade. You, or most, sorry. ah Most are here to hang out in their chats, FC shitcoins, one minute charts all day and ah scam their friends.
00:58:08
Speaker
I mean, it sounds harsh, but take a look. Yeah, if you put it that way. No, you're right. I completely agree. I think that's kind of sadly the state of where we are. And it's also pretty bearish if you think about um that we like rely... we like destroyed the image of crypto so many times already and we just like keep doing it and we just like rely on new people basically growing up and giving it a chance again but like young people aren't really in the best economical position either especially like they won't really be anytime soon as they were during Covid or something for example So like where is ah new where are new flows really supposed to come from or who is really like that's why like there there won't be any new alt season in the way that it was back then like even as you said earlier in the podcast back then in 2017 you like believed in something you still believed in ICOs and even I like in 2017 I believed in like the technology and the change and
00:59:01
Speaker
Like no one really believes in that anymore. know Not even the the people inside of crypto except maybe for Bitcoin. So it's not really looking too too well on that front, I guess. I'm a very optimistic guy usually, right? And I love Bitcoin. I just i just don't understand. Like I just shake my head. um yeah In 2022, right, it was obviously fraud and everything we could. Well, they, it was a fuck up, right?
00:59:30
Speaker
um But now, right, now is the best time ah to show Zoomers the exact same narrative. Look how powerful it is in silver, in gold to convince them.
00:59:47
Speaker
Like this is the chance everyone was basically speaking of, right? Debasement. ah Government is printing everyone into oblivion. um You lose purchasing power, right? And we got nothing better to do than then to do all this all these shenanigans. Bitcoin does have things over gold. Like you said, like you don't need to pay to store it. You can just like easily access it, store it yourself and stuff. like Right.
01:00:16
Speaker
It does have things going for it. I mean, i'm i'm i'm very I'm very optimistic about ah Bitcoin too. I just believe we need to lick our wounds basically and then at some point ah you see those Zoomers growing up. We saw it basically ah since 2017. It was always some other narrative, right? It was ICOs, then we've been dumped with ah FDV, right? Fully diluted value in 2020. We pumped a lot of dog shit.
01:00:44
Speaker
ah with insane unlocks and everything, right? And believe this was different that time, right? Now we have this um debasement narrative or whatever, right? Which is very powerful, right? But we are just too dumb.
01:01:00
Speaker
And that's why I like, although I hate all bankers equally, that's what I like about Larry Fink. Because he's doing a great job, right? He's going out and shitting all this narrative to boomers. He's he's a better shield than most people on CT probably.
01:01:16
Speaker
And what we do is being greedy. Exchange owner fight exchange owner. This one is not like if if you find a breadcrumb, then 10 other fucking rats come at you. and try to steal that shit from you. As I said, the fucking market, all assets, right, is $500 trillion dollars in the world, right?
01:01:39
Speaker
If you look at private equity, for instance, or let's look at um structural products, right? They do nothing else but sell insurance, right? Covered cards or whatever. We have them in Bitcoin as well. They grew from $500 billion to trillion.
01:01:56
Speaker
in just a couple of years. So it's not a question of liquidity or it's not a question of narrative. It's it's how you sell things to people.
01:02:07
Speaker
But you won't do or you won't be able to do it if you got like some fucking, I don't know, on-chain scam, whether it's the president, whether it's some New York major, ex-major now I saw in my fucking timeline. yeah It's kind of crazy. They just do stuff like that. It feels very Banana Republic-like. Like people even buy it, right? it's not It's not that they launch it. Well, fair enough, right?
01:02:34
Speaker
Quick scam. People buy it, right? And shill it to their friends. it's yeah It's not about we invest in something. It's who gets off the scam faster than the others before it goes down. It's not about investing. It's not about the future. It's not about tech. It's now scamming your own friends and try to get off this scam before your friends and before it actually goes to zero.
01:02:58
Speaker
So, rax I don't know. um This is not how you convince people of being serious people.
01:03:10
Speaker
Maybe we can we can convince like the boomers and the older generation because they don't really understand what's happening on chain and all of that stuff anyway. So if they just like get shilled Bitcoin and see only that, then we can get over all the other stuff.
Wrap-up and Future Outlook
01:03:25
Speaker
It still gets to those boomers, right? You so you see, you see um what's his name? ah You see Michael Saylor being more often on CNBC than fucking ah Schiff.
01:03:39
Speaker
So, and what he does is he does the fucking same. He tells everyone we are not going to dilute everyone below 2x NAV or something, right? He promised in his fucking ah last quarter earnings, we stop issuing shares, right? um If we are below 2x NAV.
01:03:58
Speaker
What did he do? He did the exact fucking opposite a month later because he see bit he saw Bitcoin price going down. And this is also the reason MicroStrategy went down 60 or 70 percent because these people are just liars and you bring them on CNBC, right? They show you the and then it's just a fucking rug pull.
01:04:17
Speaker
i say this These things got to change, man. You can't just lie to people nonstop. You can't just fucking scam them at every given possibility, right?
01:04:30
Speaker
Unless you're the government. You need to be for like even the proper banks. like There's a saying, right? this is This is why all the big guys go to prison because you can't scam boomers, right? You can't scam 401ks, you can't scan patient fundnts you scam you can't scam them.
01:04:48
Speaker
This is going to bring you in jail. You can very well scam retards, right? Nobody nobody says anything if you scam foreign, I don't know, on-chainers, right? It doesn't matter because you're just not allowed to scam boomers. This is the rule of thumb.
01:05:07
Speaker
But yeah, I i mean, we we go too deep into the rage mode, so let's talk about something else. I think that's a good good time to to like wrap it up. like we We can call for some more um coming together of the community and people like sticking up for what we what we used to believe in someday. Whatever. Just like be bit nicer to each other.
01:05:27
Speaker
all going to make it. Let's bring that back. We're all going to make it. Most of us. Some of us. now like I'm very optimistic, right? and It probably needs a bit of time until flows return, right, at some point. Especially now into OPEX, where IV is usually getting blow out in all these silver ETFs, gold ETFs.
01:05:47
Speaker
um A bunch of open interest expires, right? It's a very, very bearish time around for all these retail names. They like to correct after every big OPEX. Now we go into the biggest OPEX of the year. So maybe um we are going to see some flows coming back to Bitcoin.
01:06:08
Speaker
Right. um But yeah, we got to stop fucking being um those rats. Yeah.
01:06:18
Speaker
That's a that's a good thing to good good notes to end it on though. um Do you want to to talk a bit about your your camp or like chill anything for for the people that like found this interesting and want to know more about you or what you do or whatever?
01:06:33
Speaker
Well, i I created Summer Camp, I believe, in the end of 24. Everything went dry up and everything I was looking for an opportunity to still be active and still be around.
01:06:46
Speaker
So Summer Camp originally was like a group of people where I am, or I'm still coming on live every day. Today is CPI. Yes, today CPI in two hours. So I do a preview in text, I ah do voice chats to explain what all these macro data releases mean, how they impact the market, how to trade them, whether it's a trade, whether it's nonsense and so on and so forth. um I do presentations about options, about what people require, about um bond auctions, about the bond market, treasury, Fed, all that stuff. And this is what I package then usually into two or three months of camp.
01:07:31
Speaker
And then yeah the group just turns free and we just cruise along perpetually. um But originally, um and i mean it doesn't look like we end it anytime soon because the space is still very dry but um Yeah, very good opportunity to stay active every day, to keep on track, um well, and get sold it ah what the upcoming or recent um data in macro or positioning in the market um tells you or tells me. And I just translate it into very, very simple terms.
01:08:11
Speaker
if
01:08:13
Speaker
Yeah, if you're interested that in that, check that out. Trade on in Silico Terminal. And thank you very much for coming on. This was very fun to discuss. We ended up in ranting while discussing any market. That's fine. That's a good podcast episode. I guess if we were anyone hears this, maybe they agree with me or not.
01:08:36
Speaker
But I think we are more or less everyone or most of us are not really happy right with the situation. Thanks for letting me do better giving me the chance to let some steam out. right Goodbye, everyone.
01:08:55
Speaker
Adios.