# Macro Shifts and Crypto Rotation Strategy

**Podcast:** The Milk Road Show
**Published:** 2026-11-05

## Transcript

If there's less and less capital that is willing to put itself into some of these AI trades, you can see some of that rotate into crypto, which is interesting.
The Democrats have taken control of Congress.
Iran has taken control of the Strait of Hormuz.
And hackers have taken $6 billion worth of crypto from Binance.
But all the while, Bitcoin is still fighting to hold on to the $80,000 level.
But what is going to happen next?
And what does all of this mean for crypto?
And what do investors need to know about all of this?
Hello and welcome to Milk Road Crypto, the show that's pretty sure the only thing that both parties agree on is printing more money.
And we like that here.
I'm your host, John Gillan.
Today is Wednesday, November 4th, and today we are joined by Felix Javan.
Felix is the host of Forward Guidance Blockworks Macro Podcast and one of the best podcasts in all of digital assets and in all of macro.
Felix is a great authority on all things macro and all things crypto, so we're going to talk about all that today.
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But for now, welcome to Mocha Crypto.
Felix, sir, how are you?
What's up?
Good to see you.
This was overdue.
Glad we finally made it happen.
I have been looking forward to this for a long time.
When I first started hosting podcasts for Milk Road, you were one of the first people I asked to interview.
So I'm glad we finally got to get together on this.
And this is a great time because macro is driving a lot of things in all markets right now, but particularly it feels like it's weighing on digital assets here.
And I want to just start with your initial reaction to the news this week.
The Democrats have taken control of Congress.
A lot of people are worried about what this means for markets, for things like crypto, for AI.
Just what's your initial reaction?
to this major political event here?
And what was your outlook from here now that this has happened?
Yeah, definitely a pretty sizable blue tsunami, which is, yeah, wasn't priced by any means in markets, I don't think.
It seemed like we were two thirds of the way there to pricing in a Democrat sweep.
I think it was a foregone conclusion that the House is going to go blue.
It was leaning towards blue for the Senate.
So, yeah, it landed us at, I don't know, like 70% odds of a sweep there is what we went into the event with and certainly got a lot more than that.
We got a blue tsunami.
I think it surprised even the most optimistic estimates of how the Democrats would perform.
And, you know, the easiest way to look at that and just how it started to react for markets was what was going on in Texas there.
Just a total blue wave there, especially the governor.
run there.
And that going blue is definitely very meaningful and probably the highest signal in terms of the impact it would have on the broader economy, the AI build out and markets in general.
So it was really interesting last night to see that for most of the afternoon, it was leaning towards the Republicans to win the governor for Texas.
And then as soon as that flipped towards Democrats winning, we started to see the semis landscape start to sell off.
Bonds are rallying, equities are starting to sell off.
And so that was, pretty clear to me that a lot of this was not priced in by any means.
And so it was really interesting to see just the cascading as that happened overnight.
So I think right before I went to bed, it looked like we were down a couple percent on the NASDAQ futures and things were falling apart a little bit.
And then...
Seems like investors came to their senses a little bit, thought a bit more about what's the second or the third derivative impacts of this whole thing.
And yeah, I woke up this morning and markets were green and have been ripping ever since.
And especially it looks like there's been some pretty significant moves in the hyperscaler landscape, which is really interesting.
So, you know, it all makes sense to me.
You know, if you're going to be pausing data center development, that means less demand for semis and the core inputs in the data center build out.
And it means that anybody who already has those data centers is.
You know, it feels like the value of those data centers for inference, for AI, just, you know, the value of what's already built just went up 10x or whatever you want to call it.
So, yeah, the rotations made a lot of sense to me.
We saw a huge vol crash.
I think VIX was down 17 points or something like that or percent down to like a 16 handle today.
So, you know, not surprising to see these major event risks, hedges roll off and that sort of thing.
Yeah, crypto ripped on that, which is interesting too.
There could be this certain idea that if there's less and less capital that is willing to put itself into some of these AI trades, you can see some of that rotate into crypto, which is interesting.
So a lot of the rotations and correlations that happened today make a lot of sense to me.
But I think we need to see what happens once these hedges are unwound now.
Now that we've had the vault crash event, now that we've had the resolution to the event, it's like, all right, let's see how we really trade the next few days here.
I had Lynn Alden on the show very recently, and I asked her kind of what her outlook was for a split government where we have a blue Congress and a red White House.
And she said that this kind of locks in the status quo of deficit spending, government spending continuing.
Tom Lee also said that he doesn't think that the Democrats are going to be able to get through anti-AI or anti-crypto legislation at the national level while Trump is still holding the veto.
Do you kind of agree with that outlook there that like the sort of like general bull market?
behind both of these two major narratives is sort of locked in?
Or do you think that there are some risks that the market hasn't priced in now that the blue tsunami has been as big as it's been?
Yeah, I think definitely status quo should be the baseline here.
I mean, Trump is still president and he can veto most things.
Like they would need a veto-proof majority in the Senate, which I forget how many you need for that, like two-thirds or something.
And that just seems like a very, yeah, a very low probability event to occur.
So for the most part, yes.
You know, you're going to have the Democrats that are going to be pushing certain bills.
Trump will veto 99.9% of them.
Nothing will really happen there.
In the same vein, you know, fiscal deficits are still going to be wide.
They're still going to be whatever they're trading at like right now, like 6% of GDP.
That's all well and true.
So it feels like maybe a small decrease in the fiscal impulse because you can't like.
you're not going to see these meaningful, like big, beautiful bills or anything like that get passed for the next couple of years.
So you're not going to see those like really meaningful fiscal stimuluses, unless of course we get some sort of crisis.
Like obviously that's the one thing that DC can agree on is spending money in a crisis.
But aside from that, yeah, it feels, it feels like status quo.
We're just interested in contrast.
Like typically markets have actually quite liked gridlock government.
You know, it means either side can't really do anything too crazy.
somewhat limits the amount of the fiscal impulse as well.
And, you know, typically I would say pre maybe 2018 or so that was just called pre-COVID like that was, yeah, that was always a bullish event.
But now I'm trying to figure out how much of that rings true still knowing that so much of the marginal growth of the economy and just markets in general has been so much more state led.
You see these outright investments and things like intel from the administration, and you see a much heavier hand from government authorities.
So there's still a lot of that that will happen regardless, just through the executive branch of the presidency.
There's definitely this trend of more and more executive orders and bypassing Congress.
So yeah, it feels like marginal changes in either direction, really.
I don't know if a gridlock Congress is the key catalyst here for a meaningful rally.
There's plenty of other ones, but I don't know if that's necessarily the correct one.
Obviously, this time of year seasonalities are very strong going into the end of the year.
There's always that.
There's, again, all this event risk that is rolling off now.
We've seen that today.
I think a large reason for so much of these strong moves has just been the hedges rolling off and the de-risking, this sort of clearing event.
So yeah, largely status quo.
You know, there's still going to run a fiscal deficit, but you also won't see those big, yeah, big, beautiful bills happen anytime soon.
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Okay, so largely status quo, more or less business as usual.
You spoke about how the federal government has taken more of a heavy hand in markets and in a lot of things.
But somebody who is taking a much less heavy hand is Chairman Kevin Warsh at the Federal Reserve.
He, I think you tweeted out that he's like answering questions almost in riddles at this point.
And it's like going so far out of his way to avoid like giving clear answers.
And like it says he hates forward guidance, which I, you know.
your podcast called forward guidance.
So if you rename the podcast, you let me know, but I'm really curious your thoughts on what worse strategy is going to be in the next two years now in this situation, right?
Like if we have this split government, how does this calculus work back to his, you know, his approach to monetary policy and this strategic ambiguity he's been maintaining as chairman?
Yeah.
I think part of it is trying to wait to see where these task forces he announced where that all settles out.
You know, I think there's, There will eventually be some significant changes in terms of what kind of policies they're trying to deploy in terms of the balance sheet and all those different task forces that he announced.
But I think we're at least another six to eight months away from knowing the results of that.
So it feels like in the interim is very much this wait and see approach.
I think there's two things going on.
There's one, which is that there's...
very ambiguous where the economy is going to head here and therefore inflation and also somewhat the labor market as well.
You know, so much of this inflation has been driven by either oil and the energy crisis in the Iran war and the AI build out and what's been going on there and the investment boom associated with it.
So it's really difficult for monetary policy makers to navigate through that.
It's not this 2010s era that was quite straightforward.
So I think it's correct to have a bit more of a patient and wait and see approach here and less of a heavy hand.
But obviously in the interim, so far markets have to price whatever they're going to price and make their best guess there.
So obviously we've had the first hike and then we had a pause and then markets right now are priced for a hike.
So regardless of how much they want to be involved or not, so far markets are still going to trade around these expectations.
So, you know, it feels like right now over the last couple of months, we've had.
quite a bit of hawkish rhetoric, not a lot of actual execution of that hawkish rhetoric.
Yes, there is the one hike, but overall, like, you know, just really slow walking this whole process and just trying to be as little involved as possible, like the shortest times of a press conference as possible and making sure that, you know, the media in the room that are asking worse questions, they only have one question.
It's just like as little amount as information and market moving events as possible, I think, as they try to wait for these things to happen.
At the same time, too, like in the past 15 years or so, obviously, the Fed has been the big marginal deployer of liquidity in markets.
And I do think there's also some more intentional changes in strategy there to make that more towards the commercial banks and more towards the fiscal policymakers to make those decisions, which I'm somewhat sympathetic to.
I think it's good when more of that happens from commercial banks.
I think it's more up for debate whether it's good for the Treasury to do that.
I mean, one argument is to say that the Treasury and the administration there represents the will of the people versus something like the Fed that is more just, yeah, these nominations that aren't elected.
So somewhat sympathetic to that.
But yeah, it just feels like there's a lot of things we just need to wait out for, whether it's how inflation is going to shake out, how these task forces are going to shake out and where we go from there.
So in the interim, it just feels like, yeah, they want to just make as little noise as possible.
um but but regardless you know markets are going to price things and go with it anyway so it's kind of this weird spot I think a weird spot is a great description for a lot of what's going on right now.
You brought up the balance sheet management at the Fed.
You brought up liquidity.
And as crypto investors, these are things that a lot of people watch or certainly get impacted by if they're not watching it.
But I'm curious your thoughts on how the Fed is going to respond to capital demands because it seems like there's a huge demand for liquidity for funding the global government debt markets for continuing to fund.
the CapEx for AI and the economy and markets here.
And it seems like the Fed has been somewhat reluctant to supply the liquidity that the market's demanding here.
How do you think that plays out?
Do you think eventually they're going to be forced to, or do you think they're going to, like you said, like lean on more on the commercial sector to do that?
And how does that play out?
And like, where does crypto shake out in all of that?
Yeah.
Yeah.
There's a lot of, there's a lot of assets to issue in, and only X amount of cash in the world.
There's a lot of equity issuance from the top, hyperscalers, there's plenty of debt that they need to issue as well.
And then there's also these new IPOs.
There was SpaceX a few months ago, and now there's going to be Anthropic coming up as well.
So when you put the three of those together, there's a lot of assets that need to be issued from the private side.
And then as you pointed out, there's also a lot of debt that needs to be issued from the government side as well.
So there's definitely a tightrope to walk here.
And throughout that whole situation, because of the fact that inflation has been above 2% for so long, we've really been in a pretty crappy liquidity environment for a few years now because, you know, the traditional levers can't be pulled as easily when you have inflation just secularly trickling through every part of society.
So they can't be as gung-ho as they once were in supporting that dynamic.
So I think that's what you're trying to see, especially the credit market, the debt market, and all these.
AI bonds that are being issued trying to navigate, which is that, look, we're out of free cash flow.
And so we need to tap either equity issuance or debt issuance to get to the other side of this build out.
And when you're hiking rates, it's going to widen credit spreads.
So it's a tough spot to be on there.
There's a lot of assets that issue, which makes liquidity tough in aggregate.
So then when you fold in crypto, it makes sense to me that crypto has been trading how it's been, which is that you know there's a lot of fundamental believers there's a lot of you know you look at four-year cycle stuff and happening cycles like everything's lining up um you know we've seen a lot of washing out in the in in the industry so it's an industry it's a sector that wants to go but you just don't see this support in terms of just the amount of liquidity i think required to see this meaningful rally so what we're left with is just this you know market structure that is driving us all insane where it's like crypto will rip for one day or two days and then just give half of it all back.
And it's just like mostly built on leverage.
You know, obviously back in 2024, it was really easy because we just had this whole ETF bid that was happening.
We had the sailor bid.
You know, anybody right now who wants to buy crypto could easily do so.
And that wasn't the case a couple of years ago.
So you don't have that fundamental drift upwards.
So it really comes down to this liquidity environment, which is interesting to contrast what we're talking about with the midterms now, which is that Look, if we see a slowdown in that data center build out and, you know, potentially less issuance and less competition, perhaps that leads to this bit in crypto.
So maybe that's why it's ripping today.
Obviously, it's, you know, it's extrapolating pretty far out there to take one day price action so far today.
But I mean, that's kind of how I'm reading it.
No, I think that one day of price action is going to hold for the next two years for sure.
No, but I think it's a very interesting question.
And it's evolving and it's really dynamic, but it drives so much of the market.
And it's something I've been paying close attention to.
I want to get your thoughts on the energy crisis that's come from this oil situation.
Because oil is a major input into the global energy market, obviously, but there's also fertilizer.
So many other things that this touches.
And the loss in supply of oil has been dramatic.
And when I interviewed Lynn Alden last week, she said that she thinks this is by far the biggest thing going on in macro right now.
And the Fed is not quite a sideshow comparatively, but like definitely not as important.
How have you navigated all the volatility from this?
And just like, what are the ripple effects that are going to continue to move through as this like crisis continues to unfold here?
Yeah, I mean, definitely navigated it not as well as I hope I would have, but it's also very difficult when you get.
fake tweets in either direction every single day and you have to try to decide whether that's that's the real one or not but here we are yeah i mean i think that's also been somewhat of an intentional policy tool is that it's it's really hard it's been really hard over the last eight months or so for oil to probably trade where it should have like that the the futures like the cash market at least you know you can you can certainly make the argument that it that it should have been well above 120 by now for where the market's been at.
But it's just, you know, you look at positioning in the oil market and nobody wants to put size on right now because you might wake up the next day and be down 4% on a fake tweet, you know, get stopped out and then be back at the same price four hours later.
So it does feel quite intentional, this approach.
So yeah, it's been tough.
But underneath that, underneath this whipsawing in the front month futures of the oil market, you've seen this steady bid in longer dated futures of the oil market that are reflecting that fundamentals, which is that the SPR is drained.
Yeah, Hormuz is open or closed.
I don't even know what you really want to call it.
But the fact is that there's no volume coming through there.
China is importing oil again versus they weren't six months ago, really.
yeah there's just there's just not a lot of oil and and market forces are slowly pricing that out and same with same with the distillates downstream i think that's really where the the news is in terms of the economic impact is like diesel prices which is that you know regardless of what they can do in terms of avoiding spot oil getting above 120 bucks like we've seen diesel price that regardless and and the diesel market is what really is is the downstream impactor of so much of the economy so regardless i would i would make the argument that setting aside oil like with where prices have been from diesel and, and, and crack spreads in general, like that has had a meaningful impact on, on the economy now.
And I think to the point where you can, you could make the argument of, of there being some, some demand structure from that as well.
So that sort of leads me to where this next slide goes, which is one, it seems like we're getting some interesting signals in terms of how the Trump administration is thinking about the war next, now that the midterms are over.
kind of feels like they're floating this idea of just trying to to get out of it as soon as possible there's been some interesting tweets from like jd vance talking about how the biggest reason they lost the midterms was was because of this war which is largely correct i think so so if that happens at the same time that like this this ai build that that we're talking about is slowing down which has been one of the biggest drivers of the economy um as well as this demand destruction from especially diesel impacting the economy it feels to me like we're starting to to turn from this heightened growth environment that we've been in over the last six to nine months or so to, I would say, leaning more towards a slowdown in the economy.
So that's where I feel like we're going next.
I think we're peaking out in terms of growth.
And I feel like that gets, yeah, I feel more confident that now after these midterms that happened and what we saw in Texas.
Yeah, I think to that point, circling back to what we said about the Fed, I think it's smart to wait and see how this all pans out.
The next meeting is in December.
They have some time to see how that trickles into the inflation data.
So it's sort of this wait and see thing to get confirmation of all of that.
Okay, so you're still waiting to see how some of these things play out.
But it sounds to me like you are saying that you think this is slowing the economy and it likely will continue to weigh on the economy.
Tie that back to markets for me because the...
The AI trade in equities and in semis and in different layers of the AI stack has been really strong throughout the year.
But in the last few weeks here, or I guess like months now, there's been a major pullback on a lot of these assets.
Hyperscalers, Intel dropped, I think like 30% in a single day.
So there's been a lot of volatility.
And like you said, with oil, people are hesitant to put size on.
It seems like now people are taking size off on a lot of these things.
And like the leverage unwind has been really sharp and dramatic.
So you talked about the oil shock weighing on the economy.
Do you think that means that the bull market in risk assets is also over or compromised?
Or what's your outlook on that?
I feel like it's sort of similar to Q4 2018, actually, where back then Powell came in and he was new.
He was just doing a couple of rate hikes off this, what turned out to be a false confidence of excessive growth and inflation, which very quickly turned into a actually.
pretty substantial gross slowdown and we won't really ever be able to know how strong of that slowdown was because then COVID happened like not too long after.
And at the same time, they were doing like quantitative tightening and everything.
So yeah, the economy was slowing down.
And what happened there is that you saw like a month where indices went down 20% and then the Fed came in and pivoted pretty aggressively.
And then a few months later, they were cutting rates.
They were you know, fixing the repo market because in September 2019 that started to blow out.
And then, yeah, that's where the analog gets really difficult because then right after that we got COVID and then obviously it's just like, yeah, printing money like crazy.
But I think there's some parts in there that are pretty useful to look at in terms of just this idea of a bit of a flash, not like a flash crash, but like a pretty decent.
unwind in markets that quickly led to that clearing event or that catalyst but then you have to contrast that with like so many other aspects of market structure right now like we've seen so much leverage degrossing over the past couple months there's been this midterms thing that has been an overhang so yeah again i'm just in this wait and see environment it feels like we could get to that point where maybe we see a bit of a bit of a pullback and then you get that clearing event and then we start to see confidence that inflation is starting to come down because oil is continuing lower and the ai build out is is slowing more and more um and diesel prices etc are slowing the economy like you can see that sequence of events that would very quickly lead to silver markets pricing out the hikes and that are priced in right now um and then going to at least a neutral tone you know, certainly a possibility, I think in 2027 to start to price in rate cuts at that juncture too.
So maybe that's that catalyst, but I think, yeah, like for the, for the broader liquidity plays like, like Bitcoin and that sort of thing, I think that's what we need to wait for.
And then, so it just becomes a decision of like how much frustrating trot do you want to live through knowing that that's where we're going to go?
Or do you just wait for that, that clearing event?
But also, I mean, who knows that clearing event might not happen and we might just grind higher, who knows, but those are different frameworks of how I'm thinking about it.
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Okay, yeah, that's very helpful.
And I appreciate the perspective of like, not being dogmatic about this is what's going to happen, but being like, here are some potential paths, this could go down.
And here's what I'm watching.
I think that's really helpful.
A lot of people have been saying for a long time, Felix, that eventually, the AI trade would slow down, would plateau, would cool off something like what we're seem to be seeing in the markets and that that would lead to people looking for new sources of alpha and performance and a rotation back into crypto and digital assets i heard you say on a recent episode of ford guidance around up i think it was a week ago two weeks ago but you said that the fundamentals in crypto have been getting really strong and that's kind of stand out from some of these other markets right now do you think that that you know that thesis of rotation to crypto might be starting to play out and might be something we see in 2027 or what are your updated thoughts on that?
Yeah, I think largely the fundamentals are improving.
Like there's been so much washout of venture investment into so many projects.
Like there's been some really exceptional businesses that have been built in the last few years that just had a really crappy token structure.
And like a lot of those have now been fully vested.
They started to clean up those balance sheets and that sort of thing.
There's a lot of boxes getting ticked right now.
We're starting to see more and more product market fit around things like stablecoin usage, tokenizing variety of asset classes, tokenized equities and that sort of thing.
RWA perps, the perpetual landscape in general is obviously starting to get really exciting right now.
We're starting to see that the formal adoption from the CFTC and the SEC in terms of guidance there.
So those are all great.
I think there is a couple other potential risks that we need to be respectful of.
There's obviously the AI stuff and the potential hacks associated with that.
You just mentioned at the top of the show about the Binance hack of $6 billion.
There's definitely some risks that we need to navigate here.
But in terms of the use cases that we're recognizing have pretty functional product market fit and tokenomics that are much more accretive to the actual...
owners of those tokens like i just i don't want to fade that entirely it's just about trying to triangulate that with this kind of crappy macro environment that we're in but uh yeah really excited so definitely don't want to like yeah don't want to dismiss the industry right now i think um i think there's a lot of cool stuff coming it's just about trying to navigate to the other side of it Right.
And there's always a balance of pros and cons, risks, and that's, I think, a very sobering take and not hopium, but not FUD either.
I do want to talk about some of these fundamentals, though, because they keep getting stronger and in different ways and different times.
Last Thursday, I believe it was, it was announced that ICE, the parent company of the New York Stock Exchange, is going to be investing in trade XYZ, bringing hyperliquid perps onshore to U.S.
traders.
Stanley Druckenmiller.
tweeted or posted on x about this elon retweeted that and said interesting uh this was a big moment for the for the hyperliquid fans um it just talked to me about the implications for this and why this is such a big moment for for hyperliquid and for crypto overall yeah i think um definitely been a big fan of hyperliquid basically since the beginning and it's cool to see where it's where it's gone here um definitely exceeded any sort of my wild imagination which has just been Exceptional says a lot about Jeff Yen and the team associated with him.
And yeah, that definitely feels like the next leg here.
I think there's going to be some interesting, not quite bumps, but things to figure out in terms of what the structure looks like.
Like we've already seen an aggregation of the, of the trad fight community, like, you know, Citadel and the light that have been trying to appeal and sue the CFTC against this.
So there's obviously going to be the fight from the incumbents that needs to be navigated.
I think there's also going to be the, the technical challenges associated with bringing these, these perps to, to the U S on shore and in a, in a regulatory compliant manner, you know, stuff like non K KYC and the way liquidations work in terms of ADLs and like, you know, knowing your, your counterparty and counterparty risk, like these are things and like, yeah, who your clearing agent is and all of that stuff that is, that is necessary in the U S and that is regulated by the CFTC.
Like those things will need to be applied to.
perpetual exchanges when they come on shore.
And obviously none of that exists for pretty much any of these, these Dexpert exchanges right now.
Like it doesn't exist for hyperliquid, doesn't exist for lighter, doesn't exist for variational as sort of the big three coming on right now.
And that's not a bad thing.
Like I think there are going to be some interesting innovations.
Like I definitely don't want to fade.
a lot of very smart people looking to figure this out here.
I imagine if, you know, ICE and Stan Druckenmiller are investing in Hyperliquid, they have a pretty robust technical roadmap of how they're going to achieve this harmonization of liquidity.
But the fact of the matter is, is that there is some things that need to be figured out there.
But I think we'll get there.
You know, whether that looks like having two separate venues, I think would be, if that's where we end up, I would be a little bummed.
But that does seem like the most likely scenario.
But It would be amazing if we found a way to harmonize the whole thing so that you don't have to go to like Hyperliquid US or Hyperliquid, you know, ex-US basically.
But I don't know.
Those are just technical things to figure out.
So, you know, it's not like blue sky here.
I think there's still some stuff to figure out.
But directionally, obviously, like it's incredible what's happening and super excited for that.
Yeah, and I think the thing that's encouraging is that the regulators in charge of figuring out these bumps as you described them are actually collaborating on trying to figure that out.
The SEC, the CSCC, they've been very public and engaged about that.
So I do think we'll get some kind of resolution, and I think everyone's trying to move towards one there.
You touched on this in one of your prior answers, but I am curious your thoughts on this.
Crypto has had a brand.
problem and there's been a lot of people from wall street coming to digital assets but part of their first job seems to be like doing brand therapy on bitcoin on crypto overall and this hack from binance is kind of like a big thing that some people are questioning again you know the safety of this asset class and stuff how significant a hit to crypto does that present in the minds of you know institutional investors and just where do you think we stand right now on the the brand reputation for crypto and digital assets as we're trying to bring wall street on chain and continue this institutional adoption of the asset class yeah it's a tough spot i think before that hack i was definitely a lot more constructive on animal spirits coming back and just overall psyche and excitement for the industry i think i don't i don't want to sound like a cynic on any of these things but i'm just kind of being realistic here and calling balls and strikes and it's like you know, it's tough to allocate in that environment.
It's tough to get really excited in that environment because we just don't really know where the things go.
And then suddenly when you get the world's biggest crypto exchange hacked like this, it's just kind of like, okay, well, what else?
Like, is anything safe?
And I think that question needs to be sorted through and turned through.
But I think people were, you know, last week or whenever it happened, I think people were exaggerating the impact short term.
Like, you know, Binance is able to freeze most of it with help from like Tether and Circle and that sort of thing.
um and then able to plug the whole or the rest of it like they make a ton of money that's that's fine so there's no issues there but i think i think longer term it prolongs this period of market healing that we need to go through in industry healing and you know like i mentioned earlier we've we've already started to tick a lot of boxes but you know maybe this is just the final box we need to take here which is just like a you know an exchange going getting hacked or whatever.
That's the final bottom signal.
I mean, I'm sympathetic to that, but I think it, I think it just, it extends the period of time capitulation that we need to go through.
And I think you see that in markets right now.
Like we just keep chopping around, nothing wants to break up and it'll be time.
And it obviously a few months ago, we had a lot of initial excitement and stuff running and, you know, on chain was getting excited and all that stuff.
And I think they'll come back, but.
Yeah, just it extends, it prolongs the period until that really happens here.
And obviously, you know, there's no way for any of us to know how many more hacks there might be, right, because of AI or what have you.
So, yeah, it just prolongs the period, I think, that we need to take here to heal.
Well, I appreciate that perspective.
I also think that Binance did handle a lot of things about it exceptionally well, which I think stands out too.
You know, one of the things about being in an industry with public blockchain where everything is so open and transparent is...
You can see so much of this stuff and other places might hide these things, you know, like legacy financial institutions, for example.
But I guess it's all part of the tradeoffs there.
You know, you mentioned this this chop that we've seen from Bitcoin.
And over the last couple of years, this has been more or less Bitcoin's like standard process of like chopping, ranging sideways for many, many months.
And then like a huge volatile move to the upside.
And that that seems to be what's happened for Bitcoin in the last like.
let's say three, four months here, right?
We had the lows in the summer, then we had this enormous historic short squeeze, and then Bitcoin is still chopping more or less in the range it's been since then.
Talk to me about the change in behavior from what used to be one of the most volatile assets ever to just be sort of like pancaking at 80K here for months on end while all these other huge events are going on in the markets.
How does that change how you think about Bitcoin as an asset or does it?
And just how are you reading that?
Yeah, I mean, part of it is just like the law of large numbers of when you get an asset that is like Bitcoin trading at a trillion and change, it's going to take a lot more to move it in either direction at that juncture.
And then also just the holder base has turned a lot.
Like we've seen a lot of the long term holders started to take profit, but in a pretty slow and intentional manner.
Like we saw a few of those OG whales that would pursue OTC transactions to cover that and do it in a pretty intentional way.
And that was all moving.
and getting absorbed into the ETF buyers, which is also a very different buyer base.
So, you know, those are going to be ones that, you know, maybe they just have 2% of their portfolio in Bitcoin and they plan to not touch it or really think about it for 10 years, as opposed to that original base where it was like 90% of their net worth in there.
So there's all of that.
And then obviously just the opportunity cost of what's been going on in other markets.
I think it's fair to say that AI and the AI trades have taken the limelight, and I think it probably deserved to over the last year or so.
There was also gold and precious metals that were ripping.
I think a lot of that was really just Chinese central banks spying that kind of sparked a narrative, and then everybody FOMOed in.
So there's been these hot sectors that are just taking the attention away.
And so I think you're just left with this slow bleed and chop and lower volatility secularly.
Don't really see that.
really ever increasing again to back to, I don't know, like the 2018 days or anything.
Unless, of course, like, yeah, we weren't a trillion dollar asset class anymore and we were something way smaller, but I hope and don't think that that's going to happen.
So that's where we are.
It's just, yeah, it's just the asset class maturing.
I think it's generally a good thing.
I think there's plenty of other more volatile altcoins that you can trade on if you want that sort of thing.
Yeah.
Well, I, I like that.
Like, I don't think this is going to happen, but we might get more volatility if we go back to being a $50 million market cap.
Yeah.
Well, let's hope that doesn't happen.
Felix, it's something I'm really actually like really excited to talk to you about.
And I wanted to save this for the end because I'm, I'm want to, I'm kind of nerdy about these sorts of things, but you know, at Milk Road, we've been innovating and launching new products and brands to, to kind of like.
innovate through all these different changes in the markets here.
Blockworks is one of the most respected names in digital assets and in financial data in the digital assets industry.
You guys have been innovating and changing a lot of things recently.
Can you talk to me a little bit about some of the things that have been changing about Blockworks?
Just what you guys have done to evolve through this process and what you're bringing to market now.
It's just so much has changed.
And I'm curious your thoughts from the inside of what that's been like.
And just tell us a little bit about that.
Yeah, totally.
Our business has changed a lot over the last year.
I think, yeah, a lot of people still view us as this media company, which we no longer are.
We're still doing some podcasts, but yeah, we changed a lot.
I mean, we acquired Massar in June, which was also a major catalyst event to this.
But we're really focused on data and analytics now.
I think there's...
Speaking to all the stuff we said about like ticking these boxes of improving the industry and the fundamentals of the industry, I think an important part of that is really understanding the things that you're doing due diligence on and that you're potentially investing in and trading or whatever.
So, you know, having accurate, transparent data is just, I think, one of the most important ways towards achieving that goal of transparency.
So, you know, if the institutions are coming and we're going to tokenize all these different asset classes, like we need to grow up.
as an industry in many regards and I think the way that we can help support that is through better data, better transparency around different protocols and tokens that exist.
So that's sort of the why around why we've launched things like the token transparency framework of trying to push towards these benchmark disclosures that product these certain things that should be disclosed and expected by investors.
And then same with the data analytics side.
Yeah, the past few months have been kind of wild, just integrating everything that we acquired from Masari.
And now we've just been launching like mad.
We've had this Intel platform, this market intelligence platform that's been really cool.
And then it feels like the cornerstone of all of that has just been really getting focused on where people use data and everything now, which is just in their AI agents.
So we've been launching and innovating and taking everything that we acquired with Masari and then our existing data sets that we already had through Blockworks data.
and bring it all together in an MCP and an API that people can just plug into their agents and rip with.
And I think it's really cool, man.
I think it's very helpful for either issuers of tokens to monitor different components of whatever token that they're owning, basically.
And same with exchanges, the assets that they list, monitoring those.
We have a monitoring product that's super important.
And then just for anybody who's doing research and trying to understand better, like what they're investing in or, yeah, what does that landscape look like to have that MCP right in their agent, which has been really fun to launch and work on.
It's cool to see, like, I'm definitely a huge user of AI tooling.
And, you know, regardless of how I feel about the financing aspect that we talked about earlier, I think the use cases here are just absurd.
And I really strongly feel that anybody who thinks that these things are useless, it's just like a skill issue.
I think it's like, you're just kind of showing that you haven't really, you're not really dialed in on what these things can do.
So it's cool to bring it all together.
So yeah, we launched this MCP recently.
We have like a free tier now that we're rolling out where people can get like a hundred bucks of credits and link that right away into their agents.
So it's been cool.
It's been quite the transformation over the last year.
It's been really fun to see.
That's awesome, man.
I really appreciate you walking us through some of that.
Because just like you said, It has changed so much at Blockworks so fast.
And it's been really exciting to see the quality of the products you guys have been shipping.
Your co-founder of Blockworks, Jason Janowitz, or Jano to the boys, he said that agents are going to be the biggest users of financial data.
And it seems like you're kind of like pivoting Blockworks more in that direction and planning for that reality.
You know, you and I are both financial analysts.
Talk to me about the future of what this looks like for the industry of like people beginning to bring more and more of these powerful tools and data into.
their AI agents as they try to navigate financial markets.
What do you see that future looking like?
And how is Blockworks sort of planning for that as it's coming?
Yeah, no, that's such a great question.
I think it's entirely correct.
I mean, it comes down to thinking through like, what are going to be the most durable moats in this age of just expansive intelligence and AI?
And I think, you know.
personal branding and media like like you have and what milk road has and what i have and what blockers has i think is one of them and i think another major one is around data and proprietary data and usefulness of data because that is just one of the core inputs into models into llms and you know the other again getting to this point of like skill issues around using these agents is like part of that is what's the quality of inputs that you're putting into because that's going to be a main driver of what kind of output you get from using these things so If you input the best data, you're going to get the best output.
So I think it's huge.
And then again, to your point about research analysts and hedge funds that are using this thing, the due diligence process is moving out of writing out reports or reading these lengthy things or Googling all over the place to find different charts or building your own charts to just plugging in an MCP for a data layer that you trust and then just ripping with it.
creating all of a list of dashboards, you know, running correlations and regressions on a whole bunch of different things.
It's like literally doing whatever you want.
And I think that's also going to elevate just the whole ecosystem in terms of investors and traders across the board.
Like a simple way to think about it is maybe when you were just, you had your Coinbase account and you were like, I don't know, I'm bullish, like stable coins.
So I'm going to go buy.
one company that i see there that is that is a tailwind for for stable coins and then just roll with that but you know the the sequence looks very different when you're using an agent right like they're gonna they're going to think a lot more from that portfolio management perspective.
They might suggest you instead to have a basket of these four or five different asset classes, and maybe you want to hedge that with a short on this other sector that you may not be as bullish on for whatever reason to kind of have a long short thing going on.
And obviously, that's going to increase the amount of tokens used and just the complexity of intelligence that is occurring.
So yeah, I feel really strongly that being tapped into that data layer is...
is where a lot of this is going to happen.
I think it's going to lift up the expertise and the technical ability of all these investors and traders.
And then it's also going to be great for us as a business as well, obviously.
Yeah, just very complimentary, I think.
Gotcha.
Yeah, well, I'm looking forward to that future.
Felix, we're getting close to time here, so I always go too long when I'm excited to talk to somebody.
But I got to ask you a question about your outlook for 2027, because a lot of people have been talking about how the third year of a president's term is usually the most bullish for markets and that markets do really well in the period right after midterms.
What are you expecting to see in the markets in 2027?
Do you think we're going to see the markets recover and sort of these bull markets that we've seen resume the strong price action?
Do you think that we've kind of rolled over here in some ways on liquidity or other things?
And, you know, the energy crisis is going to weigh down the economy.
Like, what are you expecting from markets in 2027?
And do you think that that bullish trend from history is going to play out again?
Yeah, I think the next six months or so is still going to be kind of more of the same, like heavy rotations, still a lot more questions than answers.
Still waiting to see whether this slowdown that I articulated starts to occur or not, because I think...
Markets need to adapt to that and haven't priced that in by any means really yet.
So yeah, I'd say the first six months or so is largely more of the same with the exception of perhaps a bit of a seasonal, you know, you just mentioned that the seasonal one of midterms is also just like the end of year, the Santa rally, all that good stuff.
So, you know, maybe, maybe you get a bit of a rip here for the next little while.
And then I think a coming back to terms with some of these questions that are not answered.
And yeah, I think like mid next year, we start to get those answers, whatever they might.
might be.
And it feels like that will allow us to understand the next big narrative from there on.
And I think for me, like, again, fundamentally very bullish on the crypto side of things.
Like, I think that's definitely an asset class that you want to be focused on for longs and to see those tailwinds ride.
You know, all these AI trades that have been hot over the last six months or so, I think that's...
That's definitely a bit more questionable, especially with these midterms and how they've shaken up.
It probably won't be as bad as everybody was freaking out about last night, which is just like, I was definitely guilty of it.
As soon as the Texas governorship flipped the blue, I was just like, RIP data centers, which is more a joke than anything else.
But I think people are definitely taking that to heart.
But we'll probably meet somewhere in the middle, which is that look like money talks.
And if you can find ways to meet in the middle, maybe this will work out.
Yeah, it depends where all that shakes out there.
Yeah, but I would say the main one is that if we do get this bit of slowdown that I expect, I think there's a good chance of us going from the current curve pricing and hikes to pricing in at least neutral or flat to cuts in 2027.
So I could see that as being something pretty positive for markets.
All right.
Well, I hope some of these positive things play out in this way.
I think you're very good about being balanced and circumspect, but there is always a risk of major upside.
So I like that you still acknowledge that too.
Felix, this has been an amazing conversation.
BlockWorks does the best digital assets conferences in the industry and Digital Asset Summit London is next week.
So I want to give you a chance to tell us about that.
But then, you know, the final question I always ask every guest is where can we send people to find more of you and your work online?
So tell us about all of this.
Yeah, thanks, man.
Yeah, doing the DAS London next week, we sold out of our VIP tickets, our allocator tickets.
There's a bit more of the general admission tickets left.
So if you're in the area, get a ticket and come by.
It's a lot of fun.
Two days, November 10th and 11th.
Check that out.
Yeah, just Google DAS London, Digital Asset London.
You'll find it.
Yeah, and then same, go try out like Connector, Blockworks, MCP.
Like there's 100 dollars free credits.
go rip that and see what you can create.
And then otherwise, yeah, you can find me at the, I'm not going to pronounce my handle, but like Fijo Inc.
Right there.
go follow me down.
I'm so glad this whole podcast is worth it to make you say that out loud.
Cause every time I told you this before we started, every time I go to X to look for you, I start typing Felix.
And then I have to be like, how do I spell this thing again?
Nobody knows how to say it.
And because it's a made up, it's just half my first name and half my last name.
I know it's, it's, it's like a trap that everybody says.
Felix Jovin, head of content block works.
Thank you so much for being on the show, man.
I really appreciate you coming on.
This has been a great conversation.
And just like I said, like, it's really great to have sort of like.
detailed thoughts, but balanced and circumspect perspective on digital assets and just the market overall right now, because everybody is really hungry for this.
So thank you so much for being on Milk Road Crypto, and I hope we can catch up again soon.
Yeah, thanks, man.
Thanks for having me.
That was a lot of fun.
And thank you all for joining us.
I hope you all learned something today.
So until next time, as I always say, stay safe, stay educated, stay bullish, and we will see you all in the next episode of Milk Road Crypto.
Thanks for being here, everyone.
Bye.
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