This episode dissects the disconnect between bearish retail sentiment and bullish institutional and macro fundamentals, arguing that the real opportunity lies in fading the crowd's short-term frustration.
Contrarian Bullishness in a Bearish Market
- Key Insight: The hosts observe that the vocal, online crypto community is becoming increasingly disconnected from the institutional capital flows that now primarily drive the market.
- Jonah points out the flaw in the prevailing sentiment: "Nobody has an intelligent thesis. It's more just frustration that the market hasn't full sent to levels that make getting rich like quick and easy."
- Strategic Implication: When the "peasants" of the crypto world—a class the hosts now include themselves in compared to institutional players—are uniformly bearish, it often presents a strong contrarian buying opportunity. These participants are likely underexposed and will chase the market higher on a reversal.
The Macro Case for a Continued Bull Run
- Interest Rates: The sheer volume of capital waiting for rate cuts is too large to be front-run, suggesting a significant repricing of assets like Bitcoin is still to come.
- Political Tailwinds: A potential Trump administration is viewed as favorable for markets, and a Supreme Court review of tariffs could result in a massive, multi-hundred-billion-dollar stimulus-like refund to importing companies.
- Regulatory Momentum: The hosts emphasize that recent deregulation, like the passing of crypto-friendly acts, has a delayed impact. It kicks off a 6-to-18-month process for corporations to integrate crypto, meaning the full effect on price has not yet been realized.
- Actionable Insight: Investors should avoid trading crypto based on short-term macro fears. Crypto has idiosyncratic flows, and the long-term structural tailwinds from deregulation and institutional adoption remain firmly intact.
Identifying the Fastest Horses: Solana and Ethereum
- Avi details his current trading strategy, focusing on assets he believes will lead the next leg up. He identifies Solana and Ethereum as having the strongest market structure due to fresh capital inflows.
- Avi explains his trade structure for Solana, which involves a clear invalidation point. He notes his entry was around a SOL price of $194, with a stop-out below $184 and a target of $260.
- His approach is to identify moments when the market is "completely offsides" and position accordingly in high-beta assets.
- Avi's Thesis: "We are 50% higher than the peak Bitcoin reached pre-Trump election. That doesn't seem like enough." He argues that the market has not fully priced in the positive implications of a pro-crypto US president.
Navigating Macro Regimes and the Role of AI
- Deflationary Forces: Jonah believes AI will be a powerful deflationary force, comparing its productivity impact to the invention of Google Search or email. He also points to a glut in commodities and resolving supply chain issues as factors that will push inflation down.
- Avi's Counterpoint: Avi expresses skepticism that this "dream scenario" will be a long-term era. He argues that populist governments will always print enough money to offset any deflationary pressures from technology like AI. His long-term view remains "rising growth, rising inflation."
- Strategic Consideration: This debate highlights a key uncertainty for investors. Whether AI's deflationary impact can outpace government money printing will determine the dominant macro trend and the best-performing asset classes over the next decade.
Deregulation Trades and Niche Opportunities
- The discussion explores specific investment ideas outside of mainstream crypto, focusing on deregulation and precious metals. Jonah highlights his position in MLPX, an ETF for hydrocarbon pipeline companies.
- MLPX (Master Limited Partnership ETF): This is an exchange-traded fund that holds publicly traded master limited partnerships, which are primarily companies in the energy infrastructure sector, like pipelines.
- Jonah frames this as a deregulation trade, capitalizing on the Trump administration's pro-pipeline stance, which unlocks value for companies previously hindered by federal roadblocks. It's a play on the regulatory environment, not a direct bet on oil prices.
- Avi shares his own portfolio, which includes significant holdings in precious metals miners (gold, silver, copper, uranium) as a hedge against his long-term inflationary outlook.
The Enduring Bull Case for Gold
- Avi elaborates on his thesis for gold, which he believes is in a long-term uptrend similar to the one from 2000-2011. He sees it as a crucial portfolio component driven by both monetary policy and geopolitics.
- Monetary Policy: As central banks inevitably cut interest rates, the opportunity cost of holding a zero-yield asset like gold decreases, making it more attractive relative to bonds.
- Geopolitics & De-Dollarization: Nations like China, Russia, and India are actively diversifying away from the US dollar by accumulating gold in their central bank reserves. This trend reflects a slow but steady erosion of the dollar's dominance in global trade.
- Bitcoin as "Digital Gold": Jonah, despite not holding gold, sees its rally as a bullish proxy for Bitcoin. As gold's market cap grows (now ~$24 trillion), it reinforces the "digital gold" narrative and makes Bitcoin's potential to capture a fraction of that value seem more attainable.
Breaking "Childhood Curses" in Investing
- The conversation touches on how formative experiences can create biased investment frameworks, or "childhood curses," that must be overcome.
- Jonah admits he missed the recent gold rally because he came of age as a professional during the 2010s, a decade when gold produced zero returns, leading him to dismiss it.
- Avi shares an anecdote about a wealthy immigrant family who exclusively invests in real estate and restaurants, distrusting the stock market because of negative experiences in their home country, despite likely missing out on significant S&P 500 gains.
- Actionable Insight for Researchers: This highlights the importance of constantly re-evaluating core assumptions. An investment thesis that was invalid for a decade can become highly relevant with a shift in the macro regime.
The Modern Path to Alpha: Deep Ecosystem Involvement
- The episode concludes by exploring how retail investors can still generate alpha in a market that is becoming more efficient and institutionalized. The consensus is that the edge has shifted from passive holding to active, specialized participation.
- Avi, drawing from his experience managing funds, states that the best managers are genuinely obsessed and work 10-12 hours a day, focusing on making money rather than building a public brand.
- Jonah contrasts this with his career trading internal capital, where his edge came from attaching himself to a revenue-generating business that provided market intelligence and allowed him to weather larger drawdowns.
- The Wealth Hack: The key takeaway is that outsized returns now require deep involvement. "Pick a few winners and try to get deeply involved in the ecosystems and then you probably have an edge on token price." This means understanding tokenomics, participating in governance, and joining community discussions.
Conclusion
This episode argues that current market bearishness is a temporary, sentiment-driven distraction from powerful underlying macro and regulatory tailwinds. For investors and researchers, the key is to maintain a long-term conviction and understand that generating alpha now requires deeper, more specialized work within specific crypto ecosystems.
