💬Session Question/Réponse MAI 26 (LIVE)

The speaker begins by discussing the current market situation, particularly regarding the S&P 500. He believes that being long in the market today is not advisable. He recalls warning signs from 2024, indicating that investors should have been taking profits from long positions, especially those invested since the 2000s. The market showed short-term pullbacks after the Covid bubble, but a final push led to divergence signals by summer 2024, with an official signal coinciding with Trump's tariffs. The speaker expresses concern that the market is creating a bubble, or rather, that a bubble already exists. He states that if the market were accelerating now on solid fundamentals, he wouldn't be entirely against it, but numerous underlying issues already plague the economy. He warns of a potential 40% loss on the S&P 500, which would retrace 50% of the bullish trend, particularly affecting the US due to unsustainable excesses. He considers this his main scenario, though he acknowledges the possibility of an even greater market delusion, which he currently sees no evidence for. He advises against buying today and views selling as counter-trend, given the visible excesses. He stresses that selling now carries immense risk because the market is resistant to falling due to powerful cognitive biases. He presents two outcomes: either a brutal return to reality, which would be beneficial in the long run, or a full-blown bubble. He states that he has been out of the market since 2024, having been trapped by staking blockages, forcing him to hold a position that has already fallen significantly. He then shifts to discussing Atom, noting that it's not a short-term trading vehicle but rather an investment. He mentions his personal "stop at zero" strategy for Atom, meaning he's prepared for it to go to zero or validate his investment thesis. He observes that Atom's market cap has touched the bottom of its range, and for validation, it would need to triple to 3 billion, or even reach 6 billion to signify meaningful movement. He points out a "Wyckoff" pattern on the market cap chart, and if it rebounds and breaks out of a 4-year accumulation phase, it would require Atom's valuation to multiply by four. This, he believes, would necessitate strong fundamentals, which he still sees in the Atom ecosystem, despite the public Cosmos chain being less active than its private counterpart. He mentions the ECB piloting the technology, reinforcing his view that it will become an open-source stack that doesn't aim to capture value like Polkadot or Avalanche. He recounts being trapped in a weekly Atom trade that became a monthly range. If Atom breaks out of this range, it would need to reach 3 billion, then 4 or 5 billion, meaning a five-fold increase from its current 1 billion valuation. He emphasizes the need for sustainable growth, not just a quick pump, to establish 5 billion as a solid support level. If this occurs, he envisions Atom reaching 12 billion (its previous resistance) and potentially doubling to 25 billion or more, leading to a primary trend that could last until 2035. He estimates a long-term value zone of around 40-50 billion, aiming for a x10 return. He distinguishes between trading for capital accumulation (often with leverage) and investment for value creation. He prefers investing in things that create intrinsic value over time, rather than short-term speculation. He finds trading less appealing as he accumulates capital. Regarding managing gains, he explains that in a trend, one must learn to let gains run. For Atom, if it breaks out of its value zone, it should not return to it, and the trend will likely extend at least the size of the previous range. He anticipates Atom's value zone settling above 25 billion if a trend establishes itself. He notes that the market often sees two trend continuations before divergence occurs, where price appreciation outpaces fundamental growth, signaling the approach of a terminal value. He discusses his oil trade, where he targeted the top of the range at $95. He's now buying dips, believing it will break out to new historical highs, driven by the ongoing Middle East crisis, which he sees as a long-term issue. He predicts oil will reach historical highs by mid-June, potentially followed by a pullback if the situation resolves, but he expects further "choke point" conflicts. He emphasizes being long on oil around $80, as he views commodities, especially oil, as the best hedge against current market risks, given the global recession and stagflation. On Ethereum adoption by institutions, he clarifies that institutions are not necessarily buying Ethereum for themselves but act as vehicles for client funds. He believes that as the traditional financial system, with its accounting frauds and excessive leverage, demonstrates its deep-seated problems, confidence will erode. He sees Ethereum as the natural replacement infrastructure for traditional finance, not just for the US but globally. The current system's complexity, re-hypothecation of assets, and reliance on trust are unsustainable. He argues that institutions will be compelled to use Ethereum because clients will demand cryptographic proof and non-custodial solutions, eliminating the need for trust in intermediaries. This shift means clients will retain ownership of their assets, with institutions providing services through smart contracts. He foresees a future where trusting traditional financial institutions will seem absurd. He believes institutions will become net sellers of Ethereum, as they convert transaction fees and staking rewards into fiat for tax and operational needs, creating a constant supply of Ethereum. However, he contends that this analysis is incomplete, as it neglects the demand side. He believes a significant portion of Ethereum's demand (30-35%) will come from staking, as it offers a risk-free, inflation-neutral yield, superior to traditional fiat assets. He compares this to the monetary premium of sovereign bonds, suggesting that if Ethereum captures even a fraction of that value (e.g., 15-20% of the 180 trillion sovereign debt market), its valuation will be immense. He sees Ethereum as an online sovereign state, more stable than governments, attracting capital fleeing the problems of sovereign debt. He dismisses the "Tina" (There Is No Alternative) argument for investing in tech stocks, believing investors will eventually realize the illiquidity and overvaluation of these assets. He analyzes the WTI/Gold ratio, noting its breakout from a channel, indicating a new bullish channel for oil relative to gold. He expects gold to remain flat for a year or two, as it's a non-productive asset. He argues that gold's price primarily reflects the quantity of dollars in circulation, not its intrinsic value. With a likely reduction in dollar liquidity due to de-dollarization and bond redemptions, he doesn't foresee a significant rise in gold prices. He suggests that other undervalued assets, like certain stocks or Ethereum, offer better risk-adjusted returns. He believes the Ethereum/Bitcoin ratio is poised for a restart, expecting it to return to its median level, as Bitcoin is unproductive and serves as a store of value, while Ethereum represents productive energy in a growing economy. He criticizes the notion that certain crypto assets, like Ripple, are for utility rather than investment, arguing that this misunderstands value creation. He compares it to oil vs. gold: oil, despite its price fluctuations, creates immense value through consumption, while gold is largely stored. He highlights that Ethereum's supply is fixed, unlike oil, where new reserves are constantly found. He asserts that if the total supply of oil were known and limited, its price would behave differently, like gold. He believes the constant circulation of Ethereum by institutions (a small fraction of its total supply) will not suppress its price, especially given the demand from staking and its utility as the foundation for the future economy. He asserts that Chainlink is well-positioned, particularly if the Clarity Act passes, as it is a US-centric interoperability solution. He notes its strong price structure, remaining above averages, and anticipates it reaching 40 billion, his target for interoperability protocols. He compares Chainlink's consensus-building method to Cosmos's general consensus system, concluding that both are valuable, but Chainlink's token-centric model might limit adoption compared to Cosmos, which offers technology without requiring Atom purchases. He expresses concern about the Korean and Japanese markets, noting that their recent surges are inflated by currency devaluation and speculative bubbles, particularly in the AI sector, reminiscent of the dot-com bubble. He emphasizes that such rapid price increases don't reflect genuine value creation. He addresses the question of questioning models, stating that all models have inherent failure rates. While he relies on Armstrong's and Dal's cyclical observations due to their past statistical relevance, he's prepared to be wrong. If the market becomes purely psychological, his models would fail. He admits to a bias in his discussions, focusing more on challenging or underperforming trades for pedagogical value, which can create a perception that his predictions often fail. He views Bitcoin's current surge as a rebound, not necessarily a sustained trend, and expects it to retest $100,000-$115,000, possibly reaching a new historical peak, but not significantly higher. He believes the current cycle's top has likely been made. He discusses the dangers of shorting the US market, especially for retail investors, due to the market's structural limits (infinite upside vs. finite downside for longs). He argues that while trees don't grow to the sky, market manipulation and speculative bubbles can persist beyond rational expectations. He reiterates that quantitative models and the law of large numbers suggest current valuations are unsustainable. He also introduces the concept of "time value," which he plans to elaborate on in a future book, stating that the financial system is currently mispricing it, leading to a need for systems like Ethereum. He believes Atom's success hinges on its utility as a decentralized platform for coordinating beneficial network effects. He highlights IBC (Inter-Blockchain Communication) and bridges to Ethereum as key drivers. He explains that a hub-and-spoke model, with Cosmos Hub acting as a neutral router, is necessary for scaling and efficient resource allocation, fostering cooperation. He sees services like Eurekaa for bridging to Ethereum as economically sensible and beneficial, generating network effects without needing to force token adoption. He believes the Atom price doesn't reflect this potential, which could lead to significant appreciation. Regarding Europe, he sees potential advantages in intellectual freedom and critical thinking, attracting scientific talent. He acknowledges resource dependency but believes Europe's neutrality fosters partnerships in a fragmenting world. He also points to strong decentralized movements in Europe, particularly in blockchain governance, which he believes will reshape the political landscape, starting with direct blockchain-based voting systems in countries like Switzerland and France. He envisions a future where AI assists in understanding complex legislation, making political manipulation difficult and empowering citizens. He prefers Monero over Zcash for privacy, citing Monero's consistent structure and value creation compared to Zcash's volatile, speculative nature and lack of underlying value. He reiterates that most meme coins or projects like Doge are "stupid and without interest." He re-emphasizes that institutional adoption of Ethereum means non-custodial deposits, where clients force institutions to use Ethereum-based smart contracts for security and efficiency. He views this as an inevitable revolution due to the overwhelming technical advantages (cheaper, more efficient, more secure). He acknowledges the current complexity of blockchain user interfaces but predicts they will become completely abstracted for mainstream adoption. He mentions the recent official launch of their non-custodial Ethereum staking solution, Lido. He dismisses Intel's recent stock surge as part of the speculative bubble in semiconductors, driven by unsustainable promises of capex from tech giants. He argues that investors are playing a contradictory game, simultaneously believing tech giants will cut spending (thus not selling their stocks) while also believing semiconductor demand will continue (thus buying semiconductor stocks). He predicts this will lead to a collapse in semiconductor prices when the artificial supply shortage turns into an excess. He highlights the divergence between the growth in money supply (M2) driven by credit and the lack of net injected liquidity from the Fed, indicating a dangerous speculative environment. He warns that the US market is leveraged 2.3 times the real economy, and a 30% drop could trigger a cascade of liquidations. He believes the Fed won't print money to save the market amidst high inflation. He criticizes the "sociopathic" behavior of tech billionaires who push for rapid technological advancement to fulfill their visions within their lifetime, creating an unsustainable and potentially destructive future. He believes that historical patterns suggest such extreme wealth disparities often lead to economic recalibration. Finally, he touches upon Bitcoin's supercycle, acknowledging its understood value, but predicts that future cycles will be less exciting as the market matures and people realize the 4-year predictability is flawed.