And I think that Bitcoin has a phenomenal ability to find the exact market pathway that will blow out the most number of people. What's up everybody? It's LG Ducet here and welcome to the Milk Road Show, the daily crypto show that can't believe it's only March 2nd. It's going to be a long year, folks. And to help us navigate this, we're joined by Peter Smith, founder and CEO of blockchain.com, an OG of the industry and someone who has seen it all. He's been doing this since 2013, man. So, he's going to bring his wisdom and we're going to talk about why we are where we are in the market. If the Clarity Act is supposed to happen, I don't even know. The deadline was March 1st. It's March 2nd. I actually don't know what's what the latest is the effects of this new geopolitical theater on our dear crypto. And of course, what he's interested in going forward. Today's episode is brought to you by Midnight, bringing rational privacy to blockchain, Warbucks, the easiest way to trade crypto, and Nexo, earn interest, borrow and trade crypto. Peter, welcome to the show, man.
Thank you. Thanks for having me. Yeah, absolutely. Great to see you.
Okay, listen. There's a lot of different things that we could actually talk about today and we were kind of chatting about all of them beforehand. I actually want to know, I don't know this part because I haven't looked at the news or nobody's talking about it because everyone just wants to talk about Iran and what's happening there. There was a deadline for the Clarity Act that was yesterday. I'm assuming it wasn't met. I don't know what the latest is.
No, I think it got, you know, consumed by the shooting war that's going on over in the Middle East now.
They got other things going on.
Yeah. Yeah. So, I think there's other things that have sort of taken priority and you know, I think the March 1st priority was a bit of an artificial construct anyway.
So, what's happening with that? Because I think that that's been like an overhanging story this year, right? Where we saw that pump in January when it was going to come and Brian Armstrong saying no thanks and the kind of falling to the back burner, let's say. But what do you think is actually going to happen there?
Yeah, I think that the Clarity Act is going to pass. And I think it'll pass before the midterms. That's kind of the big question everyone's asking. Is it going to be passing before the midterms, after the midterms? You know, the reality of it is that I think it's a little harder to get done than people thought, but that's often things in life. But I think we're getting closer and closer and the bill has kind of reached the appropriate level of compromise. And so our position along with a lot of the industry is that a bill is better than no bill. And we're really rapidly getting to the point where we should really just kind of as an industry get together and pass this thing. I think you know some of the price action you're seeing also reflects that right you're seeing you know that dynamic as well which is important the market is you know an important barometer of how likely we think things are but you know look my guess is that the clarity act passes like I said before the midterms probably before the summer and then we're able to sort of put that behind us and get on with making the US the crypto capital of the world.
Would you be willing to accept kind of the concession on yield that was the kind of the main holdup at the last draft?
Yeah. You know, and I think that this is part of the political process and in a democracy is like no one's going to walk away from this 100% happy, you know, and that in itself is important. You know, I've spent a lot of time in DC the last couple of months lobbying. I was talking to one senator, you know, she's like, 'Well, you know, I'd really like to go this far. You'd like to go that far.' And she's like, 'But I think I could settle here and we're all going to be a little unhappy.' She's like, 'The problem is crypto people don't know how to be a little unhappy.' And I said, you know, I think it's not an unfair observation. You know, we're a very loud and annoying constituency, one could say. And I think if something is logical and to me like what the crypto industry wants on yield is logical and great for consumers. Like I can understand why some of the other folks in the industry want to dig in on it. At the same time, you know, I'm also sort of a big fan of incremental progress. I think you either have to have step change progress or incremental progress. The clarity act is not step change progress. It is incremental progress no matter what is in that bill. So if it's incremental progress like let's just focus on progress. I'm also you know have been through the MiCA process the European equivalent for the last few years and I know that you know there's what gets passed there's what gets reconciled and then there's the implementation. And so even once this passes, you know, there's going to be a lot left to figure out exactly what this bill means in practice. Which brings us back to like my view that incremental progress is probably the right thing here.
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Is this, do you feel like the lack of the Clarity Act and its kind of ambiguous deadline or timeline let's say, would you say that's one of the biggest kind of price suppressors at this current moment in the timeline?
Yes. I think, you know, and I love crypto Twitter. I want or X Twitter. Crypto Twitter always, you know, X cryptox. Crypto Twitter like just sounds better, but crypto X as we could call it. I love it. And I love reading technical analysis and four-year cycle theories. And my favorite new one is the blood moon cycle theory. I think this is all somebody said this is all like it's astrology for men.
For day traders. Astrology for day traders. I think that's very true you know and so but it's very entertaining just like astrology is very entertaining and what I would say is you know I think that we've had a very weird set of market conditions for the last few years you had I think a very very brutal set of market pullback when you know post FTX implosion and all that due to like regulatory crackdown like I think it got worse than it necessarily would have been otherwise.
I then think that the market got very excited about the Trump election you expectations were very very high. So the price went to a level as if all of the things that Trump promised to do in his term were already done. And then I think the market has gotten a little depressed as it has realized that things take a bit longer to do, right? And so you know I had OGs and we run a large OTC trading desk where we, you know, serve a lot of the Bitcoin OGs and whales. And I had these OGs and whales, you know, calling telling me they're selling, you know, because this didn't happen, that didn't happen. I was like, guys, like, did you think this was all going to happen like in the first 90 days, 180 days? Like, there's a Senate, there's a House, there's a, you know, like also like crypto is very important, but like it's not priority one. And so, do I think that the administration will deliver, you know, what it promised and is committed to the industry by the end of his term? Absolutely. particularly if they win the midterms. No doubt. Did I ever think that it was going to happen in the first 180 days or 90 days? Absolutely not. And I think that the market kind of got ahead of itself. You know, that said, I think as these things start to happen, you will see the price appreciate and kind of come back to where that expectation was.
You sound like you're a bit more of a fundamentals guy, Peter. Is that a good assumption or do you believe I feel like as an OG you also may believe in more of the TA cyclical nature of crypto?
I mean I'm 100% in on the blood moon.
No, I'm just kidding. When you said that I found an article about it on Trading View. Let's pull that up and just quickly look at it. See if there's truth to this blood moon. I like any price action in crypto. There's always going to be some theory behind it. No matter every week we've got a new story these days. So this basically is telling us that the blood moon I think happens blood moon is set to occur in this cycle after the ones that occurred on March 14th and September 7th last year. So when is the next blood moon and that's I think it's arguing that that's when the reversal will come. Do you think Peter, come on, man. You've been here since 2013. You know, and I think you probably also witnessed this that 4chan post back in September saying, you know, x amount of days bear market, x amount of days bull market, the top will be October 6. And it happened exactly like that even though it was a year's old post. Is crypto is Bitcoin so simple as to like tie it to like do we over complicate it with fundamentals? Is it so simple to be blood moons and four-year cycles and all that kind of stuff. You've been here for most of that.
Okay, so a couple things. The first is that I think Satoshi did a really good job of lining up the Bitcoin cycle with the US election cycle, which you know historically is also pretty interrelated to the liquidity cycle and the ISM cycle. So like you know I don't believe in a per se exact four-year cycle because by the way the four-year cycle has never been exactly a four-year cycle. Also, you know, everybody that's still like four-year cycle, you know, one of the biggest features of the four-year cycle is that the new all-time high, the prior all-time high would get broken after the halving. And this time it got broken way before the halving and then the price spent most of the price action after that. It the price spent has had spent most of the time under the prior all-time high. Right? So like there's a lot of selective data manipulation to prove these theories. I think that a market you know finds a price based on a lot of factors. So for example I 100% think that the market sold off in the fall because of people who believe in the four-year cycle. Like at the end of the day more sellers than buyers and the price is going down. And I think that there's a lot of people who believe in the four-year cycle and enough if enough people believe in something they can make it true in markets hilariously right the most famous example is GameStop. enough people believe that GameStop could go up that they actually made the damn thing go up.
Peter, you know some of these OG guys, are they is that how they behave? Were they just like you were saying that after the election certain things didn't happen and so they were getting cold feet and they're selling? Is that and we saw that in the charts too. We saw that in the data in the onchain data that a lot of people that have held Bitcoin for a long time were selling.
who are like they had this mental, you know, target in their mind like when Bitcoin gets to 100K, I'm going to sell half my BTC or I'm going to sell a quarter of my BTC or whatever it is, you know, like and so, you know, when the price was going up and looking strong, they were like, 'Oh, okay.' But, you know, as the price starts to come down and they're like, 'Well, you know, Trump maybe is the crypto president. Maybe the four-year cycle is real.' And the interesting thing about Bitcoin is like it's not like a lot of other asset classes where like if a billion dollar position exists, it's most assuredly owned by an institution. In crypto, there's like there's just regular people who are not financial traders or managers who have these enormous Bitcoin positions, right? They're like the biggest active day traders in the world across crypto. And I think yeah, a lot of those guys, you know, as the market came down and looked weak and, you know, different factors came together, it's like maybe the four-year cycle is real, you know, and they started selling. I think we're probably through most of that. And now, if you look on chain, you know, whales are buying more than they're selling. It's something I monitor pretty closely. I think though that like people often ask me like, you know, what do you actually believe in when it comes down to the, you know, to the price of Bitcoin? And I think that Bitcoin has a phenomenal ability to find the exact market pathway that will blow out the most number of people. Like Bitcoin finds the maximum pain pathway. Like it just does. It's amazing at it.
And so my theory, my unified theory of the price of Bitcoin is like tell me what's most painful for the market and I will that's what will happen.
That's what crypto that's what Bitcoin is going to do. Are you talking about Bitcoin specifically or I guess you lump crypto in with everything else with Bitcoin and everybody else.
There's only one asset that's in crypto only one big asset in crypto not trading correlated to Bitcoin right now which is Hyperliquid.
Hyperliquid. Okay. Yeah. I was hoping you'd say that.
Yeah. So you know which we can talk about but yeah everything else trading pretty correlated to Bitcoin right so yeah but now what do I think is the most painful path forward for crypto right for Bitcoin price right now there's so many it's one of two things there's so many OGs and fund managers and people I talk to that are expecting a Bitcoin price of like you know let's call it low 50s 48 so the 200 EMA weekly or whatever it is which you know moves around a little bit based on you know So it's not a static price level, but let's say that it's roughly at 51, depending on how you calculate. There's so many people expecting 51 that it almost cannot do that. Like the two like ways that crypto goes forward from here that are most painful are either that Bitcoin rips back above 100, which by the way is only a 20% move or 30% move at these levels because that's going to blow out a bunch of people and be really painful for a lot of guys who didn't get long because they thought it was going to the 50s or it's going to go to like 38.
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What's the most painful one of those scenarios, Peter?
Honestly, the most painful because most people like from what we're seeing in like the hedging markets and stuff, a lot of people have hedged the downside. The most painful thing is probably for Bitcoin to go up really hard. Because no one's expecting anyway. We're all sitting here being like, 'Okay, the entry zone is at, you know, 48K, the low 50s.' And, you know, like that's where the cycle bottom is according to the Ichimoku cloud and the, you know, something death crossover and whatever other astrological symbol we come up with. And so the most painful thing I think for most of the market right now is for crypto to go up pretty violently.
Would that be and do you think let's get it a little bit more specific. Do you think it would be for Bitcoin to dominate in that scenario or for Bitcoin to not for the opposite to happen for have like a mini alt season in that pop?
I think a mini alt season in would be really painful for most managers because everybody has just sold them. You know, actually one alt that people are buying is hype, right? So the most painful thing and it kind of happened today, right? Everything's up massively today except Hyperliquid.
Yeah. Yeah. People already bought it. People already bought it. Already got bought. Yeah, exactly. People already deployed their capital.
Correct. Yeah. People are rotating out of that their profit there into the other stuff.
Yeah. People are like sell your SOL and ETH and buy Hyperliquid. You look at Hyperliquid. It's like by the way in the interest of full disclosure I am long hyper. It's a very it's a small position in my portfolio but I'm long Hyperliquid and think it's a super interesting product. That said like you know I think kind of like it's really funny when like crypto Twitter is just talking about something constantly you probably should not be buying it.
