Hey G, just letting you know the recording has started.

For everyone, we're currently in a cafe having a macchioli and had a few questions on crypto and outlooks on a few things.

So as an early investor, you favored companies with dividends, low debt and disliked growth companies, for example, Netflix due to their high PE ratios, right?

Yet many crypto projects yield 0 revenue.

So has your perspective evolved on this topic?

I think analyzing using the company framework can only make sense on security like DAOs or protocols.

And that does not apply to store value crypto, NFTs and most tokens.

As many have explicit mandates to not be a security and therefore never having any obligation or desire to pass through value to holders.

Is that why you advocate for crypto projects to pay out dividends rather than buy back tokens?

Why the preference for dividend yields though?

Especially when you can synthetically create this by selling a portion of your holdings during the buy and burn to get a sort of dividend.

Yeah I believe the desire for token buybacks is driven by selfish tax concerns.

If it's the same, then why not pay dividends and let holders buy back more tokens themselves?

there are many reasons, but I would say the biggest is ongoing concern.

A dividend paid out is safe from the remaining value in the coins going to 0 if they fail to perform, and majority of them do fail to perform.

Isn't it better that the money is retained by token holders than the government?

So Why do you call tax concerns selfish rather than optimal?

Also about your going concern, if there is going concern, isn't a buyback better as lots of liquidity to exit during buybacks and rather than a dividend where the profit is distributed to everyone, including people who didn't really believe in the going concern and deserve to hold these coins to 0 in my opinion.

As an intelligent investor, shouldn't I prefer this?

Yeah, well, the frame of reference here is not between a crypto investing tax resident and their government, but rather between token holders who do not have the same penalties of dividend taxation, yet are still herded into the sub-optimal choice of buybacks.

If it's a going concern, then buybacks are a terrible idea because everything collectively owned goes to 0, in which case the survival strategy should be to throw value out of the building before it collapses.

I would think that an intelligent investor should recognise that absent tax concerns, everyone would prefer a dividend over a buyback, unless the company has the ability to reinvest at higher rates of return, in which case a buyback is not done either.

The retained earnings are invested rather than used for buybacks or dividends.

Mechanical buybacks have no ability to assert a rich or poor valuation and would mean that even at extremely rich valuations, the optimal choice is to buy back.

That's rather illogical, don't you think?

You once also said fundamental analysis tells you what to buy.

Technical analysis tells you when to buy it.

However, it seems you updated your views on fundamental analysis being less important due to massive amounts of intervention in markets.

Has any of your views on technical analysis changed?

Outside the popular charts, you tweet such as hodl waves.

Do you believe there is any merit to drawing lines on charts?

I still think of TA as a fluffy aid to optimise entries or exits.

Although there might be some merits to practising male astrology and many people swear by it, It is not something that I strongly believe in, nor find very helpful.

I think you might get a lot of CT hate from answering this in that case, especially since so many influencers make a living from posting TA.

But what is the reason for popularity of this male astrology, like you said, and why do successful quote-unquote TA accounts garner such a large fan following?

Is it because TA is a lot more digestible, so has an appeal to wannabe traders who enter the space and want to feel like they are doing real work rather than gambling?

I do not want to trash talk TA because I think ultimately success of dark arts depends on the practitioner.

It is just that in this case the success rate to synthesize profitable TA traders is so disgustingly low, in my opinion, that it's practically impossible to justify as a mass market strategy to succeed.

I don't know how the successful traders manage to keep winning and I wish I had that skill, but I am part of the vast majority that suck at trading, especially based on TA.

Yeah, I definitely agree and relate to the sucking at trading part.

I thought I'll move into crypto for the last crypto cycle.

I believe the first cycle till may played out close to what you expected with BTC, breaching all-time highs, bringing retail money in which you created the top.

Were you surprised that we saw a double bubble and a second top in November 2021?

Yes, I was rather surprised about the second top.

I have a firm stance that by almost all metrics other than price, the market had topped.

I often share charts by Glassstone and look into Bitcoin and most of the charts show that the peak was in May, not in November.

The strength of the H2 rally was beyond my expectations.

I suppose it was just driven by the alt L1 narrative.

Did FTX and Alameda using customer funds play a role in this?

There's popular CT narrative that a lot of what has happened in the market can be thrown out and not studied for the next cycle as it was driven by fraud?

It is impossible to say, but I do think that's

Okay, so what's your opinion on VC firms who invested billions of dollars in 2021 and 2022, does G think they're smart and why are they okay to burn so much money?

I feel that they all got high on their own supply.

Did you see the list of VCs that were being plastered on Alt.01's DeFi and gaming projects?

It was a cesspool of no-name nonsense funds spun up by a couple broads that rode H1 well and wanted to play the VC game of early and cheap grant allocations.

I do not think they are smart, in fact I can't name any that launched in that era that is notable today.

I have no idea why they are okay to burn so much money.

I hope they still have money left and they should buy my bags.

Georgie Tunny Understandable on no-name funds, but there was billions of dollars plundered by very reputable funds into obviously bad projects such as the 11th Alt L1 or unsustainable Ponzi-Nomi play-to-earn projects, or even funding rounds of existing projects at ridiculous valuations.

FTX Ventures being the prototypical example of a fund that burnt millions of dollars or billions of dollars, but other reputable VCs such as A16Z, Tiger Global, etc.

Personally, I only have negative things to say about funds that are not

If these superstar fund managers could invest at scale, they should borrow money, pay funding and internalise all the profits themselves.

Not all the funds are bad, but I would say it seems rather obvious to me that most funds are just a free grift on the external money, or a way to gain access rounds through syndication in get better terms.

I do think that many did actually believe in the Alt L1 thesis, but then again given their size I feel like

it was confirmation bias because at least with an alt L1 thesis you just justify allocating huge size but not so much for projects which are smaller.

Elon Musk said that crypto will survive but it will be a long winter after FTX blew up.

G replied saying that she believed the winter is over calling the bottom.

As smart and rich Musk may be, I don't think he was ever involved in crypto other than memeing around with dodge and BTC.

At that time, the bear market had gone for months and the idea that FTX would restart the clock seemed like too much of a fantasy bear porn scenario to me.

I suppose it was just luck, if you're bullish in crypto like a broken clock, you'll be eventually right.

Is this your humble Spartan side at reading this to luck, or is there more to it where a large liquidation event like FTX usually marks the bottom?

Well, I always talk about my high dimensional hentai gods that pee into the future

and whisper to me what will happen in riddles.

But it seems everyone believes it as a joke.

I mean, that couldn't possibly be the case, right?

Yeah, so for the Next question I've got, it's kind of crypto going forward.

Will there be more crypto cycles in your opinion and why do you believe so?

I do think there will be more crypto cycles.

The 4 year BTC halving cycle has been an amazing cycle that seems to naturally sync with the human emotional and also financial markets full bear cycle.

As long as BTC is the number 1 crypto, I think the four-year cycle remains the reference point.

So you don't believe in the shorter cycle theory and think 4 years is the refractory period in spite of more eyeballs and institutionalization of the space?

Do you think this will change after the next cycle?

I think the period will still be 4 years, as long as BTC is in charge, but the peak will shift earlier as people realise the optimal strategy is to front run each other.

If ETH usurps and holds that position firmly, I would say that the shortening cycle theory would have more weight and can be explored more seriously.

What do you believe will be strong drivers of the next cycle?

I think the financialization of crypto by Tardify will be a strong driver in the next cycle.

This will be driven by access to crypto products in familiar Tardify wrappers and would attract a nice inflow of capital into the crypto market.

I think inter-country settlement is still some ways away.

For sure, insties could and would settle with each other over the blockchain.

who are you expecting to come into the next bubble, retail or institutions?

And what coins do you expect them to buy?

Last time you expected retail to come and buy DeFi, but they bought dog money instead.

Are you better prepared to be surprised next cycle?

Yes, the expectation of them buying DeFi was simply too optimistic of me.

I do think it was a huge overestimation of human ability that the new entrants would be able to move beyond meme coins.

So I would guess that the next bubble they will buy BTC slash ETH and whatever are the meme coins of the week with smart sales narratives.

It is unfortunate, but a lot of coins are just too complicated for normal people to understand.

Do you expect to see small countries start buying BTC or ETH during the next cycle and

do you have plans to use them as exit liquidity?

I think we will see countries buy crypto in the future as they were saying, hey you fuckheads, I can see that you are printing money irresponsibly.

Will it be the next cycle and will it be PTC ETH?

I would be surprised if that happened since it'd be sooner than I expect.

There are some eponyms that I think of as Jesus.

I'm going to call them out and maybe you can divulge into them to give more details.

1 of them you always say is, I believe that the market functions in a way that large groups, aka the herd, are not able to realise.

People get angry about this 1, maybe because they hate being cynical or just enjoy the waggony vibes.

I suppose it depends if you view the markets as positive or zero-sum.

If everybody is wealthy, then no 1 is poor.

Sure, there's absolute poverty and other absolute measures of wealth or quality of life, but I do think that wealth is mostly relative and that means that not everyone can have it.

If people can agree with me on that, then the only thing is just the percentage between the rich and the poor, those that make it and those that are the herd.

Another 1 that you always say is normies only come in if BTC or ETH breaches all time high.

From my interaction with normies, they perceive time very differently from us.

whole of H1 2023, normies I spoke to were saying how crypto is so over after FTX, not realizing that the market had been trending up.

By the time the normies have been emotionally reset about crypto, they'll only know next year about it as it's about to or have just breached all-time highs.

Another thing that you always say is get a Korean girlfriend when she starts buying at 20% premium to dump her and all your coins.

Korea, lower Korea specifically, is a really interesting market.

Although Koreans all learn English in school, their proficiency is not good enough that they can participate in Anglo social media platforms like how the rest of the world communicates on CT.

Because of this, they are actually very reliant on domestic key opinion leaders to spoon feed them international news and interpret it for them.

And yes, along with the capital controls and limited trading venues, this makes lower Korea an insanely hurdy market, where if 1 sheep runs off the cliff, the rest will all follow.

Maybe I am stereotyping and overgeneralising though.

Haha, I'm not sure if the kimchi premium will appear again, and if it does, would probably not be to such a large degree, but that would definitely be an interesting bonus signal to look out for.

I believe capital controls have loosened a bit, and the arbitrage is more understood now, and will not ever get to such

Another 1 that you say is, it's better to get punched in the face today than to have an infection for months, i.e.

The faster and more intense the crash, the more likely it's a bottom.

But if the crash is slow, then it'll just bleed down over a long climb.

I think this is really about whether you are path dependent or independent.

If it is going to happen anyway, it might as well happen now and we get it over and done with.

Yeah, rip off the band-aid kind of thing, I like that.

You also mentioned when we spoke early last year that cascades are good because it forces you to leverage longs such that they're completely wrecked rather than slowly adding margin and staying on life support, which burns more money that could be used to buy the bottom.

Yeah, I do think faster is better and more merciful compared to a slow and painful grind, but the market knows that as well.

This is why I say that it is not just the magnitude of the bear that is important, but also the duration of it.


Speaker 0: Hey G, just letting you know the recording has started. For everyone, we're currently in a cafe having a macchioli and had a few questions on crypto and outlooks on a few things. So we'll get going. Are you ready G? I am ready.

Cool. So as an early investor, you favored companies with dividends, low debt and disliked growth companies, for example, Netflix due to their high PE ratios, right? Yet many crypto projects yield 0 revenue. So has your perspective evolved on this topic?

Speaker 1: I think analyzing using the company framework can only make sense on security like DAOs or protocols. And that does not apply to store value crypto, NFTs and most tokens. As many have explicit mandates to not be a security and therefore never having any obligation or desire to pass through value to holders.

Speaker 0: Yeah, okay. Is that why you advocate for crypto projects to pay out dividends rather than buy back tokens? Why the preference for dividend yields though? Especially when you can synthetically create this by selling a portion of your holdings during the buy and burn to get a sort of dividend.

Speaker 1: Yeah I believe the desire for token buybacks is driven by selfish tax concerns. If it's the same, then why not pay dividends and let holders buy back more tokens themselves? Well,

Speaker 0: there are many reasons, but I would say the biggest is ongoing concern. A dividend paid out is safe from the remaining value in the coins going to 0 if they fail to perform, and majority of them do fail to perform. Isn't it better that the money is retained by token holders than the government? So Why do you call tax concerns selfish rather than optimal? Also about your going concern, if there is going concern, isn't a buyback better as lots of liquidity to exit during buybacks and rather than a dividend where the profit is distributed to everyone, including people who didn't really believe in the going concern and deserve to hold these coins to 0 in my opinion.

As an intelligent investor, shouldn't I prefer this?

Speaker 1: Yeah, well, the frame of reference here is not between a crypto investing tax resident and their government, but rather between token holders who do not have the same penalties of dividend taxation, yet are still herded into the sub-optimal choice of buybacks. If it's a going concern, then buybacks are a terrible idea because everything collectively owned goes to 0, in which case the survival strategy should be to throw value out of the building before it collapses. I would think that an intelligent investor should recognise that absent tax concerns, everyone would prefer a dividend over a buyback, unless the company has the ability to reinvest at higher rates of return, in which case a buyback is not done either. The retained earnings are invested rather than used for buybacks or dividends. Mechanical buybacks have no ability to assert a rich or poor valuation and would mean that even at extremely rich valuations, the optimal choice is to buy back.

That's rather illogical, don't you think?

Speaker 0: That makes sense. You once also said fundamental analysis tells you what to buy. Technical analysis tells you when to buy it. However, it seems you updated your views on fundamental analysis being less important due to massive amounts of intervention in markets. Has any of your views on technical analysis changed?

Outside the popular charts, you tweet such as hodl waves. Do you believe there is any merit to drawing lines on charts?

Speaker 1: Not really. I still think of TA as a fluffy aid to optimise entries or exits. Although there might be some merits to practising male astrology and many people swear by it, It is not something that I strongly believe in, nor find very helpful.

Speaker 0: I think you might get a lot of CT hate from answering this in that case, especially since so many influencers make a living from posting TA. But what is the reason for popularity of this male astrology, like you said, and why do successful quote-unquote TA accounts garner such a large fan following? Is it because TA is a lot more digestible, so has an appeal to wannabe traders who enter the space and want to feel like they are doing real work rather than gambling?

Speaker 1: I do not want to trash talk TA because I think ultimately success of dark arts depends on the practitioner. It is just that in this case the success rate to synthesize profitable TA traders is so disgustingly low, in my opinion, that it's practically impossible to justify as a mass market strategy to succeed. I don't know how the successful traders manage to keep winning and I wish I had that skill, but I am part of the vast majority that suck at trading, especially based on TA. Yeah, I definitely agree and relate to the sucking at trading part. But yeah, for the next questions,

Speaker 0: I thought I'll move into crypto for the last crypto cycle. I believe the first cycle till may played out close to what you expected with BTC, breaching all-time highs, bringing retail money in which you created the top. Were you surprised that we saw a double bubble and a second top in November 2021? And

Speaker 1: why do you think that happened? Great question, actually. Yes, I was rather surprised about the second top. I have a firm stance that by almost all metrics other than price, the market had topped. I often share charts by Glassstone and look into Bitcoin and most of the charts show that the peak was in May, not in November.

The strength of the H2 rally was beyond my expectations. I suppose it was just driven by the alt L1 narrative.

Speaker 0: Did FTX and Alameda using customer funds play a role in this? There's popular CT narrative that a lot of what has happened in the market can be thrown out and not studied for the next cycle as it was driven by fraud?

Speaker 1: It is impossible to say, but I do think that's

Speaker 0: a good theory. Okay, so what's your opinion on VC firms who invested billions of dollars in 2021 and 2022, does G think they're smart and why are they okay to burn so much money?

Speaker 1: I feel that they all got high on their own supply. Did you see the list of VCs that were being plastered on Alt.01's DeFi and gaming projects? It was a cesspool of no-name nonsense funds spun up by a couple broads that rode H1 well and wanted to play the VC game of early and cheap grant allocations. I do not think they are smart, in fact I can't name any that launched in that era that is notable today. I have no idea why they are okay to burn so much money.

I hope they still have money left and they should buy my bags.

Speaker 0: Georgie Tunny Understandable on no-name funds, but there was billions of dollars plundered by very reputable funds into obviously bad projects such as the 11th Alt L1 or unsustainable Ponzi-Nomi play-to-earn projects, or even funding rounds of existing projects at ridiculous valuations. FTX Ventures being the prototypical example of a fund that burnt millions of dollars or billions of dollars, but other reputable VCs such as A16Z, Tiger Global, etc. Were burning a lot of money as well. Personally, I only have negative things to say about funds that are not

Speaker 1: my own money, or mostly own money. If these superstar fund managers could invest at scale, they should borrow money, pay funding and internalise all the profits themselves. Not all the funds are bad, but I would say it seems rather obvious to me that most funds are just a free grift on the external money, or a way to gain access rounds through syndication in get better terms. I do think that many did actually believe in the Alt L1 thesis, but then again given their size I feel like

Speaker 0: it was confirmation bias because at least with an alt L1 thesis you just justify allocating huge size but not so much for projects which are smaller. Elon Musk said that crypto will survive but it will be a long winter after FTX blew up. G replied saying that she believed the winter is over calling the bottom. G was correct. So how'd you know that?

Speaker 1: As smart and rich Musk may be, I don't think he was ever involved in crypto other than memeing around with dodge and BTC. At that time, the bear market had gone for months and the idea that FTX would restart the clock seemed like too much of a fantasy bear porn scenario to me. I suppose it was just luck, if you're bullish in crypto like a broken clock, you'll be eventually right.

Speaker 0: Is this your humble Spartan side at reading this to luck, or is there more to it where a large liquidation event like FTX usually marks the bottom? Well, I always talk about my high dimensional hentai gods that pee into the future

Speaker 1: and whisper to me what will happen in riddles. But it seems everyone believes it as a joke. I mean, that couldn't possibly be the case, right? What even are hentai gods? Haha.

Speaker 0: Yeah, so for the Next question I've got, it's kind of crypto going forward. Will there be more crypto cycles in your opinion and why do you believe so?

Speaker 1: I do think there will be more crypto cycles. The 4 year BTC halving cycle has been an amazing cycle that seems to naturally sync with the human emotional and also financial markets full bear cycle. As long as BTC is the number 1 crypto, I think the four-year cycle remains the reference point.

Speaker 0: So you don't believe in the shorter cycle theory and think 4 years is the refractory period in spite of more eyeballs and institutionalization of the space? Do you think this will change after the next cycle?

Speaker 1: I think the period will still be 4 years, as long as BTC is in charge, but the peak will shift earlier as people realise the optimal strategy is to front run each other. If ETH usurps and holds that position firmly, I would say that the shortening cycle theory would have more weight and can be explored more seriously.

Speaker 0: What do you believe will be strong drivers of the next cycle?

Speaker 1: I think the financialization of crypto by Tardify will be a strong driver in the next cycle. This will be driven by access to crypto products in familiar Tardify wrappers and would attract a nice inflow of capital into the crypto market. I think inter-country settlement is still some ways away. For sure, insties could and would settle with each other over the blockchain. Okay, so

Speaker 0: who are you expecting to come into the next bubble, retail or institutions? And what coins do you expect them to buy? Last time you expected retail to come and buy DeFi, but they bought dog money instead. Are you better prepared to be surprised next cycle? Probably both.

Yes, the expectation of them buying DeFi was simply too optimistic of me.

Speaker 1: I do think it was a huge overestimation of human ability that the new entrants would be able to move beyond meme coins. So I would guess that the next bubble they will buy BTC slash ETH and whatever are the meme coins of the week with smart sales narratives. It is unfortunate, but a lot of coins are just too complicated for normal people to understand. What about nation states? Do you expect to see small countries start buying BTC or ETH during the next cycle and

Speaker 0: do you have plans to use them as exit liquidity?

Speaker 1: I think we will see countries buy crypto in the future as they were saying, hey you fuckheads, I can see that you are printing money irresponsibly. Will it be the next cycle and will it be PTC ETH? I would be surprised if that happened since it'd be sooner than I expect.

Speaker 0: There are some eponyms that I think of as Jesus. I'm going to call them out and maybe you can divulge into them to give more details. 1 of them you always say is, I believe that the market functions in a way that large groups, aka the herd, are not able to realise.

Speaker 1: People get angry about this 1, maybe because they hate being cynical or just enjoy the waggony vibes. I suppose it depends if you view the markets as positive or zero-sum. If everybody is wealthy, then no 1 is poor. Sure, there's absolute poverty and other absolute measures of wealth or quality of life, but I do think that wealth is mostly relative and that means that not everyone can have it. If people can agree with me on that, then the only thing is just the percentage between the rich and the poor, those that make it and those that are the herd.

Speaker 0: Yeah, That makes sense. Another 1 that you always say is normies only come in if BTC or ETH breaches all time high. What about that? From my interaction with normies, they perceive time very differently from us. Throughout the

Speaker 1: whole of H1 2023, normies I spoke to were saying how crypto is so over after FTX, not realizing that the market had been trending up. By the time the normies have been emotionally reset about crypto, they'll only know next year about it as it's about to or have just breached all-time highs.

Speaker 0: Tess Nice. Another thing that you always say is get a Korean girlfriend when she starts buying at 20% premium to dump her and all your coins.

Speaker 1: Korea, lower Korea specifically, is a really interesting market. Although Koreans all learn English in school, their proficiency is not good enough that they can participate in Anglo social media platforms like how the rest of the world communicates on CT. Because of this, they are actually very reliant on domestic key opinion leaders to spoon feed them international news and interpret it for them. And yes, along with the capital controls and limited trading venues, this makes lower Korea an insanely hurdy market, where if 1 sheep runs off the cliff, the rest will all follow. Maybe I am stereotyping and overgeneralising though.

Haha, I'm not sure if the kimchi premium will appear again, and if it does, would probably not be to such a large degree, but that would definitely be an interesting bonus signal to look out for. I believe capital controls have loosened a bit, and the arbitrage is more understood now, and will not ever get to such

Speaker 0: a degree as previously. Yeah, thanks for that Ainsley. Chee. Another 1 that you say is, it's better to get punched in the face today than to have an infection for months, i.e. The faster and more intense the crash, the more likely it's a bottom.

But if the crash is slow, then it'll just bleed down over a long climb. I think this is really about whether you are path dependent or independent. If it is going to happen anyway, it might as well happen now and we get it over and done with. Yeah, rip off the band-aid kind of thing, I like that. You also mentioned when we spoke early last year that cascades are good because it forces you to leverage longs such that they're completely wrecked rather than slowly adding margin and staying on life support, which burns more money that could be used to buy the bottom.

Speaker 1: Yeah, I do think faster is better and more merciful compared to a slow and painful grind, but the market knows that as well. This is why I say that it is not just the magnitude of the bear that is important, but also the duration of it. Yeah, okay. Yeah, that makes sense.

See all g3 transcripts on Youtube

The Degen Spartan Podcast (Part 1)