Crypto Negativity Has Much More to Run: 3-Minutes MLIV

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Transcript

00:00Mark, we're just talking to Tom there about the tech sell-off that we're seeing globally.

00:04Are there macro implications for this? Of course. I mean, I think AI is the biggest macro theme in

00:13the world at the moment and will be the case for some time. As you know, Kritia, I'm in the camp

00:18that we are in an AI capex bubble, but that this is not the bursting of it. You know, at some point

00:23before the ultimate bursting, we go to a more volatile stage. Maybe we've entered that, but I

00:27think even that's debatable at the moment. This sell-off is barely a flesh wound, to put it in

00:32terms of Monty Python at this stage. We haven't seen anything too dramatic. In fact, the price

00:36action today was quite impressive. I do think over the coming months that we're seeing that

00:41circularity of some of these investments, the fact that the really strong earnings from names like

00:46Amazon and Alphabet are partially bolstered by billions by the increased valuations of their

00:50investments of other AI names. The circularity is getting really problematic. We've seen some really

00:55worrying kind of investments and behavior and promises on the data center side from some of

01:02these AI names, from these kind of meme stocks, from these momentum stocks. So we're in that more

01:06frothy stage. So maybe we're getting into more volatile stage. I don't think we're close to the

01:09ultimate bursting yet. And certainly the price action wasn't too dramatic yet. So maybe we could

01:14see another couple of percent here. But I expect people ultimately to buy this dip for now.

01:17Yeah. Given how much some people cling to those AI bets, Mark, and how much passion they have,

01:24maybe the Holy Grail reference is very relevant. Let me ask you about crypto, which also might be

01:29relevant to this conversation. Really interesting trading through October, dropping for one reason,

01:33and then the early part of November dropping for what seems to be a different reason,

01:37even if actually this morning it's a little bit stronger. What's happening with crypto?

01:40Yeah, it's really interesting to note that Bitcoin today is trading below its one-year average. It's

01:48365-day moving average. So, you know, the average purchase of Bitcoin over the past year is offside,

01:53given there were one year from Trump's election victory. That's quite interesting. So therefore,

01:57Bitcoin's been actually one of the worst trades of the Trump presidency. And given that he was meant

02:03to be the big crypto backer, I think that might change the narrative there. The aspect of why that's

02:07going to be fueled in the downside is digital asset treasury companies are having real problems. And I think

02:12there's a lot more outflows to come there. So I think we are in a sustained crypto downwave. Bitcoin's

02:18constructed to have repeated boom-bust cycles. That's how it works. It can't work when it's stable at high

02:23prices. So it's hard to know. I think it's six 70% plus corrections over at 17 horizon. We're overdue another

02:28one. I think we're probably in the next, the start of the next 70% plus correction in Bitcoin, and that'll drag the

02:34whole crypto sector lower. That'll weigh on retail sentiment. It will be kind of, but it's not, it

02:40doesn't have a direct kind of feed through to the broader market. Sure, it's going to hurt some of

02:44these meme stocks. It's going to hurt some of these marginal momentum names. It's going to be slightly

02:48bad for the tech sector. But ultimately, there are real solid names at the core of the tech business.

02:53And that's really kind of marginal froth. It hurts the retail index, and that will eventually field into a wealth

02:58effect on the economy. All these problems are growing. And that's why I think the AI bubble will burst next year.

03:03But crypto won't be kind of coincide with the collapse of the AI bubble. Crypto will probably collapse

03:09first AI a few months later.