AI Good. Fiat Bad. What’s your plan, anon?
What Is The Left Curve
Most internet denizens know this meme by now… but, for reference
It pays to keep it really simple.
The Morpheus Bull
A crypto bull market is arriving. It’s time to dial down the spiritual thought, the hobbies, the relationships. The meditations on what it means to be human. And focus on making money.
Because the nature of money is changing. If the real “Bull” arrives it’s actually the Fiat “bear”. That is to say - governments thought adding endless debt was a free lunch but it’s increasingly accelerating into an untenable situation. And the only way to deal with it is by pretending you’re borrowing at low rates, and inappropriately easy monetary policy in the face of obvious inflation.
Thus this is in crypto terms, the Morpheus Bull Run - referencing the meme where Neo asks Morpheus, “You’re telling me I will be able to convert all these Bitcoins into millions of dollars?” And Morpheus smiles knowingly with his gapped front teeth and says, “No Neo - I’m telling you when you’re ready you won’t have to.”
You can go ahead and ignore me if you want, and tell yourself that your purchasing power is going to be stable. That you trust the breakeven market and we’ve reached peak inflation, and it’s all gravy from here. No wage price spirals! This recent wage price hike across virtually every company in every industry was the last one for sure.
But I don’t believe it. The last time crypto mooned, what happened to your purchasing power afterwards? The reality is I have no trust in the vast, expansive debt based experiment that Central Banks and governments are running in real time. I worked hard for my money. I’m not going to let it get debased to nothing. Fuck that.
Let’s talk bullish drivers
Fiscal and Monetary Go Brr
We’re pricing in rate cuts- with people somehow not laughing talking about deflation with Manhattan rents at $5k a month. Cryptocurrencies with deflationary or moderately inflationary profiles that have skyrocketed since the fiscal and monetary excess of Covid will see increasing demand as financial tightening stops - as we still have the full fiscal expansion in place, with debt levels rocketing nearly as fast as the peak of COVID.
Demand for non USD Based Neutral Payment Systems
Russia hasn’t lost the war in Ukraine - and has seens huge increases in bilateral trade with China, which means there’s a need for a new payment system. The Taliban is back in charge of Afghanistan. There is no new deal with Iran about nuclear development. Gold is relentlessly bid due to geopolitical chaos. The US and its ally Israel are rapidly losing hearts and minds which lowers their ability to secure order in international affairs or pursue mutual agreements on taxes, or financial regulation. The US has lost quite a lot of moral authority by dealing with the Maduro regime. Argentina has elected an anarchocapitalist. Unregulated or neutral international payments accepted in many countries strongly benefit the crypto demand story.
AIs Living on the Blockchain: The Real Unbanked TAM
The Nasdaq just outperformed the S&P 500 by over 30% year to date because AI went from hype to something we all use every day. Governments have made it clear they intend to apply heavy handed regulation to AI models, which are - for the most part - portable, creating a likely huge offshore market for all manner of AI driven businesses. The real “unbanked TAM” will be AI projects that cannot easily work within Chinese or US constraints. As AGI approaches, latently conscious entities will license tech to humanity from offshore havens - with no need for bank accounts.
The AI crypto thesis is simple. Jack buys ETH. Protocol spins up GPUs to sell Jack some software, some porn, or some compute/ calculation. Jack sends ETH to protocol. Compute is provably run according to a spec - via ZK calculation. Jack doesn’t have to worry about this but people who review the software look to make sure it adds up. Jack does not give a fuck if he is buying what he wants from an AI, or a human. The entity has no need of a bank account. It does not have engineers. It mostly consumes GPUs, which it can buy with crypto. Crypto miners have lots of graphics chips anyways. Storage protocols are a thing already. So high latent synergies.
The Left Curve Path: Magic Internet Money ~= Shiny Rock.
The Left Curve reality: Crypto is going to Gold’s market cap within 3 years. That is $13.8 Trillion. Right now, crypto has a $1.5 trillion market cap. So it could conceivably 10x. The current implied volatility of Bitcoin is extremely high (about 85%). Even with this - you still get to a likely high sharpe ratio (above 1.5). Actually forget the sharpe ratio. Who cares about sharpe ratios when you’re talking about something that can believably be 10x in 3 years.
Obvious In Hindsight: Financing Terrorists With Gold. Trump Stops WW3.
In hindsight it will be inevitable. Russia (a terrorist state) financed itself with Gold, not crypto. And it wasn’t even remotely close - we’re talking about $100s of billions of gold Putin explicitly used to avoid US censorship since Crimea in 2014. Gold was clearly not useful for AI calculations, which drove the entire economy. Its properties did not afford useful censorship resistance. China is aggressively cracking down on getting gold out of the country - which is very easy to detect in large amounts in a country covered in surveillance cameras.
Biden isn’t popular despite a strong economy and strong stock market, because he’s viewed as a warmonger. The corporate elite will cynically plow money into the Donald, alongside the Saudis and others - to ensure that an isolationist US President is in charge. Trump never wanted to permanently punish China. They own too many units in Trump Tower. He just wanted to do a big league deal. Xi wants to annex Taiwan by 2027. We probably avoid WW3 if the Orange Man is in charge. Corporate interests understand this and will swallow their pride in the name of shareholder returns. Nuclear war is bad for the buyback. Trump crossed Biden in the odds market in late November.
A Trump victory is hyper bullish crypto for 4 reasons. First, he will gut the SEC. While he was president the organization ran on a skeleton staff and Jay Clayton paved the way for the SPAC absurdity of 2021, and has since made comments about the current SEC’s overreach. Second, Trump held a fcking appreciation Gala for his NFT holders and his wife Melania is constantly shilling projects. Third - he is a real estate developer who hates high interest rates and will lean on the Fed to restart QE for no reason other than it makes the Dow go up. Fourth - Trump’s isolationist international policies encourage other countries to do whatever the heck they want with legislation, which makes them less worried about being easy on crypto.
Tech Innovations That Have Made Normal Funds Huge Profits
On the tech side, ZK proofs are going to allow off chain calculations to be represented on chain. Which means that the main problem of crypto (lack of scalable applications) will be solved imminently. Even without ZK, things like modular blockchains offer other paths to scalability.
In January, Bain Capital - the ultimate group of institutionally friendly normies, is going to be parading around $100s of millions if not Billions of profits from their investment in Celestia (modular blockchain). I’ve met some of the team - and let me tell you - they will present well on an institutional roadshow. Token holders in FTX are deep in the money. You’re going to have sovereign buyers anchoring off the Bitcoin ETF having a viable custodian. Let’s say your the Norgesbank. The World Gold Council comes in and shills you. Then Larry Fink and Rick Rieder come in and say, “You know what, do you want to finance Russia or do you want to invest in an environmentally friendly store of value run by a young visionary named Vitalik?” Which of those pitches do you think is going to land???
The reality is that ETH supply growth has stopped since September of 2022. Digital scarcity is no longer an arbitrary theory or a ponzi tautology as advocated by the Bitcoin 21 million supply cap. Am I short Bitcoin? No. The reality is that greenlit sovereign inflows due to the ETF as well as some credible smart contract development work on top of Bitcoin, including ZK proofs mean Bitcoin has a 3 year window or so to figure out its fee situation before security gets dicey. After the ETF - I do think BTC is a funding trade, but I think that’s a short term fade that you can only press if there aren’t any sovereign headlines within 3 months of the Bitcoin approval.
But the main show is not Bitcoin, and is - in my opinion, concentrated in 3 groups of altcoins
AI Coins, and AI use cases (80%) Biotech coins / biotech use cases (10%) VR/ AR metaverse interoperability with AppleVision Pro (10%)
Walking through each of these theses in brief -
Bottlenecks on GPU availability, and the ability of distributed protocols make AI coins that solve problems for users pretty appealing. They can actually lower costs, but more importantly ensure availability. As I write this our team is scrambling because Runpod (our GPU provider) is down, and we are down from 10 machines down to 2. Open source models keep improving every other week, and we are going to rapidly reach a point where they are banned or regulated. I don’t want to get into why - but trust me on this one. The powerful stuff isn’t going to be legal for much longer.
In a true bull run I expect AI coins to reach $1T in market cap. People will meme that all crypto AI projects put together should have the same market cap as NVDA. Medium term $80B val is probably the cap for an AI coin (OpenAI valuation will be an anchor). Layer 1s like SOL and ETH will benefit asymmetrically from AI tokens built on top of them whereas Bitcoin will barely benefit, hence my desire to use it as a funding trade. I imagine Dorsey and others are figuring out how to deploy Block engineers to launch some sort of Bitcoin native AI solution as we speak, so we will see - but this is a base case. Storage coins - such as Filecoin, which will be needed to deliver outputs, store models, and provide training data will also be AI beneficiaries.
Biotech coins - buying access to life extension, and crossing sovereign borders is an extremely appealing crypto use case that aligns well with whale demand. People who are crypto billionaires are willing to shell huge amounts of money on bio-tech enhancement. I’ve written about this before and it’s a big personal interest area. But ultimately - this isn’t going to be the driver of $1t of market cap like AI will be in my view. Overall though I can see $200b or so of Biotech coins, and that definitely is not the case right now so I’ll be hunting “low cap gems” that aren’t absolute scams.
The VR/ AR thesis is exciting. If I see a good interoperability play across Apple VisionPro, Meta, and other projects I could get excited there as pixel density on VR is improving enough that a lot of the original NFT theses could actually play out now.
Time to Left Curve Path Again
But – let’s boil it down to the absolute essentials.
Fiat currency bad. AI good.
I think you’ll make enough money in the AI-Crypto intersection to afford life extension tech or cool stuff in the metaverse.
I’m already going HAM applying AI to my own trading so I am constantly using the tech. So I’m going to dedicate my “goodalexander” persona to endlessly investigating and trading AI crypto projects on the long side, and hopefully eventually founding one.
Is this my way of saying I’m giving myself a real job instead of being an esoteric blog philosopher? Perhaps.
Do you want to sound smart or do you want to make money? It’s time to follow the Left Curve Path. Let the machines do the heavy intellectual lifting. That’s the whole point afterall, isn’t it?
One More Time, Repetition
Trade using AI. Use AI Coins. Determine what coins good. What coins bad. Post about AI coins. Buy AI Coins. Rinse, wash repeat. 1 year. Breaking bricks. Learn. Launch AI coin.
Lift/ run / keep health progress up in the meanwhile, because the point of the entire thing is to make enough dough to extend my life.