Markets are trading lower ahead of Fed Chair Jerome Powell’s speech this afternoon. I give my take on what Powell will say… and whether you should expect a Fed pivot anytime soon.
Bitcoin continues to trade around $17,000 despite the FTX meltdown. I break down why this volatility reminds me of the dot-com days… how one big asset manager is moving into crypto… and how investors should play the chaos in the crypto market.
A well-known short seller is going after crypto stock Silvergate Capital—going so far as to call the company a fraud. I explain why I’m skeptical of the short thesis… and why the stock could rally 200% from here. Plus, one more crypto stock for your watchlist…
- What to expect from Powell’s speech [0:30]
- Will the Fed pivot anytime soon? [5:25]
- Why Bitcoin is resilient amid the crypto market chaos [7:15]
- Why I’m skeptical of the short thesis on Silvergate Capital [10:14]
- One more crypto stock to watch [33:28]
Wall Street Unplugged | 7
Announcer: Wall Street Unplugged looks beyond the regular headlines, heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.
Frank Curzio: What’s going on out there? It’s November 30th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. It’s an interesting day today. The market’s come down a little bit, but the big story is Powell’s speech. He’s going to be speaking at the Brookings Institute. It’s one of the top stories outside, if you’re not paying attention to Twitter and how Elon Musk is sending out crazy tweets all the time… Oh my God, it’s so terrible. It’s crazy. It’s so funny. Man, just everyone pays so much attention to Twitter and Elon Musk right now. It’s so funny, so crazy. Well, it’s both sides. You got to love the drama.
Frank Curzio: But when it comes to the markets, you’re looking at Powell and it makes sense. Even though the guy spoke two weeks ago, I don’t know how different this speech is. He’s speaking at the Brookings Institute, I don’t know what he’s actually going to say that’s going to be different. Again, we’re looking at two and a half weeks ago, he raised rates again by 75 basis points. So, everybody wants to pay attention to every single word, and granted, every single word moves markets, depending on how you interpret it, right, because they’re looking at any indication or some kind of like, you just tipping your hand a little bit into the December meeting, which is December 14th.
Frank Curzio: So, will he stop raising? Because some people say, “Yeah, well they’re going to slow the pace.” And then he said, “There’s no way that we’re stopping anytime soon.” He came out afterwards and said that during his speech. So, last quarter they released the outline, and then they actually had him speaking, and you saw the market go up, and then the market really tanked because he was like, “Whoa, whoa, whoa. Kind of everything I just said there, that’s not what I meant.” Just people take it for what they want. For example, they’re saying that Powell and the Fed are going to slow down rate hikes. Now, what does that mean? Some people say it’s a pivot. It means it’s got to stop. Does it actually mean you’re going to stop raising, because that’s not what he said. He’s not going to stop raising. They’re not going to stop raising. They said they’re not. I mean, they’re slowing the pace, but they’re not stopping. That’s not on the table. They can’t stop.
Frank Curzio: I mean inflation was what? The CPI’s 2%, used to be. What is it, 7, 8% today? Looking at most forecasts, I’m forecasting at the end of 2024, that we’ll hit 3%. That’s the forecast, at the end. And they said they need it to get down to 2%. So they’re not, they’re not stopping, or they’re not going to reverse. I mean, maybe they could stop, but still they’re going to raise, but what does a slowdown mean? Because technically a slowdown, it can mean we could have five more 50 basis point hikes, which is much slower than the 75 basis point hikes, which would crush the economy. That’s not going to happen. But that’s, technically, you could say that’s a slowdown, but it’s how you interpret it.
Frank Curzio: And lately, no one’s really interpreting it right. For me, just listen to what the guy says. Listen, we’re not slowing anytime soon. Inflation is still extremely high. Yes, it is moderating, finally we’re seeing it moderating. I thought it was going to moderate over a year ago at Jackson Hole, like they said, it was at 5%. But he’s saying this, but people are interpreting it in different ways.
Frank Curzio: So when I look at this, you just raised 75 basis points, right, four meetings in a row by 75 basis points. But we never saw two 75 basis points in the history of the Fed. Meaning, so of course, you’re going to slow, you have to slow. You can’t be going at this pace, which is crazy. It takes a long time for this stuff to filter in.
Frank Curzio: Anyway, I can’t see Powell doing or saying anything different later on today, which by the time you listen to this, you’ll probably know. Maybe he says something different and the market’s through the roof, we’ll cover that tomorrow, or down a lot. But I think he’s going to stay the course, which is, say pretty much exactly what he said three weeks ago with the last raise, that it’s going to be a 50 basis point hike most likely, which is a slowdown from the 75 basis point hike in December. But if you’re looking at it and why it would be different, you have to look at the last three weeks and what’s changed?
Frank Curzio: The only thing I really saw is very strong retail sales for Black Friday. How many companies come out? Amazon, Salesforce, Walmart, all these companies coming out. They’re supposed to wait till their quarter, they’re announcing right after. “Things are great. Holy cow, we sold more than ever. It’s a record year. It’s a record year.” We covered that yesterday. Of course, it’s a record year when inflation’s up 10%. So right away, if you sell exactly what you sold last year at the same prices or prices are going to be 10% higher, it’s 10% growth. To say it’s only 2% growth is crazy. So of course, it’s going to be records. You really have to look into the details and into the numbers with the inflation that we have. It’s more important, it’s margins.
Frank Curzio: What are they selling it for? What are they getting rid of this stuff for? If you’re selling $10 billion worth of stuff and you sold $8 billion last year, but $10 billion is a massive jump, but yet, it costs you $12 billion to purchase all that stuff that you have on inventory, you need to blow out of it at those prices. Your margins are down, your earnings are down. That’s not good news, but sales are up.
Frank Curzio: So, is today’s meeting going to be a big deal? I don’t know, maybe? Maybe it moves the markets, but I can’t see Powell changing course. And more importantly, like I’ve been going over with you week after week, you have to look long term at what the Fed’s trying to do here. The bull market, this is for the bulls. What you need to see, the bull thesis is, we’re going to see them stop and that’s great. But the bull thesis is, we need to see a weaker economy, which we just saw really strong spending numbers. Again, housing prices came down. They’re like, “They came down three months in a row.” They’re down 1%. They’re still up, I think, whatever it was, 8, 9% year-over-year. They’re still up incredibly. But at least we’re seeing again, moderation. That’s what we need to see. But I don’t think anything changes here because going into next year, we’re going to have significantly higher rates, and they’re going to stay there for a very, very long time.
Frank Curzio: While the Fed is actively and aggressively removing liquidity from the market, tricking its balance sheet, that’s going to be all next year, no matter what. They’re not reversing course. So yes, this could be a trading opportunity, but let’s see. But if you’re a bull, you shouldn’t be happy at record retail sales. You should be seeing that come down.
Frank Curzio: We’re going to see the jobs’ numbers come out, let’s see how that looks. Again, they want millions of more people to be unemployed. That’s the bullish case, we need to see millions of more people lose their job. Isn’t that incredible? That’s the bullish thesis on stocks because they need to see the unemployment rate go higher before they really could say, “Okay, we’re stopping, and we’re going to stop for a while and then wait and see.” Because I don’t see stopping in the cards until March. Again, it’s going to be data dependent, but I mean, unless we see a significant slowdown, which is going to crush earnings… But let’s see what he has to say, and this is the big news. I don’t think it’s going to be any different from what he said a couple weeks ago.
Frank Curzio: I also want to talk about Bitcoin and Ethereum. You look at Bitcoin topping 17,000 again, which I think is kind of crazy. By the way, I’m going to Art Basel in Miami, going to be several companies leaving tomorrow with some NFT projects. Really cool people. Looking forward to it. If you’re down there, give me a shout. Huge, huge event. But when I look at Ethereum and NFTs and things like that, you just hearing everyone rip Bitcoin, all that. Bitcoin hitting 17,000, I want you to think about this.
Frank Curzio: To me, it’s kind of crazy since it was around 19,000 in July, and this is 19,000 even before July. It was 19,000 in June. I have to look at the chart. And then July was three arrows, which a big blow then Celsius. Those are the bankruptcies, right? So, we had that in July, and then it spilled into August. November was FTX, which was a disaster. We had BlockFi that just said that they filed for bankruptcy; yet, Bitcoin went from 19,000 to 17,000, and granted, if you look at it two months before that, it really came down before those bankruptcies probably because these guys are so leveraged and blowing out of everything.
Frank Curzio: But if you look where Bitcoin has stayed, and you look at what else could possibly happen in this space right now because I think all the survivors, right now, are in pretty good shape. This industry is not going anywhere. If it was, you wouldn’t see what’s going on with Fidelity, officially started open up retail Bitcoin accounts just a couple days ago, sent emails to their customers, 10 trillion asset managers, 40 million investors can. Institutions are coming in to allocate this. And now, you’re looking at Bitcoin’s market cap, which was what over a trillion is 320 billion.
Frank Curzio: And so, Fidelity’s not the only one that’s doing this. We see that institutions are coming in, they still haven’t come in yet, and they are going to come in. FTX might discourage a few people, but people want allocation to things other than the dollar and other than gold because they see what’s going on with the dollar. And they hate politics, they hate the politicians, they know they don’t give a shit. There’s no checks and balances. They spend money as much as they can, just as for their agenda.
Frank Curzio: I can’t wait for the Georgia runoff. That’s going to be funny. Holy cow. For the billionaires that are donating, they’re going to go to both of those parties and be like, “I want this, this, this and this.” And you know what? That’s exactly what they’re going to get. They’re going to get everything that they ask for because that’s how important that is. Even though the Democrats won the Senate, it’s still very, very important. There’s a lot of money being spent there.
Frank Curzio: The people hate this. They hate the politics; they hate the bullshit. And Bitcoin, if you look at Bitcoin and millennials being 40 years old now, wow, I’m really old. I mean, they grew up in a digital world, they don’t really look at gold, they look at Bitcoin. Bitcoin’s here. It’s terrible right now, and it’s come down. But for it to hold these levels and not be down a lot further, I’m surprised. I’m asking myself what could push it down further from here? I don’t know, maybe it’s another bankruptcy because we see stress sellers coming out like crazy.
Frank Curzio: It’s not hard to come out short against this industry, but they’re coming out against good names like Coinbase and Silvergate. And these companies have gotten nailed here, much more further than what Bitcoin has declined, especially lately. And these are U.S. regulated companies. This isn’t like Binance, this isn’t FTX. This isn’t where they have, you can’t see the financials. No. They must show their assets, their balance sheets. U.S. regulated companies report their numbers every single quarter, have analysts deeply covering these stocks. Could there be something under the hood or someplace else? We’ve saw that during a credit crisis that they’re able to hide things.
Frank Curzio: But right now, these companies are being more transparent than ever. Their CEOs are going all over the media saying, “Ask me whatever you want.” I mean, take Silvergate. We have a big name short-seller Marc Cohodes who’s saying it’s a fraud, which he claimed that FTX was a fraud and a good track record of being a good short-seller. So, he says he got a big position in it, which he disclosed and he says, I’m quoting here with Silvergate… He goes, “It’s crazy.” And he put this thing out saying that, “FTX exposure is only a billion dollars of deposits. If there’s a run of the bank and the U.S. government wakes up and started kicking the tires of this bank, they’re going to realize they have no know your customer process on their system right now, and they have no anti-money laundering on right now because FTX is a criminal operation cut and dry.” That’s what he said. So, he’s also said that on Twitter that and I’m quoting that, “Sam Bankman-Fried admitted on record that funds meant for FTX or why to Alameda because FTX didn’t have banking access.”
Frank Curzio: He said, “It seems to be a matter of time before regulators tape off this crime scene.” He says, “But if this happens to be true,” and he’s claiming he knows things that are not on the books, then, you know look, SI, could they go under? I don’t know. But for me when I’m looking at it and it’s, you know have to look at, these are U.S. Regulated companies, FTX is a different story. You ask them and they’re give you different answers. You have no idea what’s going on. These guys have to disclose every single number, every single thing.
Frank Curzio: So, when I see some of the arguments that he’s making here, I just, I don’t understand about know your customer, and I don’t understand about the anti-money laundering and more important, just the wire transfer. I don’t understand if that’s a short thesis. Because if I have assets at Bank of America through Curzio Research, and I tell Bank of America to wire money to one of my subsidiaries, I’m not sure what the problem is. Bank of America would not be held liable for that, even if my subsidiary was a sham, because as Alameda has the banking credentials which are needed to get a wire. So, I don’t understand how that impacts Silvergate. If FTX has an account that, again, but I’m not sure I understand that thesis.
Frank Curzio: I would love to get him on here to see if he explains because I want to get this story right. I want to see. This is how we made a ton of money on, we did very, very well on in our crypto portfolio. Again, a lot of things are getting crushed to be fair, just like everything else in crypto. But that was one we sold out of and did incredibly, incredibly well. I believe in the single digits are close to that. But we did very, very, very, very well in it.
Frank Curzio: And this was a stock that was trading at 225, 22-week-high, and it’s now at $25, and he’s pounding the table at $25, and this is his thesis. So, I’m not sure how the wire transfer, but now, let’s go into KYC because I’m not sure if Cohodes understands what this is. I do, because my investors had to go through this process three times without Curzio Equity Owners security token. That’s what you do with security tokens. You have to go through all these processes and you’re supposed to do it even through utility tokens. You have to know your customer, anti-laundering, you actually have these checks on when you open a regular brokerage account, you just don’t know it.
Frank Curzio: And if you open up a brokerage account and you have felonies and warrants for your arrest, if you open a brokerage account within a couple of hours, someone’s going to show up at your door and try to arrest you if you have your address, which you have to list, right? That they do all these background checks behind the scene. But they make it very specific. This is what you need to do, especially in crypto, right? This way you avoid money laundering and all this. So, you have to know your customer. So, we had to do it when we started to securitize when we first raised money, then again, we went on a merge-exchange, international exchange and we said we want to be in a U.S. exchange: tZERO. And then, they had to do it again and we were pissed, because it’s the same people going through the same process. But we’re like, “Hey, this is what you have to do, this is the process, that’s fine.”
Frank Curzio: But anyone signs up to tZERO right now, if you sign up and say, “Look Frank, I want to buy your token, I want to buy your company. It gives you a direct equity stake in our company just like a stock does, and I want to buy it.” You go to tZERO, they’re going to do these checks. They automatically go through that process. But thank God with crypto, and now, it’s a very quick process. It could be 15 to 30 minutes, sometimes even less. Two years ago, it took two to three days, so it was a real pain in the ass. They had to go through this stuff.
Frank Curzio: But anyway, when we look at KYC, and I want to bring this up here because he’s saying that KYC, that FTX basically doesn’t have the KYC, and they’re not checking their customers or Silvergate’s not checking their customers with KYC and AML, anti-money laundering processes. KYC, when I look at it, this is what it is. They do an initial due diligence. So, you have to have executive summary. They do this automated, your company description, target customer, operational needs, reputation. So, they’ll go through customer complaints, pending prior litigation, which FTX, every one of its customers who went on the FTX platform had to do this. And they were one of the largest. They were one of the largest in the space, they’re the fourth largest.
Frank Curzio: The compliance review, they have to do, confirm money, registration, licensing, all that stuff, information security. They need to do monitoring and stuff like that, which a lot of these hedge funds, maybe they didn’t look too much under the hood or whatever, but for this process they’re looking at one of the largest players and saying, “Okay, you’re good to trade.” Which everyone was okay with, right? But you’re doing all this fraud under the hood of things that you don’t know. And he’s saying that Silvergate should be held liable and not only liable that this is a company that is fraudulent.
Frank Curzio: I don’t understand that process. There’s not one person in one bank in the world that wouldn’t have proved FTX and all their business through KYC. And if you’re making this argument, you could make a much, much bigger argument for the 15 large hedge funds that all invested in this company who was supposed to even more due diligence. Because this is an automated process, and we had to go through it.
Frank Curzio: And again, we could be hiding money and stealing things and doing crazy things and easily pass this test. But to say that they’re not doing it or they’re doing business with someone who’s a fraud, who’s a fraud. And when everyone was a fraud, a lot of people got fooled. You didn’t shut down all the banks that lent money to them, did you? Because you really didn’t know what was going on behind, behind, behind the hood, right? They were able to hide, they were great. They had accountants. Even Arthur Andersen was involved and didn’t catch it. One of the big four, there was only big four accounting firms. They were one of the big four. And then, of course, change their name and change the industry. Now there’s a lot of big names.
Frank Curzio: So, when I look at Cohodes, who’s a reputable person in this space, and again, I would love to get him on interview, you’re going to reach out to see, because I want to ask him these questions. Because again, you want to get it right because you’re shouting at top of rooftops that this stock is fraudulent, which I’m going to be honest, it doesn’t matter if he believes that or not as a short-seller. His job as a short-seller is to go crazy on Twitter, call a company of fraud, shout negative things to the rooftops because even if you’re wrong, so what? You did a great job pushing the stock much lower. You’re short, you could be out of it right now. Nobody knows it. I mean, I always argue that as a short-seller, you could do almost anything you want and claim that everyone’s fraud, whatever.
Frank Curzio: And you’ll read the disclaimer on the bottom, and it’ll say, “Well it’s believed to be that the sources I’m using are reliable but they may not be reliable or whatever. I may be out of this position,” and all this shit. You know, you could destroy someone’s reputation pretty easy and be wrong. Make a fortune on it. Get out of it. And there’s no consequences for calling out a management team. Because you’re not just saying, “Hey, this business is bad and I’m shorting it.” You’re saying it’s a fucking fraud. That’s different.
Frank Curzio: So, if you’re saying it’s a fraud, you need to show much more proof than what you’ve said so far. And I haven’t seen it. It doesn’t mean he’s not right. You can give him the benefit of doubt because he’s a good short seller. I’m just saying shorting it here, it’s very easy to short names in an industry that’s blowing up, especially when they’re stocks. It’s not easy to short cryptos but stocks, it’s very easy to short.
Frank Curzio: That’s why you’re seeing Coinbase get wrecked. Even though they have $5.5 billion in net cash on their balance sheet, even though these companies, same thing as Silvergate. Silvergate is regulated by the Federal Reserve. They file quarterly results. You could see all the numbers. Reserves are in U.S. dollars, holding U.S. dollars. The CEO’s on TV like crazy telling everyone, “Look, if you have everybody removing their money from this, which is what short-sellers could actually do. It is a bank and have run in the bank. Or, if crypto goes a lot lower, this company can go under, but it’s not going to be due to fraud. It’s going to be due because the industry’s coming.” It’s a big difference than if you’re calling fraud.
Frank Curzio: You could say when it comes to Coinbase, I think, when you look at Chanos is shorting Coinbase saying like, “Look, the crypto industry’s going down. They’re going to see less people trading on that platform. It’s going lower.” I think he’s been short for a while. I don’t remember him using that Coinbase as a fraud. It’s hard to prove a company’s a fraud that trades on a New York Stock Exchange. It happens, but it’s rare, guys. It’s really rare. Fraud, we’re talking about, it’s a big word. Again, a short-seller could throw that word out and there’s no consequences.
Frank Curzio: But I can tell you Bitcoin holds 17,000, it goes higher. I don’t know what the risks are for going low. I’m thinking everyone who owns crypto is going to sell Bitcoin, probably sold it already. But yet, you have trillions of dollars that are going to be open to this and able to buy it here. Is it going to be volatile? Of course, it’s going to be volatile. Take a look, liquidity out of the system. That’s less traders. But a lot of these companies now, even Coinbase, most of their money’s institutional.
Frank Curzio: When I look at Silvergate and the CEO, I mean SI, they said they had 10% exposure to FTX. So, about a billion of, $11 billion assets. But I’m not sure where the fraud comes from. But I would love to get this explanation. Because again, could he be right? Absolutely, he could be right. But what does he know that nobody else knows? And the regulators know, the Federal Reserve doesn’t know. And believe me, after FTX, they’re ripping those companies apart to make sure that every number he is accounted for.
Frank Curzio: And I love CZ, but I thought it was kind of funny when he kind of ripped, it was a tweet that he said about Coinbase saying, “Oh, they might have exposure to FTX.” And then he deleted it and he talked to them, and I was like, “Wow, that’s pretty funny because Coinbase is U.S. regulated. You see all their numbers, I don’t see all of Binance’s numbers.” You said you’re going to provide them. But I think you pretty much need to see them, especially in this market where a lot of, a lot of smart people were fooled. You can go back and say, “Wow, I can’t believe you saw this. I can’t believe this, I can’t believe that.” That’s fine. Everybody comes back and plays Monday morning quarterback.
Frank Curzio: But bottom line, nobody really saw this coming with FTX. Nobody saw it coming. Because when I look at this and look at crypto, I mean, put together a list of names that are going to be survivors. I’d spend a little money actually buying coins on Silvergate because we hold here and Silvergate comes out. Or, you have somebody that’s huge in the industry and a massive fund come in and say, “Hey, I analyzed these numbers, I analyzed these banks.” Warren Buffett invests in banks. He hates crypto. So, that would be a bad example. But if you get a big name saying, “Hey, we looked at these numbers and they’re good.” This thing’s going to pop by 200% like nothing. And it’ll still be down 60% from its highs. And you’re talking about a $25 stock that was $225. Should it have been cut in half? Absolutely everything in crypto should have been cut in half. You’ve seen demand come down, Bitcoin come down.
Frank Curzio: But if you think that this is the end of crypto, are you crazy? I mean, Ethereum, there’s a lot of shit out there. We’ve been very clear on this, saying 90% of this industry I’m looking at is absolute shit. It’s garbage. I can’t find anything on it. You can’t even see the guy’s picture for the management team. They have a profile, LinkedIn, no picture. I’m like, “What the hell’s going on?” If you have great ideas, you want everyone know who you are. You want to be as transparent as possible in this industry. It’s why every company I deal with, with crypto, I tell them they have to be transparent. I need to see your numbers. If you’re not showing me numbers, if you’re not being fully transparent, goodbye.
Frank Curzio: And this is before FTX. Now, forget it. Anyone’s going to invest in these companies needs to see everything. That’s why it’s important when we have Coinbase and you have Silvergate, or if you have some of these players, if you’re doing the right thing, these are the survivors from the dot com era. The companies had enough cash on their balance sheet, didn’t leverage themselves. Again, people forget when that market crashed, people were ripping it. The Internet’s bullshit. It’s garbage. I told you it was bullshit for the last five years, even though it went up. We told you. Incredibly overvalued, really? Because it’s still one of the greatest, innovative technologies. You still see, I mean, you look at streaming, how old is streaming? Streaming’s not that old. Social media’s not that old.
Frank Curzio: Now, look at how much in cloud in the past eight years. Now look at AI, everything. Faster speeds, faster internet, faster data analytics. So, you always see resets in these huge growth markets. It’s what we’re seeing; it doesn’t mean you throw fraud at it. It doesn’t mean like, “Holy shit man, this is garbage. I’m getting out of it.” Right now’s a good time for your aggressive capital to find out the companies that, “Hey, I think are going to do pretty well.” And aggressive capital, say you have $5,000 that you’re willing to lose. Because this is an area that you could quadruple this money because again, it’s, you’re a short seller. It’s easy to shout from the rooftops and say, “Oh Coinbase is done, Silvergate is done. They’re horrible.” I didn’t see FTX, I didn’t see BlockFi, I didn’t see Celsius. I didn’t see any of those CEOs, Three Arrows, Alameda, go on TV defending their companies. I didn’t see any of that. They just freaking went into hiding.
Frank Curzio: But now, I mean, you talk about two transparent companies here. And again, if it’s fraud, you got to find that fraud. You got to come out with it because you’re saying the Federal Reserve and those regulators are a bunch of assholes and asleep the wheel right now because they don’t see what’s going on. And maybe you’re right and he is a good short-seller. But I’d love to have him on and question about this. Because for me, I’m more inclined of buying calls yet risking losing $5,000 knowing I could turn that $5,000 into $30,000, $40,000, than shorting, outright shorting the stock here, when it went from 225 to 25, based on the two things you said, which I’m very familiar with KYC, AML. And they’re not going to get in trouble for that. Do they have it on another? Because they have to have it on their clients. It’s automatic. They had their Silvergate exchange network, which is for institutions who want to buy and sell Bitcoin. They have their reserves in U.S. Dollars. They’re not trading Bitcoin, they’re not leveraged.
Frank Curzio: So, could you pick it apart? Yes. Could crypto go down? Could Silvergate go under if Bitcoin goes to $10,000? Maybe, but it wouldn’t be because of fraud. So, if you’re a believer in crypto like I am, especially like Fidelity is, especially BlackRock is, especially institutions where they know Bitcoin’s not going anywhere and the whole world is going to be digital soon. In 20 years, everything is digital. I mean holy shit, how much is digital now? You see digital sales are still going up. They were up 40% or something and mobile sales up to, I mean, just getting more and more, right? As we get older and older, everyone is just 100% growing up in a digital world.
Frank Curzio: But Ethereum, NFT, smart contracts, again, I’m going to be in Miami. I mean, some of these projects are amazing. These are smart contracts. This is your way to validate ownership. You own it. It’s on a blockchain. Nobody can do anything. Nobody can touch it. I mean, it’s massive. It’s massive when you see the opportunities that are kind of come out with NFTs. I’m not talking about JPEGs, and it’s going to be a lot of art at the place I’m going, but just gaining access to certain things. And there’s lots of great ideas within NFT projects. That’s why I want to start a newsletter around this. And yes, you say, “Oh volume’s down. A lot of these things are getting killed.” Because a lot of them are bullshit and they’re basically art pieces that you’re going to own.
Frank Curzio: But if you, NFTs, what’s the necessity behind the NFT? Because when people pitch me projects on NFTs, I’m like, “What’s a necessity here?” Just like in crypto, “Oh, we’re going to be able to store everything in a blockchain, all these files.” Well, you can do if a Dropbox for like six bucks, that doesn’t solve a problem.
Frank Curzio: But NFTs, giving you special access, eliminating people like Airbnb by creating NFTs around all your houses and real estate and projects and ownership and saying, “Hey, I own five mansions here, and if you buy this NFT and I’ll sell it to 500 people, you have access.” You set up the weeks they have access and it’s all on the blockchain. Don’t need lawyers, don’t need anything. That sounds like a pretty good idea. That’s really cool. I save a ton of money. Why do I have to go to other platforms and share my revenue, simply because you have a good software program. That’s why you see money pour into blockchain.
Frank Curzio: That’s why you’ve seen all the major companies investing in the word that’s so bad now is the metaverse. Because the metaverse isn’t this video game, it’s the ownership of your own content for the first time, your own content digitally for the first time ever. You don’t have to build things for Meta or Amazon or whoever, and then they make $50 million off your idea and they give you a check for $400,000, which a lot of people would take. But you know what, if you created the idea, wouldn’t you rather get the whole amount?
Frank Curzio: Now, you can create these ideas in different worlds and do different things and sell different products. And it’s all creativity. Where all these kids who are under 20, they’re all developers now. Look what they do in Minecraft. Look what my kids, your kids, when they sit down, what they do at Minecraft, what they do at Fortnite, where they’re building stuff, right? They’re creative, they’re doing with Roblox. I mean, this is serious stuff. It’s not just a video game. Everyone going in and saying, “I don’t understand. I’m not going to spend my time in the metaverse.” You are spending your time in your metaverse.
Frank Curzio: Your metaverse is basically going on your mobile and going on different applications. This is going to provide a much better experience. You’re going to have ownership of your content, material, it’s going to be more fun. You’re not going to be monitored. They’re not going to steal your freaking data and sell it to the world anymore, which is crazy. Shouldn’t you be getting paid for that? That’s why you’re on all these social media platforms absolutely for free. Because they just take everything from you and sell it to advertisers. Now they’re getting crushed because of Apple’s private privacy policies. But this stuff’s not going away. NFT’s aren’t going away. Ethereum’s not going away. Bitcoin’s not going away. So, you want to find out the companies now, a lot of short sells, it’s easy to come out and just say, “Everything’s a fraud,” especially when you had how many high profile bankruptcies in this industry? And it’s tough. But you got to figure a lot of leverage has to be out of the market right now. There’s going to be more exposure to FTX as we go a little further and more hedge funds.
Frank Curzio: But there’s a lot of money on the sideline that wants come into Bitcoin, that wants to come into Ethereum. And man, at these prices, I’m just surprised. I thought Bitcoin would be at like 12, 13,000 now and it’s not. It’s holding up. And you’re going to see trillions and trillions of dollars have access to Bitcoin for the first time ever. And it’s a trillion dollar market cap, strictly retail. It wasn’t institutional, now it’s institution.
Frank Curzio: That’s another thing with Silvergate. Silvergate deals with institutions. These institutions do these checks. They have to do these massive checks. You say, “Well, they messed up with FTX.” These guys invested in 600 companies. They messed up with FTX, yes. Very large companies, they usually do due diligence. They didn’t there. But when it comes to banks and dealing with banks and institutions and large firms, there’s a lot that has to go through there. Because if you get that wrong as a bank, as a fully regulated entity, you’re in a lot of trouble. So, to say that they’re a fraud and you’ve seen the CEO and everybody go on TV, I don’t know if they’re a fraud. Could they be? Absolutely. I could be wrong on it, and I wouldn’t say it’s a coin flip, yes or no.
Frank Curzio: But I know there’s short-sellers that have a clear interest in pushing the stock down that are going to go and shout at the top of the rooftop, say anything they can to make sure it goes down. And you really never don’t have to know their position. And Marc Cohodes could blow out his whole position right now. You don’t know. Or, he could be doubling down saying, “It’s going to go to a dollar, it’s going to go to zero, whatever.”
Frank Curzio: But I want to try to interview some of these guys and the short-sellers and he’s been going on a couple podcasts. I’m going to reach out to him. He’s a big fan of tZERO. I like him. I just, for me, as an analyst and someone that covers this stuff and looks at the numbers, I want to see what he sees. Because what he’s saying on Twitter doesn’t gel with a company that’s fraudulent. He’s not providing enough evidence for me to say that it’s fraudulent. I haven’t seen it. He’s saying, “Wait and see, wait and see, wait and see.” Wait and see what? And there’s companies that didn’t, that’s what happened with BlockFi. They didn’t have, I think they didn’t do KYC on a certain amount of clients or whatever and they had to pay a fine for the SEC. That’s a mistake. It’s not fraudulent unless you, you’re actively caught laundering money, country through country, drug dealer by drug dealer. Which again, this is a U.S. regulated company. You have to show a lot more than that.
Frank Curzio: But right now, the point of this is, start looking at crypto. Start looking at things that you could say, “I’m just holding. And I’m not going to look at it.” Because this is an industry that’s changed the world industry. This is where the innovation’s coming from. This is where a lot of the biggest technology companies are investing in right now. Billions of dollars investing in these technologies. There’s a lot of shit in there. It’s pushing the whole industry lower. But this is how fortunes are made when you’re buying stuff at these levels. This is what private equity firms do. You’re able to go into Europe during a credit crisis when you and I couldn’t do it, we couldn’t buy all the assets and a lot of the assets because they had to reduce their balance sheets because new regulations came in and they were buying shit for pennies on the dollar. I couldn’t do that, right? You couldn’t do that. But these hedge funds can. These massive private equity firms can.
Frank Curzio: General Growth Properties, I mean, look what, who was it? Ackman, 1,000% returns? You couldn’t really buy into that as an individual investor. But that’s what they do in markets like this. They take things that are saying, “Hey, this is an industry that’s going to be around forever. It’s not going away. A lot of good assets, the survivors are going to be great, years from now, and it could be even sooner.” So, if you’re looking for speculation in a market where you get crush speculating because so many names are overvalued. This is an industry that if you’re really a believer over the next couple of years, there’s a lot of value here and it could be an incredible amount of growth over the next few years.
Frank Curzio: But we want to try to uncover this, get the stories right, and see what we could do. That’s our job here. So, let’s see what happens. Is it a fraud or not? Hopefully, we get Cohodes on the podcast, going to reach out to him on Twitter. If you guys don’t reach out to him, I’d love to have him on because again, he’s a big fan of tZERO. I like his research, I follow him on Twitter. I like his stuff, just with this situation and FTX you had right. And FTX, everything he was saying we couldn’t verify. Okay, you’re saying this about FTX. Okay, let me see if this is true about FTX. I can’t see because FTX isn’t provide anything.
Frank Curzio: Silvergate has everything. They’re an open book right now. They’re an open book. So, if you’re calling this company a fraud, there’s got to be more to it than what you just saying on Twitter of what I saw. And let’s see, with wire transfers and KYC and shit… There’s got to be more than that, if you’re calling out a company for fraud knowing that they’re illegally doing something, transferring money here or there, it’s a big difference.
Frank Curzio: And let’s see. But let’s see. Silvergate, it has come down tremendously. We saw Coinbase come down tremendously, which has a good balance sheet that’s going to generate a shit load of income on its stable coin, up to $800 billion probably next year. Which is why, yeah, that’s a pretty big deal. And this is the place where institutions are going. This is the place where everyone who is on these other exchanges as business accounts are going to Coinbase. You know why? Because they’re FDIC regulated. So, they have insurance coverage on the accounts.
Frank Curzio: So yes, while you see less trading and Bitcoin and stuff like that, especially with individual retail investors, you’re seeing business accounts transfer the people that they trust, that have regulations. That’s Coinbase. That’s Coinbase right now. So again, if you’re a believer that, and I’ve been through these ups and downs in markets for 30 years, three decades, man, I’m old. I’m an old shit. If you’re a believer, crypto’s going to survive. If crypto’s going to go a lot higher and do much better and Bitcoin’s going to survive and Ethereum and NFTs and a lot of these top fifties, 75 tokens which have great technologies, blockchain, going to as survive.
Frank Curzio: I mean, Coinbase is the name you need to look at. Silvergate’s a name to look at and keep asking questions. Don’t just follow people who’s on Twitter or whatever, and again, they have an agenda. People have an agenda to make money by pushing this thing lower and lower and lower and they can say whatever they want. I want the facts; I want this backed up. What are you seeing that I’m not seeing? Because he might be right.
Frank Curzio: And quick story before I go here, because I had a company in my portfolio, it’s a real estate company. I worked at TheStreet.com, and we’re were up by like 70% on it. And Carson Block came out with a short recommendation saying he talked to an individual’s person in China, whatever. It’s China-based stock. And I said, “No way.” I said, “Absolutely not.” And he actually spoke at Stansberry conference where I worked. I spoke to him, and I was like, “Listen,” I said, everything I see, he’s like, “It’s all bullshit.” He’s like this, and he highlighted five key points that made me go out and I said, “Listen guys, we got to be cautious here. Let’s sell. Let’s take profits.” And about four months later, they came out and that company went bankrupt.
Frank Curzio: So, Cohodes could be right on this. It’s just a matter of sitting down talking to him saying, “Okay, what are you seeing here that nobody else is seeing that they’re not reporting on their books?” Because in China, you can say whatever you want in your books. FTX can say whatever they want in books. Most cryptos outside the U.S. can say whatever they want in the books. But this is a company that has to disclose their information because they’re U.S. regulated by the Federal Reserve.
Frank Curzio: And I could tell you, if it’s not fraudulent, this is a name that should be trading in the seventies, not in the twenties. So, let’s see what happens. Questions or comments, I’m here for you, firstname.lastname@example.org. Thanks for all the support, you guys. We’ll see you tomorrow with a really cool interview. Take care.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
P.S. I recently joined HIVE Blockchain for its live event—Going Digital: Investing in the Future of Bitcoin and Blockchain.
Some of the biggest players in the space presented on topics ranging from central bank cryptos… to ESG… to whether Bitcoin really is the future of money.