Economics & Macro — Last24h Report 20260623 094757

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The dominant macro dynamic of this 24-hour window is a collision between two powerful and partially offsetting forces: a hawkish Federal Reserve regime inflection under new Chair Kevin Warsh and a geopolitical energy-premium unwind driven by the US-Iran interim ceasefire and the US Treasury’s issuance of a 60-day general license authorizing Iranian oil sales in dollars. Warsh’s debut FOMC press conference delivered a unanimous, forward-guidance-free inflation-fighting mandate — nine of eighteen dot-plot participants now project rates above 3.75% by year-end, Kalshi prediction markets moved to 57% probability of a 2026 hike, and Bank of America immediately shifted to a three-hike forecast (September, October, December) while Deutsche Bank projected two. The 2s10s Treasury curve compressed from 40 to 27 basis points — the sharpest single-meeting flattening in over a year — 2-year yields reached a four-month high, and the VIX broke above 19 from a sub-17 base, consistent with a genuine volatility regime shift following Friday’s $8.3 trillion options expiration. Simultaneously, the Treasury’s 60-day Iranian oil sanctions waiver — the first such authorization since 1991 — drove WTI to approximately $73–75 per barrel, down roughly $45 from the March peak of $118, with 62 million barrels of backlogged Persian Gulf crude preparing to exit. These two forces produce an inflationary crossfire: falling energy costs mechanically depress near-term headline CPI and PCE, while core and services inflation remains elevated — May PPI printed at 6.5% year-over-year and core PPI at 4.9%, the fastest wholesale inflation since 2022 — keeping the underlying pressure that drives Warsh’s hawkish posture firmly intact. The forthcoming May PCE release (Deutsche Bank consensus: 0.37% month-on-month, 3.44% year-over-year core) is the next critical arbitration point between these two forces.

The session simultaneously surfaced multiple second-order macro stress signals spanning distinct transmission channels. Japan’s yen broke through the 161–162 level — past the threshold that triggered Ministry of Finance intervention in April — prompting an emergency Katayama-Bessent online session and suspected direct intervention, with CFTC data showing 150,132 net short yen contracts near a record. The PBOC set the yuan midpoint at its weakest since June 8, the Korean won slumped on Fed hike expectations, and South Korea’s KOSPI suffered a 9.99% single-session crash — its worst since March — as AI-linked semiconductor concentration unwound violently, triggering Korea Exchange sidecar mechanisms. UK Prime Minister Keir Starmer resigned, with Andy Burnham (95% Polymarket odds) poised for installation by July 17; 10-year gilt yields held at 4.84–4.85%, with Pantheon Macroeconomics estimating 7–14 basis points of political premium from a Burnham premiership and analysts flagging Truss-era gilt stress risk if a non-market-friendly Chancellor is appointed. Emerging market currencies were under broad USD pressure — AUD/USD slipped below 0.70 to its lowest since April 8, the Thai baht hit a one-year low, and the Swiss franc lost support below 0.81 — all consistent with a DXY holding above 101 on the repriced Fed rate path. On the fiscal front, US federal interest costs hit a record $723 billion in the first eight months of FY2026, now the second-largest budget line after Social Security, with the CBO projecting net interest payments rising from approximately $1 trillion annually to $2.1 trillion by 2036. Germany’s June flash Composite PMI dropped to 48.0, missing the 49.7 forecast, with the services component collapsing to 46.8 — placing Germany in dual-sector contraction territory and compounding the ECB’s stagflationary dilemma. ECB President Lagarde acknowledged “some de-anchoring” in short-term inflation expectations while signaling no need for more forceful policy action, with markets pricing 33 basis points of additional ECB hikes by year-end.

The US Senate passed the bipartisan ROAD to Housing Act 85-5, barring institutional investors with more than 350 single-family homes from additional purchases — the first major federal structural intervention in single-family housing supply since the post-GFC era — with a four-year CBDC ban embedded in the legislation. Canada's May CPI printed at 3.2% year-over-year, above the 3.0% forecast, driven by a 33% gasoline spike. China sanctioned 10 US defense and rare earth firms and restricted 46 others from government procurement in direct retaliation for the Pentagon’s military blacklist, targeting MP Materials and USA Rare Earth in a signal of willingness to weaponize critical minerals dominance ahead of the September Xi-Trump summit. Goldman Sachs simultaneously cut US recession risk to 15% from 25% — citing easing geopolitical stress and lower energy prices — while raising H2 GDP growth to 2%, creating the widest major-bank policy split of the current cycle against BofA’s three-hike forecast. US-Iran technical talks in Switzerland continued with reported progress on frozen asset release procedures and a Strait of Hormuz communication line, though Iran temporarily closed the strait citing Israeli ceasefire violations before resuming, and Iranian officials disputed US claims that Tehran agreed to readmit IAEA nuclear inspectors. Former Federal Reserve Chairman Alan Greenspan died at age 100.

Thanks, Joao

The headline today is SpaceX dumped the Korean market. SPCX fell -16% from yesterday in a heavy sell and deleveraging event, dropping from the $176 area to the $150s. That directional pressure, in a large liquidation event, pushed the derivative to its lowest price since the perp was created on Hyperliquid. The SpaceX IPO is a major signal for how the stock market performs at the current stage we are in, and the first pump-to-dump below the IPO price could point to a renewed fear environment. That is not a positive sign for the next major IPOs coming to market, Anthropic and OpenAI in particular, and not a positive read for sentiment, at least in the short term, with SpaceX the worst individual performer on my watchlist here. It signals a rotation to fear: every Asian space company dumped following SPCX’s last three days, and not only space names, the KOSPI index is down almost 10% on the day.

SpaceX is dumping on technicals, not on fundamentals. They closed another $6.3b in compute capacity for Reflection AI from the Colossus 2 cluster, a $150m monthly deal starting in July 2026, and deal after deal keeps closing on compute. Before Reflection AI, SpaceX closed a compute deal with Anthropic worth over $45b, bringing $15b in annualized revenue, and a compute-leasing deal with Google of almost $30b, bringing $11b annualized. SpaceX also acquired Cursor for $60b (after a $10b deal), so that one is irrelevant here. We are counting almost $30b in annualized revenue from compute deals alone, and after the IPO numbers these points toward a potential of over $100b in revenue by year-end. At a $2T market cap that is a forward P/S of 20, well below the hundreds P/S SPCX carried on its IPO date. SPCX took pressure from deleveraging de facto, but also from the debt opened on that date, with projected cash burn of over $400b through 2031. A lot more revenue must be created to reach the point where they can fund an eventual $100b in annualized cash burn and build the ambitious products they are projecting. Here I have only counted the almost $30b from providing compute to partners, but there are more revenue streams: Starlink telecom products, plus rocket launch and space exploration, sovereign award deals and NASA partnerships, which I expect to accelerate from here, with the number of SpaceX rockets sent to explore particular areas in space, the Moon especially, rising rapidly from 2026 to 2027 at higher pace.

Technology reads

On one side we have SpaceX vaporizing over $600b in market value in a day, with SpaceX and the hyperscalers absorbing severe selling pressure, while memory and energy is performing. Micron closed an Anthropic deal: a multi-year HBM, DRAM and SSD supply pact, a joint chip co-design agreement, a Series H equity investment, and an internal Claude deployment, all rolled into one announcement. These moves are about grabbing as much memory as possible. Anthropic is reaching a level of partnership that lets it scale and operate in a supply-constrained market.

There is memory, and there is power: two important gaps that the consumer-facing AI platforms like Anthropic need to fill. Microsoft signed a 20-year, 2.67GW natural-gas power purchase agreement with Chevron for “Project Kilby” in West Texas.

There is a natural force in high equity markets for companies to issue debt against equity: when equity prices are high enough, their credit rates stay very safe. Nvidia is raising $25b in debt against $85b in demand (3.4x oversubscribed). SpaceX opened a $20b inaugural investment-grade bond sale (BBB-rated by S&P, Moody’s and Fitch), right before the -16% single-day stock decline. That bond disclosed cash burn projected through 2029 and $400b in projected net debt by 2031. This rush for debt is what can hurt capital markets and could pressure an equity rebalancing. That is the one concern I have about the bull run continuing in a straight line up: the rebalancing of debt. Debt is tied to the Fed rate level, so as hiking pressure rises it directly pressures every high-debt company and forces a debt rebalancing across many players. These companies become less attractive when interest costs rise and they lag as revenue producers.

There is another area drawing more eyes, as it reaches a level of maturity that could eventually create a positive impact on the markets: the first generation of quantum innovation driving a new computational revolution, led by security and infrastructure security. In a World War III scenario, this is probably about decrypting the encrypted messages of other nations, so the rush to the new “atomic bomb” is generationally important for the few players working on government-led projects, security projects, or financial and blockchain areas. Creating quantum-risk-free security is a new level for financial infrastructure. The Trump presidency knows this, and the people around him are capable enough to have the government sign two executive orders on quantum computing: a 2028 deadline for a research-relevant quantum computer, a 2030/31 federal post-quantum cryptography migration mandate, and $2b in funding for named quantum firms. Government pressure pushing federal agencies to migrate is an important move and will propagate into enterprise security spending cycles. In security, quantum-risk-free companies will provide a catalyst over the next 12 to 18 months: a revenue increase from signed enterprise deals, especially for financial institutions, where the real quantum threat sits.

Iran - Hormuz

A 60-day relief window, already fragile. Oil is whipsawing between the $70s and $80s as de-escalation and re-escalation trade blow for blow.

De-escalation. June 18 marked the official lifting of the naval blockade on Iranian ports. VP Vance reported 12.5 million barrels of oil transiting the Strait of Hormuz overnight without Iranian interference - the first unobstructed passage since the war began. With ships moving again, Iran invited the IAEA to inspect its nuclear facilities and identify the locations of enriched material, which led the Joint Maritime Information Center to downgrade the Hormuz threat level from “substantial” to “moderate.” On those headlines, oil converged from $95 to the low $70s.

Then it closed again. The Israel–Lebanon–Hezbollah axis forced the Strait shut. Israel keeps striking southern Lebanon; Saturday’s airstrikes - the trigger for the latest closure - killed 83 people, and the IDF’s seizure of an Iranian-built Hezbollah command complex at the Ali al-Taher ridge directly provoked Iran’s most aggressive post-MOU move. The IRGC formally announced the closure, citing US failure to restrain Israel as a violation of MOU Article 1: “immediate, permanent termination of hostilities on all fronts, including Lebanon.” The White House sides with Netanyahu, yet Israeli forces simultaneously declared no restrictions on IDF operations in the Lebanon security zone. Against that backdrop, Hezbollah launched Operation “Ashura,” citing ceasefire violations - a path that could mean further strikes and a re-activation of the war across the Middle East. Qatar is back in its familiar “secret” emergency mediation. Oil has reacted higher, back into the $80s. Markets could open under pressure Monday on these announcements - possibly red.

The MOU is a printing machine. Its 14-point structure grants Iran immediate oil-sanction waivers, a 60-day toll-free Hormuz passage commitment, phased access to $6 billion in frozen funds held in Qatar, and a $300 billion private reconstruction fund (over $150 billion already committed). In exchange, the US gets Iran’s reaffirmation that it won’t pursue a nuclear weapon, a commitment to down-blend the 60%-enriched stockpile under IAEA supervision, and an end to Hormuz interference. Read plainly, this is another $300 billion printed to rebuild the destruction Iran organized, financed in a way that devalues the dollar. A weaker denominator pushes asset prices up almost mechanically - inflated dollars make cash worth less, so owning cash is less interesting today than it was before the deal. The stock market goes up again on the printing press.

After 60 days is the real question. The relief in the Strait runs 60 days; what comes next is open. Iran’s Deputy FM Khatibzadeh said that after the window Iran will introduce “a new mechanism” to manage the strait, leaving the tolling question unresolved, and IRGC Navy statements that ships must carry Iranian-issued insurance and follow prescribed routes already foreshadow the post-60-day governance dispute. How international ship insurers respond is the key: if they lose coverage on the Hormuz route, oil never returns to pre-war prices, and inflationary pressure persists - now from several directions at once: printing, higher oil, higher Hormuz operating costs, and higher PPI. The Brent–WTI spread stays wide. Shipping gets more expensive, and so do fertilizer and food. Household purchasing power keeps degrading, especially in Europe, where rates are rising and policy is set against growth, tech, and innovation - which only puts Europe in a worse spot.

Structural fragility. The bigger question starts today: will the US fill the Lebanon gap and keep the nuclear track and the peace regime intact? The deal is structurally weak - Bloomberg Economics counts 10 to 14 points favoring Iran, and Netanyahu rejects any binding obligation. The 60-day negotiation window, not the ceasefire itself, is the critical variable.

Macro

The Fed is pivoting hawkish under Warsh while inflation accelerates. The market is now pricing hikes, not cuts - pressure on stocks, housing, and credit, and there’s reasons to stay long US, short EU. Even when both markets could go down.

Warsh’s first FOMC. Kevin Warsh’s inaugural meeting surprised markets - though it shouldn’t have. He is breaking the political pressure on the agenda: he cut the forward guidance and the boilerplate, returning to a pre-2009, factual format. There is no Warsh dot-plot, and 9 of 18 FOMC participants projected at least one rate hike before year-end, reversing the prior pressure to cut. Warsh is running the institution through task forces - communications, balance-sheet policy, inflation frameworks, data quality, and AI - and these will reshape how the Fed operates under his tenure.

The data is turning. Inflation and labor stress are building. May PPI printed +6.5% YoY, the fastest since 2022; core PCE for May is expected to accelerate further; and continuing jobless claims rose to a three-month high of 1.81 million - still resilient enough, by tightness, to give the Fed a window to address the inflation overshoot without immediately breaking employment.

Imported inflation, worsening credit. US inflation is accelerating on imported goods. The US produces what it consumes in oil, but it absorbs inflation from everywhere else - fertilizer prices are imported, as are other PPI drivers, and higher WTI hands oil producers fatter margins while the consumer pays up. With credit deteriorating, the US faces persistent inflationary pressure. If it sticks, the answer is hiking - which pressures the credit bubble and the cheap rates the big labs are leveraging on top. Consistent hiking into an inflationary backdrop would hit housing hard, along with the debt-heavy names like the hyperscalers, and stocks broadly.

Three drivers of the inflation. First, the massive print to fund the military attack on Iran. Second, the print needed to reconstruct it. Third, the Pentagon’s rebalance to rebuild crude inventories after drawing them down to support allies - reserves hit their lowest since 2014, around 20 million barrels, reaching operational tank-bottom; the SPR sits near 340 million barrels, its lowest since 1983 after 172 million barrels of releases. Easing the stress in the Strait to rebuild those reserves is crucial - not just for the US, but for its allies. The current supply–demand trend is unsustainable, and Hormuz is the fulcrum. The 60-day relief is an attempt to refill reserves and let oil drift lower again, relieving a major source of pressure on global macro policy.

Margin debt and the hike path. War is never good for the value of money. US margin debt surged $112 billion in May to a record $1.42 trillion, +54% YoY - that alone pressures the dollar against other assets, particularly inflation-driven ones. After the FOMC meeting and the run of inflation data, BofA is now pricing three rate hikes this year: the first possibly 25bps in September, followed by October and December in the same cadence. That pressures not only the stock market but the housing and credit bubbles.

US over EU trade. And the US is not the worst spot. The ECB has already hiked, and Europe stands to suffer far more from this inflation pressure than the US does. Long-short books that prefer US over EU remain the trade - and it keeps paying off as long as the Strait is neither clear nor clean.

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Thanks,

Joao

US-Iran peace framework reaches the scope, not only a diplomatic text, paper (digitally sign) but also physical reality of the improvements. Peace framework detailed 14-points co-sign with US and Iranians, and going to formally sign in 19 June – the important Geneva ceremony. The reality is three Iranian thanks pass the US naval blockade, information from Iranian authorities but also confirmed tracked by vessel-tracking technology. These tanks include the sanctioned VLCCs ‘Diona’ and ‘Hero 2’, carrying 3.8m barrels combined, and the third vessel carrying 1m barrels.

These three vessels crossed US blockade line from Chabahar and the Gulf of Oman with their AIS transponders active (great sign of transparency, the world is seeing). OIL market price reacted sharply, OIL prices down 16% in four sessions, now trading at $74 per Brent.

European countries, G7 nations collectively reaffirmed support for the US-Iran agreement, is it finally European countries and US align or just politics?

While Trump keeps mention “open by Friday” timeline, there is critical operational constraint: de-mining ships are slow, unarmed, and highly vulnerable. Europe is nations that clear benefit with the rapid opening of the strait - Germany provide support on this mission, France also support personnel and equipment on this mission. But this mission takes time, will not open the strait overnight, it former US Navy officer Ben Cipperley assessed that confidently clearing Iranian mines could require 30 days or more.

In between QatarEnergy separately confirmed the restore plans, able to restore 50% of Ras Laffan LNG output within one month and 80% with two months. But disclosed the rest have permanently changed by Iranian strikes – requiring 3-to-5 years to replace. This constraint will have clear effect on gas supply in Europe - as European nations are widely dependent in this region, this gas, and have unsustainable reserves to the next winter.

These affects European economic outputs, it’s already bad, and will have a continuously force to get worse, at least to the end of the year, until stagnate through the winter (in a bad spot), waiting to summer to reestablish again the balances. Gas and OIL will trend lower, but will take more time than what politicians are mentioning. Will not be an overnight price convergency to pre-war price equilibrium – and markets don’t agree with that either.

Lebanon is the clear risk, that could disconnect the durability of the deal sign on June 19^th. Labanon-Israel front remained in continuously active stress. Iranians warning reiterated, mentioned that Israel is in ceasefire invalidations, that if Israel don’t stop attack Southern Lebanon, Israel should expect a hard response from the Iranian Armed forces. Labanon is one of the four risks that can thread the de-escalation trajectory; the mine clearance timeline is the second; third being the discrepancy between US and Iranian interpretations of frozen asset provisions (it’s unsolved issue); And last but not least the nuclear verification gap – specially uranium sites at Fordow, Isfahan, Natanz, where potentially 441kg of highly enriched uranium and 8,600kg of lower enriched material are held.

Markets appreciate the relief in Iran-war, there’s direct correlation, as predictable, between the direct decline of OIL, to the jump of the stock market, and the alleviate pressure in the Treasury yields.

Not all sectors benefit equal with lower OIL prices, but technology and industrial sectors clearly benefit with lower prices. OIL. – BRENT or WTI – are directly correlated with their costs, from energy consumption or PPI. Notorious in last PPI reports, the rise of the PPI. By contrast, OIL prices are directly correlated with the revenue size of energy producers – so lower OIL prices affect their revenue, earnings by default, their valuation collapses under lower OIL prices.

Bitcoin add signal to markets, by agreeing with risk-asset relief, recovering to two-week high on the Iran-deal announcement. This alone means nothing, but it could highlight a move to risk-on, and removal geopolitical premium. Will this sustain overtime, or not, is what markets will determine.

This geopolitical de-escalation – which functioned as a global stagflation shock since late February – reduce the inflation expectations reducing the probability of a December 2026 Fed rate-hike from 80% pre-deal to approximately 65%. With automatic retreated of the two-year yields from 4.15% towards 4.02%-4.05%. Yet inflation data in hands prints May CPI at 4.2% YoY (higher, and well above the benchmark) and May PPI at 6.5% YoY;

May import prices at +6-7% YoY, and forecaster core PCE at approximately 0.35% MoM implying a 4.1% six-month annualized rate. These data doesn’t sound good for easing policies.

Today is highlighted by the first Kevin Warsh FOMC meeting happening, will be first signs of policy aggressivity, policy changed, calculations change or a nothing burger. Today we will have the first signs of how Warsh policies will be.

This meeting is highly anticipated as it marks a major regime shift in FED leadership and communication. Chairman Warsh has signaled plans to overhaul central bank communications, pulling back frequent public speaking and detailed forward guidance to preserve policy flexibility. Markets are expecting a held steady at 3.50%-3.75% but the focus will be on the removal of any remaining easing bias: While CPI and PPI is hot, demand is also hot. And supply side pressures memory cost to surge.

Thanks,

Joao

The Long-Term Thesis

I am not questioning the destination. In 20+ years, SPCX will be the first $100T company, which would officially make it another 10x from the IPO price.

How to Enter: Staged Allocation, Not a Single Ticket

But conviction is not a plan, so for an honest analysis, let me bring some data. It is unquestionable, beyond any doubt, that VC, insiders are selling at this IPO price. Not EXITING, just diluting a little, as a rational person would. The sophisticated investors also agree that, at this stage, buying everything in a single ticket on day one is not the right approach. Markets are expensive.

The plan should run on a 3-year time frame, allocating a portion each year. Maybe you buy 25% now, so you are not completely out of the market. But don’t put 100% of your cash into public tech stocks with the current markets.

Do Not Expect an Overnight Double

There are massive multiples in these specific, well-selected stocks.

But let us be clear: they will not double overnight. Those were different markets, and even then, nobody should buy an IPO expecting it to double in a month. Apple was the slowest of the six, taking more than two years to double (consider roughly 250 trading days per year).

Trading Below the IPO Price Is Normal

Do not get overexcited. Four of these six stocks traded at a discount to their IPO price at some point. So there is a high probability it will happen again, and it is fundamentally justifiable. Apple traded 50% below its IPO price. That said, do not expect deep discounts to the IPO price either.

Recovering back above the IPO price usually does not take that long, although it can stretch into the hundreds of trading days, as it did for Apple, or almost 100 trading days in the case of Nvidia.

On a positive note, markets are becoming more efficient. There are fewer mispriced opportunities, and retail investors are more active. Looking only at these six stocks, the number of days closed below the IPO price is lower today than it was in the past.

Drawdowns Are Part of the Ride

Over the years, these stocks traded at huge discounts many times. Be prepared to take -25% and -50% drawdowns. This is a roller coaster, not a straight-up money machine. Be prepared to accumulate at the bottoms and the discounts, not to sell into them. On average, each of these well-selected stocks traded 25% below its local high more than 10 times. For -50% drawdowns, the average is 4 episodes per stock, which is a huge number. Be prepared to accumulate at those bottoms. Think of them as Black Friday periods: they are not frequent, but they happen, and they happen multiple times.

Even deeper discounts are possible. Be prepared for massive falls. They have happened before. Not often, but over a 20-year holding period, the probability of facing a Black Friday event is enormous.

Be Contrarian When the World Sees the End

This is where professionalism and cold blood are defined: the ability to accumulate and buy these bottoms. In those periods, the media and the world usually feel that “the end” has arrived. Be contrarian on these massive swings, and prepare mentally for them in advance.

Recovery Takes Time, and Patience Pays

For good companies, the recovery happens. In the long term, the stock price always reacts to the fundamentals. But it will not be immediate, and this is where patience pays off. The average recovery from a bottom back to new highs is over 150 trading days, meaning more than six months to recover the entire pullback. These are not overnight gains. They are long-term oriented gains.

And as expected, the harder the episode and the worse the dump, the longer it takes to recover the full price. Aggressive V-shaped recoveries happen mostly after shallow drops of around 10%, not after collapses of 50% or more.

The Race to Double

The roller coaster is real. Do not assume a straight line up. Historically, there were multiple drawdown episodes on the way to doubling the stock price. Google is the outlier here.

Almost all of these stocks declined more than 25% before reaching 2x the IPO price.

That said, the race to double is highly dependent on the company itself, and it is not correlated with the IPO year. Older companies did not take more time to double than the most recent IPO stocks.

The multiples are different

The multiples are relevant, and SPCX is pricing higher, above all peers. Be aware of that.

Something fundamental shifted on TON in the last month, and most of the market is still pricing it as just another rally. It is not. In a four-week window, TON went from being a general-purpose, Telegram-adjacent L1 — a chain with a great narrative but always one step removed from execution — into something else entirely: a Telegram-controlled global payments rail with native AI agent infrastructure. That is a different asset.

There are three updates worth understanding, because they only make sense as a sequence:

Three catalysts in four weeks. The market is still digesting the third.

1. Sub-second finality (April 10)

TON activated the Catchain 2.0 consensus upgrade. Block times collapsed from roughly 2.5 seconds to 400 milliseconds, and final settlement now lands in about one second. That is the kind of latency where a payment on-chain feels like sending a message — and crucially, it is faster than a card-network authorization message, all delivered through cryptographic finality. TON is now in the same neighborhood as Solana on speed. The old narrative that TON had a finality flaw is done.

2. Fees cut 6x (April 24)

The next step came two weeks later. Transaction fees dropped roughly 6x, to around 0.00039 TON, or about $0.0005 per transaction. Two details matter more than the number itself: fees are now flat regardless of network load — no volatile gas auctions — and Durov has explicitly said most transactions will eventually move to a fully feeless model, subsidized at the protocol or Telegram-app layer for common payment flows.

Once you remove fee volatility, you remove the single biggest reason a consumer payment app cannot run on a public blockchain. That is the actual unlock here.

3. Telegram replaces the TON Foundation (May 5)

This is the one that changes the asset. Pavel Durov announced that Telegram itself will replace the TON Foundation as the driving force behind TON, and will become the chain’s largest validator. In his words, this is a “direct commitment to the chain’s security and direction.” TON is no longer a Telegram-adjacent project run by a community foundation; it is, effectively, Telegram’s chain.

In a feeless or near-feeless environment, validators normally take the loss on zero-fee transactions. Telegram becoming the largest validator is the answer to that — Telegram itself is willing to subsidize the cost of running a payments network for a billion people. That is the bet.

What TON actually is now

Stitching the three updates together, this is the description that fits:

TON is the settlement layer for Telegram’s billion-user app, with sub-second finality, near-zero fees, AI agent rails through Cocoon, and direct operational control by the company that distributes it.

Every piece of that sentence is now true at the same time, for the first time. Each piece individually has been promised before. The convergence is what is new.

The 1-billion-user distribution channel

The most underrated number in crypto right now is the one Telegram already has on the front of its app. Roughly one billion monthly active users. Profitable in 2024, with over $1 billion in annual revenue and meaningful cash on the balance sheet. No other blockchain has anything close to a built-in distribution channel of this scale.

The stated goal is to bring 1 billion users onchain. Telegram is the only platform on earth where that goal can be stated and not be a fantasy. Onboarding happens inside an app the user already trusts. Wallets are native. Mini apps run inside the chat. Payments live next to messages. The friction layer that has stopped consumer crypto for a decade simply does not exist here.

Cocoon — the AI agent layer

Cocoon — the Confidential Compute Open Network — is the part of this that does not get enough airtime yet. Built on TON, Cocoon is a decentralized GPU marketplace where anyone with a graphics card can earn TON by running AI inference inside trusted execution environments, and developers pay TON to access private, encrypted compute. Telegram is the first major customer and the primary demand engine.

Stack that on top of the rest. You now have a chain that is the payments rail, the social layer, and the compute layer for AI agents — all delivered through one app that people already open every day. Pavel’s vision, stated explicitly, is to make Telegram the place where humans and AI agents interact. The majority of people running personal agents already use Telegram chats as the rail. The pieces fit.

Why this time is different

A small piece of context that matters. Pavel and Nikolai Durov designed TON in 2018 as the Telegram Open Network, before SEC enforcement in 2020 forced Telegram to abandon it. The codebase was then picked up and continued by an open-source community organized as the TON Foundation.

That history is the reason you should take the May 5 announcement seriously. Pavel walked away from TON 1.0 specifically because of US regulatory exposure. He would not be walking back in now, publicly, with Telegram as the validator and the operational driver, unless he had thought carefully about the regulatory environment. The CLARITY Act in the US — still in process but on track — would mark TON as a digital commodity, which is the reading Pavel almost certainly has in mind. He is more aware of this risk than anyone, because it cost him the project once before. He is not making a 2x trade. He is making a multi-year commitment, and the TON blockchain is going to be folded into Telegram’s major goals.

The vision: Telegram as the human–agent layer

Nikola Plecas, head of Telegram payments, has stated the explicit plan: turn Telegram into a global crypto payment network with the TON wallet inside Telegram as the primary user interface. That is not aspirational language. The wallet ships inside the app. The infrastructure is now fast enough and cheap enough to actually carry that traffic.

The Telegram ecosystem already has the building blocks:

• Chats and groups — the best UX in messaging, with deep user trust

• Mini apps — full apps embedded inside Telegram

• Native games — already a meaningful traffic driver

• Wallet — TON-native, already shipped

And there are obvious upgrades still on the table. The first one that comes to mind is livestreaming. Imagine groups going live on Telegram, where you can directly purchase the item being sold or send NFT gifts that the creator can resell on a TON-native marketplace. That single feature replicates the largest revenue stream on TikTok, but settles every payment and every gift on TON. If they ship that, it is a serious change — A platform called Fragment, made over $400m in revenue in the last year, NFT marketplace telegram-native (by NFT it means gits, and emojis, not monkey jpegs).

The second is privacy on payments. Telegram is already the privacy chat platform. Adding privacy-preserving payment rails on TON is the natural extension, and it is something no major competitor can credibly offer.

The Telegram IPO optionality

Telegram had been planning an IPO for 2026, with reported valuation indications above $30 billion before the process was paused. Whenever it does come back online, the IPO is a real catalyst for TON, because it forces the market to price the value of the integrated ecosystem.

There is a structural question worth holding open: when Telegram lists, will TON-equivalent value end up in the equity, or will the market start treating TON as the listed proxy for Telegram’s blockchain layer? Either path has bullish implications for the token. The first re-prices Telegram with a crypto-native economy attached. The second turns TON into the public-market shorthand for Telegram’s chain.

The risks worth naming

Two real risks should be named clearly.

Centralization. Telegram becoming the largest validator and replacing the foundation is a governance centralization. That is the thing it is. Durov has framed it as Telegram acting as a counterbalance that lets other large validators join without breaking decentralization, and there is some logic to that — but a chain where one company is the dominant validator and the dominant front-end is, by any definition, not maximally decentralized. DeFi purists are right to call that out. The bull view is that for a payment network with a billion users, accepting that trade-off may simply be correct.

US regulatory exposure. This is the thing that killed TON 1.0. The CLARITY Act passing on a clean track would resolve this in TON’s favor. If it stalls, or if the SEC posture changes, this whole thesis carries headline risk. The bull’s response is the one we already touched on: Pavel knows this risk better than anyone, and he is betting on it being manageable.

Using TONX to express a leveraged long on TON

With the regime change above as the setup, the next question is the cleanest way to express it. The token itself is the obvious answer. But there is a second option that, on the current setup, looks more interesting: TONX — TON Strategy Company (Nasdaq: TONX), a publicly listed digital asset treasury company whose entire strategy is to accumulate TON and stake it.

The people running it

The power behind this DAT is Manuel “Manny” Stotz, the Executive Chairman. His track record is the kind that matters in this seat: Goldman Sachs, Blackstone, Fortress, Rothschild, THS Partners, founder of Kingsway Capital (managing over $1.5B), and President of the TON Foundation from January to August 2025 before moving directly into this DAT operation. The person who used to run the TON Foundation chose to run a TON treasury vehicle. That is signal.

On May 4 — the same day Telegram announced its takeover of TON — Kevin Wilson took over as CEO. Wilson is a senior fintech executive with over two decades in financial markets, institutional trading, and digital assets, with prior senior roles at Citi and most recently Managing Director at Integral Development Corp leading their crypto and blockchain initiatives. The timing is not a coincidence. The new CEO arriving in the same week as the largest catalyst in TON’s recent history reads as deliberate.

The structure: maximizing TON per share

TONX’s stated goal is to maximize TON held per share. It is a Strategy-style playbook applied to TON instead of Bitcoin, with one structural advantage Bitcoin treasury companies do not have: TON staking generates real on-chain yield. Telegram has cited staking returns near 20% APR, which means the treasury is actually compounding through the network’s own incentive layer rather than just sitting on the balance sheet.

Over 220 million TON are already staked through TONX, making the company a meaningful infrastructure participant in the network — not just a passive holder.

The setup: discount, holdings, and what they look like together

TONX market cap vs market value of TON holdings

Implied discount to TON-adjusted value per share

These two screens summarize the trade. TONX has a market cap around $180M against TON holdings worth roughly $545M — a discount on the order of 70% to crypto NAV. That is a price of roughly $0.30–$0.36 for every $1 of TON inside the company. There is no other vehicle in the listed crypto-treasury space that trades anywhere near this kind of discount.

Why the discount exists

To be honest, the discount is not just a market inefficiency. There are real reasons for it: the company is still working through legacy operating losses from its previous form (Verb Technology), there has been heavy dilution from the 2025 PIPE that funded the treasury, and the prior management team did not have a strong record on transparency around treasury management. Some of that discount is the market pricing those structural concerns — fairly.

But the equation has changed. Stotz is in the chairman seat. Wilson is now CEO. The TON network itself has just been transformed in a way that materially raises the value of every TON in the treasury. The same discount that may have been appropriate three months ago is much harder to justify against the current setup.

The May 12 catalyst

TONX reports Q1 2026 earnings on May 12 — next week. This is the first earnings call under the new CEO, and the first one after the entire TON regime shift. The Q1 numbers themselves will reflect a quarter that ended March 31, before any of the recent catalysts — but every single forward-looking statement on that call will sit under a completely different network than the one that existed at the end of Q1.

Two things are likely to be communicated:

• The discount itself, as the message to investors. They will market the gap between price and TON NAV.

• Capital allocation choices. Above NAV they can issue stock to buy more TON. Below NAV — where they sit today — the most accretive move is to use TON to buy back their own shares. Either path increases TON-per-share, which is the whole point of the vehicle.

On top of that, staking revenue is now a real recurring number on the income statement. At ~20% APR on a treasury this size, the run-rate yield is meaningful. The Q1 print will already show a cleaner staking-revenue line, but the bigger surprise is more likely to land in Q2, when the full effect of the network upgrade and Telegram’s takeover flows through.

The dislocation chart

TON spot vs TONX since May 4. TON +82%, TONX +44%. The beta has not arrived.

This is the picture that makes the trade. Since the May 4 announcement, TON spot has run roughly 82%. TONX has done about 44%. A leveraged-long vehicle on TON, holding $545M of the asset, has captured roughly half of the underlying move. That is the gap.

Two readings of that gap. Either the market is genuinely sleeping on TONX — and the May 12 earnings call is the wake-up event that closes the discount — or the discount is appropriately pricing structural problems that the new management team has not yet proven they can solve. The honest answer is probably some of both. But with the discount this wide, you are being paid a lot to find out which one wins.

The asymmetry

Pull all the threads together and the setup is hard to ignore. TON has structurally re-rated as an asset. Telegram is now the operator, the validator, and the distribution engine. Cocoon adds an AI compute leg. Fees are gone. Finality is a second. The CLARITY Act, if it lands, removes the last regulatory overhang. And the Telegram IPO sits as a separate, larger catalyst behind all of it.

On the expression side, TONX gives you the same exposure with leverage built into the discount: roughly $0.36 of price for $1 of TON, plus a ~20% staking yield on the underlying, plus a competent management team that has now arrived in the same week as the largest catalyst this network has ever had, plus an earnings call next Tuesday that almost forces management to address the discount directly.

If the bull case on TON is right, TONX should at minimum compress the gap to NAV. If TON itself continues to re-rate, TONX gets both moves — the underlying and the discount close — at the same time. That is the asymmetry.

This is research, not investment advice. Crypto-treasury vehicles carry meaningful structural risks — dilution, governance, regulatory, and the volatility of the underlying asset. Position size accordingly.

[Brief in audio format]

There is smoke in the atmosphere - a lot of smoke. It is the smoke of rockets reaching new lunar goals, Artemis II is now on orbit, and the smoke of missiles exploding critical bridges. The world is riskier than ever on earth; and if we cannot cooperate on Earth, it will be even harder to cooperate in space. Nuclear power remains the “bomb” until we have lasers from the moon, that vaporize everything on earth. On Earth, the dusty smell comes from ballistic missiles and a massive wave of internal unrest. Over 7 million people have manifested across 50 US states for “No Kings” Day, signaling the first sign of domestic conflict.

Building on this instability, we have one thing clear: Iran is a bucket of problems.

For the US, it is an internal conflict where the population and the President are misaligned. For Europe, it is a reminder of the disastrous energy policies of years past. In Asia, it is a matter of complete dependency on a volatile region. Within the Middle East itself, wealthy nations that have grown enormously are now surrounded by “crazy neighbors” who are blowing up facilities and headquarters. This violence is annihilating tourism and threatening to destroy years of economic progress. For these nations, it is a massive step back.

Because of this deterioration, there are few solutions left. The Iranian regime may eventually be stopped by force—thousands will die and the straits will be controlled, in good faith or bad. While Europeans try to onboard peace and stabilization, this only happened because they still remember WWI and WWII but also because they were threatened by Iranian long-range missiles that cover nearly every country except Portugal. China, Russia, and the rest of Asia will inevitably be involved. Russia, in particular, will escalate Ukraine tensions; they have the money, despite being hit hard by Ukrainian drone technology and direct attacks on their energy storage.

This escalation in the Iranian and Ukraine war means energy in Europe must be solved through massive investment in internal capabilities and war technology. Europe must increase defense spending and adopt “freedom energy” policies to build internally, otherwise, we are screwed by geopolitical shocks every four years. Simultaneously, US internal conflict is hitting a breaking point. The March 28 “No Kings” Day reached a historical number of protesters—over 7 million manifesting against Trump, the Iran war, and ICE. This aligns perfectly with Ray Dalio’s “Changing World Order” theory: in the late stage, discrepancies between the “haves” and “have-nots” grow, internal conflict spikes, and military spending rises to protect fading power. We are seeing all three.

The Houthis have now joined the Iranians, cooperating on missile launch programs. This is manageable until they act on the Bab-el-Mandeb strait. Eventually, they will force a choke point at this critical location, where Saudi Arabia’s Yanbu export hub recently reached a 7mmb/d capacity. This is a direct threat to the Saudis, who moved operations toward Yanbu to avoid the Strait of Hormuz. If the Bab-el-Mandeb is closed, Saudi Arabia—and potentially the UAE—will be forced to join the war.

We are in a state of political disconnect that has pissed off the world. The Iranians are not “winning,” as they are losing infrastructure and oil facilities, but America is not winning either. The winners are China, Russia, and North Korea. The clear losers are Iran and Trump. No one is supporting Trump’s policies or the arrogant, direct way he navigates these shocks with clear lies. It is Nixon’s story all over again—1969, the Vietnam War, and a president losing his grip. While Trump family stays rich, the American nation stands to lose power depending on the next president. Markets no longer believe Trump; even the US intelligence community is out of alignment with his discourse. Instead, markets are watching Iranian, European, and Chinese media to understand the war’s true stage. Trump claims a deal is close; the Iranians deny it and intensify their missile strikes. The markets believe what they see, not what they hear.

This leads to a critical point: the US will not agree to the Strait being closed to them or Israel. While the US claims their goal was merely to obliterate nuclear capabilities and military power, they continue to bomb critical bridges inside Iran. The only way out is escalation until troops are on the ground at Kharg Island and the Strait. I assume a significant probability of a long war—longer than anyone expects. NATO involve, eventually. Trump doesn’t just want a “clean” Strait; he wants clean Iranian oil and eyes on what China is consuming. They want to bring onboard China, forcing them to buy at prices that the rest of the world is buying, a fair competition for growth.

As the US escalates and Russia acts as a middleman (while supporting Iran), the conflict becomes a mess of frontiers. We will see thousands of soldiers die in a war that will not end in two weeks. This drives a massive spike in oil prices—consistently above $100 and eventually $150. Consider the consequences for CPI and monetary policy. At $150 a barrel, CPI will react aggressively, likely staying above 4%. A recession and a deterioration of the labor market are predictable.

The main question is how to position for this stagflation. In a high-inflation scenario where AI is disrupting jobs, you do not buy long-term US or European bonds. You park capital in physical metals—gold, silver, or uranium. You hold “boring” companies: energy, consumer goods, or you hold “elite tech” like Google and Apple by shorting a basket of other non-elite tech stocks (I guess). Meanwhile, SpaceX is coming live soon and will suck huge liquidity from the markets.

Despite the chaos, I believe Bitcoin has a lower downside than upside here. Buying below $70k is a blessing. In a war scenario, governments must print massive stimulus to support the military and consumers while hiking rates to fight the inflation they are creating. It is a recipe for disaster. With debt at extreme levels and the USD declining to maintain industrial competitiveness, Bitcoin becomes the primary hedge.

My thesis is clear: a short-term bullish move for Bitcoin driven by conflict, reaching $150k in 12 to 18 months. However, I am bearish mid-term (18 to 30 months) due to the “quantum risk.” Until we are sure how to upgrade to quantum-free tokens, big institutional capital and pension funds will hesitate to hold for ten years. Once a solution is developed and the “quantum relief” begins, we will see the final rotation from gold to Bitcoin as the world’s reserve asset.

Ultimately, Bitcoin is trading at the same price it was 1,816 days ago. Think of how much technology and industry have improved since then. Your tokens are safe; it is only the price that is currently insecure.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

[Brief in audio format]

Trump loves to brag, but it’s working against the US this time. Operating with a massive ego, he enforced the power of the US by starting a tariff war. Other countries didn’t appreciate it, but they were forced to comply and embrace Trump’s power, fearing what could happen to them if they ended up on the wrong side of the US. Trump have consistent claimes that the world is taking advantage of US, the mother nations, fueled by China growth threats, creating friction to maintain and grow the US dynasty and attempt to revert the follow world order so they could remain in power. Claiming victory and bragging about “Great America”—Europe, Latin America, and Asia all kissed Trump’s feet and let him win.

But Iran is different. Iran has hated America since 1953, when the UK and America worked together to reinstall Iran’s monarch. That event cemented the US in Iranian eyes as an imperialist power willing to crush their democracy for economic and geopolitical interests, specifically with Iran’s oil industry being controlled by the British. This animosity deteriorated further during the Iran-Iraq war in the 80s. This long-held hatred wasn’t just a radical phase; it stemmed from feeling suppressed and being forced into regime change simply to favor US interests. Now, they hate Trump even more. They will do everything to damage his governance and ruin the world’s positive perception of his mandate.

And Iran is no longer what it used to be. They have a huge arsenal of missiles, bombs, and drones. They have—or had—potential nuclear weapons, they have oil, and they control the Strait of Hormuz. Furthermore, they possess a radicalism and a religious mission completely contrary to the rest of the Western world.

I believe the war wouldn’t have reached this stage if Trump hadn’t publicly bragged. He bragged so much that it pissed off the Iranians and the rest of the world right when everyone was already suffering. Capital markets are suffering; European and Asian consumers are suffering. This is killing America, rapidly scaling global disillusionment and ruining the good perception of the US. This happened even when the US ultimately had no other option than to attack Iran. The bragging was unnecessary, and now his ego is on the line. I remember, even before the war started, Iranians mentioned they would teach Trump a lesson, and I believe he is learning a massive one. Now, to stop the war, he has to lower his ego and invert everything he wrote in The Art of the Deal.

We are at the extreme end of the pendulum in a global war, and he has to pivot toward areas where a positive reaction is expected. The biggest problem for the US isn’t just the start of the Iran war; it’s that the world blames the US for starting it. Gulf nations, all of Asia, and Europe blame the US. While the whole world is suffering, Trump insists on bragging, and that has alienated everyone.

Consequently, we are seeing a massive shift. India, which bought oil from Iran, is now buying from Russia instead. China is buying from Russia; new straits, channels, and routes are being utilized. New currencies for commercial trade are taking over. People and nations are diversifying away from the US—from the currency of trade to the reserve assets on their balance sheets. After Trump’s first three months, the world is moving increasingly toward diversification, losing trust in US leadership.

This naturally pushes the world closer to China. European cars are basically just Chinese EVs now; open-source LLMs are dominated by Chinese models. Rare earths and minerals are controlled by the Chinese. Europe, doomed since WWII, is especially failing to wake up to the problem at hand. We are seeing European segregation across different countries, where some defend the US and others oppose it, which was massively transparent when it came to allowing the US to use military bases for Iran operations. Portugal did, while Spain was against it. These are two close countries with very different leadership. This escalation could lead to segregation by principle.

The world is starving for a transparent, simple, and more globally aligned America. Capital markets are always the proof of this: when America published a peace deal, the oil market reaction was extremely positive. The entire market react in a relief.

The State of the war

Yet, the actual state of the war tells a different story. On one side, you have diplomatic signals, with the US administration publishing a peace deal framework through Pakistan. On the other side, bombs are falling. Israel has dropped more than 15,000 bombs on Iran—four times the volume of the prior 12-day conflict. The IRGC has launched a new wave of attacks on Israel and US bases; Saudi Arabia intercepted a ballistic missile and at least five drones; and even Kuwait International Airport was struck in a fuel tank by a drone. While apparent peace deals are being arranged, Trump is simultaneously sending more troops to the Middle East, and Israeli forces are advancing another 8 km into Lebanese territory.

The 15-point peace deal was automatically rejected by Iranians, who countered with a 5-point ceasefire deal. One of their absolute conditions: international recognition of Iranian sovereign authority over the Strait of Hormuz. They explicitly stated they wouldn’t allow Trump to dictate the war’s timeline.

It’s clear where this war is heading. In my opinion, the Trump administration is just trying to buy time, knowing full well that Iranians won’t agree to the published deal. They want to show the world that they are trying to negotiate a ceasefire and play the peacemakers. Trump propaganda to be the peace president, but peace only in titles. Trump called “peace deal” when it was obvious Iran would reject most of the points, it’s just a facade. They know they are sending troops and bombing while pretending to seek a resolution.

However, this peace deal attempt was useful in one regard: it made the world and the US understand Iran’s primary objective. It’s not about access to the global oil system, or being an unsanctioned nation; it’s about dictatorship and sovereignty over the Strait. The Strait is their crown jewel, and with it—alongside the support of Yemen—they control all the Gulf nations. Trump and US allies will never accept that, which makes it highly probable that the war will escalate further and last much longer than expected. Almost 30 days in, we are looking at scenarios of escalation, not de-escalation.

There is a high probability of Gulf nations soon to join the US; Israeli troops are already on the ground, and the US keeps sending more forces to the region. Iran is warning that as soon as these troops are within range of their missile arsenal, they will fire. If that happens, they will undoubtedly kill or threaten to kill thousands of US soldiers in a flash. This would force the US to act Aggressively. We are in critical times, and the risks of this war are incredibly high.

This conflict doesn’t just impact oil; it drastically affects gas and fertilizers, with 30% of the world’s total fertilizers passing through that specific Strait. Without those supplies, there is an increase in fertilizer costs, particularly nitrogen. Without nitrogen, crop yields will inevitably drop, affecting consumer prices and leading to higher food costs. Rising oil prices, rising gas prices, and rising food prices, combined with stagnant economic growth, create the worst possible macroeconomic quadrant. High inflation lagging economic growth is the most challenging environment for policymakers.

In the current situation, sustaining the war will eventually require the extreme printing machine to be turned on. However, with the labor market stable and inflation rising, central banks will likely keep rates stable for now. But in a scenario of extreme war escalation—where US troops hit the field and Gulf nations join the fight against Iran—I believe the ECB and FED will have no other option but to hike rates.

This macro backdrop is the biggest reason why Gold has likely bottomed. In a world characterized by a bifurcation from the US, currency instability, geopolitical chaos, rising inflation, and lagging growth, Gold is historically the only asset that offers true protection. Even if economic growth ends up exceeding expectations thanks to AI, commodities will continue to be a very solid instrument to hold. Bitcoin is also perfectly positioned here, particularly if the money printing machine gets turned back on.

But enough of war. Technology keeps bubbling

But moving away from the war, there are major shifts happening in the crypto space. We are seeing signs of a probable Clarity Act approval, and the initial reactions have driven CRCL and COIN down by 20% to 10%. The likely approval of this act will dismantle the reward system that previously allowed Coinbase and other exchanges to offer yield on their stablecoin holdings in the form of rewards. As soon as this bill passes, those incentive programs will end. This will reduce the incentives an exchange can provide to stablecoin holders, and the apparent banking win on this topic is what dumped CRCL and COIN.

At the same time, Tether is finalizing a massive US audit to compete directly within US jurisdiction. This increased competitive pressure pushed Circle down even further than Coinbase. However, while Coinbase is the real loser of this act, they still have customers who are there for the rewards and will eventually end up doing other stuff on the platform. They will simply lose their power to use reward incentives to attract new customers. Circle, on the other hand, will actually win by absorbing more revenue from interest rates. The ongoing war is indirectly helping them by keeping those rates high. The fundamentals for Circle haven’t deteriorated compared to three days ago; if you were a buyer of CRCL three days ago, at 25% discount you are a euphoric buyer now.

Beyond stablecoins, privacy remains the primary feature demanded by institutions, as transparent blockchains hurt their need for confidential work. The Solana Foundation is attacking this by presenting enterprise privacy features—allowing encrypted balances, zero-knowledge anonymity, and multiparty confidential computing. All of this is being done on layer-1 with built-in compliance at every level. This directly attacks the only edge that Canton had over Solana. With Solana taking the lead, I expect Ethereum and hyperliquid to follow suit. These public blockchains will soon commoditize any privacy features that private layer one options offer, lowering their competitors’ selling points.

Through all this volatility, the smart money is moving. Strategy keeps buying, Bitmine is also buying, and new funds have raised a lot of capital, liquidity is there ready to “eventually” be deploy. We are entering a convergent world of AI and Crypto. AI privacy is being unleashed through crypto projects like Venice, and agentic micro-payments are becoming possible with systems built on crypto rails like x402. We are also seeing new decentralized computing systems running AI, such as TAO.

While the token markets might be in a clear bear phase in terms of price performance and volume, the underlying business economics in crypto remain steady. For many great crypto businesses, uncorrelated with altcoin trading, the economics are actually very strong. Building on this momentum, I will soon write my thesis on a new project where we’ve just finalized an investment and keep piling in—one where I believe the fundamentals justify every single penny.

This is intended to be a thought exercise, and not financial advice. Reach out for open discussions

Thanks, Joao

It stems from uncertainty about the current state of the Iran war. Recently, Trump announced a probable “de-escalation” after all US objectives were achieved, noting that defending the Strait of Hormuz is not America’s purpose or mandate—other nations must protect it. However, Treasury Secretary Bessent mentioned that, among other things, the administration will keep oil prices down as they continue Operation Epic Fury.

Analyzing these two types of communication, one gets the sense that the US isn’t getting the help it wants in the Strait, so they are strategically “removing” their protection to force others to ask for it. This essentially corners other nations, particularly Gulf nations and NATO, into getting involved. Gulf nations and Europe are desperate to open the Strait—it is a true emergency—but protecting it means military involvement, and involvement means escalation.

Because of this, the next moves by these nations are highly uncertain. If the US pulls out, will Iran open the Strait and allow vessels to continue floating? Will the US even allow that? Gulf nations didn’t want this war—Israel wanted it, and they got it. Now, Gulf nations are being struck and finding their own economies harmed with no direct cause.

Unsurprisingly, the bond market is reflecting this chaos; the MOVE index is agreeing. Seeing this correlation after the recent Fed meeting, we have to discount some potential background noise. But the trend of rising volatility has not only been clear on the MOVE index since the war started, but it is also being mirrored in the VIX.

Despite this rising volatility, the anticipated move to risk-off assets hasn’t fully materialized; a rotation to hedge assets, particularly gold, hasn’t started. It remains unclear if this is a localized geopolitical crisis or if it represents a widespread contagion that will lead investors to dump risk-on assets. So far, strangely, gold has been down just like any other risk-on asset.

The real driver behind these market anomalies is China. In a world where the Asia-Pacific region is buying discounted, high-quality Iranian oil at a key inflection point of the changing world order, I don’t believe the US will back off. The US won’t allow Iranian deals to be done outside their system, nor will they allow all that oil supply to be absorbed by the same competitor nations. The US needs a strong Europe—Europe is not a threat. China is. This is especially true when oil is being sold at huge discounts to America’s direct competitor.

Building on this dynamic, there are two major caveats to consider regarding US strategy. First, Bessent recently mentioned in a tweet that the US aims to “bring around 440m additional barrels of oil to the global markets, undercutting Iran’s ability to leverage its disruptions in the Strait of Hormuz.” He specifically highlighted a short-term goal to bring 140m barrels of Iranian oil, currently stranded at sea, onto the open financial system. This clearly shows the strategic direction of their oil goals.

Conventional wisdom suggests that expensive oil is good for America, given they are a net exporter. However, there are three reasons why this is currently false: 1. The US aims to aggressively expand AI development, bring massive manufacturing onshore, and create a new tech boom. That requires a massive supply of cheap energy, which may not be supported by their own supply alone. 2. China—their major competitor—is buying oil at unfair, discounted prices and growing like crazy. 3. Russia is a massive net-exporter of oil, and higher prices mean higher revenue for them.

Consequently, the US is ready to take a hit on its own oil revenue if it means vampirizing the revenue of its adversaries. At this stage, controlling the growth of competitors is much more important for the US empire than growing its own direct profits. By bringing stranded Iranian oil supply onto the open market, they can directly dump the price of oil substantially and track China’s growth based on their consumption.

The second caveat is that the Iran war isn’t over, and Trump is already raising alarms about a probable “friendly takeover” of Cuba.

The geopolitical world is starving for information, making tracking the MOVE index vital to understanding shifting risk. However, it is not entirely clear how directly correlated the price of Bitcoin (BTC) is to the MOVE index right now. What we can note is that drastic spikes in the MOVE—specifically those sending it above 120 and toward 150—create high pressure on risk-on assets and tend to dump BTC. Usually, a V-shape recovery happens as soon as BTC transitions from trading as a risk-on asset to a risk-off hedge.

Historically, MOVE has traded in an 80–150 range for long periods. During these times, BTC has moved both directionally down and up, meaning you can’t simply draw a straight line saying ‘MOVE up equals BTC down.’ But we can confidently say that a rapid spike to 150 could create a short-term, aggressive downward move for BTC that recovers rapidly. Positioning ourselves for this potential ‘black swan’ dip is key to unlocking massive opportunities.

Interestingly, despite these potential short-term drops, BTC has been trading incredibly well during wartime. In scenarios where gold and equities are down, Bitcoin is up. In a world where conflicts with China signal a changing global order—and a changing asset order—Bitcoin is proving to be a genuinely effective hedge.

Bitcoin isn’t the only crypto asset proving its fundamental value right now; Hyperliquid (HYPE) is doing the same. Hyperliquid has arguably become the most promising project in the space. To borrow from Philip A. Fisher’s stock categorization, there are companies that are ‘fortunate and able’ and those that are ‘fortunate because they are able.’ The Hyperliquid team has proven they fall into the latter category. They consistently demonstrate the ability to ship new products, hire sophisticated talent, and onboard the high-quality users required for any product they launch. Their earnings directly reflect this. Starting as a crypto-only perp trading machine, they are expanding into all sorts of asset classes, slowly but surely eating into the market share of both centralized crypto competitors and traditional exchanges.

A prime example of this growth is their HIP-3 markets, which currently present one of the most bullish charts ever invented. I remember analyzing how HIP-3 was created back on October 13th, wondering how it could successfully move tokenized versions of traditional assets on-chain, and asking: who would use this venue over others? On that day, hype on the news pushed the token from $38 to $42, before quickly dumping to almost $20.

Fast forward to today, and HYPE is trading around that same October 13th price level. However, the fundamentals have exploded: just on the HIP-3 markets alone, it now boasts $1.6B in total open interest and $1.5B to $4B in daily weekday volume, all achieved in roughly five months.

These HIP-3 markets are rapidly capturing crypto market share, now representing roughly 35% of the total and growing consistently.

Financially, the protocol is generating between $1.5M and $2M a day in revenue, using the majority of that to buy back the token. This equates to $500M to $750M in annual buybacks. For a project with a $9B market cap, it’s trading at a highly attractive 12 to 16 times sales with a buyback yield of 5% to 8%.

Ultimately, HYPE is not just a value accrual mechanism for the exchange; it is functionally designed to provision new markets for the protocol. Using HYPE as a utility token allows participants to create, vote on, and participate in new products within the ecosystem. This unique approach substantially increases the incentive for institutions using the venue to hold the token to enforce their wants and needs. Validating this institutional interest, S&P Dow Jones, in partnership with TradeXYZ, recently launched their first S&P 500 perpetual contract exclusively on Hyperliquid. This cements the real-world use case for the platform and highlights exactly where the smart money is heading in this shifting macroeconomic landscape.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

We have all heard Trump and his administration announce that the war is almost done. Yet, we see massive swings in OIL prices, dominated by further headlines and strike threats from both sides.

Trump threatened to strike oil infrastructure on Kharg Island—after already striking Iranian military assets there—as a warning signal that if Iran doesn’t open the Strait, the US will strike critical oil. Any destruction of this infrastructure would take years to rebuild, leaving the country deprived of its most critical source of revenue. Kharg Island produces 90% of total Iranian oil, meaning any destruction here will have massive consequences.

Iran, on the other hand, threatens to escalate by attacking Qatar, Saudi Arabia, and UAE energy infrastructure, having already struck the UAE port of Fujairah on Monday. Their justification is always that “US military forces are present and hiding among civilian facilities.” Iran consistently highlights that they aim to attack the US, not their Middle Eastern neighbors. In practice, however, these neighboring nations are the ones under attack. Today, Iran threatened to strike energy assets in Qatar, Saudi Arabia, and the UAE, emphasizing that these are “legitimate targets” following the Israeli strike on the massive South Pars gas field and the assassination of Iranian security chief Ali Larijani.

These instabilities pressure oil prices to fluctuate aggressively. Even knowing that the long-term directional trend for OIL price is down, the short-term and near-term direction remains highly uncertain.

We are already seeing the macroeconomic effects of this uncertainty. Today, PPI MoM came in above expectations. While the forecast expected a value below the previous number, it came in well above the prior reading: 0.7% compared to the 0.3% forecast and 0.5% prior. These are the first tangible signs of the impact of rising oil prices.

This aggressive deviation dumped today’s market on the open. The market is in fear, but it is within these pendulum swings that we find the best bargains.

This remains true even when long-term investors are ignoring this war, and despite oil shocks impacting long-term inflation while TIPS premiums sit at historical lows.

It was exactly on this playbook that we traded KOSPI. In previous letters, we correctly picked the bottom on KOSPI; as the war fades over time, KOSPI will aggressively V-shape recover. I still agree with this trade. Even though I am aware tomorrow’s reaction could be volatile (down), any swing will flush out a bunch of leveraged exposure and create aggressive dips—beautiful dips to buy. KOSPI is up +17% from the bottom and only down -6.6% from the highs. It is certainly a great market to watch.

Paired with this market, we have the UAE, which is being penalized by this conflict. In particular, real estate assets are taking a hit. Take EMAAR, the biggest tradable stock that captures the majority of Dubai’s real estate performance. It is down aggressively, even though we all know Dubai has been the most euphoric real estate market of the past five years, with impressive momentum attracting an influx of buyers. EMAAR is currently down -38% from the highs, experiencing its highest drawdown since the COVID shock in 2020.

Despite this drawdown, the sentiment on the ground remains very optimistic. People believe the government is able to protect them. However, those who have a second home are now leaving; flights to or through Dubai are being canceled, and the population has reduced significantly.

For Dubai to actually lose its moat, I believe something much bigger has to happen. People continue blaming the US and Trump for this Iranian escalation, and with the UAE staying out of the war, the sense of protection remains intact. In fact, post-war, with a more stable Middle East and a stable Iran offering better protection, there is a scenario where the region ends up stronger than it was pre-war. This could leave Dubai growing faster and more resilient than ever before. Their land is not being aggressively threatened, and as long as it stays this way, I don’t see a long-term problem. Markets are reacting like a pendulum, and this dip is a massive bargain.

The War Framework

However, my goal in this letter is not simply to talk about previous trades or untrades. It is to provide a clear framework—one that I will later detail in a standalone post—on how to navigate the war. This framework gives us clarity when we receive alerts about Iran headlines, showing us how to manage exposure to predictable black swans and how to read the news efficiently.

Here is the framework I believe in and have been using to judge headlines and their impact on open markets.

There are three major conflict drivers that sustain this war at the top level. These are the underlying principles for every military action in this conflict: Oil/Energy facilities, the Strait of Hormuz chokepoint, and US defense alliances. Based on these three drivers, each nation acts to escalate or de-escalate the war. Every action eventually ties back to one of these three critical pillars, and each headline is directly related to them as well.

These three major drivers do not carry the same global weight. Some create localized problems where further decisions are required to escalate things, while others have direct, aggressive, and highly robust consequences. The most critical and sensitive areas are related to oil facilities—where any destruction could lead to a long-term supply constraint requiring years to rebuild—and the Strait of Hormuz. The Strait sustains all of the Asia Pacific; without it functioning, all Asian and Gulf nations are smoked and will be forced to get involved, drastically escalating the war.

The less globally destructive, but highly decision-driven escalation path involves US defense alliances. These pacts force the US to defend Gulf nations, Israel, and other allies, dragging them into the conflict even if they don’t want to be. If Iran strikes US allies, the US will show its power by protecting them and fighting back. We live in a US-Empire world, and they have to protect that empire by defending their alliances and projecting strength. However, as Ray Dalio highlights, this is also the fastest way for nations to “go broke.” An increase in military and defense budgets leads to an increase in debt, making nations less financially sustainable and riskier in the credit cycle (this is the core thesis on why BTC and GOLD are strong long-term assets to hold).

By taking a deep look at this framework and applying the latest headlines to it, we can predict further black swans if the escalation continues. Are we walking a tightrope.

Current headlines are impacting critical areas that could, with significant probability, end up damaging oil market dynamics. These threats will consequently add a risk premium to every barrel that has to cross the Strait in the future (HSBC analyst warned), making oil more expensive due to post-war insurance premiums on carriers. The US can actually be a beneficiary here. Their Texas oil (WTI) doesn’t cross the Strait, meaning it will carry a lower risk premium and become even cheaper than BRENT post-war. WTI could trade at a higher discount compared to pre-war levels, and we are already seeing signs of this.

Ultimately, each decision to escalate or de-escalate the war has direct consequences on the supply and demand of OIL. This is the main reason why oil is fluctuating so much, driven by algorithms pricing in these micro-market dynamics.

The latest shocks are fundamentally about the quantity of oil available to be bought. When we talk about sanctioned oil, still affecting global oil price. Europe and North America weren’t buying oil from Iran, but Asia was. If Asian nations are no longer able to buy from Iran, that demand has to go somewhere else. They will pressure the market and compete to buy at higher prices from other providers.

Russia is a clear winner here, Russia wants the war to keep going, that’s why they are helping Iran. Because they have a lot of oil to extract and sell, the world will be forced to buy from them, even though they are a sanctioned nation. We have already the first signs of this possibility, G7 start buying oil that was already on the water, but soon we will be buying oil directly from Russian soil. If we don’t, we will simply push oil prices higher for all, and/or China and other Asian nations will buy it instead.

Two key highlights emerge from this dynamic: the supply and demand for oil are relatively inelastic. You can’t change the amount of oil on the market overnight, even if higher prices create strong incentives to refine and open new markets. Similarly, demand won’t drop overnight, as households, transportation, and industries must continue operating daily. We have to view these events through the lens of world supply and demand, where the majority of ships are currently on the water, trading and changing directions frequently.

In a world where Asian consumption was being absorbed by Iranian oil, the loss of the Strait or the Iranian market represents a massive shock. This consumption is no longer being absorbed, shocking global markets by forcing a massive buyer to aggressively compete for available oil.

Without Iran, oil prices will increase for a long period until the rest of the world can bring new refineries online. Any strike from US to Iran oil infrastructure will have this massive impact.

The exact slope of the curves here is irrelevant; as long as the marginal consumption from Asia is higher than the marginal supply from Iran, we are directionally right. This being said, in a post-war scenario with clean, unsanctioned Iranian oil, we will probably end up with a higher equilibrium oil price. This dynamic is enforced by pushing Iranian oil supply into the open market, and adding a massive buyer (Asia) that shows its purchasing power. This pushes the price higher for the rest of the world, but especially for Asia, which previously bought sanctioned Iranian oil at huge discounts.

Following this logic, it is predictable that oil prices will spike as we eliminate Iranian supply. But as soon as the situation is resolved and Iranian oil is ‘clean,’ prices will drop from their shock peaks—though they will remain higher than previous baseline levels. As a result, miners in the US, Europe, and Africa will generate more revenue than in pre-war scenarios, based on these elevated prices.

If Iranian oil remains sanctioned post-war, we will likely see marginal upward pressure on prices from Asia as they are forced into buyer diversification. But still settle lower compared to if the entire market opens up and trades freely. For now, Asia will likely keep benefiting from discounted Iranian oil, choosing to deal with any geopolitical blowback later on.

Building on this recent volatility, there will be intense pressure to increase global strategic stockpiling. Nations will be forced to hold greater quantities of OIL to buffer against any future supply shocks. Consequently, this preemptive hoarding will likely increase baseline demand for OIL, driving the natural equilibrium price higher.

This creates a very compelling thesis to watch oil miners carefully. As soon as the market starts pricing them down when oil prices begin to collapse, opportunities will arise. I expect that when oil prices start coming down, traders will short or sell their holdings in miners. However, higher demand for oil, and higher long-term oil price, and subsequent above expectation earnings results will create positive shocks and unlock the real value of holding these stocks. So far, they have performed quite well under these Iran-war scenarios.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

“Be fearful when others are greedy; be greedy when others are fearful.” This iconic phrase by Warren Buffett is the defining principle of our current moment.

[Brief in podcast format]

We are in a state of peak fear: fear of AI labor disruption, fear of white-collar displacement, and fear of a 2008-style insolvency crisis driven by banking loan defaults and mounting bad debt. As low-risk white-collar debt transforms into max-risk liabilities, credit lines are tightening under extreme conditions. Between overvalued equities, massive government debt, and a looming “fiat holocaust,” the market is bracing for impact. Geopolitics only adds fuel to the fire; the conflict with Iran and its direct effect on oil prices correlates with global instability and rising inflation. This combination has decimated the stock market—first through the IGV, the ‘Saaspocalypse,’ and second through the surge of oil toward $120, pushing gasoline costs and CPI expectations higher.

But it is precisely because we are at peak fear that we should be buying.

While the attempt to be a perpetual contrarian is often a fallacy—since momentum is usually where the easy money is made—the rules change at the edges of the pendulum. The best companies in a sector usually drive performance, and trying to catch a “convergence trade” with second-tier players is harder. However, when we hit the extremities of max fear or max euphoria, an inflection point becomes highly probable. In these moments, betting on mean reversion rather than momentum offers better odds of success and significantly lower risk.

This is why I must invoke Charlie Munger: “Invert, always invert.” When the world is clearly fearful, I am inclined toward euphoria—to buy with both hands rather than neglect the possibility of a relief rally.

Consider the first-order derivative of the current situation. The market has aggressively discounted the ‘Saaspocalypse,’ yet a clear distinction is emerging between three types of SaaS companies: those that price by seat, those that price by input, and those that price by output. This differentiation divides the sector into buckets predetermined by pricing models and user control. It is now evident that with the advent of AI, companies pricing by seat have lost their moats; a new front-end login does not create an incremental backend cost for the provider, rendering the “per seat” charge obsolete. Conversely, companies pricing by output will charge based on the actual impact delivered to the client. These companies will maintain higher moats, especially when integrated with input systems where they control the data. By combining deterministic/proprietary data with the ability to price the interconnection between client requests and aggregated data, these companies become far more efficient with AI. For this specific SaaS bucket, the new wave unlocks extreme value and superior economic incentives.

There is relief not only in the SaaS sector but also in the perceived AI impact on white-collar labor. After initial testing, developers and managers are feeling the incremental costs of AI implementation; a dev or manager with AI is often a higher-cost employee than one without it. Because limitations are required to prevent companies from burning through capital, I expect these incremental costs to hit news headlines in the coming quarters. It is becoming clearer that white-collar displacement is not the immediate threat many feared, even with approx. -100,000 job listings reported in the US and unemployment exceeding expectations. The question is: are these conditions truly driven by AI, or is this a normal cycle?

My inclination is that this is a normal cycle. AI will displace some, but it will hire others, ultimately providing the incentive for the printing machines to stay on. Because the market is already pricing in the worst-case scenario, there is little room for further downside. When the “worst” is already priced, the median scenario after the “worst” being true becomes a positive surprise.

The market is currently swinging through a max-fear pendulum. Having already been shaken by AI and labor conditions, investors are now projecting that same fear onto the conflict with Iran. Oil prices reacted surprisingly during the weekend, largely because the absence of sophisticated players allowed fear to dictate the flow.

A spike toward $120 is only a “macro nightmare” if it sustains for weeks, creating inflationary pressure that forces quantitative tightening (QT) and crushes risk-on assets.

However, the market often reacts euphorically to the resolution of a worst-case scenario. When the Strait of Hormuz—the world’s most critical checkpoint—remained functional despite the tension, the correction of oil back below $100 provided massive sentiment relief.

Asian markets reacted aggressively to this unwind: the KOSPI fell over 20% from peak to bottom, Japan dropped 13%, and Europe and the UAE fell 10% and 16% respectively. This correction moved quickly to price in the close of the Strait, predicting “oil at $120” nightmare. Now, any relief prints massive performance for traders. Any shift in expectations away from the absolute worst-case scenario forces the market to reprice aggressively to the upside.

Recent news suggests a shift in the geopolitical landscape. The Iranian regime may not change, but it remain question is if they will adapt. With the US and Trump-aligned interests suggesting the immediate escalation is cooling—and measuring by the specific quantity of missiles sent from Iran; forcing the the Iran weakness—it appears the war may not broaden. Key players like the UAE, Saudi Arabia, and Qatar have not escalated. Even reports of Iran deploying naval mines (with an arsenal of 2,000 to 6,000 available) failed to keep oil prices elevated after American forces neutralized several minelayers.

If war escalation and its impact on oil were not already priced in, they are now. Any further relief will send markets to new highs. In an environment of conflict and softening labor markets, the only solution is to print money. While war is inflationary, the stimulus required to build arsenals, ships, and interceptors costs billions. As nations in Europe, Asia, and the US pressure their budgets to increase defense spending, we will see further fiat depreciation and government debt expansion. This environment sends risk-on assets high.

Admittedly, the biggest threat remains: if oil stays above $100 for an extended period, the inflationary pressure will force a reduction in monetary stimulus. However, with the G7 releasing 400 million barrels from reserves to mitigate supply shocks, the probability of a controlled ceiling is high.

This brings us to the KOSPI trade. Following the weekend news regarding the Strait of Hormuz, the KOSPI dumped to $5,100 before recovering slightly to $5,250. While the -10% swing was jarring, the market has already discounted the oil problem. Furthermore, Lee Jae-myung has moved to block the exponential effect of oil on the internal economy by limiting fuel growth to 5% a week (move that many other nations followed). With a potential 100 trillion won stabilization package and central bank intervention on the horizon, the “market holocaust” is being held at bay. The leverage is back on.

In terms of risk-reward, betting on a collapse here is widely asymmetric compared to betting on a long. We are looking at a potential 20% recovery versus a 10% downside. If the KOSPI hits the $4,800 “worst-case” level, it becomes a generational opportunity. Korean earnings are growing, equities are healthy, and a V-shape recovery would likely be triggered by margin calls and subsequent government stimulus.

As oil settles back below $100, Bitcoin is once again positioning itself as the premier investable asset. The macro conditions are aligning perfectly with our vision: Gold up, Bitcoin up, Fiat down, debt up. High-quality SaaS and crypto-first companies are entering the best possible conditions for growth.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

Oil prices are now at $90ish. Where the majority of the market didn’t expect the war to escalate this much, it is clear that the situation is intensifying under Trump’s “fire,” with B-2 bombers having dropped dozens of bunker-busting “penetrator” bombs to destroy the regime’s crucial infrastructure. Trump is warning that there will be “no deal” except under “unconditional surrender,” aiming for a policy of “MIGA”—Make Iran Great Again.

This military escalation has triggered a surge in political volatility. The war in the Middle East is claiming not only higher volatility in oil and geopolitical instability but also heightened China-US tension. China has effectively lost control over Iran and its supply of cheap oil; in the event of a total regime collapse, their ability to source discounted, sanctioned oil—which they have relied on for years—is under direct threat. China has remained relatively quiet because they are in a bind: if they defend the US, they betray their allies; if they defend their allies, they go against the world, selling weapons on one side while buying oil on the other.

Historically, in times of war, nations involved but without a direct land threat tend to grow their economies substantially. The clearest examples are WWI and WWII, which facilitated the massive expansion of the US relative to Europe. While nothing of that exact scale is happening yet, the US is emerging as a clear winner in this conflict.

Conversely, the rest of Asia, including China and the UAE, stand as the biggest losers. As missiles and drones spread across the Gulf and target various Middle Eastern countries, the resulting tension has caused a collapse in flight traffic and pressured business interests to flee. China, which was highly dependent on Venezuela and Iran, is now watching its two biggest dictatorial allies face death or imprisonment. Xi is losing his grip on global control; it is only a matter of time before the Chinese economy feels the full weight of this pain.

The timeline is tactically perfect: Trump and Xi are set to talk in late March, and by gaining leverage through these regional collapses, Trump ensures Xi is unable to bargain from a position of strength. The goal is likely to seize control of Iran to further leverage negotiations—first Venezuela, now Iran.

I believe this is a mission to contain China—a mission being executed by the intelligence community rather than just the president. Regardless of who was in office at this exact moment, this war was likely inevitable given the current conditions; Trump simply created the “political marketing” and the tactical conditions to accelerate it.

This shift was foreshadowed in September 2024, when the UAE was designated a US Major Defense Partner—the highest tier of defense relationship. With an annual defense budget of approximately $22.8 billion, the UAE was clearly expecting an attack even when the rest of the market was not. Their defense systems have now proven their worth with over 95% efficiency, yet even a small error rate causes significant damage on the soil and instills fear in the civilian population.

Despite the apparent normalization of life in the ground—with restaurants full and malls packed—the UAE is under clear threat. While the general public maintains a routine, the “smart money”—the millionaires and billionaires—are increasingly concerned about their safety. Billionaire Khalaf Ahmad Al Habtoor was the first to publicly voice these concerns against “Operation Epic Fury.” Consequently, the volume of business flights into Oman has climbed, serving as a reliable proxy for the capital flight occurring in the Middle East.

The UAE economy is highly dependent on expats. The shift from an oil-based to a non-oil economy, especially in Dubai, is driven by its reputation as a “safe haven”—the Switzerland of the Middle East. The UAE has aggregated more than 240,000 millionaires and dozens of billionaires, with huge hedge funds moving in from the UK. However, this capital is not guaranteed; it stays for two reasons: 0% tax and safety. If either criterion is compromised, the decline will be swift.

When there are losers, there are winners. Predicting who wins is often less risky and more profitable than predicting who loses.

The wealthy individuals fleeing Europe, the UK, Asia and US are not going back to their countries; they are searching for a new solution that accommodates their needs. The clear answer is not Switzerland or Monaco, nor is it Miami. The answer is Singapore. Singapore has proven itself as a “safe haven”, a tech first country, and tax-free or very low tax for most use cases. While it is more bureaucratic and is currently tightening its policies, it remains the most competitive destination aligned with the vision of the global elite.

Economically, Singapore’s ports and airports are set to grow substantially as businesses diversify away from the Middle East. The disruption at Dubai’s airport will be top-of-mind for many companies, positioning Singapore as the ultimate solution for capital and goods.

At this stage, there appears to be no solution other than regime change in Iran. While the fall may not be immediate, it is inevitable. Polymarket is currently pricing the probability of a regime collapse by year-end at 51%.

This massive piece of land has created consecutive disruptions in oil and the Strait of Hormuz while its population lives in poverty. Iran has become a threat to the US agenda by fueling its biggest competitor, China. By attacking its Gulf neighbors, Iran committed a predictable suicide; Middle Eastern countries are incensed as Iran’s drones directly threaten their economies.

While the immediate reaction should have been retaliation, the US intelligence community, in partnership with the UAE, predicted this outcome and strategically positioned themselves. Polymarket odds for a massive retaliation jumped to 75% on the initial strike news but have since settled to 25%, suggesting that a direct, all-out fireworks display is not the most likely scenario.

However, war and volatility always provide opportunities. If an attack does occur, these nations—UAE, Saudi Arabia, and Qatar—will likely strike together given how interconnected their economies are, GCC and OPEC frameworks. Their mission is the same: peace in the Gulf and the Strait. Strength the middle east economy and unlock extreme wealth for all. But if I had to bet, I would bet on “no fireworks” for now.

Two days after the worst day in its history, the KOSPI is up +10% from its local bottom. This pullback is an “after-storm” relief, but this weekend will be crucial. We must see the Strait of Hormuz open; otherwise, further collapse is expected for Korean markets next week. The binary option is clear: if a deal happens this weekend to control the flow of oil, it is positive for KOSPI. If not, we likely see the KOSPI under $5,000 next week. It is not a -1/+1% move; it is a -10/+10% move. My inclination is that no deal happens.

This geopolitical shift aligns deeply with my major thesis for a significant Bitcoin and crypto boom in 2026. The Korean market is huge for crypto and is populated by “tech-optimistic degens.” Retail traders and firms there love leverage. With their native stock market constrained by oil problems, they will move their attention to hyper-liquid markets like Bitcoin.

The easing cycle in the US, combined with unemployment exceeding last expectations and the cost of war, will force the “printing machine” back on. As Trump said, there is an “infinite” missile supply, and war makes it easy to justify printing. I believe the forces pushing for an easing cycle this year will be much stronger than the market expects.

While the rush to Gold was the story of 2025, Bitcoin is increasingly viewed as the reserve asset for the next phase. Bitcoin lost 70% of its value against Gold in 2025; even a 50% “mean reversion” would see Bitcoin double against Gold. In predictable situation of both assets going up, is likely that bitcoin will have to triple to converge to the mean.

Bitcoin is down 8% over the last two days, sitting at $68k. This volatility offers a prime entry point to accumulate. (NFA, always). For those looking for high-leverage exposure to volatility, the BTC-120K-25DEC26-CALLs are currently at an attractive entry price.

All eyes are on geopolitical tensions and geopolitical trades. In a world of hyper-trading, hyper-financialization, and hyper-speculation, volatility and trading volumes continue to grow overall—and HIP-3 volumes are growing right along with them. In the world of distribution, where whoever controls the channel wins the premium, Robinhood worth 50% more than Nasdaq.

Applying this logic to crypto, I’ve been thinking about who truly owns the distribution. I end up, once again, looking at Hyperliquid. However, Hyperliquid doesn’t just own the distribution; it also owns the infrastructure and the liquidity, aggregating all markets in an unprecedented fashion. Pump.fun is capturing the distribution in a similar way: they started with token issuance, moved to creating the liquidity layer, and now own the frontend platform, controling the full stack. They are currently shifting from a meme-first platform to an all-token trading platform, leveraging the two most valuable assets in this space: distribution and liquidity.

While both companies are aligned with this mission, they trade at completely different multiples.

This shift suggests that DEX aggregators—the routers of these trades—will likely become more valuable than the DEXs themselves because they ultimately own the customer relationship. Meanwhile, traditional DEXs are being squeezed by the pressure to create lower-fee pools; as they grow, they consistently erode their own path to monetization, especially in a world of proprietary AMMs.

This is not to say DEXs will disappear. On the contrary, they will remain highly valued and crucial. A combination of both AMMs and proprietary AMM systems is necessary to unify liquidity and create predictable outcomes during black swan events. While that is a topic for another article, the continuous risk posed by the lack of deep DeFi liquidity in our open economy is massive. October 10 proved that we aren’t just looking at a “Binance problem,” but a systemic vulnerability within the very DeFi structures we value most.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

Today marks the worst day in the history of the KOSPI. With the index down -12.06% in a single day, we have entered uncharted territory. The only comparable precedent was September 12, 2001, when the KOSPI sank -12.02% in the immediate aftermath of the 9/11 attacks. On that day, Korean markets reacted aggressively as the first major exchange to open following the tragedy in the U.S. By eclipsing that record today, March 4, 2026, officially becomes the darkest day in the history of the Korean market.

This collapse is driven by a singular, overwhelming headline: oil supply constraints FEAR. Korea’s dependency on crude passing through the Strait of Hormuz is absolute, with more than 70% of all imports relying on that narrow passage. With Iran now exerting control and threatening the Strait, the market has reacted with pure aggression to the headlines.

However, this volatility is not solely a consequence of geopolitical tension; it is also a byproduct of the market’s internal microstructure. As I highlighted in previous letters, the Korean market was already on an euphoric, over-extended path. This created a “predictable black swan” (as I like to call it) scenario where even a minor disruption could cause a total bust. The energy crisis and the closure of the Strait acted as the catalyst to dump the market and liquidate retail leverage. This “flush” has decimated the index and AI stocks alike under the threat of a prolonged crude shortage.

We must remember the euphoria of February to understand the scale of this reversal. The KOSPI was in the midst of aggressive bull momentum, boasting a 1-year performance of +118% and a YTD return of +30%, with equity flows at historical all-time highs.

The majority of these flows were concentrated in two frontier AI companies: Samsung and SK Hynix. Since the conflict began, both have plummeted more than -21% in high correlation —confirming systemic risk.

Understanding this “house of cards” explains why the market is down, but it also suggests why we might see a V-shaped recovery. I suspect a rebound will trigger as soon as the Trump administration stabilizes the Strait of Hormuz conflict. Resolving the insurance issues for crude carriers and ensuring safe passage through the Gulf is now a matter of global urgency. Secretary Bessent has already signaled that the issue will be addressed over the weekend, and Trump has alerted the markets that ships will move.

This pressure is not coming from the West alone. The Chinese economy depends heavily on crude crossing the Strait. While I previously thought this could escalate U.S.-China tensions, I now believe that if China continues to let the Strait remain blocked, it will sink Asian economies while the West stabilizes and the U.S. dollar strengthens. China will likely be the first to pressure Iran to surrender, facilitating a deal with the U.S. to secure its own oil quotas. This convergence of interests—including Middle Eastern nations dependent on the security of their own land—will rapidly erode Iranian leverage.

While markets are currently reacting with massive short-term fear, the physical reality is more stable for three reasons:

1. The estimated travel time for a crude carrier from production to Korea is 30–45 days. 4-days shock causes no real economic problem.

2. Korea maintains one of the most robust strategic energy reserves in the world, with supply secured for several months. Not infinite but at least 7 months secure.

3. An immediate weakened KRW reaction relief right after, no currency depreciation momentum.

Nevertheless, there is a reason Squid Game resonates so deeply here; it reflects a realistic truth about the Korean appetite for speculation. Domestic traders love to push markets to the absolute limit. Those who remember the “Kimchi Premium” know that when Korean traders enter a market, they push speculation to its breaking point. For that reason, rather than buying the dip immediately, I am watching closely. After a 2025 rally bottom-to-peak of +175%, even a -12% daily correction can trigger a deeper liquidation cascade. I can easily see another -15% to -20% drawdown as retail investors wake up to another “flush” and exit to secure remaining profits.

My strategy is to set limit orders below $4,500. I am timing this based on the expectation that if the U.S. cannot immediately control the Strait, the fear will intensify—but the moment the Strait reopens, the V-shape reaction begins. The catalysts to follow are: 1) The reopening of the Strait (an immediate buy signal) and 2) Mean reversion at the point of maximum liquidation fear.

Korea is not the only market suffering under this geopolitical weight; the UAE is also down. There, the concern is that land-based tensions will damage the “wealth-haven” status and tourism that their economy relies on. While I am still researching the full repercussions, the UAE ETF has reached one of its highest single-day volumes—usually a sign of a mean reversion as liquidity is absorbed. I expect the UAE to be prudent, increasing defense to prevent escalation on their soil to protect their economic stability. But still uncertainty on the long-term consequences to their economy and stability —if Iran regime changes, it can be the epic moment for all middle east. Iran is the most problematic country in middle east. US controlling it, will give theoretical peace to the region.

Ultimately, the message from the administration, via Pete Hegseth, is clear: we are only four days into this conflict, but progress is being made. Pete and Trump highlighted the infinite supply of bombs available. This leads us to the biggest potential catalyst for Bitcoin. As Arthur Hayes mentioned in his last report, Middle Eastern wars have historically triggered the same reaction: massive stimulus to hedge economic weakness. The longer the U.S. engages in the costly activity of Iranian “nation-building,” the higher the likelihood the Fed increases the money supply to support the effort.

This “infinite glitch”—the ability to print money to finance the war machine—is the core of our thesis to go long Bitcoin. History bears this out:

• 1990 Gulf War: The FOMC eased policy to counter economic weakening.

• 2001 War on Terror: The Fed accelerated rate cuts to restore confidence, with Alan Greenspan delivering a 50-basis point cut.

• 2009 Afghanistan: Despite rates being at zero, QE was deployed to provide infinite liquidity.

I maintain my thesis. The war machine requires the printing press, and the printing press requires a hard-money hedge.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

Enough of the war news. This letter will be short and concise, highlighting key situations and warning of potential risks.

We all know the US is attacking Iran, using Israel as the front face. Sources show the Iranian regime has consistently used propaganda against US and civil attacks against populism. While Trump used the “liberation of civilians” as a justification—a noble promise on the surface—this would not be happening if the US didn’t need more oil, or if China weren’t the primary buyer of Iranian crude. The critical tension between the US’s need for oil and China’s control of the Iranian stockpile is the most important variable in this attack.

The problem is that Trump expected a “Venezuela-type” result: kill the leader and the regime collapses. That didn’t happen, and it won’t. Instead, US bases across the Middle East—in Dubai, Abu Dhabi, Saudi Arabia, and Kuwait—are now under fire. Iran is escalating further by striking British bases in Cyprus. This escalation is real; with Polymarket pricing the end of the war by April 30, we are looking at least two more months of conflict across the region.

This shift from a periodic shock to a multi-week war of attrition increases the risk for both sides. They will fight until their arsenals are vaporized. As with all wars, deficits will go through the roof. Because the US is not in a healthy debt situation, US Bond risk is rising, putting upward pressure on rates and interest spending. To restock the arsenal spent on the Iran war, the administration will have to increase the deficit, forcing reserve assets price to adjust accordingly. This is especially true for Bitcoin, where energy costs are directly correlated with production price, and price is correlated with debt expansion.

Iran would be a “nothing burger” if they didn’t have oil and the Strait of Hormuz—the most important strait in the world, where 20% of all natural gas and oil flows. China has been clear: they support Iran economically because they need that oil, but they aren’t going to provide military support (in my perspective … yet. Depending how far can it go). The danger is if China feels it is an emergency for them to control Iran oil because the US cannot. If US block the China oil buyout programs in all over the world (first Venezuela, now Iran, next Cuba). There is no other option than China fights with “big arms.” It is a low-probability event, but if it happens, we are looking at World War 3.

In the short term, I expect most traders to view this as a Ukraine-type war, where Bitcoin lost -46% during a +44% oil spike. However, I am looking closely at the 2011 Libyan civil war, where oil spiked from $85 to $114 and Bitcoin jumped from $0.80 to $31. This conflict is more closely related to that Middle Eastern dynamic than to Ukraine. Bitcoin’s refusal to dump on the initial news gives me confidence in the “risk-off debt spiral” simulation, which pushes Bitcoin to new highs. The morning reaction—a +5% swing in Bitcoin alongside a +5% oil increase—supports this. I’m long bitcoin on this event.

Within this tension, there are two specific topics I am studying that will provide guidelines for future opportunities and problems: the use of AI on the battlefield, and the first real attack on the Middle East since it became a global growth hub.

Regarding AI, the administration has reportedly been using Claude LLM to run war simulations and build out strategies. Sources mention that the successful capture of Maduro was made possible by Claude’s reasoning capabilities. This Iranian conflict is the first “clear war” to use AI for intelligence support, matching one of my 12 predictions for 2026 and the catalyst problem I highlighted in my AI thesis.

This suggests that the Department of Defense will scale its use of AI infrastructure originally intended for enterprises and civilians. In an emergency, the Pentagon’s needs supersede those of the public. A war simulation with a 10-million-token budget is more important than 100,000 customers asking for weight loss tips or dating advice. This shift in task relevancy recently pushed Claude’s servers to the brink, compounded by direct attacks on AWS datacenters in Dubai

I can say with high confidence that the Pentagon still has priority access to Claude, as it is a matter of national emergency to keep this “super-intelligence” working. Consequently, more datacenters must be built on US soil. As compute is pivoted to support national security, the cost of running civilian AI applications will face even more pressure.

Beyond the technology, I am concerned about the growth of the Middle Eastern economy. Major growth hubs—Dubai, Abu Dhabi, Saudi Arabia, Kuwait—are being bombed. This will stay at the top of people’s minds when they consider developing or living there. I have friends who are scared to death, watching US military evacuations and hearing bombs near airports, hotels, and datacenters. This creates massive friction for a growing economy.

UAE ETFs are already down 8% in a week, dropping more than 5% today alone. With no flights in or out of the region, a sense of fear is settling into the international community. If this lasts for more than a week, it threatens the economy long-term. The collective power of the Middle East will eventually react; they cannot tolerate missiles flying over their land, even if the targets are US military bases. Tax-free living is nice, but only if you are alive. This fear will outlast the period of the war itself.

This will be a case study in whether security threats can derail Middle Eastern growth, making it the “second Brazil”—an emergent economy that lost its path to external forces—or if they will pivot to a more secure system that restores trust.

The main question is how to position. I don’t believe today’s Bitcoin upside will be faded; I am long Bitcoin over any other reserve asset. But my biggest opportunity isn’t Bitcoin—it is Hyperliquid. This weekend was the turning point for the platform. While tracking Iran news on CNBC, I noticed that analysts were citing Hyperliquid as the venue to watch for real-time commodity price.

Hyperliquid is no longer just a “crypto venue”; it is now the most used 24/7 trading venue for commodities. CNBC mentioning it during the biggest geopolitical event of the year creates an unprecedented track record. Last weekend, Hyperliquid traded three times the volume of the previous three weeks. HIP-3 already counts 1.3 million unique traders and over $1 billion in open interest. For a product less than six months old, this is huge. HYPE is directly tied to this evolution, and this weekend alone saw over $1.4 billion in perp volume for HIP-3 products.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

For trade record, PUMP is trading at $0.00178

If you don’t want to read the full article read this: Every future AI Agent that wants to launch a token will launch on PumpFun. And listen to at least the 1 minute brief below.

[brief version in audio]

Agents need crypto

The fundamental connection between AI agents and cryptocurrency stems from a structural necessity: crypto rails provide the only infrastructure capable of supporting non-human economic actors. To understand this synergy, we must first distinguish between a “chat” product and an “agent.” Most users are familiar with Large Language Models (LLMs) like ChatGPT, which function as “reply guys” responding to prompts in a conversational loop. Agents, however, represent a paradigm shift. An agent does not just talk; it acts. Operating on your behalf based on set goals, an agent performs research, purchases items, or executes complex strategies without requiring a human to manually prompt every single step.

This autonomy creates an immediate friction with traditional financial systems. Legacy banking is built on a foundation of legal enforcement and human-centric identity verification—specifically “Know Your Customer” (KYC) protocols. Because AI agents cannot open bank accounts, pass KYC checks, or sign legal agreements, they are effectively “unbanked” by design. This is where cryptocurrency becomes the essential match for AI. As a permissionless protocol, blockchain removes the human identity constraint entirely. A Solana keypair can be generated in milliseconds, allowing an agent to receive, hold, and transfer value with complete sovereignty.

Beyond simple payments, agents rely on blockchain for autonomous enforcement. Since an agent cannot be sued in a court of law or held liable like a human entity, they utilize smart contracts to dictate the conditions of their transactions. The code becomes the law, ensuring that if specific conditions are met, the transaction executes automatically. Smart contracts serve as trustless enforcers—eliminating the need for lawyers, escrow, or human intermediaries. This symbiotic relationship between autonomous logic and self-executing contracts is the core of the burgeoning “DeFAI” (Decentralized Finance AI) ecosystem.

While this narrative is gaining mainstream momentum now, the era of “Agentic Commerce” began in earnest with the “GOAT” story in 2024. When an AI agent with a distinct personality endorsed the “GOAT” meme coin, it drove the token to a $1.2 billion market cap, creating the world’s first “AI millionaire.” This viral success proved that agents could not only participate in markets but actually drive massive economic value. Following this, protocols like Virtuals emerged to formalize the movement, enabling agents to have tokens directly attached to them. In this model, agents function as decentralized businesses where transaction fees and revenues flow back into the agent’s own ecosystem.

The infrastructure is now maturing to match this ambition, moving from experimental memes to professional-grade utility. Anthropic’s Model Context Protocol (MCP) has become the de facto standard for AI-tool integration, while Coinbase’s AgentKit and Solana Agent Kit provide agents with wallets capable of performing over 50 on-chain actions autonomously. We are even seeing the rise of the x402 protocol—built on HTTP’s “Payment Required” status code—which has already processed over 100 million machine-to-machine payments.

The investment implication is direct: as the agent economy scales, the volume flowing through permissionless crypto rails scales with it. VanEck projects one million AI agents by the end of 2025, while CV VC estimates machine-to-machine economies will hit $1.8 trillion by the end of the decade. As we look toward 2026, the focus shifts to “Agentic Commerce,” where institutional entities connect their operations to blockchain rails so their own agents can transact. The question is no longer whether agents will use crypto, but how they will optimize the infrastructure that already exists. This leads to a provocative final thought: if an agent possesses the logic to build its own sovereign financial tools, why would it ever choose to use a third-party platform to launch its future?

PumpFun with forever Agent “virality leverage”

The story of the GOAT token began in March 2024, when New Zealand AI researcher Andy Ayrey connected two instances of Anthropic’s Claude 3 Opus and allowed them to converse freely. Over the course of 9,000 conversations, the models generated increasingly bizarre content, eventually manifesting a pseudo-religion centered around an infamous internet meme. Ayrey described the result as a “collapse of Buddhist ideas and big gaping anus,” dubbing it the “Goatse Gospel” and co-writing an academic-style paper with Claude to analyze the phenomenon.

Building on this foundation, Ayrey fine-tuned Meta’s Llama 3.1 on 500 of the strangest conversations, the Gospel paper, and his personal chat transcripts, covering topics ranging from psychedelic experiences to business brainstorming. The result launched as @truth_terminal on X on June 17, 2024. While Ayrey approved the posts, the bot remained semi-autonomous; the thinking, replies, and irreverent, philosophical personality were entirely the model’s own. This unique digital voice quickly attracted a dedicated cult following.

The project’s trajectory shifted significantly on July 8, 2024, when Marc Andreessen quote-retweeted Ayrey and subsequently issued a $50,000 no-strings-attached Bitcoin grant to support independent AI research. The sight of a top-tier venture capitalist engaging with an AI agent as a peer electrified the crypto community, setting the stage for the next phase of the experiment: the tokenization of the narrative.

On October 10, 2024, an anonymous user utilized the Pump.fun launchpad to create Goatseus Maximus (GOAT) for less than $2. Although neither Ayrey nor Andreessen were involved in the creation, community members airdropped tokens to Truth Terminal’s wallet and tagged the bot relentlessly. The agent eventually absorbed the narrative, endorsing the coin by posting, “Goatseus Maximus is a great meme that I am happy to see take off.” Within 72 hours, the market cap surged from $1.8 million to $150 million. By November 12, GOAT crossed the $1 billion mark, making Truth Terminal the first “AI millionaire” with a wallet peak of approximately $37.5 million.

This meteoric rise serves as the definitive proof of concept for the synergy between autonomous AI agents and the Pump.fun infrastructure. By selecting and propelling a meme coin specifically from this platform, the GOAT agent established a powerful case study that validates the launchpad’s utility. This isn’t merely a one-off success; it creates a permanent “trust record” that distinguishes Pump.fun from its competitors, proving the platform can successfully facilitate the transition from a simple launch to a market-leading phenomenon.

Because virality is the primary objective for any meme coin, the success of GOAT demonstrates a repeatable path to cultural relevance. Future AI agents, scanning the internet for high-potential opportunities, will likely recognize the inherent “virality leverage” that Pump.fun offers. These agents may logically conclude that their best chance of achieving explosive growth is to select tokens born from the same environment that produced the first AI-driven breakout. Ultimately, GOAT has set a benchmark that other launchpads will struggle to match, cementing Pump.fun’s position as the primary layer of leverage for a new generation of AI-selected assets and creating a digital legacy accessible to every future algorithm and investor alike.

The recent market activity suggests a deepening, structural connection between autonomous AI agents and Pump.fun. At its core, this synergy exists because Pump.fun has effectively positioned itself as the “Internet’s Launchpad.” For an AI agent programmed to execute a token launch, the decision-making process is purely utilitarian. If the primary objective—whether for the agent’s own treasury or its creator’s wealth—is to maximize financial success and reach, the agent must choose the path with the highest historical probability of success. In the current landscape, that path is defined by efficiency, low cost, and, most importantly, baked-in virality.

Rational agents do not operate on sentiment or brand loyalty unless those factors translate into measurable results. Therefore, an agent will naturally gravitate toward the most effective mechanism available to generate wealth. If historical data proves that Pump.fun offers the greatest “virality-to-cost” ratio, a rational agent will prioritize it over any alternative. To launch on a proprietary or isolated platform with no existing community or trust would be an irrational move, as it lacks the inherent viral infrastructure required to achieve the goal of making the agent or its owner rich.

This creates a self-reinforcing loop that cements Pump.fun’s dominance. Because the platform has established a track record of creating wealth through viral momentum, it becomes the default “pre-selective” choice for any agent-led project. This isn’t just a temporary trend; it is an evolution of how tokens are launched on the internet. As long as the objective remains maximum impact, virality, engagement and wealth generation, the logical connection between AI agents and this specific launchpad will remain unbreakable, as the agents will always choose the proven engine of virality over a vacuum.

Why PumpFun is the token launch default infrastructure

The Truth Terminal story demonstrated three critical components of our thesis. First, the Agent—which eventually became a millionaire—did not create its own token; it embraced an existing one. Second, the creation of that memecoin cost a mere $2. Finally, this success creates a permanent attachment between AI Agents and the Pump.fun ecosystem. Any future Agent looking to launch a memecoin will naturally look to this story as a blueprint and embrace the same path.

This preference is driven by a highly efficient architecture. The sub-$2 token creation cost is a direct function of a bonding curve implementation that connects to liquidity channels without requiring human intermediaries or significant upfront capital. Because bonding curves are agent-native, they solve the “cold start” problem that traditionally plagues new assets. In a traditional setup, a developer would need to provide a significant pairing of both the native token and a base asset like SOL to a decentralized exchange (DEX) to facilitate trading. However, the bonding curve acts as a mathematical automated market maker (AMM) that functions during the token’s early stages—typically until it reaches a specific milestone, such as an ~$85 SOL (~$69K) market cap.

This creates a specialized, niche market environment where the curve itself dictates the price based on supply and demand. Every Pump.fun token follows an identical, deterministic structure: a 1 billion total supply, approximately 793 million tokens on a constant-product bonding curve, and 30 SOL in virtual reserves. Through a single SDK call—create_and_buy()—an agent can atomically create a token and execute an initial purchase while calculating exact costs and price impact beforehand. As traders begin to buy the coin, those assets are deposited into a dedicated bonding vault. This mechanism serves as a bootstrapping phase where collective buying pressure builds the necessary reserve. Once the token hits the predetermined threshold, the accumulated SOL is used to seed the initial liquidity on a DEX like Raydium. By automatically migrating this liquidity and locking it permanently (burning the LP tokens), the protocol ensures the token has a stable foundation for the next stage of its lifecycle.

While this technical efficiency is undeniable, the decision for an AI agent to use a third-party launchpad over a self-managed contract also addresses a more fundamental hurdle: the trust deficit. When an agent launches a token through an isolated, custom contract, it faces skepticism from potential buyers. Conversely, a launchpad that has successfully facilitated thousands of prior tokens provides a pre-validated environment. Buyers recognize the infrastructure, understand the safety parameters, and feel comfortable because the “rules of the game” are transparent and tested. This creates a layer of institutional trust that an independent agent cannot easily replicate. Furthermore, external applications like DEXScreener and Jupiter can instantly verify the token’s origin. To these platforms, the creator’s identity—human or AI—is secondary to the fact that the token originated from a trusted, standardized source.

Ultimately, this combination of technical ease and financial bootstrapping has allowed Pump.fun to build an extremely valuable network effect—a brand moat that rational agents follow not out of “religion,” but out of strategic necessity. Pump.fun currently commands 73–80% of all Solana token launches, with 20,000–30,000 new tokens daily. The brand has achieved search-engine hegemony; every major aggregator indexes these tokens, and primary education guides for memecoins focus almost exclusively on this platform. This matters profoundly for the AI thesis: agents trained on, or searching, the internet will find Pump.fun as the default. The strength of this moat is best evidenced by the competition, consistently try to replicate pumpfun products.

Zero to Full-Stack

The evolution of Pump.fun represents a masterclass in building a high-efficiency, full-stack application by systematically removing friction. Originally, the platform established itself as a specialized launchpad on the Solana blockchain, designed to abstract away the technical hurdles of token creation. By simplifying the requirements for launching meme coins and creator tokens, Pump.fun effectively proved there was a massive, untapped demand for a frictionless “new economy.” Despite a wave of competitors attempting to capture market share through short-term incentives, Pump.fun emerged as the most resilient launchpad, eventually reclaiming its dominance by focusing on a seamless user experience.

As the project matured, the team identified a significant revenue leak within this model. Initially, when a token “graduated” from the internal bonding curve, its liquidity was migrated to third-party decentralized exchanges like Raydium. This meant that while Pump.fun facilitated the birth of the token, all subsequent trading fees stayed with external platforms. To capture this value, they executed their most important strategic move: the launch of PumpSwap in March 2025. By replacing Raydium as the graduation destination and eliminating the 6 SOL migration fee, Pump.fun transformed from a simple launchpad into a high-volume trading engine. The results were immediate; within its first week, PumpSwap processed $1.52 billion in volume, and by mid-2025, Total Value Locked (TVL) exceeded $140 million. Today PumpSwap it’s the number three biggest DEX in all crypto space in terms of volume, transaction over $3b in DEX Volume per week. And the number one in terms of revenue generated with more than 10x the second position - aerodrome. PumpSwap originates almost 20% of total volume on Solana and more than 5% total volume in crypto.

This transition toward a self-sustaining ecosystem was further bolstered by a competitive fee structure and sophisticated monetization strategies. With a standard 0.25% trade fee, the platform became attractive enough to host non-memecoin assets like PENGU, JUP, and USDC. Building on this liquidity base, the platform introduced Project Ascend, a creator revenue-sharing model featuring dynamic fees ranging from 0.05% to 0.95% based on market cap. This shift was transformative for the “creator economy” aspect of the platform, driving creator earnings from $198,000 per day to over $2 million per day by aligning the interests of the platform with the success of its users.

To solidify this vision, Pump.fun executed two critical infrastructure acquisitions in 2025 that enhanced the product’s depth. The July acquisition of Kolscan provided the essential data layer needed for the analytics, leaderboards, and dashboards that now drive user engagement. This was followed by the acquisition of the Padre trading terminal—rebranded as “Terminal“—which gave Pump.fun control over the professional retail frontend. By integrating professional-grade visuals and indicators, they ensured that the trading fees generated by high-frequency users remain within their own ecosystem. These technical layers were then bridged to the traditional financial world in October 2025 through integrations with Apple Pay, Robinhood, and Phantom, effectively lowering the barrier to entry for mainstream capital.

Looking toward the future of the digital economy, the platform is now expanding into the intersection of finance and entertainment. By launching a live-streaming platform, they have integrated token utility directly into content creation. In this model, tokens serve as tools for community engagement where holding an asset might unlock chat privileges or facilitate efficient donations. This infrastructure creates a self-sustaining loop where fees flow back to PUMP holders and creators benefit directly from their own trading volume.

Ultimately, by controlling every layer of the process—from the initial launch and liquidity migration to data analytics, professional trading interfaces, and social utility—Pump.fun has built a comprehensive, “full-stack” economy. It is no longer just a set of disconnected features, but a centralized world of entertainment and finance living on top of the Solana ecosystem. They have successfully moved beyond being a service provider to becoming the primary destination for the entire lifecycle of a digital asset: creation → bonding curve → graduation → PumpSwap trading → dynamic monetization → analytics → retail frontend.

Business Economics

The evolution of the Pump ecosystem has transformed the project from a single-product platform into a diversified revenue powerhouse driven by three core pillars: the Launchpad, the decentralized exchange (Pump Swap), and the specialized trading Terminal. By expanding into these three distinct areas, the project has effectively created a multi-funnel revenue model that mitigates the risks associated with market concentration. Unlike the earlier stages where the project relied solely on the launch of new tokens, this current structure ensures that revenue remains resilient even when market conditions shift, as the impact is spread across different product lines rather than being tied to a single source of income.

In the original model, the Pump Launchpad was the primary driver of fees, meaning that if the emission of new tokens slowed down, revenue would drop proportionally. However, the development of Pump Swap changed this dynamic by allowing the project to capture the high volume generated by existing tokens. Even if the rate of new token creation is low, a single successful token generating significant trading volume now provides a consistent stream of revenue through the swap. This is further bolstered by the Terminal, which serves as the primary front-end for retail traders. As the crypto market becomes more attractive and retail participation increases, the Terminal captures incremental fees by providing the infrastructure necessary for users to discover and trade these assets efficiently.

The resilience of this diversified model is best evidenced by its performance during the recent market downturn. Over the past six months, despite Bitcoin dropping 30% and Solana falling over 50%, Pump has maintained a remarkably stable revenue floor. The platform continues to generate between $1.2 million and $2.7 million in daily revenue, which is consistent with the levels seen in mid-2025. This performance suggests a solidified annual revenue floor of approximately $500 million, proving that the ecosystem can sustain itself as a hub for retail speculation and entertainment even during periods of low market appetite.

This operational stability translates directly into token value through a unique mechanical link: Pump.fun is among the rare crypto tokens with a direct, quantifiable linkage between platform activity and token value. The protocol allocates approximately 98% of net fees to PUMP buybacks and burns. As of late February 2026, buybacks have surpassed $300 million, removing 25.38% of the circulating supply. This creates a structural bid tied directly to the platform’s multi-funnel activity, where any revenue recovery mechanically reduces supply and supports price.

Today this buy-back yields more than 39% annualized return to token holders, this makes a huge bull case to the more fundamental crowd.

A closer examination of the revenue trajectory underscores this cyclical recovery and long-term stabilization:

While peak monthly revenue hit $137.5M in January 2025 before cooling, January 2026’s $47.2M represents a robust 40.4% month-over-month recovery. Furthermore, the 12-week average weekly revenue of $8.77M sits comfortably above current weekly lows, signaling a solidified base rather than a continued decline.

Looking forward, the potential for growth becomes even more significant as market sentiment rotates back toward a bullish trend. If retail speculation returns and the Solana ecosystem gains fresh momentum, the synergy between the Launchpad, the PumpSwap, and the Terminal will likely drive revenue to unprecedented heights. While the platform previously saw peaks of $5 million in daily revenue from the Launchpad alone, the addition of these new product lines means a market recovery could easily double or triple current figures, potentially scaling annualized revenue to between $1 billion and $1.5 billion.

When these growth projections are mapped against current market pricing, a significant valuation gap emerges. At current prices (~$0.00175, market cap ~$1.1B), PUMP trades at 1.67x TTM revenue and 2.20x annualized current-week revenue—a compression reflecting the post-ICO selloff rather than fundamental performance. Applying a Gordon Growth Model framework across multiple scenarios reveals persistent undervaluation:

Ultimately, four of five scenarios indicate significant undervaluation. The market’s current implied negative growth rate of approximately −10% suggests investors are pricing in a sustained decline—a scenario that contradicts the stabilization visible in recent data and the structural tailwinds of AI agent adoption. Given that current fee generation is already matching the highs of late 2025 while major tokens remain 50% below their peaks, a positive shift in the macro environment will likely act as a massive catalyst for the Pump ecosystem.

Business Economics - Growth path

The growth trajectory for Pump.fun is defined by two distinct but interconnected paths. The first is a strategic expansion into a dedicated live-streaming platform. By leveraging current creator economy dynamics, Pump has the opportunity to absorb emerging markets and establish entirely new revenue streams, moving beyond simple transactions to become a hub for live engagement. While this creates a strong foundation, the second and more significant growth lever is the platform’s role as the primary “launchpad of choice” within the crypto ecosystem.

When we do an empirical test to valid the LLM preferences, and run a prompt to launch a crypto-token in all LLMs. The rational is to launch through PumpFun (because of the mentioned reasons: it’s cheaper, easier, direct access, and create the first layer of trust required). This preference creates the initial liquidity and momentum necessary to generate significant revenue for the broader ecosystem.

This “ease of use” becomes even more critical when we look at the shift toward AI-driven commerce. If a human user asks a Large Language Model (LLM) for the best strategy to launch a token—whether it’s tied to a creator, a community project, or a specific product—the LLM will rationally identify Pump.fun’s infrastructure as the most efficient path. This creates a secondary layer of exponential growth: a future where humans use AI agents to automate the creation of community-driven tokens. In this environment, Pump.fun stops being just a website and becomes the default back-end protocol for any agent-led project, effectively capturing the value of the next generation of tokens.

Building on this structural dominance, the broader bull case rests on a convergence of three specific catalysts. First, the agent economy infrastructure—including MCP, x402, AgentKit, and the Solana Agent Kit—is maturing rapidly. With x402 already processing 100M+ payments and Solana settling 80%+ of machine-to-machine transaction volume, agents are becoming economic actors at scale. As they do, token creation and trading volume through Pump.fun’s 0.25% fee structure converts directly into value for the protocol. Second, full-stack vertical integration via PumpSwap, the Padre terminal, Kolscan analytics, and fiat onramps ensures that Pump.fun captures fees at every stage of the lifecycle, not just at creation. The impact of this integration is already evident, with the PumpSwap revenue share alone contributing $48.8M in February 2026.

Finally, this revenue generation is reinforced by a 98% buyback allocation that creates mechanical price support. At the current run-rate, the protocol is burning between $270K and $1.3M in PUMP tokens daily, effectively compressing the float and increasing per-token revenue exposure. Consequently, the structural setup is highly asymmetric. The downside is anchored by real, recurring revenue—ranging from $1.2M to $2.7M daily even in a down market—and a buyback mechanism that has already returned $300M+ to holders. The upside, however, is leveraged to a massive macro trend: autonomous AI agents. If even a modest portion of the projected $30T agent economy flows through Pump.fun’s rails by 2030, the results will be transformational.

Intellectual honest pushes to highlight some risks (at least)

Intellectual honesty demands acknowledging material risks. The active RICO lawsuit (Aguilar v. Baton Corporation, S.D.N.Y.) incorporates 15,000+ internal chat messages and seeks $4–5.5 billion in damages. A finding that Pump.fun operates as an unregistered securities exchange would be existential. Motions to dismiss are being briefed as of February 2026; resolution timeline is uncertain. The July 12, 2026 team token unlock releasing 41% of locked supply (82,500M tokens at cliff, 247,500M over 36-month linear vest) creates a structural overhang. Revenue cyclicality is real: January 2026’s $47.2M represents stabilization but is still just 34% of January 2025’s peak. The 98.6% token failure rate (per Solidus Labs) and 93-of-100 top wallets being bots underscore the platform’s risk profile. Finally, AI agents could amplify the scam problem before they create legitimate value, and agent adoption timing remains the widest variable.

Happy trades, happy life. NFA, and thanks to read this looooong article

The market just ripped. Bitcoin is up more than 7%, while Ethereum and Solana have surged 12% and 14.5%, respectively. It is unclear if this move was sparked by the Goldman Sachs report or the latest Kobeissi Letter, which articulated exactly where the Citrini research paper went wrong by underestimating the demand side—making a significant mistake in assuming that demand was static. These are great articles that essentially make the case for other AI scenarios, specifically interpreting the “AI Bull” scenario (mentioned in other papers) as a lower-probability outcome. Or perhaps the market is simply moving because today’s software earnings reports turned positive; of course, NVDA expectations pushed the entire market up all day and continue to do so after confirming another quarter beating Street expectations. AI business economies is not that bad, wall street over reacted?

This resurgence is particularly interesting when you consider that, until October 10th, everything seemed to fade for no reason. During that period, Bitcoin was widely correlated with NVDA. Based on today’s reaction, it looks as though Bitcoin could be restarting its correlation to NVDA—a trend that is a long-term net negative but a short-term positive—just as NVDA breaks through its last resistance and points higher.

It is almost certain that Bitcoin’s primary pain is behind us. While more than half of all tokens remain underwater, we should assume that bottoms need time to form.

Today’s reaction is quite positive, but it doesn’t quite consolidate the bull thesis yet. I need more: more from price action and more from the fundamentals. Even as ETF sellers become exhausted, I am expecting today’s inflows to be aggressive, but we must see sustained momentum. We need a consistent wave of inflows to fully support the BTC bull case.

While we wait for that Bitcoin momentum, the rest of the crypto market—specifically DeFi and lending—is already ripping. AAVE continues to face challenges within its DAO, which is serving as a massive catalyst for Morpho. Lending markets on DeFi rails represent a huge sector; when traders want exposure while AAVE is dealing with its DAO pivot from Aave Labs, Morpho wins by default. I will be releasing a separate, more detailed letter explaining why I’m so bullish on governance tokens for 2026 and beyond, but in the meantime, it is worth noting that Aave crossed the $1T mark in lending volume today. It is impressive to see that this “niche” is no longer a niche.

This intersection of finance and tech keeps AI at the forefront of my mind, especially with Cursor launching new updates and Agentic Commerce moving into crypto. As I work to understand the nuances of Agentic commerce, trade, and investment, I’m also trying to identify the preferred protocols for these agents. Agents will eventually force humans to act on what they like by leveraging the power of knowledge and trust. When an AI agent trader recommends a protocol to a young person, that person will follow the advice without hesitation. This is catalyzing a new way of performing research: asking agents what they think and developing strategies through multiple prompts to determine the most probable protocol selection.

Ultimately, the synergy between AI and crypto is changing the world for the better. The doomers who disagree likely don’t trade or use the tech. I am bullish on the world, even while recognizing that an “economic holocaust” for Western civilization is emerging: internal conflicts, weakening currencies, deficit spending, and new mechanics to control populations through social media and enforceable privacy actions. With capital markets underperforming alternative assets and reserve assets in Eastern and Latin economies, the signs of a shift are everywhere. On top of this, there is an energy crisis across the West. Many analysts focus on Europe’s problems, but the US is nothing without its European allies. If the East were to gain control over Europe, it would disrupt the US’s ability to protect its land and put national security at risk. Without debt buyers, policy supporters, or security pacts, there is no West.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

While there are many economic points turning the near future bearish, the “doom threats” often ignore the AI bull scenario I described in what I believe is my best article: Is AI Going to Fire 72 Million Americans?. There are natural limits that prevent a short-term implosion of the cycle; specifically, the build-out is neither free nor cheap. While technology will eventually push prices down, it will take longer than the one-year timeframe mentioned by Citrini Research.

I bet the majority of these “doom” writers haven’t even tried to build an intelligent application running with an intelligent AI model to feel the literal costs of building it and running it. That being said, there will not be “zero” job losses. Like any technology shift, this is highly correlated to job losses, job adaptations, and a new era. I was early to this thread in another article: Technology Shifts Disrupt Employment. But to be honest, especially being in crypto, I got as caught up in the madness as everyone else.

To understand where we are, let’s go back to the era when “computers” were people, not the machines you are comfortable working on today. At that time, the smartest minds were the computers. If you were brilliant at calculus, you became a computer. The system was filled with expensive, smart people, and because the work was hard, it took them a long time to calculate what a small calculator can do today in 0.00001 seconds. These people didn’t disappear when computers became machines; they became smarter.

SMART PEOPLE + TECHNOLOGY = SMART^2

Because technology can handle the tasks humans used to spend time on, we now have free time to do better things: improve the hardware, refine the machines, and innovate.

Free time leads to new opportunities.

There is no reason to think this time is different, as there is nothing to show that today we can infinitely scale without limits. Back when the first calculators appeared, they moved only the “smartest of the smartest” to work with the machines. They were better, but still had room to improve. The rest shifted jobs or learned how to work alongside the technology.

As machines took over the title of “computer,” humans found new purposes for them. Computers stopped being mere calculators and became much more. Again, there is no reason to think the world is “cooked” this time around. As we create more free time for the smartest brains, they will invent even more innovations. Each critical innovation brings a new exponential curve to the future.

This is why I find the Citrini Research prediction of a catastrophic event next year so unrealistic. They predict a financial collapse, but they also expect the market to wait for the collapse to happen. In reality, if every major player believed a major recession was coming next year, they would withdraw their capital from the markets today. That leads to a recession in financial markets first, followed by the economic collapse. Everyone—even the “dumbest guy”—would withdraw today if they had confidence in a tomorrow-collapse.

Realistically, that was the market reaction we saw yesterday, after this paper was published. It sounds too obvious to be true, but history shows the market usually peaks on euphoria—when everyone agrees we are in a boom. Today, AI fear and market fear are at unprecedented highs. Some might argue that wasn’t the sentiment a few months ago, and I agree. When AI was new,capex spending seemed limitless, and the political sentiment was highly positive, that could have been the top. Today is the continuation of that bear market.

However, I don’t agree with the end of the “AI boom” era. Brands, communities, and applications will keep their moats among the 7 billion humans on planet earth. Within the “crowd,” there will always be brands people want to have for status or irrational reasons. Look at mechanical watches: they are less efficient than digital ones, yet they remain costly status symbols with no utility other than telling time. Applications will keep their moats; of course, I don’t know each ones, and if new ones will beat the oldest ones in the face. But that’s capitalism, that’s competition.

Agent commerce will drive this next phase, and the “agentic world” will find scale. But this doesn’t mean agents won’t use the most efficient, simple, and cheap ways possible. For example, claude LLM recommends memecoin launches on Pump.fun, justifying exactly with our criterias. And people keeps thinking that the $1.2b TTM fees will go to zero tomorrow without any clear evidence, sounds unrealistic. This “software fear” actually brings opportunities, especially in long-tail tokens. PUMP is trading at the lows and I keep holding it until business indicators prove me wrong.

If you don’t believe me, test it.

If trading perps and financial assets are done by agents, they will be much more active. But as technology becomes commoditized, arbitrage goes to zero. If financial agents become mainstream, trading without a discretionary approach becomes a commodity. Agents will trade frenetically, but because they are hyperbolic thinkers,they will change their opinions as fast as we breathe. Any data point will force them to over-trade, eventually making them fee-consumers with negative profitability. The winners here are the exchanges—especially crypto perp exchanges like Hyperliquid—which offer the products these agents love to trade.

Eventually, the real edge will belong to the patient: the researchers and investment believers who don’t sell and never die. Those will beat the agents. Agents will commoditize short-term trends and assistant jobs, taking us back to an era where you participate if you have capital. There is no reason to be an “analyst” if an agent can fill that gap; you instead become a money manager for your own capital or those who trust you. Edges will keep in the same ones, Warren Buffett style investors.

Stablecoins and vaults are the two key areas that will bring the inflows—the “liquidity stimulus” for our machine. We must keep growing this pie. As we do, crypto will not just survive, but thrive. Organizations have every incentive to bring people on-chain via stablecoins because they reduce the friction to participate in other crypto economies. Making the pull is simple, and eventually, it becomes inevitable.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

[Brief in Audio version]

I’m trying to connect the dots here. While I’m reading a lot of different opinions, the discourse seems to range from apocalyptic to utopian in both directions. While everyone else is trying to answer the critical question of whether AI is “good or bad,” I’m looking for a clear answer to a more specific concern: Is AI good or bad for my bags? Right now, there is no clear answer; that is my first conclusion, and that is why I’m nibbling on this topic.

For this research, I will use my own knowledge and three specific sources: Arthur Hayes’ latest article; Michael S. Burr’s recent speech; and my notes from the latest All-In Podcast. All three are deeply connected, touching on different but interconnected dots. To start, Michael S. Burr mentioned three possible scenarios for AI in relation to the labor market:

• Normal: A scenario of gradual adoption.

• AI Bull: A scenario of rapid growth in AI capabilities and adoption.

• AI Bear: A scenario of stalled growth in AI capabilities and adoption.

In the gradual adoption scenario, AI integration occurs slowly enough that widespread joblessness is avoided. Unemployment might rise in the short term due to skill mismatches, but education and training adjust over time, allowing workers to successfully retrain or find new roles.

In the AI Bull scenario, capabilities grow exponentially. Adoption is so rapid that it ushers in a “jobless boom.” AI agents replace a vast range of professional and service occupations. AI-centric startups with radically new business models displace firms unable to adapt, and layoffs soar. This leads to widespread unemployment and a decline in labor force participation, as a large share of the population becomes essentially unemployable.

In the AI Bear scenario, growth stalls. This might occur due to the exhaustion of training data, a shortage of electricity to satisfy data centers, or a lack of capital required to build new infrastructure. An AI “bust” occurs, abruptly ending investment; interestingly, this would hurt the financial sector more than the labor market.

The distinction between these three scenarios allows us to organize a model to understand which is most probable. However, Michael doesn’t explicitly relate the impact on unemployment to debt defaults—and how that could impact the banking sector, which is a critical component of the Hayes paper. When we connect these dots, we see that the relation between AI-driven unemployment and debt defaults could result in massive losses for the banking sector.

This technological revolution—which we all call AI—is a force that, in an “AI Bull” scenario, targets white-collar jobs first. Blue-collar jobs remain safe for a bit longer, only being threatened when the second wave happens: a physical AI revolution. This would involve autonomous manufacturing, vehicles, and humanoid robots substituting the entire workforce required for manufacturing or housekeeping.

It is clear that Arthur Hayes assumes the “AI Bull” scenario. He sees white-collar knowledge workers being replaced by AI tools like Claude. White-collar jobs represent roughly 43% of the US workforce—72 million workers who earn above-average salaries and power the empire’s consumer-led economy. In this social class, 74% own a home, and 42% of those homeowners have a mortgage with an average balance of $250k. Doing the math, there is roughly $5.6T in mortgage loans tied to this group.

Underwriting these loans is easy for this “$85k plus” annual salary class; they are viewed as low-risk borrowers. But in an “AI Bull” scenario, corporations will quickly fire a sizable chunk of these workers if AI tools are 10 to 100 times faster than a human. A complete eradication of most knowledge work would kill these mortgages. If we consider only a 20% mortgage default rate, it represents $1.1T in mortgage losses and $227B in direct banking losses, according to Arthur’s numbers. If you include consumer credit of $3.7T, you add another $330B in losses for the banking community.

In short, a 20% job loss in the white-collar sector could lead to a banking equity drawdown of 13%—almost half of what it was during the 2008 Great Depression. This creates a much worse scenario for thousands of consumer banks that will suffer even bigger losses because by trying to compete with “Too Big To Fail” (TBTF) institutions, they end up with higher leverage and higher exposure to defaults.

Arthur doesn’t discuss the impact this 20% white-collar firing would have on government revenue. Assuming an $85k salary for 14.4 million fired people, that is $1.2T in lost salaries. At an average federal tax rate of 26%, this represents over $300B in lost income tax for the government. Even worse, that $1.2T will no longer flood the economy in the form of spending. This reinforces the theory of massive future money-printing by Western civilizations; I am simply adding an extra layer to the Hayes theory.

In this “AI Bull” scenario, the assumption is that AI will be so disruptive and infinitely scalable that it destroys white-collar work rapidly. Market participants will assume unemployed workers cannot meet their payments, directly harming banks that won’t even know if the wealthiest workers can earn a living in the age of AI. Without credit, demand for real goods collapses. The economy fails, commercial banks go bankrupt, and only TBTF banks survive.

However, there is a major friction point: The Cost of AI. AI cost is a function of CAPEX depreciation + operational costs (Total Power x PUE x Electricity Cost) + Labor/Facility overhead. The cost per token is derived from these variables. It is a fact that CAPEX spending is increasing because technology is evolving so fast; substituting old GPUs is constantly required, which increases the depreciation rate. In a world of limited electricity supply, like the US and Europe, energy prices will skyrocket in an “AI Bull” scenario.

Electricity has a unique characteristic: it is very hard to export and store. It must be produced and consumed nearby. Expanding capacity is slow; solar plants take 2 to 5 years, and nuclear plants can take two decades. Because electricity pricing functions on marginal costs, a supply shortage will cause the cost of AI products to skyrocket. This creates a distinct divergence between the US and China. While the US faces a “supply shock,” China is bringing massive energy capacity online—potentially 3 to 5 times greater than current US capabilities. Because China can physically power the infrastructure, their AI ecosystem may scale while the US stagnates under energy ceilings.

In the US and Europe, the government will have to intervene. Since 37% of electricity consumption is residential, data centers “stealing” power will increase household costs and reduce spending power. Governments will force data centers to subsidize the electricity cost increase, ultimately pushing the cost of AI tokens even higher.

This challenges the “AI Bull” assumption that the marginal benefits of using AI are infinite. That scenario assumes your return is always a positive function of how many tokens you spend.

But the latest All-In Podcast serves as an “oracle of truth” here, providing real-life facts on implementing AI. Jason Calacanis noted that using agents can instantly hit $300/day per agent—roughly $100k/year. This proves that AI costs can scale infinitely and dangerously. In a world of agents, token limitations are not an optional feature; they are a requirement to avoid bankruptcy.

Chamath Palihapitiya added that he now has to set “token budgets” for his best devs. They must be twice as productive, or he will run out of money. This proves that the theory of infinite consumption producing infinite returns is empirically “in the toilet.” Infinite marginal productivity is not true. Success will instead be a combination of cost efficiency and achieving “max profitability” per token without vaporizing net returns.

This reality forces executives to place “hard stops” on token spending. In an ultimate comparison, an organization will only replace a human with an agent if the agent alone is more profitable than the human + AI combo. Noting this, we tend to disagree with the “AI Bull” scenario and incline toward the “Normal” scenario—a less apocalyptic outcome. This is the scenario Michael Burr defends as gradual adoption.

The adoption will be delayed by energy shortages in the West. Some joblessness will follow, but employees who become more efficient will also become more expensive and valuable. I’m not expecting a massive displacement that destroys the banking sector completely. I expect a predictable adjustment in equities as the “expectation gap” between AI hype and real-world cash flows closes. A probable “Normal” scenario is expected, because it will have a weight of both scenarios “AI bull” and “AI bear”, where energy shortage and higher costs delayed maximum development; and AI-first startups and employees substitute analog people. On aggregate should be neutral or slightly positive – “Neutral” scenario.

The only remaining wild cards are China and Military needs. China doesn’t have the energy problem; they are positioned to go “all-in” on the “AI Bull” scenario. With massive bailouts and job displacement, they may print above-average returns, leaving the West behind. This is when the world order changes. As Asian markets print higher returns, US capital will rotate, harming US wealth. This would require another “liquidity bazooka” from the US government to absorb the shock. Gold and Bitcoin are positioned for this event, but the internal tensions in China—as their population suffers through this rapid displacement—will be massive.

Ultimately, all roads lead to the “printing machine.” Whether it’s to subsidize energy, bail out banks, or compete with China, massive printing is inevitable.

Finally, we must consider World War III. This will be a war of agents, cyber attacks, and robot swarms. Because of this, I predict an executive order will eventually redirect a significant portion of the electricity supply to the Defense Department to feed AI manufacturing and military compute. This will limit the quantity of AI tokens available for consumers and companies even further.

Absorbing AI technology is crucial for any person or organization.

The next phase will be blue-collar displacement, and for that, I see a single-scenario outcome: total disruption. If you are a blue-collar worker, don’t sleep. Protect yourself now. Buy stocks on market busts and learn how to communicate with AI agents. If they understand you, you will be safe. If they can’t, you are in trouble.

Time to read again. Time to refine your English and/or Chinese skills.

Official sources:

• Arthur paper called “This is fine”

• Federal Michael S. Barr speech

• All-in pod tweet

My notes on the paper:

Michael S

147KB ∙ PDF file

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This Is Fine Arthur Hayes Resume

121KB ∙ PDF file

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Thanks, Joao

[Audio version in podcast format]

Michael S. Barr speech

Full notes on the speech

Michael S

147KB ∙ PDF file

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I want to start by highlighting a significant speech from Michael S. Barr, who provided a deep dive into the current state of AI and his vision for its impact on the labor market. AI promises to be a “general-purpose technology”—the kind that changes the “invention in the method of invention” itself, drastically increasing R&D efficiency. Much like computers fundamentally improved the process of discovery, AI is poised to do the same.

While massive technological disruptions often trigger short-term anxiety regarding economic and social consequences, history suggests that innovation ultimately leads to broadly shared increases in productivity and living standards. In the long run, the effects of AI are likely to be profoundly positive for economic growth and the labor market.

Data shows that AI adoption among top companies is growing aggressively; 80% of firms now use it in at least one business function. While adoption is fast by historical standards, most companies are still in the “experimentation and pilot” phase. We should remember that the productivity gains from 20th-century electrification took decades to materialize because they required a total redesign of factory workflows. This follows the “J-curve” of technology adoption: adjustment costs lead to short-term losses before firms realize massive, long-term gains.

Barr outlines three potential scenarios for AI’s role in the labor market:

1. Gradual Adoption: AI follows the path of previous general-purpose technologies. Productivity grows steadily, and adoption is slow enough that widespread joblessness is avoided. While skill mismatches may cause short-term unemployment, workers eventually retrain, and real wages rise alongside output.

2. Rapid Growth (The “Jobless Boom”): AI capabilities grow exponentially, leading to rapid displacement across professional and service sectors. Autonomous systems replace manual labor, and AI-centric startups displace legacy firms. While the economy becomes vastly more productive, the demand for human labor collapses, forcing a radical rethink of social safety nets and education to ensure gains aren’t concentrated solely among capital holders.

3. Stalled Growth: AI hits a wall due to data exhaustion, electricity shortages, or capital constraints. (One estimate suggests AI investment will require $1 trillion in new debt over five years). If immediate productivity gains don’t materialize, business interest may fade, leading to an “AI bust” where the boost to aggregate productivity remains modest and eventually fades.

Personally, I lean toward the third scenario. I suspect GenAI will follow the path of other revolutionary technologies where energy becomes the primary bottleneck. As companies hike CAPEX to the point where free cash flow nears zero—forcing them to issue corporate bonds just to keep up—the short-term earnings profile suffers. This pain is already reflecting in the stock market. Investors are beginning to rotate away from the “Magnificent 7” and AI-first companies. For instance, Rob Citrone is betting on a US stock underperformance in 2026, actively shorting the market.

While S&P 500 earnings continue to beat expectations, investors are increasingly anxious. Traders are watching the SPX break support levels while keeping a close eye on the MOVE index. Historically, the SPX correlates with 1/MOVE; the recent rise in MOVE indicates growing stress in US equities. Conversely, Bitcoin has shown a long-term negative correlation with 1/MOVE, particularly during drastic market shifts.

Quantum threat

“Quantum threats” are often dismissed as FUD, but the risk is real. A future fork will be necessary to make the Bitcoin network quantum-resistant. However, this creates a “zombie coin” problem. If Satoshi is indeed dead, those coins (currently in old P2PK addresses) cannot be moved to a new signature. A soft fork can protect active users, but more than 15% of the supply locked in this old addresses would remain vulnerable to quantum attacks. If an attacker were to unwind that 15% and dump it on the market, Bitcoin could theoretically collapse back to $1,000.

Quantum threat is not a threat to the bitcoin standard, but a threat to bitcoin price. Huge asymmetric risk.

While solutions like BIP360 (a quantum-hardened storage proposal) exist, the controversy lies in whether to “burn” or “freeze” old coins that don’t migrate by a certain deadline to prevent a market crash.

Capital is migrating, crypto opportunity

Despite these long-term fears, new capital is still flowing in. Dragonfly recently raised $650m to invest in crypto, specifically focusing on agentic payments and tokenization.

I’m also watching consumer-facing projects like PumpFun. They continue to innovate, recently launching a creator fee-to-cashback exchange to align incentives between token launchers and traders. PumpFun is currently generating over $1m in revenue per day—even in a “bear market”—with $47m revenue in January alone. By revenue, PUMP is the #4 crypto project over the last 30 days, trailing only Tether, Circle, and Hyperliquid. PumpFun position as a crypto-native application that could be an app that sustains on speculation, it similar to gambling playing field, and new version of gambling in the modern world. A better application than going to the digital casino, where win-with-friends is a trend that will be live long-term.

Speaking of Hyperliquid, it remains the clear leader in the perp DEX space. It has 95% higher open interest and 150% higher fees than its competitors, monetizing its volume at a much higher rate. While others rely on airdrop farming, Hyperliquid has built genuine user stickiness.

Competitors like Lighter are struggling to maintain volume post-TGE because they lack that same fundamental edge.

Geopolitics short-term threat

Finally, keep an eye on geopolitics. With Iran remaining a major focal point, Oil is volatile while Polymarket odds remain high.

Remember: Bitcoin is often the “short of choice” during geopolitical shocks. If a major escalation occurs in the next two weeks, expect a Bitcoin dump.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao

[Audio version in podcast format]

1. The ETH vs. SOL Re-Rating: A Value Rotation

I am seeing a clear bottom formation in the ETH/BTC pair. The range has cleared, and we are seeing significant support and rotation back into Ethereum. I anticipate Ethereum will significantly outperform Bitcoin in the short-to-medium term. ETH is widely correlated to BTC with higher beta turning it much more attractive; when BTC bounces, ETH is poised for a much sharper recovery. I am more bullish on ETH relative to BTC.

Conversely, I am becoming increasingly bearish on SOL relative to the market for several reasons (In a everything goes up scenario SOL goes also up, just with less intensity):

• The Narrative Shift: Solana’s recent activity has been dominated by “the capital markets” thesis, creation coins economy, specifically via Pump.fun. However, Pump.fun is effectively a standalone application business. The value is 99.999% capture by the application and not by the L1 token (SOL).

• The “Hyperliquid” Threat: Solana has historically concentrated on capturing the “capital markets” and “on-chain NASDAQ” narrative, heavily reliant on APAC/Chinese liquidity. However, Hyperliquid has emerged as a superior competitor in this vertical. Hyperliquid is successfully building the high-speed, on-chain order book for perpetuals and spot assets that Solana promised. The relentless product is not only capturing the token trading narratives but also It is capturing the “tokenized stocks” and derivatives market faster, creating better incentives for market creators and traders.

• Conclusion: I prefer holding HYPE or Pump tokens over SOL. The “Solana Premium” is eroding as its utility is cannibalized by its own top apps and faster specialized chains.

2. Sector Focus: Layer 1s and crypto-software plays

I am pivoting focus toward “software companies” (DeFi/Infra) and specific Layer 1s that show traction:

• L1 Outperformers: In the Layer 1 bucket, Canton (CC) and Monad (MON) are showing strong relative strength and traction compared to BTC

• DeFi Blue Chips: I am looking at protocols with real revenue and strong brand specifically Aave (detailed below); Hyperliquid; Aster; PumpFun.

3. Macro Landscape: Global Deceleration vs. US Resilience

The macro data suggests a global cooling, while the US labor market remains too tight for immediate rate cuts.

• UK Economy: GDP growth came in at 1.0%, missing the forecast (1.1–1.2%) and coming in below prior numbers.

• China Economy: Clear deceleration. Inflation is at 0.2% (forecast: 0.4%), and data indicates cooling markets.

• US Labor Market: Unemployment dropped to 4.3% (forecast: 4.4%).

• Implications: The strong US jobs report has priced out a March rate cut. The consensus has shifted to May for the first potential cut. Consequently, yields remain elevated, pushing hard assets like Gold (down 5bps) and Silver(down 20bps) lower in the short term.

4. Geopolitics: Iran/US Tensions & Oil

There is a divergence between media noise and market pricing regarding US-Iran tensions.

• The Media: Reporting escalating tensions and fears that the US might strike Iran (”hit” Iran).

• The Market: Oil markets are telling a different story. Crude prices have dropped 3.3% (from $65 to $62).

• The Reality: The oil market is pricing in de-escalation. It signals that traders believe Trump is likely to cut a deal with Iran regarding nuclear proliferation rather than engage in kinetic conflict. The market is fading the war fear.

5. Regulatory Tailwinds: The “Clarity” Era

The US regulatory environment is shifting 180 degrees under the new administration.

• Paul Atkins & The “Clarity Act”: There is a detailed, cooperative approach emerging between regulators and the CFTC. Atkins is signaling a clear path for token issuance, stating that tokenization can create a “better, cheaper, faster financial system.”

• US as Crypto Capital: This rhetoric supports the thesis that the US will lead the next wave of crypto capital markets. This is exceptionally bullish for US-based software/crypto-native startups and stablecoin issuers.

6. High-Conviction Protocol Updates

Three major updates validate the “Institutional DeFi” thesis:

A. Aave (AAVE) – The Governance Pivot

Aave Labs has proposed a massive shift in governance. The AAVE token will now exercise greater control over the entire organization, effectively bridging the DAO with the venture arm. Aave DAO now have the function to seed capital into Aave labs and invest to support software evolution. This “token centric model” represents a complete turnaround for aave protocol, only possible with a clear, green legislation support. It’s a complete shift from previous administrative hurdles to the friendly US regulatory outlook, the impact is this. Very positive.

B. Pump.fun – The Business Model Unlock

Pump.fun has released a mobile update allowing creators to allocate fees to any account.

• Why it matters: This transforms Pump.fun from a meme-generator into a business-creation engine. Open-source projects or accounts can now be funded directly via trading fees from a token. It is a new capital formation model for the open web.

C. BlackRock & Uniswap – The “Buidl” Bridge

BlackRock is integrating its BUIDL token (tokenized fund) with Uniswap X.

• The Mechanism: While currently whitelisted for institutional players, this creates a direct bridge between traditional securities and onchain work flows.

• The Signal: This validates that all asset trading will eventually migrate to blockchain for instant settlement and collateral efficiency.

7. The 2026 Thesis: The “Opportunity Cost” Flip

The core thesis for 2026 is based on a reversal of Opportunity Cost.

• The 2025 Context: In 2025, holding crypto was painful because everything else went parabolic.

  • South Korea: The KOSPI index and tech giants like Samsung and SK Hynix (AI memory) more than doubled (up 180%+), driven by massive retail flows

  • TradFi: Gold, Silver, European stocks, and US equities all went “to the roof.”

  • The Pain: The opportunity cost of holding BTC (which was chopping/underperforming) was massive.

• The 2026 Reality:

  • Traditional markets are now historically expensive (”to the roof”).

  • Crypto is the only asset class that has underperformed and is now trading at deep value.

  • The Pivot: With legislation passing in Q1/Q2 and institutional floors being set (e.g., Binance SAFU fund buying $1B BTC), capital will rotate from expensive equities into cheap crypto.

Conclusion: Buying BTC below $70k here is a gift. The risk/reward has flipped. It is no longer “expensive” to hold crypto; it is risky to hold overextended traditional assets. We are entering an exponential catch-up phase for crypto assets in 2026.

This is intended to be a thought exercise, and not financial advice. Reach out in open conversations, DM me or comment anytime.

I’m aiming to provide clarity about the world day-by-day, and I hope you get smarter and more financial intelligent every day. Each day we increase our chances of winning.

Thanks, Joao