Is This the Endgame? with Itay Vinik

Hey Bankless Nation. The title for today's episode, Are We at the End Game Now? David and I are talking about macro. Gotta pop our heads up from everything that's going on in SBF FTX. And uh look at the wider world here. Because I think there are some looming macro questions that face us as we are ending 2022 and going into 2023. We have the perfect guests to talk about them. But the big questions in my mind that I asked this uh macro analyst is a a guest I think has some fantastic perspectives on this. How did we get here?

Right? Like, what's the history of how we got here?

Where are we now?

Pinpoint us on the map.

When do we pivot? When is this Fed pivot going to happen? Was Powell's next move? And lastly, is this the end?

I don't mean the end of all human civilization, David. I'm talking about like

Oh, thank God.

the end of the the the end of this um credit debt cycle that we seem to be in. Ray Dalio talks about this, right? You only get so many spins at this wheel before.

everything falls apart. Uh so who do we have on the episode and uh why why is this important?

Yeah, we have a a macro commentator, Etai, who has come in with a bunch of charts. Uh so if you are listening to the podcast, you might actually want to go over to the YouTube because this will be a very chart-heavy episode, which we don't get very often uh here on the show at Bankless. But when we do, everyone loves it, including myself. Uh and so Etai has uh a just a long history of charts, as in like it goes back the first part of the show is gonna go back many decades. Uh but then as we progress throughout the show, we're gonna get in more and more up to modern times and be able to actually hopefully try to project what happens next. And are we at the end of the road? And Ryan, this is the first week in a long time where we have zero SBF rated related content, and I am just absolutely here for it.

I can't wait till we no longer have to say we don't have SPF content this week. That'll be the next step of the phase. But yes, um, talking about macro today, and it's refreshing to get back to some of these base essentials. All right, guys, we are going to be right back with our episode talking to Etai Vinnick all about macro. Is this the end? But before we do, we want to thank the sponsors that made this episode possible. Megless Nation, are we at the end game now? How did we get here? Where are we now? When do we pivot? What's going to happen with the Fed? We have the perfect guests to talk about these subjects. Etai Vinnick is the co founder and chief investment officer at ECWI, which is an alternative investment platform. He knows a ton about the questions we are asking. In fact, uh, we had a conversation probably what six weeks ago

or so, Etai, where I was like

Okay, I was like, you know this space very well. You have the charts and data to kind of uh tell a story.

Could you come help the crypto community and the bankless community make sense

of what's happening, what got us here, and where we are now? So uh Itai, it's great to have you on Bankless. And thanks in advance for your help in understanding these complicated subjects.

Yeah, no, no, no problem. And especially because you know you do have to have

a pretty good understanding of history and um macro history in order to really understand how the current environment is being

influenced by some of these events that even took place seven years ago.

Can can I ask you before we get into the questions of like um

How did you learn this stuff? Like, how do you get up to speed and get educated on understanding macro? It just seems like there are so many different topics. What's your story on how you got here?

Yeah, it's a it's a great it's a great question. I mean, I started my career at UBS um being an analyst and really passionate about financial markets, reading everything that I could and slowly putting the pieces together.

After that, I started a hedge fund that traded volatility. So it was pretty important to understand how some of these events can influence the volatility regimes in the market.

So really it's

15 years of experience of just putting it together.

And it just, you know, it adds up and knowledge gets compounded. And, you know, when you understand these things and you connect the dots correctly,

it could be very rewarding.

So, Itai, I know you have kind of a foot in crypto, but also a foot out. Like, you're not 100% all in crypto, like you're also looking at other alternative investments and and macro in general. Um, what's your sense of like crypto and what's kind of your experience in it? G give the bankless community uh some idea there.

Yeah, I mean, I've I've I've dabbled in crypto for a few years now.

Really, um, for our firm, what we've done prior was crypto lending that now I guess get a has a little bit of a bad uh

of a bad rep plus um

DeFi and Delta Neutral DeFi, really. So

I figured that the arbitrage opportunities in crypto were quite a bit

for taking, you know, they were they were rewarding you enough to not take direct price risk.

However, we exited crypto lending in May after Terra Luna, even though we had no exposure to Terra Luna.

I was just worried about systemic risk generally. And I was thinking, what kind of firm has too much leverage that we don't know about? So even though we had exposure to BlockFi and Gemini, we actually exited both in May.

Wow. Wow. By the way, can you like uh DM me next time you get that spidey sense? Uh that could be good to know. Yeah.

Yeah, our exposure wasn't huge, but we were using BlockFi as kind of a cash substitute. But then

once Terra Luna happened, you know, the the C Fi type of risk was high.

But also V Fi risk was high with as we've seen with Terra Luna. And,

you know, I was just worried that.

Players in the space, even the bigger companies are just not managing risk correctly. And we exited crypto entirely in May as a result.

Can you uh just maybe elaborate on what were the inputs to go into that decision? Was it like just your spidey senses? Was it just yeah experiencing contagion in other markets? Because I feel like uh I mean, I I don't have intrinsic details into like the whole state of the entire crypto industry and how we reacted to Terra Luna, but I think from my limited scope of what I can see, like most people were turning either less willful blindness, but no one wanted to believe that there was so much contagion. So, like, can you talk about like what your experiences were and why you decided to make that move?

And I think the thing too, David, I don't know if this resonates with you, but like is

some people saw after Luna, like that there would be Fallout and Contagion. But I feel like the FTX thing caught a lot of people by surprise. Like I thought all the damage had sort of started to work its way through the system.

All right.

And then there was this other like secondary, it was like a one two combo punch, and the second punch just hit us right in the gut.

Yeah.

So to me, first off, I would make it clear that even though we did crypto lending, we never did algorithmic stable coins just because

we were worried that they're not really backed by anything but the good faith of whatever VC is backing that particular project.

And

I was thinking at the time that there's a lot more

centralized risk in the crypto space than

what a lot of people believed. Because when you're looking at all these different projects, it's

Are supposedly decentralized. They're not really decentralized because there are backers across, and it's really fueled or was fueled by VC dollars.

So as a result, when we saw what happened to Terra Luna,

the decision was really this is this is kind of a new space.

There is no central bank, which is kind of the point, right? But there is no central bank. So we don't know who has too much leverage. We don't know.

What kind of asset toxic ratios are out there into different firms?

And if there's a true shock event and a real stress test,

it's kind of impossible to know who's good who's the good player and who's the bad player. So, from an abundance of caution to our investors, we just decided to