Markets Hit A New All Time High, Whats Next?

Summary

• Avi’s core call: this is a lockout rally with legs. Breadth has finally arrived — equal-weight S&P and the Russell outperforming, commodities working, software rationally punished by AI — and the melt-up is “a complete repudiation” of the idea that the Iran war or AI-doomer fears would sink stocks. The fuel is psychology: shorts who were briefly right “bear hole themselves” and can’t flip, leaving a mass of under-allocated buyers. He stays long until euphoria: “if I go a week with nobody bringing up the Iran war, I might start taking some chips off the table.”
• Bitcoin is running out of sellers. Through the whole war, while Nasdaq, software, and semis (Intel 50→42) took it on the chin, Bitcoin didn’t go down — meaning “there are just not that many sellers left.” Targets floated: 150k, then “260, 270.” Layer on the STRC reflexive loop — deposits fund an 11.5% dividend while MSTR issues stock and buys Bitcoin weekly, letting the market front-run Saylor — and you get a staircase up, then a blow-off top, “escalator up, elevator down.”
• Jonah’s change of mind makes the blow-off possible: last year he expected one “and so was everybody else, which makes that impossible.” Now consensus says “crypto is such a joke,” nobody’s positioned, and that sets up “a quiet, sneaky FU Bitcoin rally.” He’s genuinely disenchanted with DeFi but insists “Bitcoin is more bulletproof than ever… cargos are getting turned around over USDT.”
• The KelpDAO/LayerZero hack (North Korea’s Lazarus; “$7 billion… North Korea is the biggest exporter of digital rugs”) is Jonah’s proof that “DeFi is not DeFi. It’s clearly CeFi” — Arbitrum’s security council and Aave froze funds while anonymous operators decide who eats the loss. Avi’s read: rates don’t compensate the risk, so capital reallocates “away from the things that don’t work into the things that work” — Bitcoin, Hyperliquid, potentially SKY, and maybe Syrup.
• The AI trade is early, not late: “we probably need to build out 10 times the amount of compute,” and under 30% — maybe under 15% — of the workforce uses AI daily. Avi is long Nasdaq, semiconductor ETFs, “across the board.” His falsifier is consumer data: credit-card defaults spiking or luxury spending rolling over would break the thesis — “trading and investing is all about adjusting.”
• Tradeable one-offs: Avi calls Avis “a fantastic short” — gingerly scale in ~20% of the position here, probably not going past 1400, ~300 in six months, because unlike crypto squeezes, companies “can issue as much stock as they want.” Avi’s comparison: after GME in January 2021, the market went up 30% — squeeze mania is not a top signal.
• Jonah’s macro fulcrum: “fade everything except socialism.” Wars and oil shocks are transient with rates well above zero and QE in reserve; the only structural bear case is a redistribution wave — he’s bearish LA/NY/London real estate, and the tell would be an Obama–Zoran Momdani-style blue wave taking both houses and the executive: “then we can get nervous.”

Deep dive

1. Breadth arrives — the lockout rally thesis vindicated

• Avi restates the house view held since the Citron-article AI-doomer scare and through the Iran war: “The US economy is strong… Tech is an accelerator. Tech improves earnings per share” — and might even create jobs rather than destroy them. The new highs are “a complete repudiation” of the idea those shocks would hit stocks in a big way.
• The evidence is breadth: the equal-weight S&P and Russell outperforming, commodities working, while software gets “hit really hard by AI.” To Avi that’s a rational market pricing 6–12 months out, not a narrow top-10 melt-up.
• The mechanics, per Avi: “people consistently bear hole themselves” — you short, the market drops 5% instead of your 10%, rebounds to your entry, and “psychologically it’s very difficult to say I was right but now I’m wrong.” That leaves many investors less allocated than pre-war, which is why “this rally has legs.” His exit signal is social, not technical: euphoria, or a week where nobody mentions the Iran war.

2. The AI buildout is early — own it across the board

• Avi’s sizing of the opportunity: “we probably need to build out 10 times the amount of compute,” and less than 30% — “it might be less than 15%” — of the workforce uses AI day-to-day. He’s invested in the Nasdaq, semiconductor ETFs, “basically invested across the board.”
• The joke that carries the point: “we can’t release Mythos… because they don’t have the compute for it. Not because it’s so great.” Whether true or not, “directionally… we are still in the early phases of building out infrastructure for this AI revolution.”

3. KelpDAO: the hack that exposed DeFi as CeFi

• Jonah reads the anatomy aloud (from Zach’s tweet): ETH staked via Lido for stETH, restaked into EigenLayer, liquid-restaked via KelpDAO for rsETH, deposited into Aave for a leveraged looping position — until the LayerZero bridge was hacked by North Koreans, rsETH went undercollateralized, “everyone is pointing fingers at each other and also DeFi is a very serious industry.”
• His Lehman-credit-desk instinct: “if the yield is too high, there’s an asterisk somewhere” — and DeFi is that upside down. Borrowing at 3% against ETH when Schwab margin costs 6–7% against dollars means “you’re taking all kinds of risks you don’t understand.” Aave “institutionalized DeFi” — made it look like JP Morgan — and lulled the space into complacency.
• The aftermath clinches it: Arbitrum’s “very dystopian Fahrenheit 451” security council and Aave freezing funds, while KelpDAO — “probably a couple of 57-year-old dudes in a co-working space” — decides whether the hack gets socialized broadly or targeted narrowly. “DeFi is not DeFi. It’s clearly CeFi” — TradFi’s clowns, minus the institutions you trust.
• Avi’s structural line, long held: only the base layer needs to be decentralized, not the applications — and most of DeFi, unless it pivots, “is very unsafe” because “the rates are not high enough to justify that risk at all.” Capital reallocates “away from the things that don’t work into the things that work” — Bitcoin, Hyperliquid, potentially SKY, and maybe Syrup.

4. Why the 2021 yield existed — and why it faded

• Avi’s mechanism, worth the whole segment: 2021’s “phenomenal yield” came from companies issuing what was effectively equity in large percentages of their company to depositors — as if Robinhood allocated 40–50% of its float to users. That’s an impossible customer-acquisition cost; the tokens went to zero on no business model, people stopped giving away so much of their company, valuations deflated, and “your yield unfortunately is going to look very similar to what you can get in traditional finance.”
• The live disagreement: Avi says Saylor’s 11.5% STRC is “actually safer than a lot of DeFi”; Jonah objects — “I don’t think that product is that safe at all” — and Avi concedes “No, it’s not.” Safer than DeFi is a low bar, not an endorsement.

5. The rollup roadmap is flawed — and it’s sort of irrelevant

• Jonah, agreeing with Kyle Samani: “Ethereum’s roll-up road map is flawed. Roll-ups are just centralized sequencers.” Old news philosophically — but KelpDAO “was the kick in the nuts that makes it very clear and present.” Capital can’t retreat to mainnet (“too slow and expensive”), so the real question becomes whether Solana is sufficiently decentralized to host financial applications.
• Arbitrum is “a big question mark” for Avi, including as Hyperliquid’s substrate — Jonah pushes back that it won’t be “for long.” Jonah stays “very bullish on Perp” as the only Hyperliquid access route for those who won’t go on-chain, while Avi found competitor Lyra’s deposit-anything-into-USDC flow “so much easier” — “the deposit experience on Hyperliquid is terrible.”
• Avi’s cut-through: the decentralization debate is “sort of irrelevant. What’s relevant is that Bitcoin is going up.”

6. Bitcoin: no sellers left, a reflexive Saylor bid, then the blow-off

• The flow logic: a trader predicts where money already is versus where it isn’t. Everything with heavy allocation — Nasdaq, software, semis, Intel from 50 to 42 — got hit in the war; Bitcoin didn’t go down, so “there are just not that many sellers left at the price point that we’re at.” Targets tossed between the two: “Bitcoin’s going to 150k” — “260, 270.” (Earlier: “we’ve been saying buy Bitcoin under 70 [as spoken], don’t get shaken out.”)
• The STRC reflexivity, spelled out: depositors get 11.5%, MSTR buys Bitcoin with the deposits and sells stock to pay the dividend; everyone knows Saylor buys weekly, so buyers front-run him, and rising Bitcoin makes the product feel safer, drawing more deposits. That’s why Bitcoin is “staircasing up” instead of its classic parabola — “Saylor is eating through all the sellers.”
• Avi’s endgame: ride the trend into “some sort of blow-off top” — then “escalator up, elevator down, as they say in commodities.”
• Jonah’s confessed mistake makes it possible: last year “I was expecting a blow-off top for Bitcoin — and so was everybody else, which makes that impossible.” Now the consensus is “crypto is such a joke”; he’s “genuinely disenchanted with DeFi,” but “Bitcoin is more bulletproof than ever… the world is literally getting shredded apart into hemispheres… cargos are getting turned around over USDT.” Nobody positioned means “a quiet, sneaky FU Bitcoin rally.” Avi’s coda: “don’t get locked out.”

7. Squeeze mania is a health sign, not a top — and Avis is a short

• Headline trades are back — the Hims pop on “RFA” floating peptide reclassification — which Avi reads as risk tolerance returning, “money willing to allocate.”
• On the Avis squeeze (up five weeks straight), Avi compares it with GME: GME hit in January 2021 and the market went up 30%, with “actually a full 2 years of bull market” after. Jonah’s caution: “I would caution against using Avis as a barometer for market health.”
• Avi’s trade anyway: “Avis is a fantastic short” — gingerly scale in roughly 20% of the position here, “probably not going to go past 1400,” and “in 6 months this thing is probably trading at… 300.” The equity-versus-crypto distinction: companies “can issue as much stock as they want basically at any moment” — Avis can quadruple its share issuance into the squeeze.

8. Fade everything except socialism

• Jonah’s commodities-trader reductionism — collapse the complex situation to its fulcrum — applied to the whole market: “I’m not worried about anything except socialism and redistribution.” You can fade wars badly on timing (he faded Hormuz early, “took a dirt bath”) and still win if the expression is right — he bought good assets cheap rather than shorting oil futures, and they’re back at highs.
• Why dips are buyable: with rates well above zero there’s “plenty of financial engineering” left at the Fed, Treasury, ECB, and SNB, and QE after that. Black swans — a Mythos release taking down society, quantum hacking JP Morgan accounts, nuclear war — get underwritten, not traded. Buy dips, “especially assets like Bitcoin that outperform periods where they should be underperforming.”
• The one watch item: creeping redistribution in housing — he’s bearish LA, New York, and London real estate — and politically, “keep a very close eye on the Barack Obama and Zoran Momdani alliance… if that sweeps the Democratic Party” into both houses and the executive, “then we can get nervous.”
• Avi’s addendum and falsifier: he must watch economic data, because his thesis is AI won’t cause mass job loss or a spending collapse. “If you see credit card defaults start to go through the roof” or luxury spending cut back, “that’s going to falsify my thesis. And then I have to adjust — trading and investing is all about adjusting.”

9. The pivot: leaving Blockworks, a terminal, and the 1000X token

• The pair are spinning out of Blockworks (amicably — “like Gwyneth Paltrow and Chris Martin successfully co-parenting”) to build a multi-show live network: “real people who take real risk,” not “journalist talking-head clowns,” streaming multiple times a week starting in May because weekly recording can’t track a moving market.
• The product: terminal v2, launching beginning of May, built by revamping a crypto fund’s internal LLM into a retail product — “probably better optimized for markets than any of the main AI engines by a long shot.” 50% of terminal revenues (plus a share of network revenues) go to the 1000X token, Avi’s penance for the accidental launch: “people have lost money on it and I’m like, how do I make this thing work?”
• The group-chat lore explains the ethos: the “NDA” is the Niger Delta Avengers — who dove 60 meters to dismantle the Forcados pipeline, mined it so no repairman would touch it, and tweeted a $100M ransom at Nigeria’s government. Avi’s point (crime firmly disclaimed): be a “financial entrepreneur” wherever you’re planted — “the world is a big and complicated place and we can’t just superimpose our western business values onto every region.”