One of the most brutal moments of the Bretton Woods negotiations came when Keynes, exasperated by White’s steamrolling tactics, snapped:

“We are not here as beggars.”

But that was exactly the problem—Britain was a beggar, drowning in war debt and completely at the mercy of U.S. In the end, Keynes had to swallow his pride and accept the deal on American terms: a dollar-backed system that entrenched U.S. financial dominance for the next half-century. The so-called negotiation was never such—it was a lesson in power, and Keynes walked away knowing he lost.

1/ Had a lively chat with @JSeyff @krugermacro @NoelleInMadrid on Trump's economic agenda, revisiting an "Econ 101" sacred truth: tariffs create deadweight losses and therefore are negative EV. Here's a colorful thread on why this famous graph is misleading: 2/ Let me first break down the graph. It shows how globalization lowers the price of goods, requiring foreign producers to fill the supply gap since domestic producers can only supply Q1, while consumers demand Q4.

When tariffs are introduced, prices rise, allowing governments to capture the spread between the higher price and the (since reduced) foreign production. Foreign production declines for two reasons: domestic producers can ramp up supply at the higher price, and consumer demand shrinks due to the increased cost.

Got all that? If so, keep going. If not, make sure you understand this first—because we’re about to dive deep into the fantastic rabbit hole of my brain.

It’s surprising how many people overlooked the most important thing @DavidSacks said yesterday about stablecoins:

“Stablecoin demand could lower long-term interest rates.”

That’s the real takeaway. Fiscal dominance is unstoppable and stablecoins will be America’s new UST. called it ~3 years ago:

https://twitter.com/dgt10011/status/1549393616262598656

This is the only thing you need to read about tariffs to understand Bitcoin for 2025. This is undoubtedly my highest conviction macro trade for the year: Plaza Accord 2.0 is coming.

Bookmark this and revisit as the financial war unravels sending Bitcoin violently higher. For my mobile readers:

To understand tariffs today, there are two contexts you have to frame the conversation in: 1) the curse of the Triffin dilemma, and 2) Trump’s personal goals. By analyzing both, the end game becomes clear: tariffs might be just a temporary tool, but the permanent conclusion is that Bitcoin is not only going higher—but faster.

First, the Triffin dilemma: The US dollar status as a reserve currency gives the US what is called “exorbitant privilege” in financial transactions/trade, and it has a few implications: 1) the dollar is structurally overvalued due to its need to be held as reserves by other countries in a price-inelastic manner, 2) the US has to run a persistent trade balance deficit to supply the world with those dollars, and 3) the US government therefore can borrow persistently cheaper than it should be able to. The US wants to keep #3, but rid #1 and #2–but how? Enter tariffs.

Recognize that tariffs are often a temporary negotiation tool to achieve a goal. The ultimate goal is to seek a multi-lateral agreement to weaken the dollar, essentially a Plaza Accord 2.0. One hypothetical way this could happen is that the US would explicitly specify that countries have to reduce their dollar reserves, while also requiring them to shift the duration of the UST holding further out. In other words, Trump is trying to find a way to implement a “YCC, not YCC” strategy within the realms of the executive branch. No doubt Bessent is on board, recognizing that he was left a bag of trash by Yellen, whose legacy will have been the near-permanent impairment of the Treasury’s ability to manage duration by doubling the proportion of debt financing to T-bills (adding fake liquidity), exposing the US to the mercy of the whims of refinancing– idiotically while interest rates were beginning to rise. The cost to US taxpayers here cannot be understated.

As a result, the US is charting a path to achieve the holy grail of fiat alchemy: lower dollar and lower yield.

This brings me to my second point: I have shared before that Trump’s #1 goal is to lower the 10y rate, the reason being that his own bags depend upon it: real estate. His obsession with Powell cutting short-term rates, then realizing it is not working, is the catalyst. Never doubt the uncomplicated incentives of the transparently profit-motivated, and align yourself next to him. Mark my words: the 10y is going to go down, whatever it takes.

The asset to own therefore is Bitcoin. In a world of weaker dollar and weaker US rates, something broken pundits will tell you is impossible (because they can’t model statecraft), risk assets in the US will fly through the roof beyond your wildest imagination, for it is likely a giant tax cut will have to accompany the higher costs borne by the loss of comparative advantage. The tariff costs, most likely through higher inflation, will be shared by both US and trade partners, but the relative impact will be much heavier on foreigners. These countries then will have to find a way to fend off their weak growth issues leading to stimulating the economy through monetary and fiscal policies that ultimately cause currency debasement. The outraged citizens of these countries will experience a mini-financial crisis and look for alternatives. And unlike the 1970s when the world was largely offline, today we are not only online–we are onchain. So while both sides of the trade imbalance equation will want Bitcoin for two different reasons, the end result is the same: higher, violently faster—for we are at war.

TLDR: You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run.

When the US went off gold in 1971, Nixon imposed a 10% universal tariff on all imports to pressure trade partners into accepting devaluation w/o retaliation.

But before declaring tariffs are inherently bad, consider how US trade continued to dominate the global economy first. The global economy is a complex fluid system. It’s possible shock tariffs can reduce demand for dollars and lower trade deficit, weakening the global dollar supply-demand dynamics. It likely will drive inflation higher, but with the right Fed policies, can also weaken the dollar.

When realized volatility goes up for all assets, the value proposition of BTC volatility goes down on a relative basis. Ie the cost of capital to hold BTC increases.

Then as LT rates rise as a source of competition for that same capital, BTC cost of capital increases even more. This is one of the many technical reasons, in addition to global liquidity indicators and the collateral multiplier, why the rise in MOVE coinciding with a rise in LT nominal rate is bad for risk assets, but particularly for Bitcoin.

This is almost certainly related to the gargantuan levered ETFs, their upcoming option expiries and their swap counterparties

Dealers need more inventory

https://twitter.com/joshmandell6/status/1875972064969920795

the danger zone is actually the Jan-10 expiry, not Jan-17

there is an aggregate 2bn (3.5bn OI) delta to the upside with about 100mm in gamma

if you zoom out, theres another 500mm spot notional at $780 strike. believe it or not, the delta on this is 40d. 👀

1/ NYDIG, a Stone Ridge subsidiary, announced that they are looking to capitalize on Bitcoin-backed loans financed via insurance float. This is a prime example of how the asset management system can be gamed.

How does this this regulatory arbitrage work? An important thread 🧵:

https://twitter.com/samcallah/status/1873759150494417126

2/ First, the reinsurance business can be extremely lucrative, even better than the regular non-life P&C insurance business. There are various factors but the two most important differentiators are 1) portfolio yield, and 2) tax as per below model.

As the year comes to a close, I’ve taken some time to reflect on the posts I’ve shared with my alpha-seeking community. 2024 was an incredible year filled with opportunities and personally, one of my most satisfying.

Here are my top 5 best and worst calls of 2024 👇 1. In May, I recommended a tactical ETH put spread for less than 1% of capital, anticipating that the ETH ETF news was overhyped. The trade ultimately delivered a staggering 700%+ return if held to maturity.

Making 'bearish' calls is never easy—especially on CT—but that’s exactly why I take pride in this one. Trading isn’t just about holding fundamental conviction; it’s about knowing when to read the room and act decisively.

x.com/dgt10011/statu…

1/ short thread on covered call strategy:

as i shared prior, one of the most misunderstood aspect of cc strategy is people think it's an income play. Its not, and i explain it here:

https://x.com/dgt10011/status/1858256093908189645

2/ we're going to walk through the live example now that i suggested and the post-mortem. the first trade i suggested on 11/22 was to sell 400 call. explanation below:

https://x.com/dgt10011/status/1858523620147933312

IBIT Options Trading Recap!

Today marks the historic Day 1 of BTC ETF options launch. It did not disappoint, with over $1.86Bn in notional traded! There were some notable takeaways in my opinion, so here is a quick thread on the Top 10 Most Interesting Observations I made 👇 1/ Just as we expected, the market launched with a beautiful “volatility smile” quickly established by 945AM and for the rest of the day. In fact, the smile got even wider throughout the day, finishing with higher wings by EoD.

Here’s the untold truth about covered call strategies:

Often misrepresented as “income” plays, they’re actually short-volatility strategies crafted to lower the cost basis of your long position. But it’s not about blindly selling weekly calls. Success depends on timing key dates (e.g., Dec 13, Nasdaq inclusion) and understanding whether you’re in sticky-delta or sticky-spot regimes.

With the right strategy, you could potentially acquire $MSTR shares at no net cost within a year. Follow my posts here and on Substack, and I’ll guide you through the process. This is one of the most important frameworks to master, best studied by the legendary @EmanuelDerman:

If you’re bookmarking one investment guide for the decades to come, make it this one. Five minutes to rewire your mindset—and you’ll never see investing the same again. Revisit after the election; it’ll hit even harder.

Here’s the grand finale: Part III: The Radical Portfolio

1/ The Radical Portfolio’s core thesis is 60% Compliance / 40% Resistance.

To illustrate what this radical mindset means, we assess the foundational assumptions of different kinds of assets in the world that one can own as we seek to draw some heuristics out of their commonalities. Here I lay out how to categorize a few examples in such a schema:
• If you own GLD (Gold ETF), that’s compliance - 60% bucket. If you own physical gold bars, that’s resistance - 40% bucket
• If you hang valuable art on your walls at your home, that’s compliance - 60% bucket. If you own the same art held in tax-free freeports, that’s resistance - 40% bucket
• If you own your primary residence, that’s compliance - 60% bucket. If you anonymously own a shelter offshore, that’s resistance - 40% bucket

What you find here is that at a high level, highly resistant assets are by definition likely to share attributes of being decentralized, scarce, and timeless. This is the radical way we must imagine portfolio theory. We must live our lives within institutions for the most part (60%), but we also need to live our private lives away from such institutions for it is not improbable that they may break during our lifetime, most likely in a fantastic way.

Presenting Part II: A New Manifesto

If the Traditional 60/40 is broken, what comes next? At this juncture a philosophical pivot is necessary- only by breaking free from 'the System' can we prepare ourselves to face a Radically different future ahead.

Brace yourself and read on. 1. Embrace the Absence of Absolute Truths in Economics

In the realm of social sciences, particularly economics, there is no absolute truth. What we have instead are narratives—stories crafted by those in power, often to reinforce or maintain that power. The inverse of misinformation is not truth, but rather state-controlled narratives. History is shaped by the victors, and so too are our understandings of value, capital, and risk.

Consider, for example, the divergent perspectives on key historical events. What one side calls "liberation," another labels "occupation." What is "insurance" to some is "speculation" to others. This applies to capital markets as well, where risk and reward are framed by whichever authority governs the space. As a result, the lines between what is productive and what is parasitic become blurred. In portfolio construction, we cannot afford to be beholden to state-sanctioned truths about economic reality.

Our goal must be to operate beyond these illusions, understanding that markets are ultimately political constructs. The ability to transcend these constructs is key to surviving in a world where risk is ever more centrally managed.

1/ Incredible episode on the inner workings of multi-strategy funds. @TheStalwart, @tracyalloway, and Dan offered plenty of valuable insights (thank you!), but I believe they overlooked some of the most crucial aspects. Here are a few thoughts to add to the conversation:

https://twitter.com/TheStalwart/status/1843223330989776987

2/ ‘Being a multi-strategy fund is a way of organizing yourself. It is not an investment strategy.’ - Fantastic quote from Dan, and I agree.

I’ve mentioned before that Millennium is like an iOS—an investment operating system. 👇

https://x.com/dgt10011/status/1796223813770006913

Why Citadel Dropped Its Plan to Become a Primary Dealer

1/ Citadel unexpectedly shelved its long-standing ambition to become a Primary Dealer (PD), a key status in the world of broker-dealers. This move highlights broader changes in the Treasury’s liquidity model. 2/ Traditionally, being a PD was the ultimate privilege for broker-dealers—direct trading with the Federal Reserve and access to U.S. Treasuries at auction. Citadel chased this status for over a decade, even filing an RFI on the evolution of the Treasury market.

Clear eyes from @CryptoHayes and the imagined "Central Bank Currency Swap" to transmit stronger JPY without US asset dispositions. Read details here:

For those uninitiated into the fantastic world of central banks and read his post for the first time, you may think that this is all "too magic to be true." So I thought I would share some historical examples of how swap lines have been used to save markets in the past: 🧵cryptohayes.medium.com/spirited-away-… Bretton Woods era (1940s-1970s)

In the 1960s, The Fed established reciprocal currency swaps with BoE, Budesbank, Bank of France, Italy, etc. to defend their respective fx pegs. It estimated that it reached as high as $8bn in swaps (which might be around $70bn today). The accumulation of dollars abroad put pressure on US gold reserves.

Then in the 70s, the Smithsonian Agreement was struck to allow Fed, Bundesbank, BoJ to intervene in FX markets and use swap lines to unsuccessfully maintain parities after the suspension of the gold convertibility, ultimately leading to its collapse and free float thereafter.

My colleague @Matt_Hougan writes an excellent weekly memo, where he recently advocated for the consideration of $ETH as a technology investment akin to high growth tech plays like $NVDA and $FB.

This was the very last sentence of the memo. What does that actually look like? 👇 The 90/10 mix of Nasdaq and Ethereum with monthly rebalance indeed generates a higher simplified Sharpe ratio across various time series. Just like $BTC adds value to a 60/40 portfolio, $ETH adds value to a modern technology portfolio. The 1-year total return chart shows you how.