Ivan on Tech analyzes Bitcoin's position during a volatile week featuring US midterm elections, cybersecurity threats, and broader market turbulence
Ivan on Tech presents a solo market analysis covering Bitcoin's relative strength, the midterm election outlook, the AI trade and its true costs, cybersecurity vulnerabilities, and asset allocation strategy.
Summary
Bitcoin is holding around $78,000 while broader markets face pressure, with the host arguing it is showing relative strength compared to gold, which he describes as making new lows, and notes that NASDAQ has entered bear territory while the S&P 500 remains bullish. The central thesis of the episode is that the US midterm elections — expected to bring Democrats back into power — could actually be bullish for markets by creating political gridlock, preventing further destabilizing actions including what Tucker Carlson has described as a potential US nuclear strike on Iran. Ivan also covers a significant Linux kernel vulnerability affecting all public-facing servers, including blockchain nodes, and uses this as an argument for diversifying away from pure self-custody into instruments like ETFs. Additionally, Ivan discusses the AI trade at length, using Elon Musk's increase in Grok token costs as a signal that the true price of running AI may dampen adoption, and raises questions about whether end users will pay full costs or migrate to Chinese or open-source models.
Key Takeaways
FULL TRANSCRIPT
Bitcoin's Current Position and the Midterm Election Outlook
Ivan: Bitcoin is at $78,000 right now. We are holding the line here at $78,000. Last week we went all the way down to $76,000. This week is going to be spicy — very, very spicy — because we do have the midterms. The midterms are tomorrow. As soon as the midterms are done, there is a good chance of a nice bounce. Not a guarantee, never a guarantee, but there is a good chance of a nice bounce as the uncertainty around the midterms disappears.
It seems that the Democrats are going to be sweeping the House and the Senate, and that in a way could be bullish, because markets like stability. When there is indecision, when you have gridlock, the politicians cannot do anything. It is, in a way, stability. When you have a few guys here and a few guys there and they're in disagreement, nothing gets done. And sometimes it is very good when the politicians don't do anything. Sometimes you think back to Sleepy Joe — when he was sleeping, when he didn't do too much. Sleepy Joe in many ways was very good because he was just there at the beach, not doing too much.
Now there are talks about the Iran nuclear option. We just had Tucker Carlson speak about the Iran nuclear option. In these kinds of situations, we're thinking back to sweet, sweet times when we had Sleepy Joe and nothing like this was happening. Under pressure from Israeli Prime Minister Netanyahu, the Trump administration may be within days of launching a nuclear strike on Iran — this according to Tucker. Think what you want about Tucker. It's something that is being discussed, and of course it spooks the markets. It is spooking the market.
Should Democrats get a bit more power, maybe they can create gridlock. Having Democrats with more power is actually bullish in this context. It's an interesting turn of events where a gridlock would be quite bullish. So all in all, let's see what's going to happen tomorrow. Bitcoin is holding on quite nicely. We're down a bit — a red wick here, a red wick there — but it is still a bull trend.
Bitcoin vs. Gold: Relative Strength
This is in contrast to something like gold, because you always have to compare assets to each other. Gold is really dropping hard. This is price discovery to the downside — creating new lows, new lows after new lows after new lows. And Bitcoin is holding up quite okay and is actually still on the way to create a new high. We had a low at $59,000, and at some point with high likelihood we're going to create a higher low. We go from lower lows last year into higher lows. That would of course be fantastic.
Midterms normally are a good time where markets can find some kind of bottom and then continue to the upside, because the uncertainty is gone. The summary here is that despite everything that's happening, we keep it simple. We are bullish after a year of bear. Is it easy to be bullish in a bull market, in a bull trend? It's never easy. Nothing is easy. If investing were easy, everyone would be Scrooge McDuck. Everyone would be a billionaire if everything was so easy. In reality, even when you have a strategy, it takes courage and guts to follow it. And most people don't even have a strategy. So whatever they hear today — Tucker Carlson saying it's going to be nuclear — they panic. Then tomorrow we have a big fat green candle because the midterms are over and they pile back in. Always, always, strategy is important.
Asset Trend Analysis: Solana, ETH, and Altcoins
Looking at the current situation — what do we see? What's going on in the market? We have a bit of a dump with the altcoins, but not too much. On the weekly, Hype is fantastic, Pepe is fantastic, Morpho is fantastic. Everything else is kind of down between five and ten percent. For crypto, it's not too crazy, but we have kind of become a bit sensitive. Everyone has already forgotten the 2018, 2019, 2020 times where coins going up and down a lot was very normal. Now even when things are down ten percent — Bitcoin, for example, is down from the top about eight percent — people are freaking out. We have become a bit sensitive. But that's why we manage risk. We set stop losses. We follow the mechanical rules.
One very important example of how those rules are applied is Solana going bearish. Solana going bearish is a very important thing, because as you know, with assets we trade them — we don't date them. Solana going bearish means no position. It is better to be in assets like Bitcoin or Hype, which are in a bull trend. The latest example of that is Hyperliquid, because Hype is in a bull trend. You remember Lighter went into a bear trend a few weeks ago. We said there's no point in holding Lighter when Hype is still bullish — you just migrate from the bearish asset into the bullish one. And you can see what Hype did from that breakdown in the beginning of October. Fantastic. What happened to Lighter? Another breakdown. Another leg down.
At the end of the day, you want all of your assets to just go up and never down. But when they go bear trend, my strategy is to be in bull trends. Solana has gone bearish. ETH is actually still surviving — ETH is still bullish. So let's see when Solana comes back. Currently it has to pump quite a lot to get back to those highs. Should it continue down, the bull flip level is also going to come down. We follow the strategy because the number one rule of investing is: don't lose money. Look at Warren Buffett. Look at anyone. It's a common saying in crypto and in investing in general. Number one rule of investing — don't lose money. Should an asset go bear trend, even if I love it, what you want is for the asset to deliver. If it doesn't deliver, it's bear trend. We need the bull.
Looking at the others — XRP, Avalanche — still bull trend. Most assets are actually surviving this dump. Some have flipped, and ETH is on the brink. Keep an eye on ETH. Should it go bearish, there's no point holding it.
NASDAQ, S&P 500, and the Broader Market
The market now is tough. Crypto is down. People are concerned about the AI bubble. Gold is down. Everything is down. Only the dollar and the stock market are currently okay. With NASDAQ, you have to be careful — NASDAQ is now in bear territory. When something is bearish, we are risk-off. The S&P 500 is still bullish, so S&P is still good. Let's see if S&P can survive staying in a bull trend. But NASDAQ is in a very dangerous position currently.
To put some numbers on it: 1.8 trillion was wiped from US stocks on Friday. The S&P fell 1.8% and closed below its 100-day moving average for the first time in more than six months. NASDAQ ended the week 9% below its peak. Interestingly, NASDAQ is now down from its peak by roughly the same amount as Bitcoin is down from its local high back in September. So currently NASDAQ and Bitcoin are quite correlated in terms of recent drawdown.
Futures are bouncing a bit for NASDAQ. Hopefully they're going to return. Midterms are very important. We're going to have likely Democrats getting back into power.
And if you look on the bright side — the bright side is that we may see more of Elizabeth Warren. She hasn't been in the media as much since Trump came into office. She doesn't have too much airtime. But should Democrats come back, she's going to be doing all kinds of hearings, all kinds of oversight. Democrats are going to be subpoenaing everyone — all of the people around Trump are going to get massive oversight. And because Elizabeth Warren doesn't like crypto, she will be leading those hearings. She's going to be questioning everyone. JD Vance — where's JD Vance? She's going to be asking about everything he did with crypto, about World Liberty Finance, about Trump. So yeah, let's see what's going to happen. We've been missing Pocahontas.
Binance Hack Update
Binance says that their business should be okay. They say they've recovered 95% of the $6.3 billion stolen from the treasury, safer fund, and futures insurance funds. Withdrawals reopened yesterday. If you are using Binance, please confirm that it's working. Net outflows ran to $6.1 billion, and a fresh proof of reserves is going to come. That's very important.
Bitcoin as Safe Haven vs. Gold
With the Iran situation, what's interesting is that gold is dumping and Bitcoin is not dumping to the same degree. You always have to see assets in relationship to each other. The way gold has been dropping and dropping and dropping — there is zero safe haven in gold. Gold from its recent high is down 15%. Bitcoin is just down 10%. Relative strength. Bitcoin has relative strength.
But the big daddy right now is the dollar. And sometimes it's okay to be in the dollar. The dollar is also an asset. When you have bear trends — let's say you follow assets and they're all in bear trend — sometimes people ask me, "Ivan, what should I do? What should I buy? Everything is bearish." Well, being in the dollar temporarily is also a type of trade. You are holding something. So being fully out of the markets means you're all in dollar. People don't think like that. They think they're not participating, but you are participating — you're all in dollar. And when all of the other things are bearish, being in the dollar means you are in the asset which is currently bullish against everything else you're considering.
There's nothing wrong with temporarily being in the dollar or a money market fund. A US money market fund now yields 4%. Follow the strategy. If an asset is bearish, be in bull assets — or if you don't want any of the bullish stuff, you can be in cash until your preferred asset goes back up. There is no need to always be fully exposed. Just like Warren Buffett — he is heavily in cash. He has said for many years that he thinks the stock market is overvalued. At the same time, since he first said it, the stock market has ballooned way, way bigger. So he missed a lot. But his strategy is to deploy when there's a clear signal. For many years Warren Buffett hasn't had a clear signal. There is no shame in being in cash.
The AI Trade and Grok's Token Pricing
In terms of the AI situation — the Grok bots are very, very nice and are getting a lot of adoption as a competitor to Claude and ChatGPT. At the same time, Elon just increased the token cost in Grok quite a lot. This is an interesting signal. AI is useful, but if people are to pay what AI actually costs to run — that's a big question mark. Will people pay or not?
This week I think this is going to play a big role. Grok is showing the true price of AI, because now people use it for a few prompts and they're out of tokens. I had a similar situation — when the tokens reset, they disappeared very, very quickly, especially if you do something that requires a bit of thinking, a bit of planning, a process. You can run out extremely quickly in Grok. And that's the big question with the AI trade as a whole: for how long can AI continue to grow? Will end clients actually pay what it costs to run all of this? Or will they go to Chinese models? Will they go to open source? What are they going to do?
Critical Cybersecurity Vulnerabilities: Linux Kernel and Chrome
Now, with digital stuff in general — everything is getting hacked. I don't know how the internet is still online, and I'm not over-exaggerating. Apparently yesterday there was news that all Ubuntu servers — all servers — have a vulnerability because there is a Linux kernel issue where any server with a public connection could theoretically be taken over. If it is Microsoft Windows Server, it's okay. But these things come out every day now.
Also yesterday, there was another issue where Chrome had an exploit where if you just visit a website, it can control your computer. It can escape from Chrome. Normally, website code is contained within Chrome. If you write a virus as a hacker, it cannot escape Chrome. Chrome says, "I'm not allowing you to do anything." Let's say you create a website and the website tries to read all your files on your computer — obviously that should be impossible. Chrome should say, "You're trying to read this guy's C drive. You cannot read the C drive." But this bug, according to reports, made it so a website could escape Chrome and execute code on your machine.
If you chain these two bugs together — the Linux kernel one allows a hacker to take over a server, meaning they could replace the website running on that server, and then that website can use the Chrome exploit to take over the computer of the user visiting the website — it becomes quite spicy. All of you in cybersecurity, let us know the latest on this situation.
I'm kind of surprised YouTube is still online. At this point we're just vibing. Everything is kind of hacked but kind of not hacked. People even say that maybe because of these exploits, exchanges are getting hacked. How did Binance get hacked? Could it be that someone visited just a website? People are so quick to blame North Korea. Could be North Korea. Could also be some person who made a website that hacked your Chrome.
And something important to keep in mind: all blockchain nodes are servers. What is a blockchain node? It's a server. It's a computer running server software. Some computers run Nginx or Apache. Some run an Ethereum client. All blockchain nodes are servers. So if you have this critical vulnerability in a server and you're a validator, it's a big problem.
The Solana Foundation's validator relations team is saying: validators, this vulnerability — the one we just discussed, which lets anyone take over your machine — is patched in the Linux kernel but not yet patched on Ubuntu. Ubuntu has not patched it yet. Here is what you need to do if you're running Ubuntu: you need to block TCP/IP packets containing IPv4 options and disable multipath. So if you are running a node, take note.
The Case for Diversification Away from Pure Self-Custody
This is where the boomers have a bit of a field day. All of the online banks — what they can do is just shut down withdrawals until they figure stuff out. And if some money is stolen from your bank account, they're going to reverse it. There is a paper trail. There's going to be some kind of action taken very quickly. Should your wallet get hacked — it's gone. It's gone. Who are you going to call? There is no one to call.
That's why in Bullmania we have been discussing that being super ideological about only self-custody does not make sense in today's day and age. Having some exposure through ETFs — very good. I mean, personally I'm big on it for this reason. To manage big amounts on your own Ledger — and Ledger has also had issues, they leaked data — it's a lot to manage. Maybe it's another sign that we are becoming more boomer. I remember ten years ago we were self-custody only. Now times change.
The industry has changed. Now you have AIs roaming around. Imagine the gall — we humans, who are basically advanced monkeys, have the gall to say that we are able to build complex things without any critical bugs and be so confident about it. AI is really showing us that we're just monkeys who recently came down from the tree, because all of this software — some smart person wrote a lot of code, their system is working together with another system — how do you know they don't make mistakes? You don't know. That's what AI is showing us. There are bugs everywhere. Everything is going to get hacked.
And the only protection is the boomer. It's your boomer lawyer who's going to call your bank and say, "Listen, reverse what happened. My client did not send that money." In the age of AI, the only person protecting you is your boomer lawyer calling Bank of America. So yeah, the world is changing fast. Everything is getting hacked, and we have to be pragmatic. For many people in this day and age, having a bit of diversification — I think it's smart.
Swedish Supermarket Cyberattack
Look at this — Swedish grocery giant ICA, one of Sweden's largest supermarket chains, says several of their stores have been hit by a cyber attack causing refrigerators and freezers to be remotely set to 50 degrees. But can you set a freezer to 50 degrees? Why would a freezer also be able to become a heater? Is that how grocery stores work nowadays — the same equipment can deep-freeze chicken or grill chicken? Sounds incredible. Maybe it's a defrost function. The incident has likely resulted in large quantities of food spoiling. ICA says stores will remain closed. There you go. Another sign of how pervasive these vulnerabilities are.
Q&A: Self-Custody, Solana, Zcash vs. Monero, and Market Strategy
Let's go to Q&A.
Matt is saying self-custody is easy if you're responsible. Well, tell that to the Coldcard users. They thought they were responsible. And then what happened? Coldcard generated wallets in a non-random way. Were Coldcard users irresponsible? They were responsible people — even mega-maxis who were using only Bitcoin-only wallets because they thought they were more secure. And what happened? All the money gone. Your boomer lawyer cannot help you if your wallet got hacked. Who are you going to call? There is no one to call. Your wallet is drained. It's gone.
On Solana — we discussed Solana turning bearish at the beginning of the video. Someone is asking: does Solana going bearish mean the Solana bull run is over? No, it could come back. We just need to see when. The current bull flip is at $120, but if it goes lower, that bull flip level is going to come down. It could reverse. Anything can go from bull to bear and back. For now though, it's just better for me to be in bull assets. There are still many — Hyperliquid is still bullish, still doing well. There's no need to be in a bearish asset when there are bullish assets available.
Let's check Zcash — Zcash went bearish. So if you want privacy, Monero is better. Monero is holding up fantastically. This is the kind of chart that shows strength. When you have an asset go bearish like Solana, you have a risk of further downside. Could it just reverse and go to Valhalla? Yes, it could. But so could all of the other bullish ones. It's about playing the probabilities, ensuring you don't lose money, and ensuring you're in the best possible probabilistic situation at all times. When something is in a bear trend, we are risk-off.
On the midterms — we already discussed this at the beginning. Democrats are coming. They're taking over. Elizabeth Warren is coming. We discussed that a Democratic sweep likely means Trump becomes more constrained, there's going to be gridlock, and we want gridlock in this situation. Better gridlock so politicians don't do anything. Let's see the exact outcome tomorrow.
On stocks — NASDAQ is risk-off. S&P 500 is still holding on bullishly. We discussed that too. Let's see how it continues.