Chinese AI Models Are Defending Bitcoin Wallets Because US Models Won't

**Chris Perkins** (0:00)
We're in this institutional age of crypto, and when you unpack the institutional mindset, it really comes down to one thing. I want a throat to choke. I want to be able to sue somebody. That's what they'll tell you over and over again. I don't care, like, I need somebody who's capitalized that I can sue. And I think there's value in that for many institutions.

**Austin Campbell** (0:17)
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**Austin Campbell** (1:24)
All right, everybody, welcome back. So a quick market snapshot. Bitcoin has been trading around the 63K ish level today. ETH around the 1800 50s. Tenure is still hanging around around like 4.72 to 4.75. Not ideal. The FOMC hike odds are elevated above 50% right now. And here to discuss all of this today, I'm your host Austin Campbell, as always, with my co-hosts Ram Ahluwalia, Maester of Wealth, Leader of Lumida, Chris Perkins, the Golden Hand of Franklin Crypto. And joining us today is Alex Thorn, Head of Research at Galaxy Digital, who has been tracking the Coldcard exploit in real time. And by the way, if you're not listening to Galaxy Brains with Alex, you need to be. Galaxy Brains is a leading indicator of quality crypto content.
All right, let's start with one of the two big stories of the day, which is the Ashenbrenner blow up. So the biggest AI fund of this cycle blew up in basically a single month. The situational awareness fell from about 45 billion to roughly 10 billion after steep July losses, all numbers approximate according to Bloomberg. Margin calls from prime brokers forced to distress sale of public stock portfolio to Ken Griffin's Citadel. What remains is the anthropic stake and private vehicle instruments for the fund according to TechCrunch.
This is a 67 percent drop and AUM drop is 35 billion. Again, hard to know how much of that is allocated where thanks to the deleveraging. But what happened is both legs of this trade broke at once. The AI infrastructure trade, Sandisk way down, Nebius way down, Micron way down, Core Weave way down, if you're 4X levered, you don't need a crash, you need a bad month according to Chartelect.
There's a spicy claim that Citadel timed it, that Shay Belor said Ken Griffin Citadel was pushing surprise rate hike fears just days before the AI trade collapsed and forced the 4X levered situational awareness to unload its book near the lows.
On the other hand, Scott Melker said it's leverage, not conspiracy. If you believe that Citadel intentionally crashed the market, that I have a bridge to sell you on Mars, Citadel had the dry power to take advantage of the situation. That's it. So, I kind of want to start here before we go further into this. Ram, you've talked a lot about momentum. You've talked a lot about the current dynamics of the stock market. This has played in to some of your previous themes. So, what do you think happened to you?

**Ram Ahluwalia** (4:20)
Yeah, I don't think Citadel did anything nefarious here. When Micron reported the stock sold off double digit percentage points, that same thing happened last quarter when Micron reported. Momentum was three standard deviations bid. That came undone. We saw tremendous volatility in the South Korean stock market. And Leopold, the PM, was just drinking his Kool-Aid way too much. It actually reminds me of the blow up of Asymmetric, which was long Solana and short ETH. Those are like the same trade on leverage. Very similar kind of concept.
He's a young 24-year-old kid. I don't think people should exclude him from the industry. I mean, he's learned and he's accomplished quite a bit here. But that kind of positioning is reckless though. Like that's not a good portfolio. Basic stress testing capabilities would have identified this. Like where were the adults in the room? Where was the AI-based stress testing and scenario analysis?