Digital Asset News discusses how a potential Democratic Congress sweep could affect Bitcoin and altcoins
Rob and Jerry from Digital Asset News discuss midterm election polling, altcoin picks, crypto hacks, and the North Korea–Lazarus Group connection to the Binance hack.
Summary
Rob and Jerry from Digital Asset News discuss Polymarket data suggesting Democrats are likely to take control of both the House and Senate in the upcoming midterm elections, and what that political shift could mean for crypto markets. Jerry argues that divided government historically produces no meaningful change, and that sentiment — not policy — drives electoral outcomes. Rob notes that in 2010, 2014, 2018, and 2022, Bitcoin bottomed 71, 39, and 13 days before (not after) a trough following midterm elections, suggesting the period around midterms may represent a buying opportunity.
The two then pivot to altcoin picks, with Jerry favouring established layer-one smart contract platforms alongside AI-adjacent projects like Bittensor and Akash, which he argues have real-world commercial traction. This discussion leads to a live on-air index challenge: Rob and Jerry each assemble a five-asset portfolio tracked in a shared Google Sheet, with the results to be measured on the first day of Q3 2027.
They also address the surge in crypto hacks tracked on DeFi Llama, raising the possibility that some may be inside jobs, and close with a discussion of the FBI's attribution of the $6 billion Binance hack to North Korea's Lazarus Group.
Key Takeaways
FULL TRANSCRIPT
Midterm Election Outlook and What It Means for Crypto
Rob: Welcome to the live stream. It's Sunday, everybody's happy. There's time to take a break — maybe just got back from church, maybe want to watch a little football like what Jerry's going to do with his fantasy football team. But before we get into the fantasy that is football, let's talk about the fantasy that is politics, which is looking pretty good for the Democrats.
Now, this is not a political channel, but as time goes on, you have to take a look at what happens once things slip over from one predominant party in power to the next. This is not a very common circumstance where both the House and the Senate go back to the other party. Usually it's one or the other in midterm elections. But as we can see here on Polymarket — and again, Polymarket's not 100% correct — it's looking like we're going to have a flip.
I will say this before we go forward: Democrats — and not you Democrats who identify as Democrat, independent, or Republican, I really don't care — but Democrats as far as the people who were in the House and the Senate, not all but a majority have been against crypto. We can go back all the way to the Clarity Act and how that didn't go through. It was close, but it didn't. So we'll see how things go.
Today, Jerry, I just want to get your thoughts. It looks like Democrats have a 73% chance of controlling the Senate. Right now it's 47 Democrats, 53 Republicans, and it looks like it's going to flip to 52–47. That's in the Senate. The House looks like a foregone conclusion that it's going to fall — somewhere around a 214 to 218 split. Republicans are set to lose a lot of seats. And then there's the one no one talks about: governorships. Depending on the state, you have two years, four years, or longer. Right now it looks like it's 24 versus 26 governors — Democrats versus Republicans — and it looks like Republicans are going to lose that one too. So that's the trifecta, and of course the president will still be in power for two years. Jerry, what are your thoughts on what's going on here?
Jerry: Generally I'm not political, but in this case I can definitely comment observationally. My experience is that sentiment drives these outcomes even when the result is contrary to what people actually want. There's a tremendous amount of advertising and marketing around this party or that party. The truth of the matter is, if people want change — which is what people want at their core — that's the desire to vote Democrat and put a counter party in control of Congress when the administration is the opposite. What ends up happening is nothing gets done. No change happens. When people want change and they produce a result like what your indicators are suggesting, there will be no change for the next two years, because you'll have an administration in the executive branch acting contrary to Congress. It's really only when those two entities are in alignment that real change can be implemented. I just find that really odd, and it's been that way as long as I can remember.
Rob: I think so too. Some people say, "Well, it's a lame duck presidency coming out." Usually the lame duck period is right between the time a president's still in power and when the new president takes over. But as a reminder, there were some pretty big things that were passed during those periods. I believe the Civil Rights Act was passed during a similar time. George W. Bush — remember him, "fool me once, can't fool me again" — he actually passed what I believe was the Save America Act, where they were able to bail the banks out. These things happen. But will everything happen? Probably not, and it'll be quite a tumble.
As a reminder, between this time and when our markets take off, we can see that usually it's kind of negative for a couple of weeks or so. We talked about this before: six months after the midterm elections in 2014, 2018, and 2022, it was negative. But if you wait one year, you're doing pretty good. And if we take a look at 2010, 2014, 2018, and 2022, it was 71 days, 39 days, and 13 days before Bitcoin bottomed. So people say, "Ah, this is going to be great, it's going to bottom out immediately." Usually it takes a little bit of time. But this is the time — for me, not for everybody, I can't give financial advice — to buy, and maybe buy some more. Which leads me to my next point.
Altcoin Picks and Investment Thesis
Rob: Altcoins. Jerry, do you remember these things called altcoins? I've got a portfolio full of them.
Jerry: Well, you do, but I know it's not the majority of your portfolio.
Rob: Not from a value standpoint, but from a quantity standpoint. I may have 70 digital assets in my portfolio and 68 of them are immensely underwater.
Jerry: Immensely underwater.
Rob: You could have 10 bajillion Hex coins and be like, "Yeah, I got a ton of it." Yeah, but they're all worthless. Sorry, Hex people. But altcoins — I miss 2021. It was like the whole industry was filled with a lot of hope. It was great to see people look at altcoins and say, "What does this one do? What does that one do? What's the utility? What are the tokenomics? Who's behind it?" It was great because you had a bunch of forward-thinking people. Unfortunately, you also had the VCs who just rugpulled everybody and got out of the way. But I see it like this: we had to go through that to get to this point.
Amazon and Meta did the same thing back in the dotcom crash — more specifically Amazon. After that, they got to just buy up companies like crazy and became the dominant force. Things you might not have realised Amazon owned: Whole Foods, Twitch, Internet Movie Database, Audible — you name it, it's underneath the umbrella that is Amazon. And Meta, used to be called Facebook, bought WhatsApp, Oculus, Instagram, and a whole bunch of stuff. That's what I think is going to happen with these altcoins.
I've always talked about the best of Bitcoin, Ethereum, Solana, and Tron. Now we take a look at Near, Hyperliquid, and Cardano — those types of things. But Jerry, what are your big picks right now? Because I know you're not the "hey, I've got a 1000x gem ranked two million" type — you're more level-headed. What do you have for your alts and why do you think they're going to do well?
Jerry: I have a firm belief — we've talked about it many times — I have a basket of layer-ones because I believe applications and products will be built on smart contract rails. Near, Ethereum, Avalanche, et cetera. I have a basket of those.
I'm also a big fan of what I believe will be decentralisation as far as information and intelligence goes. For instance, Akash — a real pick-and-shovel project that actually takes real-world GPUs and makes them available to developers. That's a very valuable thing. Will they become hugely successful? I don't know, but I believe there is a very real possibility that they will carve out a niche. So I want to own that project.
How about Bittensor? Bittensor with knowledge graphs and data accessible to the world — well, AI runs on data. You need data to execute these algorithms. Therefore, maybe a decentralised, accessible-to-the-world library of data sets could be valuable. That's kind of how I've been thinking about alts as it pertains to your graphic about big players swallowing up smaller ones.
The interesting element in the digital asset space is I don't need to acquire Bittensor. I just have to analyse their open code, and if I believe I can do it better, I just copy it and do it. I don't need to acquire Bittensor to acquire the technology. That is a big differentiator in this space versus what you showed with how Amazon and Facebook acquired other companies to add value to their empire.
Rob: Yeah, it's a major difference when you have actual physical products that you have to produce and ship out — the last mile being the most expensive. But going back to what you just said, if you had to invest — not just looking at the technology but just to invest in these things — what are you going for?
Jerry: I would again, outside of the realm of Bitcoin, go with established digital asset projects that actually have a real-world commercialisation aspect. In other words, they actually have customers paying for their good or their service. Once one of those projects — let's call it Akash — reaches, say, a billion a year in revenue or value exchange, now all of a sudden you are beyond the beta test. It's a real project serving real customers, and now they just need some kind of force multiplier to accelerate. The use case is proven, there's market fit. There are quite a few projects in the crypto space that meet that criteria. They're just not household names yet. Akash and Bittensor are just a couple of those.
Rob: What are those ranked? Akash and Bittensor? I'm going to guess they're pretty low.
Jerry: I don't know. I'll leave that to the analyst like yourself.
Rob: Let's see. Bittensor — number 38. I like the ones that are in the top 50. If you take a look at Bittensor's market cap: $2.75 billion. Interesting. Then you take a look at Tron — wow, Tron's number eight, $29 billion, roughly $30 billion. So Bittensor could do a 10x just to get up to Tron. That's a 10x right there. It's a little lopsided, but you have to get the adoption going, and that will be the big thing. What else you got, Jerry?
Jerry: Bittensor and Akash. Try Akash — AKT is the token.
Rob: Number 181. Market cap of $185 million. It's at 62 cents now. Oh, remember these days? It was almost eight bucks.
Jerry: I do remember those days.
Rob: I was paying my rent back in those days off of coins like this — just the staking rewards. It was the greatest thing in the world. What else you got? Akash, TAO. What about telecommunications?
Jerry: World Mobile Token is one to look at. I don't know if they've reached a point of market fit where they can just scale. I think they're still trying to prove themselves, so to speak.
Rob: This has a market cap of $15 million.
Jerry: It's an interesting project. At this price point right now — and I'm not giving financial advice — but this is a pretty good entry if you've analysed and researched the project and you believe that a decentralised, community-driven telecommunications platform has a future. This might be that investment for that thesis.
Live Altcoin Index Challenge
Rob: You know what we should do? We should just do a trading challenge. Put these together, throw in like $500 between the both of us and just see what happens.
Jerry: If you wanted to create an index of five assets, I bring an index of five assets, we figure out a way to measure them side by side — which is super easy — and I put in $100, you put in $100, and we see by some chronological benchmark who does better. I'm not one to step away from a wager.
Rob: Has anybody — you know what would be fun is to take a couple of viewers' asset indexes and have a real challenge where it's the two knuckleheads on screen with a couple of real smart viewers. We all put in a hundred. Yeah, that'd be difficult because we'd get 10,000 people going, "Pick mine." How about we'll stick with this one first.
So let me pull up Claude. All right, Claude, I need you to create a spreadsheet. I want two groups of five rows. The first five rows will be Binance, Ethereum, Solana, Tron, and Near. The second group will be Bittensor or TAO, Akash, World Mobile Token, and I'll get back to you on the last one. What's your last one, Jerry?
Jerry: Give me one second. I wasn't necessarily prepared for this. Aether. A-T-H. The last one is Aether.
Rob: For everybody watching, Claude can do all these things. You can connect Claude to a bunch of different things. What I do — me and Jerry were talking about this before — is as my statements come in from my credit card, it evaluates those, finds all the expenses for my business, finds any double bookings, finds any discrepancies, and notifies me. So yeah, let's do a Google Sheet so everybody can see it, and everybody watching this show right now will be able to have access to it and we'll show you the gains and losses.
So it's telling me group two only has four: TAO, Akash, Aether, and Near came out twice. What goes in slot five?
Jerry: Add Ethereum.
Rob: But if you add Ethereum, that's six. Let's just put Near in group two. What should be in the sheet besides the name? Let's do ticker, live price, and notes. And it's already done.
So everybody, here are the two indexes. You've got my group: Binance, Ethereum, Solana, Tron, Near. And Jerry's group: Bittensor, Akash, World Mobile, Near, and Aether. We'll keep this going. When does the challenge end? Six months or a year?
Jerry: I like the first day of Q3 2027.
Rob: Q3 2027. We'll keep that there.
The Surge in Crypto Hacks and the Insider Job Question
Rob: Let's shift gears a little bit. We're talking about the greatness that was altcoins, but there's always a flip side to that coin. This morning I had a thought: have you noticed all the hacks that are going on, Jerry?
Jerry: Yeah.
Rob: I was thinking to myself, there are so many hacks. How many of these are inside jobs? People say, "Well, look, all the crypto products are getting hacked, but banks aren't getting hacked." I'm like, you're out of your mind. Of course banks get hacked. Banks get hacked all the time. Not so much American banks, but around the world it does happen — mostly it's data they get hacked for. But I took a look at all the hacks going on. There's a website, DeFi Llama, which is great, and it's tracking all the hacks. Did you know that this year alone we're already up to $3.69 billion? And look at all these hacks just in the last week. Polymarket, $2.7 million. Fence Finance, $1 million. Predict Fund, $400,000. Bloom Trading Bot, $1 million. It seems to never stop.
Jerry, what are your thoughts on the possibility of insider jobs?
Jerry: I think it's a very real possibility when you apply a game theory type of thinking around it. It makes a lot of sense for founders who might believe it's time to pack it up and don't want to necessarily give back their treasury to the investors who funded them — that they would simply say, "We got hacked, gotta close the doors, sorry." And some account in the Bahamas is sitting there waiting for them, and they're going to go spend a year drinking mai tais while they figure out their next endeavour.
Rob: This is sad. And people say this is the future of finance. Well, let's be honest, finance isn't the most squeaky clean, but it's not this blatantly obvious.
Jerry: I do believe a lot of this is advantageous exploitation. When you use a powerful tool like AI to completely analyse a codebase and find vulnerabilities, and you exploit those vulnerabilities, anybody who does not have an ethical moral character would be attracted to that. I believe there are a lot of people out there like that. So it makes a lot of sense that powerful tools are being used in unethical ways, and it's just going to be a matter of time before those very same powerful tools can create the safeguards against the attackers. No differently than the way the quantum computing threat to the existing digital world has presented its own protection — quantum cryptography. If quantum computing can beat digital cryptography, then we need quantum encryption. We're just going through that evolution, and these are some of the victims of that.
Rob: Unfortunately, that's just how it's going to have to be for a while.
North Korea's Lazarus Group and the Binance Hack
Rob: Fun fact from the chat: North Korea has infiltrated many high-tech companies using fake resumes and getting hired as remote workers. Talk about walking in the front door and getting paid to boot. Hey Jerry, did you see the FBI just released a memorandum stating that the Lazarus Group from North Korea was responsible for the Binance hack?
Jerry: And unfortunately that will not be the last. Everything should be questioned, everything should be audited, everything should be reinforced, rethought, and rebuilt with this understanding. But there's one more thing we should all recognise: Kim Jong-un is now the best investor of the 21st century. Think about that. Do you know how much he pays his citizens to work?
Rob: Air? Do they get paid air so they can breathe?
Jerry: Maybe a little chicken soup. And his ROI is roughly one to two bajillion dollars. All he had to do was force his citizens to hack into all of these databases and exchanges, and off you go. He is the greatest investor of the century.
Rob: Let me find the article. There it is — FBI.gov, October 31st: North Korea responsible for $6 billion Binance hack. Now, there's a flip side to that, Jerry, which is people could say, "Well, of course the FBI is going to say that, but it was actually the United States or some other rogue nation." Never know.