← CRYPTO 101
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- [00:00]
Podcast Host (Gemini Crypto 101 Intro)
Welcome to the Crypto 101 podcast, presented by Gemini, your bridge to the future of money.
- [00:15]
Bryce (Co-host)
All right, everybody, welcome back to another episode of the Crypto 101 podcast. I'm your co host, Bryce, as always, joined by my good buddy Brendan from across the country. Sir, how are you doing?
- [00:27]
Brendan (Co-host)
I'm doing good. I'm doing good. You know, at the time of recording this, we're getting some nice volatility back into the market, and we're enjoying it always.
- [00:34]
Bryce (Co-host)
But, man, I am so excited as well. And we're joined particularly by an exciting guest, somebody who's a markets expert as well as a builder in the space, Satraj Brambra, the CEO of Rails. Satraj, thank you so much for joining us. And how are you doing today?
- [00:50]
Satraj Brambra (Guest, CEO of Rails)
I'm doing well. I'm excited to be here.
- [00:53]
Bryce (Co-host)
Very, very excited. Are you? You're holding up with the volatile sort of market movements you're holding up. You're not getting liquidated along with the other almost $2 billion of liquidations?
- [01:04]
Satraj Brambra (Guest, CEO of Rails)
No, no, no. That's a long time away for me.
- [01:07]
Bryce (Co-host)
You're like, that's not me. I can't take any credit for that. Brendan, you're not part of that liquidation number, are you?
- [01:15]
Brendan (Co-host)
I'm not, but I was talking to TiVo about it this morning. I was like, I'm honestly impressed that we saw over $1.5 billion in long liquidations, and Bitcoin only fell about 3% over that move. I was like, we've seen bigger than 3% moves with far less liquidations in the past, so I didn't partake, but I was actually pretty impressed with how well bitcoin held up.
- [01:38]
Bryce (Co-host)
Yeah, no, I'm. I'm. I share the same sentiment there. But, Satraj, we really would love to, to before we dive into Rails and all the amazing things you guys are doing for instant trade execution and really unmatched custody on chain. Before we dive into that, I want to get acquainted with you and our audience. Tell us a little bit about your background and how you came to be a builder in the space.
- [02:00]
Satraj Brambra (Guest, CEO of Rails)
Yeah, so I'm a software engineer. That's my background. Sort of got building into crypto early, I think, when Ethereum came out. So Ethereum was sort of my gateway drug into crypto. I'm Canadian, so I just moved recently. But so Ethereum's big deal comes from there, and that's how we sort of got acquainted with crypto, a lot of us, actually. So not Bitcoin at all. For me, it was definitely Ethereum. Pretty exciting sort of to see the whole thesis behind a decentralized computer and how it's programmable and the whole programmable money thing. So that's sort of what got me in the space. I also started trading it around the same time, so got all my hard lessons there. And before then I was one of the first iOS developers in Canada. So I've been sort of caught the early mobile computing platform, then got crypto early and sort of combined the two when we built BlockQ, which was a decentralized exchange on Stellar in 2018 that was acquired in the same year it was created. And that's sort of my builder sort of flow into crypto at after that I sort of. I run the largest crypto fund in Canada, it's called Around 13 Digital Asset Fund. I managed liquid portion which has done pretty well from inception till now. And being a user in the space, you know, going through FTX sort of got us into the whole thesis behind building Rails.
- [03:30]
Bryce (Co-host)
That sounds awesome. So you manage a liquid. A liquid fund as well. Round 13. Tell us a little bit about that before we dive in a little bit deeper.
- [03:40]
Satraj Brambra (Guest, CEO of Rails)
Yeah, so we raised the fund at the top of the last bull market, very disciplined not to deploy any capital around then with the interest rates kicking into high gear. Obviously didn't know that FTX was going to get completely decimated during that time, but ended up giving us phenomenal entries and that we've been basically riding since then.
- [04:05]
Brendan (Co-host)
So when you're going through all of this, I guess what came first or what I guess which came first in terms of order when you had round 13 in rails and did one spark another.
- [04:18]
Satraj Brambra (Guest, CEO of Rails)
Yeah, so I was in round 13 obviously first right. In my passion because of the liquid fund, I'm deploying capital all the time, getting in and out of positions. So just for context, that portion of the fund's up 5 or 6x so it's returned the entire fund. So around 20% of the fund returned the entire fund over the same period of time. You talk about like 100 million plus fund and it's all come from sort of buying in and out of market. So I'm a trader and we had money on FTX proceeding professionally and we lost it for quite some time until we eventually got it back at I think 90 cents on the dollar around that sort of time. But that sort of triggered the entire thing about Rails because, you know, having built like a Dex on Stellar back in the day because we wanted speed and stuff. So one of the things at that Point sort of that that got to me was what does the next gen sort of exchange look like? Right? And as a builder, as a software engineer, you always think about the tech stacks you put together to build a product. And I, what I realized is as you sort of scale up, like on matching, it's gotta be centralized, decentralized matching will never scale up at the same speed as centralized matching will scale up. And I think that's one of the benefits of using obviously Binance and FTX and stuff like that. And if you use Dexs and they actually truly become decentralized, they just cannot perform as fast. So they all start off sort of like centralized, claiming to be decentralized, but we know they're not decentralized and when they do, they get unusable over time. So that was one of the thesis behind sort of the central matching and all of that. The other one was how do you sort of keep people's funds safe? And that's where I think crypto, the tech stack is more important than crypto, the philosophy when it comes to building this product for us. So the tech stack being on chain custody with the L2s, you know, it's readable, it's viewable, it's transparent. And you can have a central system talking to a decentralized system using cryptography that's sort of like the bridge that builds the two together and then you have both pieces of the tech stack building a newer sort of base product. And we've now been live, we spent two years building it. We went live 120 days ago, like 100 days ago. And we've done 2 billion in volume, over 500k in fees. So we are very new. A lot of people haven't heard about us, they probably won't hear about us. I think the average age before you hear about an exchange, around 12 to 13 months. And the other big portion of what we're doing is we are, we're fully compliant. So we're licensed. We're registered with cima, which is the Cayman International Monetary Authority. We're registered with them. We're actively working with the cftc. So I think that the period we're in right now you have this what they call crime season in crypto. It's very common on crypto Twitter. It's a deregulatory phase that, that sort of like sparks the whole like, you know, we're gonna like we're gonna be non regulated, which I think where a lot of people are confusing deregulation with no regulation. I Think what, what, what's going to happen is they're going to be frameworks in place, everyone's going to follow the rules. I don't see a world where TRADFI has its own set of rules and crypto has its own set of rules. Given that now converging big time. So that's sort of like. So you put those three together and I think you have one what we have the pieces of an exchange that can last into the long term outside the whole sort of like purely Dex thing.
- [07:53]
Podcast Host (Gemini Crypto 101 Intro)
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- [09:51]
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- [10:36]
Bryce (Co-host)
Ton of sense and you're going to be the perfect guy to talk to about some of these upcoming things with the Clarity act and how that sort of segments the market. And I love to hear that you're building sort of this decentralized protocol but still going with, you know, under certain regulatory authorities in order to get as big as distribution as possible and to get that far distribution, that wide reach. I notice you guys have some really interesting folks on your, your investor and partner list. Names like Kraken, which is one of the largest exchanges in the world, Flodesk, which is one of the largest market makers and OTC counterparties, Slow Ventures, which is one of the best venture capital firms. Tell us a little bit about working with folks like this and did they help you guys ideate the product? You know, kind of. Where do they all sit with you?
- [11:27]
Satraj Brambra (Guest, CEO of Rails)
So we, before we approached them, right, we had been building my, my co founder and I had been building Rails in like a prototypey version. We sort of wanted to see how the two work together. And I think what I've learned is, you know, when you go and fundraise for a brand new product at a certain point, the best way for the market to tell you if it's good or not is to actually go and pitch and see to people who actually invest all the time in these things. And I think the feedback we got was very sound and solid. I know our first round we closed it in about a couple of weeks. It was very quick. And then our second one, almost like three weeks I think. So in total we've raised 20 million over, over these last two years. And we're building, I think the whole.
- [12:14]
Brendan (Co-host)
Idea of a hybrid exchange model, which is exactly what this is, is really interesting. And we're seeing more and more from this because it's like you said again for the listeners, I want to reiterate this. You get the speed of the centralized part and then you get the security of the decentralized aspect. And it's combining the best of both worlds. And it's almost amazing that we haven't done something like this sooner. Like, why wasn't this just like something that was like, mainstreamed, like five years ago, 10 years ago? And it's always like, easy looking back on it being like, well, this is so obvious. It was right in front of our eyes and now it's coming out and we're like, well, duh, like, we should have done this. So I do think it's genius. And again, it's really cool that this is coming out, but I've seen that other exchanges have started kind of looking in this direction as well, and in slightly different ways. I know the big one that sticks out to me is Coinbase, right? They've always been a centralized exchange first, and now they've started trying to add different kinds of decentralized aspects into their exchange.
- [13:19]
Podcast Host (Gemini Crypto 101 Intro)
Like.
- [13:19]
Brendan (Co-host)
Like, I know the big one that's coming up is they're going to be adding Aerodrome so that people inside of their Coinbase account can trade through a Dex. They also have Coinbase wallet now. And then they have the base layer too. And so they're saying, hey, people can, in a very centralized way, with all the centralized support, interact with all of Defi and still utilize that. So it's interesting. I mean, do you view that as a competitor now, since they're trying to get more into the decentralized side of things, or do you still think that you guys operate in two fairly different ways?
- [13:52]
Satraj Brambra (Guest, CEO of Rails)
Yeah, I think, you know, that's a great question. And I've been thinking about this for a while, like, why hasn't this been done before? And I think part of it is because crypto is very philosophical by culture and by industry. So I think the entire thesis behind crypto for a long time has been decentralized, everything. And that's what a lot of people have operated on that on that basis. And for us, it's really been. No, it's just another layer of tech that we can build together to combine a new product. So I'm not on the replacement sort of mindset that we have to replace everything centralized with everything decentralized it's more what pieces of tech work to build another product. Now, regardless of which way you go, exchanges in the long run, their success depends on liquidity and volume. Those are the two most important metrics and they're very hard to do when you're starting a new exchange. So getting those things together is very difficult, especially if you want to be compliant. So one of the reasons why Dexs are very popular is because you have these, like big vaults that are built up, and the exchanges tend to be the counterparties themselves. So they market make with those funds and their user funds, like you see on Hyper Liquid or you see on other ones. And when you sort of talk to regulars or CrowdFi, it almost becomes like you can't do that. It's not allowed in the real world. So we have to have organic market makers that take this. So that part makes. So it's easier to scale liquidity if you're decentralized, in my opinion, because you have all these tricks up your sleeve. And we sort of tried that when we did our beta testing and we had something called Rails Play where we just to sort of test the speed of the engine and stuff. We were the market makers. It was all fake money and stuff, but we could run insane volume numbers. Like we were running hundreds of billions of volume numbers because we provided infinite liquidity to our traders. And now when you're doing actual Rails, where you have real market makers, the volumes are much lower, they're much more normal, and sort of growing those volumes organically is much, much more difficult. But that's sort of the path we're taking by going, by going this route.
- [15:57]
Bryce (Co-host)
And does Rails allow us to like, access liquidity throughout all the different sort of liquidity pools on Uniswap or Radium? Is it cross chain, tell us a little bit about the architecture or is, you know, all the liquidity that's on Rails is just, you know, it's on, on Rails?
- [16:14]
Satraj Brambra (Guest, CEO of Rails)
Yeah, it's, it's, it's whatever's on Rails is on Rails. So it's, it's very sort of like secure like that. And it's built sort of to follow the TradFi model where you, you would have market makers being a separate function. They provide liquidity. And we don't do any partaking in any of that. So we, there's just no conflict of interest. So when you're sort of building a more regulated product, you have to think about all of these things. And, and we have a lot of that in our thought process. But what is when we talk to institutions, for example, which we have good relationships with, they all want to work with a regulated entity. So because they are regulated themselves, so it's very hard for them to justify going and doing decentralized trading because they don't know who the counterparty on the other side of the trade is. Is there any money laundering happening? So I think when you look at us in the long run, we're sort of building for that sort of that trust factor as a long running institution.
- [17:08]
Bryce (Co-host)
And I was going to ask on that, I wanted to double click on sort of this compliance aspect or the regulation aspect of Rails, what does it mean for a DEX to be compliant and regulated and what does it mean for it to be unregulated? Maybe as well.
- [17:24]
Satraj Brambra (Guest, CEO of Rails)
So on our side, so we'll never call ourselves a DEX because we're not that our entire matching is fully centralized, it's only our custody that's on chain. So for us it's the entire thing. We have Kyc, kybala kyt so we have wallet screening. You cannot use Rails without any of those things. In today's sort of cycle, these are massive friction points because everyone can just go put up a vpn, connect your wallet and start trading. Which of course as a user it's much easier to get liquidity. So that's one of the reasons why the DEXs have a much easier time sort of increasing liquidity. But what we're going to see in my thesis is both as a trader and as the person sort of like creating the vision behind Rails is that eventually you're going to have a massive clampdown on regulation. It's going to happen. It's a matter of when, not if. Even if there's a nice set of rules, I think the rules will be very closely mirroring what happens in Trad 5, which has all these rules. So I don't think you're going to go and ask banks or hedge funds to remove all forms of regulation to trade. So I think we're going to have to follow that rule and that sort of what we're building for. So I think at the moment when that sort of capitalizes in the market, that'll be our moment to sort of take off and you'll see on the, on the deck side sort of that come down.
- [18:44]
Brendan (Co-host)
You know, I'm curious, we've seen a lot of regulatory changes. We know that there's been policy changes, especially in the United States towards the crypto market. But you get a unique perspective here where you get firsthand experience, you're relatively new, Exchange coming out and you get to work with, you know, the new administration. The cftc, after a lot of this, is kind of eased up. What has your experience been like working with the CFTC and the US government?
- [19:14]
Satraj Brambra (Guest, CEO of Rails)
So any, any discussion we've had with regulators always comes down to how compliant are you, what are you doing to protect your users? And I think that's, that's been the case right now. It's also been the case back in like 2018, 2019, where we talked to regulators back then when we were like one minute, Exchange got sort of bought out. So I think what they're looking to do from my perspective, is create this guideline of rules that allow you to sort of operate as under these guidelines of rules. And I don't think it's this like, if you're fully decentralized, you're completely fine. I think you have to prove you're fully decentralized if you're completely fine. So I think that it's almost like what I'm seeing now is that there's this middle ground before the rule set is in, and that's why it's pretty wild. And I think after that there's going to be a big sort of change. So I still hear the same thing around user protection. The questions are pretty stringent. It's not loose. It's like people think it is. There's a lot of thinking behind regulation, which there should be. And I realized that it's a tough process. Our work with SEMA took us nine months to get the license and we built that as a part of starting the startup. So it takes time. But I think that they are coming and the rule set is going to be. I expect them to be strong.
- [20:36]
Brendan (Co-host)
Yeah, I was going to ask, kind of like stemming from that, do you feel like it's looser or clearer? And you kind of answer that. And you said, well, it doesn't really. It's not like it's loose. But I'm getting the feel from what you're saying that it just seems like it's clearer. They're like, here are the guidelines, here's what we were expecting. Follow this, stay compliant. And that's what it's sounding. Right, Right.
- [20:56]
Satraj Brambra (Guest, CEO of Rails)
Yes, I would agree with that. And I think one of the things is that there's a lot of confusion around. You see the problem with crypto right now is that it's tied to this political spectrum that's running. So you had this extremely strong anti crypto sentiment before the new administration kicked in. And you saw what sort of happened then, right? Like the industry was almost to get decimated. And then you come back and you get this revival and now everyone sort of switched on the other side where it's like, now it's sort of up only forever and we're going to be able to do all the wild things we've been doing for many years. And I think what you do is you eventually land right in the center of both of them. And that means there's rules. Here's this is the rule set. And I wouldn't be surprised to see ask them that either prove you're fully decentralized or add KYC or KYB to your, to your products. So I think the approach we've taken is we expect the rules to be there, so we just want to build with the expectation that rules will be there.
- [22:00]
Brendan (Co-host)
Do you think that there are stricter towards certain areas of crypto? Like, my idea is, are they stricter towards listing a bunch of different altcoins, or are they stricter against perpetuals contracts, or are they stricter against futures contracts or custody? Or like, I'm just curious, kind of to get my perspective, because for the longest time it was like, absolutely no leverage of any kind in the United States. People would try to VPN to get around it and stuff, but these centralized regulated exchanges could never offer all these different kinds of leverage. And now it seems like that's easing up where, like, even all the big dogs are opening the doors to perps and futures and all these other things. But, like, do you feel like there are different areas that have different levels of, like, barriers still?
- [22:53]
Satraj Brambra (Guest, CEO of Rails)
Yeah. So that's pretty interesting. So how my observation of the entire thing is, before now, regulators didn't care. They're like, crypto's bad. We're going to destroy it. Like, it doesn't need to exist. And I think everyone was on board with them. They understood that's the message. So there's no reason to try to understand how it works, what happens, all of that stuff. Now you have sort of like an administration place that is like, no, no, we got to make crypto work for everyone. Figure out the rule set. And what you're having is, okay, now we need to learn how it works. So we need to know, what are perps, how do they work, how are they different from futures contracts? So right now with Coinbase, you have these futures contracts that are sort of like tied in little baskets together. They're not really a real actual perp like you, like you trade on any other actual perp thing. So they're basically modified futures contracts. And I think what they're trying to learn is how does a perp work? How should we regulate it? Like, what is on chain custody? Like, how does that work? So right now you have a very open mind on learning how stuff works, but what you're seeing at the same time is everyone else is like, let's push the boundaries as far as we can. So they're like, we're just going to introduce this. It seems like the message we're getting is crypto is going to be regulated. It's going to. It's. It's allowed. So let's just go as far as we can. And I think what you eventually going to get is like, no, no, let's go back in the center. This is allowed. This is not allowed. Blah, blah, blah.
- [24:20]
Bryce (Co-host)
Yeah, no, that makes a ton of sense. And I'm curious, like, you know, as. As this next big piece of legislation, the Clarity act, kind of comes through. Brennan, I like your framing. It's not that it's making it easier, it's making it clearer.
- [24:33]
Satraj Brambra (Guest, CEO of Rails)
Yes.
- [24:34]
Bryce (Co-host)
And I think the Clarity act, it has that baked into the name. But I'm just curious, like, how does something like the Clarity act impact your business? And do you see this unlocking? Does it unlock trillions of dollars of capital that previously hasn't been able to access the market?
- [24:49]
Satraj Brambra (Guest, CEO of Rails)
Yeah, I think any form of clarity is going to be a good place to see what the future looks like. So it's almost like the confirmation of a trade. When you're actually trading, you think you're looking at momentum. And I think what it does is it solidifies the direction of the momentum. So one of the things is when these sort of bills come into play and they're actually sort of signed into law and all of that stuff, then they just don't get changed that easily. But what I do think is that they set the groundworks for what it should be. And I think if you follow the regulatory path, you're generally going to be in a safer direction to build from there versus if you're on the opposite side of it and you have to come back to it. So I think that's what I'm seeing and how this sort of plays out. And like you said, it's priced into the name. It's his Clarity Act. So that's what we're all hoping for. We. No one knows what exactly it's going to be, but it should it should be some sort of clear framework.
- [25:43]
Bryce (Co-host)
Yeah, no, that, that'll hopefully be something that happens within the next, within the next six months, I guess. Like I've heard people as optimistic as saying by the end of October. But who knows? Senate, Congress, they always are dragging their feet. But, but what else, you know, before we kind of move on to some other things that are going on in the market. What else about Rails have we failed to ask or failed to highlight that we really should have?
- [26:10]
Satraj Brambra (Guest, CEO of Rails)
Yeah, I think, I think the plan is how do you, how do you sort of compete with Hyper Liquid? And that's, that's always the question we get from almost everyone. And I think one of the things I always say is, look, like I said in the past, when you hear about stuff, it's already sort of been there for like 12, 13, 14 months. You need time to let things cook. We're in our early phases of that. We're three months in our volume. Our numbers are decent. They're obviously we have so much work to do. But I think what we're waiting for is that convergence of regulatory clarity with like sort of product maturation. We have a lot of interesting products coming in the space around prop. We should probably be live by the time this sort of goes up. So we have inbuilt prop into the exchange. We're working on institutionalized vaults where the vaults have their vaults but we don't market make. They're given to professional market makers. So I think the better answer to that question is how do we compete is well, let's give it some time and see how that works out.
- [27:15]
Bryce (Co-host)
Yeah, makes a ton of sense. It was funny about the hype thing. It's like, how do you compete with hype? I saw recently Binance chain launched something called Aster.
- [27:26]
Satraj Brambra (Guest, CEO of Rails)
Aster, yes.
- [27:27]
Bryce (Co-host)
They're trying to compete. So I guess you just have to launch a token and then you could compete. Do you have any plans to launch a token for Rails?
- [27:34]
Satraj Brambra (Guest, CEO of Rails)
We do, we do. It's coming out in December.
- [27:37]
Bryce (Co-host)
Oh, nice.
- [27:39]
Satraj Brambra (Guest, CEO of Rails)
But yeah, we're trying to build a lot of utility into our token. Like I said, we're taking a conservative path on it. Like you needed to buy evaluations for props so you can sort of try those out before you get a funded account on Rails and then the general stuff around like, you know, saving fees and stuff like that. So we're thinking about all of those things. It is important. We're revenue generating already so we want to see a way to give that back to revenue to I think That's a big matter going forward is like if you're, if you're a revenue generating crypto company, a token is very valuable for, for ways to sort of. And I think a lot of clarity around tokenization is something I'm very interested in and how that sort of works out, because I think that's sort of the big unloc for crypto. Right. It's like a lot of the tokens have been pointless, like just culture, culture sort of like hype tokens where you just trade meme coins because it's like the easiest thing to trade. Now. Back then you needed a white paper. I remember in 2017 you got the white papers, you saw that, you read the golem white paper and you went immediately long, because this is going to change the future of robotics and everything.
- [28:43]
Bryce (Co-host)
And then that was before ChatGPT was.
- [28:45]
Satraj Brambra (Guest, CEO of Rails)
Even writing white papers. It took some effort to write white papers then. Now it's like you don't even need white paper. Just make a meme coin and get every. And get, get it on Murad's list and you're good to go, you know?
- [28:55]
Bryce (Co-host)
Yeah, yeah. The scammers of 2017 were really a lot tougher than the scammers today.
- [29:01]
Podcast Host (Gemini Crypto 101 Intro)
It's exactly.
- [29:02]
Satraj Brambra (Guest, CEO of Rails)
It's gotten too easy, which means that it's going to be a lot harder to be successful.
- [29:06]
Bryce (Co-host)
Yeah, that's a funny point. That's a funny point, man.
- [29:10]
Brendan (Co-host)
You know, along those lines, I don't want to derail us too much, but going back to Aster, I don't know if you all have seen the memes, but Mr. Beast, the largest YouTuber in the world, has been trading crypto quite a bit more recently. And people have been saying that he's like the topping indicator for everything.
- [29:27]
Satraj Brambra (Guest, CEO of Rails)
And so I saw that by the top, I think.
- [29:29]
Brendan (Co-host)
Yeah, he bought the top and everyone's like, sell it off and all. My, my whole Twitter feed yesterday was just about how Mr. Beast is the topping signal. And he topped out and made Aster start turning around and all this stuff. So I didn't know if you all had seen those memes recently.
- [29:46]
Satraj Brambra (Guest, CEO of Rails)
Yeah, yeah, I always follow new stuff that comes out, so it's been pretty interesting.
- [29:52]
Brendan (Co-host)
So all I'm going to say is if you do make a token in the future, just make sure that you blacklist Mr. Beast anytime.
- [29:59]
Satraj Brambra (Guest, CEO of Rails)
That's why, that's why you have to kyc and stuff.
- [30:02]
Brendan (Co-host)
Exactly, exactly.
- [30:04]
Satraj Brambra (Guest, CEO of Rails)
But.
- [30:04]
Brendan (Co-host)
All right, bringing us back on track, you had some pretty big claims here that I want to talk about. That we have to talk about them with the size. But you mentioned this idea that bitcoin will reach 300 to 500k.
- [30:19]
Satraj Brambra (Guest, CEO of Rails)
Yeah.
- [30:19]
Brendan (Co-host)
And you've credited this mainly due to the ballooning of the Fed's balance sheet and lower interest rates. My question is, I guess number one statement, can you explain this a little bit more? But also too, is this like an end of year prediction and end of.
- [30:34]
Satraj Brambra (Guest, CEO of Rails)
No, no, I think, I think what I'm seeing, like my thesis for this is this is a bit of a long term prediction and it almost always sort of follows that route. My end of year is I'm still bullish into the end of the year. I think 140, maybe 180, 200 is possible. I think that's where I'm leaning. I think we probably have a really brutal shakeout before then which seems to be going on right now and probably shakes out people a lot, a lot deeper than they think they'll get shaken out and probably rebounds back a lot faster than people. So I think big moves always leave a lot of people sidelined and it's the catch up that creates the momentum on the trade. So that's how these things tend to work. So I think in the long run I am almost certain that we have bitcoin at those prices and it's pretty. I think in a long enough timeframe, fiat becomes more worthless. It's getting to, it's sort of proven time and time again no one has any interest in reducing debt. We just got to keep increasing, keep printing and eventually it's the straw that breaks the camel's back and real assets sort of begins to rise. And you're seeing that in gold early on and I think you'll see bitcoin catch up to that eventually. I think bitcoin tends to lead the market movements first, so if it sort of corrects first, it's sort of signaling everything else going to correct after. So I think the stock market is also due for a bit of a pullback and crypto tends to be the first one to do that and then tends to be the first one out of the gates as well. So I think that's sort of what you're seeing right now. So. Yes, but I think in the long enough timeframe, I think I'm not the only one. I think people have even wilder price valuations than I do, but I think that's where it's headed. Remember, it is digital gold, right? Like it is accepted digital gold. It's the easiest way to move money across The Internet, you don't have to, you can't, you don't have to carry gold bars, you don't have to sort of, you can move it with you. It's, it's, it's really strong hardcore money. And, and I think that it, it's, it stands its place at that, at that sort of level.
- [32:47]
Bryce (Co-host)
Yeah, I totally agree. I think, yeah, 3, 3 to 500k for Bitcoin seems pretty reasonable. I saw Larry Fink projected potentially as high as 700,000 and yeah, Michael Saylor like $13 million per token by the, by 2045. But in this world where it's like basically like this thesis of you know, just monetary debasement from governments, from central banks, where does that leave altcoins? Because I, there's always this big debate of all of that money is going to go into, you know, bitcoin and then every, you know, Ethereum and Solana and the list of altcoins isn't going to see any of that. But we could just see empirically that's not true. Ever since Ethereum launched, it's outperformed bitcoin. Do you think that there's a world in which altcoins will thrive or do you really think that this whole play comes back just to, just to bitcoin and bitcoin only?
- [33:40]
Satraj Brambra (Guest, CEO of Rails)
So I always say that when bitcoin goes that high, the world is going to be in a lot of trouble and it's not going to be this favorable bull market that everyone's excited about. It's almost signaling that there's bad things happening. So you almost don't want bitcoin to go that high so fast. You want it to sort of take its time because it signals that things are really bad. People have lost a lot of value in their fiat asset. Inflation will be all time highs. So that's what happens with monetary debasement. And I think that a select few obviously make a lot on that thing and that's why crypto gives everyone the opportunity to sort of get in. But yeah, I think it's limited to bitcoin. I just don't see the same sort of effect going on. All altcoins I think that is a lot more like, they're a lot more like tech products. So right now you have like this, this artificial sort of push around with DATs. So when you have big, big buyers sort of coming in, buying up big chunks of the supply and sort of pushing the price up, that's, that's unnatural. I think over the long run the dats are going to be responsible for basically the catipulation on crypto side. And I think what builds great altcoins of the future, obviously regulation is going to matter. So do they make it legal for tokens to provide revenue back to holders? Like is there a framework for that to do that legally? And if so it comes back to building a great product that makes revenue and that revenue can be dispersed back to users. And I think you're beginning to see that with like pump fun and all these other ones that are actually outperforming over sort of the short run is there's some way of form giving the value back to the token holders. They're just not empty tokens and I think those ones just, they'll have very short lived cycles before they're out.
- [35:32]
Bryce (Co-host)
Yeah. Do you think that altcoins say in Q4, you know, as we're, we're kind of here in Q4 approaching it, do you think altcoins will outperform Bitcoin in Q4 or do you think it's bitcoin dominance is going to rebound?
- [35:49]
Satraj Brambra (Guest, CEO of Rails)
Well, to have what they want they call an alt season which I don't think is the same thing as an all season in the greatest all season was in 2017 and I think then after that 2021 because one we had a very small group of things to buy so everyone's capital concentrated on a few things. And then 2021 you had money was basically free so everyone was buying everything. Now you won't have the case, just too much fragmentation. So there's going to be a movement in some that are what you'd call cycle darlings, like the new narratives. Like you'll be looking at stuff like Athena, you'll be looking at pump fun like stuff obviously the ones that have dad flows, eat soul, all of that stuff. But hyper liquid as well. But I think it doesn't apply to all. So I have a hard time seeing us having like a major alt season. I just don't think that's possible. You'd need to have interest rates back down to almost zero for that to happen. But if you want to have any form of like our concentrated group of alts performing very well, you need to have a bitcoin dominance run once more. Like it needs to be led by bitcoin. So what you really want to see is the next leg up. If there is a leg up, be bitcoin solely like everything else getting decimated against bitcoin and bitcoin dominance, making a big run September, October, because if that happens and bitcoin sort of tops in that like 140, 160 sort of range that I talk about, then I think you're going to have a really good sort of like full select Altcoins. A huge time bound outperformance against Bitcoin.
- [37:27]
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- [37:57]
Bryce (Co-host)
Okay, I like it. Brendan, does that, does that sit well with you or do you feel like that might be a top coming in here pretty quickly for altcoins?
- [38:08]
Brendan (Co-host)
Well, it raises a good question and it's something that I've talked about. I mean, you look on CoinMarketCap, they have over, I think, 20 million cryptos that they have listed and it has ballooned so exponentially in recent years. And it kind of raises this idea because you look at the equities market and then there's listing factors and you can't just have like infinite companies, not anyone can just go and get publicly listed. There's criteria and stuff that you have to fill out. Whereas crypto, it's a little bit different. And I think that's part of crypto's core values is the idea that anyone can go and create this and they have the right to, and they have the freedom to. But you raise a really good question about infinite fragmentation, right? Because you're almost infinitely diluting the market with new projects. And then what you do is people and their liquidity are going to all these different crypto projects. And you made a good point. Like when you look at 2017, I think the reason why that was such a great run is because people at most had a few hundred cryptos to really put their money into. And so when the market went up, everyone's liquidity, everyone's capital was concentrated into just those cryptos. So not only did A, everyone see upside down, but B, the upside was greater because it was not divided as much. And that got me really thinking. I mean, now that we have 20 plus million that are at least like categorically listed, there's definitely more than that. Does that Limit altcoin seasons moving forward? Because historically we've seen bitcoin dominance range from 40% on the low end roughly to around 70% on the high end since 2017. It does make me kind of second think this process of like, could things have changed because of those factors that we just talked about? And I think it's worth like a real thought. My initial thought was, I think to some degree it has. Right. Because we have seen that's what Satraj said earlier.
- [40:06]
Bryce (Co-host)
I mean, he said that exact same thing that basically because of this fragmentation, he kind of thinks the altcoin season's a myth. But is it altcoin season that's a myth, the altcoin season that we, you know, the 2017, 2021? Or is it just that we need to watch altcoins manifest strength in a different way? Like, what should we really be looking out for?
- [40:28]
Satraj Brambra (Guest, CEO of Rails)
So I think what's very different now is that you can clearly see altcoins just do not hold their gains anymore. So you cannot not be in that sort of like, I'm going to hold this forever and I'm going to make a ton of money. Like, you know, you got an early into Solana or you're early into Ethereum, you sort of do that. I think that's sort of done especially with newer altcoins. You really have to be a trader in the space and catch the narrative. So you have short lived cycles where you'll get a big move and then you need to get out. So that's sort of how I've been approaching altcoins for over the last two years. And that sort of. It's paid big dividends, right? Like because you kind of realize that there's just too many choices and we actually are living in a world where attention span is now very small. So you think about the fact that people go on to social media and you have their favorite influencer shilling something brand new. They've made some gains on something, they just want to rotate. There's no reason to hold anything. So I think you're combining with peak sort of like social media hysteria where you're getting stuff thrown at you so fast, so hard, which also didn't exist in 2017 by the way. Or thing like this is we're living in this time where our attention is so divided, the fragmentation is going to infinity. You combine the two things together, there's just nothing able to hold gains unless it's really got like mental market share. And that's now stuff where like bitcoin obviously massive mental market share. It's accepted, it's known. But who's piling into bitcoin? It's no longer the individuals, it's the big balance sheet. So it's like institutions are having their 2017 moment now because they have a select few that they can pile into. That's why those things are going up way higher. Crypto is just, it's way too fragmented and it needs to find its equilibrium and I think that's going to take some time and I think regulations are going to play a big part in that. So what these, this acts like the Clarity act. Define, they define the narratives around where people should invest their money and what stuff that should. So I think once we have a really good sort of like framework for tokenization then you're going to be able to sort of do this like cash flow based discounting model on what a token should be worth now over five years as the revenue begins to rise, how much will the tokens get? And I think you're going to. We're basically converging with tradfi even on our modeling now. So on things. So I think we're out of this entire like it's going to go up forever. Cause it's crypto. I think that's done. And I'm actually on a macro from. I'm very bearish. I think we may have maybe one more push up before we get a massive closure on the cycle.
- [43:06]
Brendan (Co-host)
Okay, what is that?
- [43:08]
Bryce (Co-host)
Oh, go for it.
- [43:09]
Brendan (Co-host)
I was going to say what is that? What is a massive closure on the cycle? Is that a 10% move, a 40% move?
- [43:17]
Satraj Brambra (Guest, CEO of Rails)
I would say you're talking about 40, 50% move even on bitcoin. So if we go up to like 140 to 160, 180, I still see like a 40, 50, 60% move down because I think what you're going to have is all the DATs sort of like being trading well under their, I think their nav and I think they're eventually just going to have to sell what they bought.
- [43:46]
Bryce (Co-host)
So you think that this sort of Michael Saylor MicroStrategy plus all the other guys who followed in his footsteps who have been kind of issuing debt and issuing equity in order to buy bitcoin, that at some point that's going to unravel and that might be what causes the bitcoin bear market. And now Ethereum's doing it with sbet bmnr. Solana is doing it. Bold take. Bold take. I hope it doesn't happen. I hope it doesn't happen. It would be great to see, you know, some, some good actors doing this in a responsible way. Hopefully they're doing it in a way that won't be ultra, ultra over leveraged. And I, I feel like, I don't know if I, I misread in, in the, in my research and stuff but I want to see if you, you had the sailor effect in regards to Ethereum. Talking about how Ethereum might be as high as $7,000. Is that right? Am I misreading?
- [44:43]
Ali Jackson (Podcast Host, Finding Mr. Height)
Yeah.
- [44:43]
Bryce (Co-host)
Tell us a little bit about this then.
- [44:45]
Satraj Brambra (Guest, CEO of Rails)
So what I think is that if the market was to turn now and go back to like 90k and 80k then obviously it's just an extended cycle. So it's not done. It's just we haven't had too strong a move up to be able to call it like it's over. So I think then you're just having a long ranging sort of market. Then you have interest rates come down and that fuels up that, that last push up. So I think, still think that in one way or form you're going to build up towards a very big push up and that would be basically the cycle top or what you call the end. So that's how I'm seeing it. Like I think we're towards the end, not the beginning definitely. Remember like from the, from the round 13 side. Like I put in our first money at the end of 2022 and for me that has been the trade since 2022. So I'm coming towards the end of these trades in a sense. That's when the beginning of the bull market started actually. So we're now coming towards the last piece. But the last piece is always the most explosive and that tends to be across all markets, across all industries. So that's the part I think is missing right now. And there's way too many people bearish for a real strong top to be in. Like you just do not see that when tops begin to form I think every bear becomes a bull at the top of the market and that's sort of what you're looking for. And I have, I see too much skepticism and negative sentiment way too early. And I think that's part of the attention sort of thing I'm talking about because information so quick and fast to us on social media, someone becomes bearish, everyone becomes bearish. Like it moves very fast. And I think that's the big difference. Now that makes trading a little bit more difficult is the fact that Information's moving way too fast.
- [46:35]
Bryce (Co-host)
Yeah, Satraj, I mean you, you hit the nail on the head. I think you're exactly right. I know looking at my timeline on Twitter, every time there's a big sell off, like the whole market gets super bearish. Nobody's trying to buy the dip. Like, everybody's pretty pessimistic still. So I think that's a good sign that there's still some room for higher prices. You know, it just, it might be the pain trade might first be bitcoin higher without altcoins and then everybody fomos into bitcoin. Cause like, ah, screw it, I'm gonna sell my altcoins. They're not doing anything. And at that moment, bam, that's when you sort of get that final rip.
- [47:10]
Satraj Brambra (Guest, CEO of Rails)
Yeah, historically, if you look at the markets, yeah, they get, they get hammered, but they all, as soon as bitcoin rises and tops, they all go crazy. So what you're really looking to do right now is to be very selective with your positioning entering. You never want to be knife catching, but you want to be looking for bitcoin too. So what happens is bitcoin goes down, alts get crushed, bitcoin goes up, alts get crushed more. And what you're, yes, you want to be watching how bitcoin behaves more than anything else because that's sort of like your general sentiment around how things are going to change. Watch the big flows from tradfi that's been the entire driver of the cycle. So that sort of like determines how. And they still keep buying. So that makes you feel like they're the big dip buyers in this space.
- [47:56]
Bryce (Co-host)
Yeah, Watch those passive ETF flows. It's certainly something that's going to kind of hopefully keep the market going. I know when we talk to folks that advise these ETFs and advise wealth managers, they say there's such a small amount of wealth advisors that are onboarded with these ETFs and slowly but surely that spigot's coming on. So I liked what you said earlier just to kind of like put a, put a point on the conversation. The last, the first 20% of the trend and the last 20% of the trend are always the most dangerous. And then like, you know, that nice middle 60% is where you make all your money because, you know, buying the exact bottom, like during ftx, like that's a super dangerous exercise. But you know, it's the most, you know, rewarding and selling during the market euphoria and peak when everybody wants to be a buyer, like, that's also a scary, dangerous exercise.
- [48:45]
Satraj Brambra (Guest, CEO of Rails)
But.
- [48:45]
Bryce (Co-host)
But if you could kind of capture the middle, you're going to be. You're going to be.
- [48:49]
Satraj Brambra (Guest, CEO of Rails)
Yeah, those are your entry points. Right? So those are the entry points. And I think it's always good to watch momentum because, like, with Aster, if you played it well over the last two days, you would have made a killing. Like, you can see the narrative and you can. And you can sort of see how it. How quickly it spreads on social media. Like following that's coming, something I've sort of, sort of trained myself on doing, is every night I sit and just read crypto Twitter for like 30 minutes just to get. Gauge sentiment. Like, it gets me understanding where people's mind space is. And I think they become, when you put them in a big sphere, it becomes a really good countertrend signal for you to sort of trade, because then you realize who's offside, who's not offside, how sidelined everyone is, how not they are. So it looks like everyone was very long, very excited, and right now everyone's, like, liquidated. So we're setting up for. So now you want everyone getting ready to short the crap out of everything. And once everyone is shorting, then the market just moves completely against catching everyone offside.
- [49:48]
Brendan (Co-host)
Well, I know we've talked about how you're a little bit skeptical about the altcoin market. Are there any that you aren't. Are there any that you like back? And you're saying, hey, you know, I really do like these, because my kind of take on. On altcoins is that I don't believe we're going to have an altcoin season where every single altcoin all goes up like that 2017 run. I do think we're going to have periods where we have altcoins performing quite well.
- [50:12]
Satraj Brambra (Guest, CEO of Rails)
Yeah.
- [50:13]
Brendan (Co-host)
And the way that I look at this is that you just have to be more aware of what's going on and you have to kind of be a picker and a chooser. So, you know, I guess for my question to you, are there altcoins that stand out to you and you're like, no, there are, like, really good altcoin projects that can have a lot of upside. Do those still exist?
- [50:29]
Satraj Brambra (Guest, CEO of Rails)
So for us, I can tell you on the fun side what we're. We are positioned in. So we started with we. So if I sort of run this over two years, bitcoin was obviously the core, and our two big, big gainers have been bitcoin on Solana that was like the early. We got excellent entries on bitcoin, got excellent entries on Solana. I think Solana we entered around 20 to 24 bucks. Like that was when we started sort of writing that up. Coming in, coming out to that thing. I'm very positioned very similarly going into this thing now. So what do I see next? Bitcoin, Solana and then Altcoins. The one that we do like is Athena. Fundamentally Athena is growing pretty strong. It has this nice sort of like flywheel. It's got obviously the dat they do the big buybacks but also it's got fundamental value. As the interest rate goes down it's still the most strongest yield bearing stablecoin because it has, you know, the long, short sort of like thing. But it also has the treasury on it. So it looks very like a very sensible fundamental crypto project to play in. And that's something we are. I'm obviously monitoring Pump fun. It's sort of interesting. It fell down over the last few days because it made less revenue. So it seems to be trading against how much it can buy back which is very interesting. But I think if you have any form of meme coin rebounds I think Pump Fund will be a great buy. I think at revenue and its holding it's probably underpriced relative to what it should be in the market. So that's an interesting one. And then just looking forward to news. I think Aster definitely has some legs bend. Whether it works well or not, it is a competitor to Hyper Liquid. It does have the Binance blessing and at the end of the day it, it's going to have the like the reputation of like you know, CZ and what BNB has, how that has performed and somewhere or form like I think it's, it's, isn't it wholly owned by Binance if I'm not wrong.
- [52:42]
Bryce (Co-host)
I think so like 95% of it.
- [52:45]
Satraj Brambra (Guest, CEO of Rails)
So you have a hard time seeing that that's not a good project to sort of make a bet on to sort of capture some value from Hyper Liquid. So that's sort of like. That's an interesting one. So I like those three.
- [53:00]
Bryce (Co-host)
I like it. Those are some hot fresh picks for the community. I think of those full disclosure, our fund owns Pump so we've got some exposure there. I share your same bullishness. I think that it's valued at like a seventh of Hyper Liquid but does like more revenue and puts all that revenue towards buying back these tokens. And so I'm, I'm super optimistic there. We have some small exposure to Hype but but none to Aster. I missed the boat on that one so maybe I'll, maybe I'll dive into that a little bit later.
- [53:29]
Satraj Brambra (Guest, CEO of Rails)
Well now if it corrects, what did CZ say in his last tweet that all the dips are like struck like the foundation of a house. They're like that. So I would say the dips on Aster, they're probably going to be pretty wild, but they're, they're probably good. Good like anything under a buck is for us. We'll be looking to allocate there.
- [53:47]
Podcast Host (Gemini Crypto 101 Intro)
I like that.
- [53:48]
Bryce (Co-host)
I like that. Well, Satraj, this was incredible. I wish we could go longer. I hope you are able to come back onto the show at some point here in the future to talk more about Rails, talk more about round 13 and any other things that your your market musings and machinations. We would love to have you air them out here on the Crypto 101 podcast. But until next time, we hope you have a great rest of your, your month here. We hope you guys successfully build into Q4, catch some, catch some dips and we hope you have just a tremendous success.
- [54:20]
Satraj Brambra (Guest, CEO of Rails)
Awesome. Thank you. Thank you so much for having me. It was so much fun.
- [54:23]
Bryce (Co-host)
Absolutely everybody at home listening. Thank you so much for joining. We hope you come back same time, same place next week. We're going to have some more incredible high caliber guests for you today. All right, Brendan, take care. Everybody home. Have fun.
- [54:48]
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