← CRYPTO 101
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- [00:00]
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- [01:40]
Brendan (Podcast Host)
All right everyone, welcome back to the Crypto 101 podcast. I hope everyone is having a fantastic day because no matter where you're coming in from, you're certainly in the right place. The crypto market is electric right now and because of all the volatility and everything that's going on, we figured we wanted to bring in one of the biggest players in the space to talk about the overall state of the market and what they think about it and just everything. Because there's a million questions that we can ask and we have about an hour or less to do it all. So today we have Max Gockman. He is the deputy Chief Investment officer for for Franklin Templeton Investment Solutions. For those of you who are not familiar, Franklin Templeton is a $1.7 trillion asset manager with about $1.7 trillion in assets under management. Max, good to have you, man. Excited to have you on.
- [02:32]
Max Gockman
Thanks so much for having me, Brendan.
- [02:34]
Brendan (Podcast Host)
Absolutely. I mean, let's just start from the top here. You have a long history in finance, tech. I mean, even AI. What made you start looking into the crypto side of things when you have all these different avenues that you could run with?
- [02:48]
Max Gockman
Well, my whole life I've been a multi asset investor. Like, that's been the one common thread. I've never invested just in equities or bonds. And I've also seen this story play out before. I mean, you know, it was emerging markets in the 80s along with high yield. Then it was, you know, tech companies. And so you see these new asset classes come in. Everyone says, you know, why would I ever put, like, junk bonds in my portfolio? Fast forward. High yield is like the most vanilla allocation you can think of. Same thing with, I would never buy equities in Taiwan. Well, that's now where all of the GPU is powering all of our mines and all of our AI is coming from. Right. So inevitably, what happens is a new asset class comes on. People look at it skeptically. You've got a few early movers who make a ton of money, then everyone else gets fomo. They come in, it gets institutionalized. And I've just learned I want to be at the cutting edge of that, not at the back. And a lot of times when you're a fast follower, you're just in second place.
- [03:53]
Brendan (Podcast Host)
I would agree with that. It's funny, I was just talking to a buddy about a week ago. He's like, I just don't understand the whole crypto thing. He's a bit of a crypto hater. And so I try to do my convincing to him, but we haven't talked in a while, and he's like. And he's like, I just don't understand it. He's like, no one cares about this. No one wants to use it. And, you know, you look at all the big names and like, they don't have any good stances on it. And I was like, well, I don't think he's been paying attention as of lately. So I guess for the listeners out there, you know, maybe they are new or they don't understand what the bigger view of crypto as a whole is. I mean, where does Franklin Templeton kind of stand when it comes to the crypto market?
- [04:35]
Max Gockman
Sure. Well, first of all, we don't look at it as a monolith. And I think that's really important. I think a Lot of times, people especially ironically, I see some of the old crypto natives, like, they're like just bitcoin over everything. I actually personally am not a huge bitcoin fan. I think it's a network asset. I don't really. It doesn't have a real tether to it of human history like gold does. But that does not make me not super excited about everything else that's going on. And when I think about like Ether, for example, I'm thinking about I get to buy the railroads that are going to run the future of technology and transactions. I mean, these are literal Rails.
- [05:15]
Brendan (Podcast Host)
Yeah.
- [05:16]
Max Gockman
So if we think about like how wealth in America was made at the turn of the century, you know, it was the railroads. Well, Ether is that railroad. You get to buy the actual Rails, you know, and then I think about actual cryptocurrencies like Solana, which is one of my favorite tokens and one that we're launching product in with at Franklin as well. You know, that's just completely changes the way peer to peer transactions can work. It's something that all the major credit card companies are terrified of with good reason. And so bringing it back to like, what are we looking at at Franklin? It's all of that. We're looking to be a provider of solutions that are diversified, that can bring in product in a wrapper, whether that's an ETF or an ETP or a fund to investors where they are. So if they don't want to figure out how to deal with their own wallet or cold storage, we can make that work. If they're crypto natives, they're looking at adding traditional assets, but actually wrapping those assets in a tokenized format, we want to bring that to them. If there are other asset managers like hedge funds, and they need to create more complex structures and explore how to custody better, how to actually get into the yield in their holdings, we've got our Benji platform for that. So we're, you know, the fact that we have such a large scale means we can approach this space the way we approach, by the way, any other asset class, which is to say from all directions. We want, we don't want a client to come to us, whether they're an advisory client, a retail client or the largest institution, and have to turn them away to someone else. That's the bottom line.
- [07:00]
Brendan (Podcast Host)
Yeah. You know, you said something interesting, which is that like, you're not necessarily against Bitcoin, but you seem to like coins that offer a bit more utility like Ethereum, so to say, a bit More from the institutional side, it really does look like that is where the bulk of the banks or asset managers or even large institutions, it looks like that's what they're kind of turning towards. You know, they're building on these things. The common debate out there is, oh well, are they going to choose Ethereum or are they going to choose Solana? Personally, I believe that there can be a world where both exist. But it seems like at the moment the bulk of these financial institutions are focused on building with Etherium. And I think that's, you know, not even necessarily a hot take because I think the numbers are just there.
- [07:46]
Max Gockman
Yeah, no, absolutely. It's, it's, it's a fact. And I think they're different vehicles. Right. Ethereum really is a technology platform for building smart contract contract. Solana is a super fast transactional rail. And I look at it like that. So can both exist? Yeah, I mean, to me it's almost like saying, you know, you can have Alphabet exist as well as Visa. Like they're kind of doing different things now. They may overlap in certain areas. And I think when we go into like that specific soul and eth example, like, yes, there's a lot more of an overlap. That's the nature of the modularity of blockchain technology. But then it's almost like saying, well, we built a bank out of bricks and we built a sports stadium out of bricks and therefore they're the same thing. There are totally different use cases. Also. I think to me the bigger question is could you have Solana and Ripple coexist? And I would say yes, because we have MasterCard and Visa and Discover and Amex. And so you could have multiple standards. They are going to have to, to some extent either figure out how to coexist or coexist in competition. It's not going to be an either. Or this does complicate things for an investor. Right. Because like, who do I invest in? And I think ultimately that's where you have to go and do your research. Something we're doing is we're exploring these projects very in depth for talking to the folks behind them. We're exploring things like transaction volumes, which ones are, you know, moving faster, what are the ways in which they actually operate? You know, like the proof of history with Solana is a really powerful mechanism in my view. But there's. Those are kind of where we get into the actual valuation of the underlying project. But it does not mean that one project must be the only one in existence. By the way, the reason I Harp on this a little bit, Brandon, is because we would never talk about this if we were talking about say like software stocks. You know, we wouldn't say like, oh, well, because, you know, Microsoft is dominant in Office. You can't have, you know, Alphabet play with Google sheets. You can't have Apple play with words and pages. It's like, no, you know, there's a dominant player and there's other players who also do this. And it's all part of their broader ecosystem. It's the same thing in digital assets, 100%.
- [10:15]
Brendan (Podcast Host)
And it's so funny because for whatever reason the haters haven't gone away over the years, it can continue to grow. I mean, you look at Ethereum, which just set all time transaction records in January, all time user activity activity records in January, Bitcoin alone had almost more dollars transacted than Almost Visa and MasterCard combined. Bigger than either one individually. Solana has been setting records. It's the same thing. And people look at this stuff, I don't know, and I think they try to judge it a bit differently or maybe they make it more complicated than it needs to be. When you look at the current state of the market, obviously we've come down a, a lot. You know, we're recording this in February of 2026. The listeners will probably be watching this a little bit later. But you know, bitcoin kind of falling back down into the 60 to 70,000 range at the time of recording this. And the funniest thing is that, you know, once again people are coming out and they're saying bitcoin is going to be dead. I saw, you know, Michael Burry was one of the famous ones I just saw, he was chiming in and said, hey, this could cause a death spiral for the crypto markets. And it's at times like that I always like to go, there's this website, I think it's called 99 bitcoins, but they have a bitcoin obituary where they count every time bitcoin has been declared dead. And then they link the article or they link the post calling it dead. I'm like, oh, well, that's going to be another dot on the chart. And then they map it to where price is. And it's so funny to me. But you know, obviously I would disagree. I think, you know, you would disagree. Most people in finance would probably disagree with that. You know, at least me, you know, I want to buy the dip here, but I've seen you say that people should be investing in these assets methodically like they do with, you know, maybe stocks or bonds and that they are institutional grade assets now. Can you explain that?
- [12:04]
Max Gockman
Yeah, absolutely. Look, I mean, use risk management, don't invest on vibes. I think that's a general comment I would make about any asset class. The other what I mean by that is you should have a benchmark that represents your risk tolerance. And I mean that in terms of how much risk can you take and it's a standard deviation of your returns. Just to be clear, it's not super complicated for anyone who's got a GED. You know, in times of stress, can you lose 20% of your portfolio and be mentally okay? You know, are you in a state where you need to be withdrawing money from your portfolio every month? That's going to change your risk tolerance to be a lot lower than if you're young and you know, you can really ride that volatility. Once you figure out your overall level of risk, then a general rule of thumb, and again, general is the operative word, everyone should think about it for themselves. But we would say 20% or a fifth of your total portfolio risk should be as much as you allocate to any single asset class. And crypto is a new asset class, but it's still just an asset class. It still abates the physics of the markets. And so we can plug it into that now, you know, 20% of risk for a asset class that has as high of a volatility as crypto does may not translate to a huge notional allocation. Right. So that could mean for even a more aggressive portfolio that's almost all equities, you're looking at like 6 to 8% of crypto. And there's ways to lower that total volatility contribution by doing things like relatively increasing how much you have in safer assets like government short dated government treasuries, reducing how much you have in other risky assets like emerging market equities and international small caps. So you basically work to both make sure that your overall risk level of your benchmark and your portfolio isn't higher than what you can tolerate and that crypto itself is about a fifth of the total risk. And if you can do that, and by the way, we illustrate this in a paper we put out called Back to Benchmarks, which I think does a really good job of breaking down some of these concepts, it becomes much more tolerable. And then the other thing I'd say is just like any other asset class, I don't invest just in China. If want to invest in emerging markets. In fact right now we don't like China, but we really like Taiwan and South Korea across our multi asset portfolio. So similarly have a diversified digital asset portfolio. It should not be just bitcoin. That said, it is a little silly to hear folks talk about yet again, as you said Brendan, the death of bitcoin. When a major European soured wealth fund, luxembourg just added 1% of Bitcoin ETFs to their balance sheet. When we've had a bunch of whales wake up. These are portfolios with or with over 1000 bitcoin each. They just added 4 billion over the last week into the holdings. So you know like, yeah, it's. Well again it's a volatile asset class. It's going to have 40% drops pretty regularly, just like it's going to have rallies. It's if we look at it through that risk lens and what we expect for something that has, you know, a hundred day volatility of you know, 50 to 60%, this is pretty normal. Like this. This is nothing that makes me lose sleep at night.
- [15:45]
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- [17:51]
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- [18:03]
Brendan (Podcast Host)
Yeah, you're right. This is pretty normal for anyone who's been in crypto for, you know, an extended period of time, several years or more. If you've been through a couple of the cycles or even looked at a couple of the cycles, a 50 move on Bitcoin isn't all that uncommon. You know, Bitcoin is very volatile and it always has been. And when you look at back at how many moves Bitcoin has had a 50% or more, you know, the average bear market usually falls into the or more category by quite a bit. You know, you can look at 60, 70, 80% drawdowns, which I know is just gut wrenching at the time that it happens. But you always look back on it and go, man, I wish I was a little bit less fearful in those moments. You know, fast forward to the current day. You're right, there's a lot of stuff happening behind the scenes. And I think that's what people are so curious about is they have a couple of questions about like, why is this happening? What does the big institutions and the smart money investors think about it and then what's actually happening behind the scenes. So I'm going to throw a couple of questions at you in regards to all of those, but I guess let's start off with like, what in the world is happening here that is going to cause this kind of rundown? Because people look at previous ones and they say, okay, well I understand Covid Global pandemic, okay, I understand FTX or Terra Luna or Alameda Research or you know, all these different catalysts that have or the tariff crash or the Japanese carry trade crash. They can put a specific event or some sort of like blow up black swan, like opportunity to it and they say, okay, I can kind of wrap My head around it. I think this time around there's a little bit more confusion on the retail side of people struggling to understand, you know, what's going on and why it's happening. What are you seeing?
- [19:51]
Max Gockman
Sure. So those are all different examples you just listed of both macro driven things which kind of came out of the tradfi world, which again, I don't really like using those labels because this is all part of one broad world of asset classes. Also very specific crypto things, which I think is where we are now. Which by the way, ironically, a lot of times people talk about how they want crypto to be less correlated to the rest of asset classes. Well, be careful what you wish for. Correlation does not imply positive returns. So crypto's correlation with stocks and bonds has actually gone down. Unfortunately, it's because it's fallen. So what I mean is it is idiosyncratic. I would bring everyone back to the dats. I was talking a lot about dats back in October and I was telling folks who would listen that you really don't need to inject leverage into crypto ever. Do not lever crypto. I will almost never say something categorically but like, you know, I have to hear, like, that is a bad idea. It is again, because it is already so volatile. Like why do you need more volatility? So you had these public companies that were buying up like all of sol, a bunch of bit, you know, bunch of eth leverage.
- [21:06]
Brendan (Podcast Host)
Are you talking about the dats?
- [21:07]
Max Gockman
The dats, yeah. And then what happened is there was a liquidity crunch which by the way, happens in this market all the time. So hyper liquid. Very ironic name to go down in history. Right? Kind of hits a snag, cuts liquidity with a, you know, rusty knife. So everyone's positions just go thwomp. And now you're getting to this reflexive deleveraging cycle where prices fall, margin calls happen, that causes forced selling, the forced selling causes prices to fall. And you repeat and repeat and repeat. And so that's in my view or kind of these big snowball that started rolling down and ultimately became an avalanche. But when I look at that and you know, I'm not going to tell anyone listening to Buy or Not Buy the dip. I think that needs to be a question of again, your risk tolerance, your portfolio. And we can talk about like common sense ways to think about that. But what I will say is look at the state of the system and the state of the broader digital asset economy. So are the rails broken? No, they are not broken. They are functioning fine. Are there pockets of deep liquidity? Absolutely, yes. You need to be very careful. Especially this is less for retail, I would say, and more for like kind of your crypto hedge fund players. Do you know that where you're placing your orders is going to be able to fulfill those orders as they said? Are you, if you're staking, can you extract and take your assets back to liquidity quickly enough? You know, those are questions that the more medium sized investor needs to be thinking about very carefully. And then if the rails are functioning more broadly, what's the macro picture like? And the macro picture in the world is actually pretty great. We are in a very healthy global economy. So with all that happening, we need to wait for this reflexive deleveraging to end, you know, and then you will start to see the bigger players provide a backstop which in turn will provide some liquidity which will cause the market to stabilize. I think after that it should start going back up. I tend to not give forecasts too much on, on super against super volatile asset classes, but I would expect we're going to end the year significantly higher on most crypto assets than where they are as part of this drawdown because the rails are not broken and the macro picture is sound.
- [23:54]
Brendan (Podcast Host)
So let me know if I'm getting the full picture here. It sounds like you think that the drawdown that we've seen was largely caused due to too much leverage and people getting over leveraged in their positions. And that was probably a mix of like you said, hyper liquid and the explosive growth that that was seen. And then obviously Binance was a big part of this. You know, they had lots of leverage, but they also had that deleveraging event where you know, things like USDE devalued and de stabilized and that liquidated a lot of positions. And so it sounds like the liquidations are like a leading cause of this. Now. The 1010 crash, the October 10th crash of 2025 was like the initial start of it, but we've continued to see like cascading liquidation since then. Is that panic selling? Is that other fears about maybe the Clarity act and things getting pushed down the line? Why have we continued to see, you know, the selling pressure even though now, you know, we're, we're five months later.
- [24:54]
Max Gockman
Yeah, so. So you're still seeing this deleveraging happening. It's just, it's like the 1010 crash was just like this massive thing. Like you know, that said, like that was to me like the big chunk of the Mountain came off and it just started rolling downhill. And, you know, we're past, I think, the major avalanche, burying a lot of folks, but, like, the mountain is still not stable. So whenever you have issues with liquidity, which we still have in pockets, not broadly, but in pockets are still liquidity issues, you still have not enough whales really waking up to go fish. That's kind of the issue. You have that reflexive cycle that I mentioned where as prices fall, more folks get margin calls. They have to sell or their positions are for sold, which is always really bad for this kind of cycle. And again, that's where if you're an institution or a hedge fund, really think about your own risk controls, that's super critical. You will lose clients very fast and your reputation even faster. You know, if you have to tell people, like, yep, my positions just got axed kind of arbitrarily by a risk manager, you know, on. On the exchange I'm trading at. But things are starting to quiet down a little bit more. But, you know, I don't want to. I think there's a difference between buying the dip and trying to catch falling knife. Right. If you're a retail investor, missing the first, you know, 10% or even 15% of a rebound rally is not gonna be as bad as getting out because you got in too early, and then things fell another 20 before they stabilized. So better to be late to the reopening party than early, is what I would say.
- [26:45]
Brendan (Podcast Host)
As a general rule, I could not agree anymore. We say the same thing over here. For, you know, members that are. That are with us, we say the same thing. You know, why try to catch the following knife? You know, if you want to do a little bit of dollar cost averaging, I think that's all right. But, you know, for the people who want to get much more aggressive, I think it's safer to usually let the conditions switch up, let the trend become your friend a little bit again, let maybe the bottom come in. And even though you might not bottom tick the exact, you know, bottom of the market, I think it's okay to let it happen and then jump in. And I think generally speaking, that's a safer strategy than trying to catch every single move down. And because what you end up having is just yourself getting liquidated or stopped out over and over and over again. Whereas, you know, the latter tends to be a little bit more safe.
- [27:36]
Max Gockman
Absolutely. And by the way, like, no one, except maybe your two friends on Reddit, are going to care if you bottom tick. Like, yeah, like this is your Money, like, be smart with it. Just like, again, common sense. As, as I said, if you have a target allocation, like, you're like, I want crypto to be 8% of my portfolio because that's the amount of risk I can take. Just have a. This is the simplest way to actually dollar cost average in a way that is sound and institutionally healthy. Have a regular rebalancing frequency. So you can say every month I'm going to rebalance to my target. So if digital assets fell and they're now, you know, 6% of your total portfolio instead of 8, guess what? You're buying 2%. You're selling some of, say, equities that have run up great. Simple, straightforward. It's very formulaic. You could literally set up a simple program in whatever brokerage you use most likely to do this for you automatically. You're not looking at the news. You're not trying to follow a trend over time. And I emphasize, over time, this will work. Now, if you try to really time things, that's when usually you start getting into trouble.
- [28:50]
Brendan (Podcast Host)
Yeah, I would agree. I think it's near impossible to time the markets. And a lot of the people who do time it perfectly, they do it
- [28:58]
Max Gockman
by accident and they do it once, and then they, you know, they go on TV and kind of sell a bunch of books. Like, they're like, by the way, like, just, you know, people who really know what they're doing. You know, they're very few and they tend to be very quiet. So be really careful when someone's out there. Like, I mean, I think what, you know what. And you can see, like, what we're trying to do is give you common sense advice.
- [29:20]
Brendan (Podcast Host)
Yes.
- [29:21]
Max Gockman
If someone's out there saying, this is where you're gonna make money and, you know, go pay me a thousand, because I see this on the, on the influencer side a lot. And it's just like, I don't know, I mean, I feel like it's something maybe like the regulators should start looking into. Because people who are charging you for their investment ideas, a lot of times the question you should ask is, if you're so good, why are you not actually just making all the money yourself? Like, why waste time educating us? But if you're educating people on general topics, it's because you're doing a service to the community. Which is why I like being on podcasts like this with you, Brandon. Because we're not giving people bs. We're giving them rational, prudent things that are going to ultimately preserve their wealth and hopefully grow it.
- [30:09]
Brendan (Podcast Host)
I think education is so important and again, just helping the people who haven't been around for all the crypto cycles and all the volatility, helping them understand, hey, this stuff happens, why it happens. What we've seen in the past and all of this, the other big question I think a lot of people have in regards to this, so now that they understand, okay, this is why it's happening, this is what has happened, the next question that a lot of people have is, well, what is happening now behind the scenes? What's happening now? At the forefront, you guys have plugs and connections and you guys work with pretty much all the leaders across, you know, all ends of the financial industries. You know, what are you seeing on the institutional side from smart investors, all the big investors. Everyone likes what is actually happening here and what do they think about this?
- [30:58]
Max Gockman
They are generally looking through it, you know, same as we are. They, you know, depending on how opportunistic they are, there are certainly some who are, you know, making more dynamic calls. Again, I would say kind of going beyond the top layer of tokens. Generally speaking, people are being prudent with the risk budget. So it's nothing too exciting. I think where the exciting stuff is happening is more in the tokenization side and the RW side. We're seeing a lot more interest there, especially from institutional players who typically weren't in the space. And what's been interesting, we just talked about education there. So there's an education component of course, to the retail investor. But a lot of what I do is educating my biggest clients on, first of all, blockchain. And I kind of say, like, I want to introduce someone to the beauty of blockchain before I take them to crypto. Right. And once we talk about like the benefits of blockchain, then it's, then it's okay. How can I use this technology? A lot of times tokenization comes up first as a way to potentially generate liquidity or in some cases even create brand new asset classes, which is where rwas come in. And then we tend to start getting more into like tokenomics and specific projects and actual digital assets. But what I will say, and this is a really key thing, all the biggest institutions are now looking at this space. It is a sea change. Like if you think about, you know, Jamie Dimon saying that, you know, I don't remember exactly the quote, but effectively that like bitcoin is, is trash. Yeah, you look at JP Morgan's balance sheet, that that doesn't line up anymore. Right.
- [32:34]
Brendan (Podcast Host)
We've done the same thing.
- [32:36]
Max Gockman
You know, like, in fact, I. I think they just bought in, or their total holdings now are, like, over a billion btc. So, you know, so there's. There's a lot going on that is pretty different from where we were before. And as I talk to largest sovereign wealth funds, the largest pensions, they're looking at the space very differently. And a lot of them are looking at it as an opportunistic allocation, or they're looking at it as a way to generate potential liquidity for certain asset classes that were looked at as liquid before. But that's kind of the general theme is greater adoption, greater focus on discovery. And for us, it's knowledge transfer first
- [33:24]
Brendan (Podcast Host)
and foremost, I would agree. I think it is a knowledge transfer and people learning. And I like what you said. Introduce them to the technology first. Help them understand why this matters. Because sometimes you probably have people come to you and they just say, hey, I just want to throw money at it. You're saying, okay, well, let me help you understand why, you know, you want to put money into it so that we can both be on the same page when things do get south and you can understand why you're invested in the first place. And I think that that is so important. And it goes back to this topic that we were talking a little bit about earlier, which is just asset allocation and how much you could have. I saw another quote from you. It said that there's something along the lines of, like, the standard 3% allocation recommendation that's been floating around out there is a sort of. It's a form of. I think you said it was degen Gambling behavior.
- [34:14]
Max Gockman
Yep.
- [34:15]
Brendan (Podcast Host)
And it actually incurs more risk than not. And that stood out to me because I was like, I hadn't thought about it that way. Can you just kind of walk the listeners through what that means and your mindset behind it?
- [34:28]
Max Gockman
Yeah. And it's something we talked a little bit about earlier in the pod. But basically, the short answer is, no. Part of your portfolio is a casino. So when I say it's a d. Gen mentality, and a lot of times, you know, people will say that's paradoxical. It's only 3%. Like, well, I don't. I would never go to an institution. Right. Like, say, a pension and say, you know, I'm Gonna Just like, YOLO 3% of your assets, guys. Just, you know, let's see what happens. Right. Because they've got liabilities that are supporting, you know, thousands of individuals in retirement. That's A pretty fast way to not just get fired, but have security drag you out. So if you're an individual with your own portfolio and your, you know, advisor is telling you, okay, I know you like crypto, let's just kind of like see what happens. Let's put 3% in or 2%. It doesn't matter. The number doesn't actually. It's just 3% is what I feel like. You know, people often hear it's like it's okay to lose, that you'll still be fine. Why think about it like that? That has no bearing on whether you should. You may actually need to have only 1%. You may need to go up to 8. And it's a question of your risk tolerance. And what else is in your portfolio. All the asset classes in your portfolio interact with each other. They have different correlations. So how does adding certain parts of digital assets. And again, I'm speaking about the broader asset class, not just Bitcoin or just. Right. But how does adding this asset class to your portfolio change the overall covariance matrix of everything in it? Is it going to introduce additional volatility? I mean, most likely, yes. Is there a way to reduce that additional volatility? So your overall risk level is still something that you can tolerate because Maybe you add 5% into crypto and then you also add 3% into treasuries and you take, you know, the 8% out of small cap equities. And overall your risk level doesn't move as much because you took something risky, added something that's both riskier and then a little bit in something that's way less risky. That is a really important concept for investors to understand. So again, it's ultimately, it's risk management. I cannot emphasize the importance of thinking through a risk lens, not a percentage allocation lens. If you take nothing else away from this conversation, do not think of digital assets or really any asset class in your portfolio as just a notional percentage, because every asset class has a very different level of risk that it contributes to your portfolio, and that's what matters.
- [37:13]
Brendan (Podcast Host)
Yeah, risk management is. I mean, we say the same thing. I mean, risk management is one of, if not, I would say the most important, but also arguably the hardest part of it. Anyone can go in and find, you know, a big winner and you have it happen all the time. The real hard part comes to managing risk because not everything's going to be that, that big winner moving forward. And other things can happen and bear markets happen. And there's so many different scenarios. So really, really like that point. And for all the listeners out there, I mean, I would write that down, make a note of it. I mean, risk management, especially in a market that is as volatile as this one, is extremely important when it comes to the current state of the market. Kind of switching themes back here we, it feels as if the technicals are somewhat disconnected from the fundamentals because on the fundamental side it feels like the, the tail, there's so many different tailwinds. You know, we mentioned RWAs, we mentioned tokenization. I think you could allude to stable coins. I think you could allude to, you know, decentralized finance and any other form that blockchain has and probably will be used. And there is a fight over how they can use it, who can do it the fast enough. Like, everyone's already looking to do this stuff and you see it talked about all the time. And then when you kind of go back to some of those other fundamental metrics saying, hey, obviously there's all these, this is this big push in all these different categories. But on top of that, you have growing transactions, growing users, growing activity, all these things. Even on the ETF flow side, I saw something like 90% of holders are holding strong and everyone's so focused on the 10% that are selling. And so that's where I stand is I feel like there's a little bit of a disconnect here from the fundamentals and what are actually happening. And it's just panic selling from a lot of the liquidations that we have seen.
- [39:16]
Max Gockman
I would say panic selling and for selling, more importantly. But yeah, it's the marginal dollar that moves the price, right? Like, that's again, not just crypto, it's any, any security. You know, I'd say the second thing everyone should take away is crypto is just another asset class. It's, it just has a bit more volatility or a lot more volatility, but the rules of gravity of the market still apply, right? So if everyone's holding and then you've got like the small group that are just all, you know, seeking a bid, price is going to come down. It's just, that's, that's just what happens, right? There's more sellers, not enough buyers, it's going to move the market down because other investors are holding their positions, they're not willing to buy. So what needs to happen is the price needs to come down enough that those people who aren't willing to buy more actually become willing to buy. And again, we're starting to see A little bit of that happen within the crypto native space. We're probably going to, I mean, almost like definitionally, the further the price falls, the more there isn't. There is a demand. Think about like Econ 101. Right. Think if you're, you know, supply curve and your demand curve, when they intersect, you've got a well functioning market. It hasn't intersected yet. We're getting closer and you know, you what, like we said before, don't try to, you know, get the bottom tick. Just rebalance the way you normally would have a structure program for that and you will be fine. You should have as much in this asset class as you can handle given the volatility, given what we just talked about. Right. And that is risk management. Yeah.
- [40:59]
Brendan (Podcast Host)
Does the Fed chair changing change the way that you view the crypto market or have any kind of impact on the way that you view the crypto market?
- [41:09]
Max Gockman
It doesn't change the crypto market so much in itself. But like I said before, macro matters for all assets, including crypto. Right. So Warsh is, you know, I think, a relatively pragmatic chair. We know that he wouldn't have gotten the job if he didn't promise more cuts. But the FOMC chair can't just run amok and do what he wants. So we expect probably you're going to get two more cuts in 2026 and they're probably going to come after Warsh is installed. There is a bigger question for me that's going to relate to digital assets and it's how cozy Warsh is going to get with Secretary Besent because traditionally the Fed and the treasury have been very independent. Some of the things Warsh has said already make me question if that's going to be the case and if there's going to be more coordination between the treasury and the Fed. To the extent that that causes some concern from, you know, treasury holders. And we've already seen other reasons for why large sovereigns are selling Treasuries, including the tariffs. It just kind of adds to this downward momentum to the dollar, which I expect we'll continue to see. By the way, Fed rate cuts also push the dollar down more. Also, we've had one big beautiful bill that's ballooning the deficit far more than any tariff revenue. On a relative value basis, the dollar looks really unattractive relative to most Tradfi currencies. So as the dollar falls and as Treasuries also fall, that does create a bit more of a motivation for the Debasement trade, and that generally should be good for digital assets.
- [43:00]
Brendan (Podcast Host)
I know one of the fears that people have is that historically bitcoin has done, and I would say most risk on assets do well in cutting cycles. And then once you start looking at hiking, it's where people start getting a little bit more fearful. You know, what we've seen here is that now bitcoin is down, you know, maybe we do get a couple more cuts and then we go back to just sitting steady or back to hiking. Do you think that that's going to have any impact or do you think that that could be a negative catalyst?
- [43:34]
Max Gockman
I think no one's looking at hikes just yet. And that's important. I mean, we're not necessarily looking at that many cuts. But I think what's important is not to get like tunnel vision on a single trend when we're investing in anything. Right. So the Fed matters. Absolutely. If warsh comes out and somehow muscles the FOMC to just cut 50 bips every time, it's going to be very good for all of the asset classes that have, you know, a significant future cash flow. So if you think like, think about again, like kind of basic finance, right? The value of your future cash flows discounted back to the present is a value that what we would call a fair value. So the reason why, like a lot of growth stocks are very interest rate sensitive is because if we use a dividend discount model or a discounted cash flow model, you know, we're discounting them by the interest rate. The lower the interest rate, the higher their present value. And most of their cash flows, like from all the AI names are far in the future. We can think of a lot of digital assets as having a similar concept where a lot of their biggest benefits are far off in the future. So lower interest rates is good, right? That is one single theme. Look at what's happening with software stocks right now. Okay? It has nothing to do with the Fed. It has to do with investors freaking out that AI is going to replace everything that software companies does, which as an aside, somewhat irrational and ignores the fact that most of these software companies are themselves deploying AI. But that's a topic for a separate conversation, you know, but it's, it's, this is why it's important not to have tunnel vision. The reason I brought up software is because to me, what it says is right now we have a kind of a very different theme going on in crypto and it's much more of a technical deleveraging and the forced selling. So we got to get through that before we start thinking really about like the broader macro picture. But even then, look at all of the storylines happening. I think one of the things that for me has always been really exciting about being an investor, especially a multi asset investor, is you have to look at so many different things and figure out how they all interplay. Same thing here. Interest rate cuts are going to matter. They're not going to be the only thing that matters. Institutional adoption is going to matter a lot. Are we going to see other countries adopt more efficient crypto regulation, especially as it relates to taxation? Is that going to allow bigger players to jump into the space? Especially big pensions, big sovereign wealth funds? We are seeing that come out, which I think is a really bullish point. You know, are we going to see projects like Seoul actually become more usable in a day to day consumer world? I think that's going to be really important, especially as you have more consumers looking to make more cross border transactions in an efficient way. Those are the things that I'm really looking at much more than just the Fed. Although for my, you know, day job running every asset, I am very much paying attention to war and what's going on.
- [46:45]
Brendan (Podcast Host)
That's it's fair. I mean there's, at a time like this, there's so many different things to pay attention to. And I like what you said about not just getting tunnel vision on a single factor because I think that's really important is you have to weigh all of the good, all of the bad and you have to say, okay, well where does the majority of the data kind of point us towards as opposed to this, you know, one single factor which it's easy, it's really easy to get caught up in crypto. And one of the best examples of that I think is the four year cycle. We have people who come on and they love it, they think it's perfect, they think it'll never break. You have other people who come on and I would say this is the more common trend lately and they disagree with it. They think the four year cycle, and that's what we've been hearing a lot of on the podcast. I mean, do you have any thoughts or stance on that? Because this is some. I'll let you go first. This is something I debate with a lot of my retail friends all the time.
- [47:37]
Max Gockman
Yeah, so I'm probably more the other people. Look, Bitcoin halving is a real thing. I mean, yes, it happens roughly every four years. It is a supply shock. It is Absolutely. A framework. It is not canon. It does not necessitate that you're going to see price go up. If you think about any asset class as a forward discounting mechanism, it should. Like we actually know that the having cycle will happen. Right. Everyone's aware of this. Certainly every large investor is aware of this. So it's kind of should be in the price. Right. Because when we project whatever fair value of Bitcoin is for us today, we know that there's going to be a halving cycle that happens. We know much more about that than we do about how many cuts we're going to have from the Fed. Right. So from that perspective, yes, it's important. Yes, you're going to have some impact from it. But I find catalysts that are well known in advance to just not be as critical. What I find much, much more important is liquidity, investor sentiment, the broader macro picture and then where you think, you know, a catalyst that not everyone sees.
- [48:54]
Brendan (Podcast Host)
Yes.
- [48:55]
Max Gockman
So if you have an edge, usually it's because I have a view on something that's going to happen that I don't think everyone shares. That's where I lean in, into a position. But we all know the halving cycle occurs roughly every four years and we can project it.
- [49:12]
Brendan (Podcast Host)
I would agree, I would very much agree with you there. And again, weigh all the factors. I think that you can't just look at the halving cycle and say, okay, well, everything, all my investments are going to be based upon this and crypto has to get destroyed this year because according to the cycle, I just would agree with that and say that there's a lot more going on now in this trillion, arguably multi trillion dollar industry than just that. And I think it does a disservice to everything else that's happening and everything else that's going on in the different products and verticals and all that. But so let's just talk, I guess let's move away from this. We've talked a lot about just cycles and everything else when it comes to actual utility. And I'm not sure if you're even allowed to talk about this, so I don't want to get you in trouble, but you know, when it comes to actual different crypto projects, I mean, what, what do you like? You know, what are your favorites out there? Are you allowed to pick favorites?
- [50:07]
Max Gockman
I mean, I'm about to talk about things that I like. You know, I'm not going to tell you what, what you should do with that information. This is not a recommendation to buy or sell any security, you know, and not financial advice, but you know, I already mentioned it. So I'll talk a little bit about sol. I really just like that it can be a legitimate global payment rail. I think one of the biggest issues we have, you know, we talk about like by the way, including at Franklin. And I think it's an important project. We talk about democratization of privates and tokenization, how that can help like retail investors get access to private equity and venture capital. Super important. Really excited about that. I want to democratize actually money. Like there are so many unbanked people around the world. And what's crazy is, and I've seen this happen with other projects like cell phone infrastructure where you had parts of sub Saharan Africa, but went from like literally no way to communicate with the village, you know, couple hundred kilometers over to smartphones, like they just leapfrogged. So now we're going, we can go from unbanked to on chain. And that is super powerful. So if we have something that's got a really fast consensus mechanism with proof of history, we have very low fees, super high for output. You know, that to me is really exciting and you need that high speed, low fee, secure platform. Which is why I really like sol. Now it's an experiment like most, almost anything in the space. You know, it's been doing better, a lot better I would say, right. Had one full year without a block failure. But it's, you know, it's still in the early stage. I think we need some greater adoption and maybe it will come from a sovereign that kind of says we're going to allow Solana to be a medium of transaction for us. Or it's going to be kind of crowdsourced where people say, hey, we've got these smartphones now, let's get a wallet. And this is just how we're going to transact because this lets us bypass the inflation of our local market currency or even in many cases the fact that we can't go to a bank because a bank does not exist where we live, but we do have a smartphone with a network. So to me that's a really exciting project because A, I think it's got enormous potential. Two, I think it actually solves a humanitarian issue.
- [52:29]
Brendan (Podcast Host)
So if you had to pick a favorite to solve this issue, I think the big contenders out there would be Ethereum, Solana and maybe xrp. Sounds like you're leaning towards.
- [52:40]
Max Gockman
I'm leaning towards Solana. I think XRP is a good alternative. I think Ethan, to me, Ether is always going to be not a currency, but a vehicle for creating powerful projects, including smart contracts. I think for a lot. I mean, there's a lot of really cool L2s being built on. On ether, you know, and I think that's going to be important. But the gas fees make it really difficult to have as a real, like, currency. And again, like, it doesn't need to be like, why go to that when Ripple and SOL are great, viable alternatives that exist, like. But to me, one of the beauty of digital assets in general is like, the frictionless that blockchain allows. So I can just, you know, I mean, yeah, like, I. If I have holdings in ETH already, just, you know, I'm going to pay them, pay the gas fees once, and I'm going to move to a platform where I want to transact for buying coffee at the bakery. I don't need to do that every single time. I think you saw a little bit of that in the developed world almost as a meme where I was out with someone from Coinbase and they're like, look at me, I'm going to use my card to buy Juvenus Cappuccino with Bitcoin. I'm like, okay, cool. That's a cool party trick, but that's actually not a good use of this protocol, right? I would rather not pay an extra tax on my caption. I'd rather give that as a tip to the barista.
- [54:16]
Brendan (Podcast Host)
I think so, man. One of the other things you, what you were just saying got me thinking about this. And it was like I was thinking about all the different ways that you can get involved and that you can back these. And I was listening to a podcast earlier, ironically, and it was talking about how we have kind of fractionalized the way we invest and look at crypto. And it was talking about, well, now we have so many different options. Oh, you want to go get invested into, you know, let's just say bitcoin here, but it can be applied to anything. But you want to get invested in bitcoin? Oh, you can go buy bitcoin. You can also Go buy Bitcoin ETFs, you can also go buy bitcoin Treasuries, you can go buy bitcoin mining companies, you can go buy bitcoin, you know, other related companies that work with it and, you know, market makers. Now Bitgo just went, you know, public. And so you have all these different places. I think, obviously the big one that you brought up earlier that probably caused maybe some issues was, was dats. I mean, if people like Solana, if they like Ethereum, if they like some of these different, you know, altcoins, what do you think about DATs in regards to them or those treasury companies?
- [55:26]
Max Gockman
I would say go the most direct route you can. And again, I'm not going to name products, but there is a so easy way to get Solana exposure via an ETF form. I hope what I just said doesn't get me in trouble, but There are direct ETFs that give you access directly to the token. You don't need the leverage, you don't need some weird wrapper. Just, you know, also, you know, set up an account and buy it on chain. Like, get exposure in whatever way you're comfortable with, but get as close to the actual token as you can. And there is really no reason right now to not be able to get it either through an ETF, ETP or on chain through a wallet. Like, that's. And that's kind of been my issue with a lot of these other things because they, what they do is they add bells and whistles and they add risk. You do not need to add risk to crypto. It is risky enough as it is, it's unpredictable enough as it is. You know, I. Look, I started my first hedge fund in, you know, 2006. I traded credit derivatives through the credit crisis and have come out quite well from that. And it was because I knew how to break things down to their BAS principles and not add complications where I needed to. Like, I used derivatives because I needed to use derivatives. I use cash bonds where I needed to. You know, I knew also as an institutional investor, like, every single, you know, line item in that derivative stack, and I could do the math to calculate it. If you can't do all that, why are you going into something just because it's shiny and because, you know, again, I hate to say it, but a lot of times I feel like it's because someone on Reddit said it and you're like, that's a cool way. Like, people are too focused. I mean, again, I don't want to make too many generalized comments, but I see a lot of folks coming up in investing right now and they're too focused on getting their bag too fast. You know, the bag you get may be a bag of something you don't want.
- [57:38]
Brendan (Podcast Host)
Yes.
- [57:38]
Max Gockman
Right. So be careful.
- [57:42]
Brendan (Podcast Host)
And by the time you realize that you don't want it or that you shouldn't have it, it might be a little bit late.
- [57:47]
Max Gockman
Exactly. Yeah.
- [57:49]
Brendan (Podcast Host)
Well, to wrap us up here. You know, I got one final question for you. When we're looking at the future, what is Franklin Templeton's plans for the crypto space?
- [58:00]
Max Gockman
Our plan, and I'll kind of end where I started. It's to be the solution for any investor interested in being in the space, expanding the role in this in their space, transacting with others in the space. We want to be a full featured platform, whether it's crypto natives, crypto newbies, institutions, or retail. We're really working on that. One of the huge benefits, and by the way, one of the reasons I came here after running a defi hedge fund is because we have scale. We have that $1.7 trillion you mentioned. It lets us get into meetings with folks that otherwise I couldn't get into. It lets us have leverage in transactions, which is much better than leverage in debts. And it means we can build really cool stuff. I mean, I just spent last weekend with our CEO, Jenny, and our head of digital asset teams, really brainstorming some ideas that I can't share just yet. But what I can tell you is it's so important that we all had to fly across the country to spend our Saturday, you know, 8:00am to 8:00pm really figuring this out. We are committed to the space and we're committed to serving our investors with really innovative products that also, this is really critical, are secure and sound and have really robust liquidity and practices behind them. So that's what we're doing with Franklin.
- [59:31]
Brendan (Podcast Host)
Well, once we can know about what happened in that meeting and once we can know more, you gotta let us know. We'll be happy to have you back on and you can tell the whole world about it. But you know, Max, from the whole crypto community over here and the whole blockchain space, we appreciate what you're doing. We appreciate what a lot of these other people that are coming from more so the traditional financial side. You know, we all appreciate the foundation that's being built in the infrastructure and we like the adoption path and we hope to continue, continue to see more and more people have the opportunity to interact with this stuff because a lot of us are fans on it. So again, really appreciate you having on having you on. Where can people track what you're doing? You know, maybe any socials, websites, anything like that for both yourself and for Franklin. Sure.
- [60:22]
Max Gockman
So for myself, really easy, just type in my first and last name, maxgockman.com. it'll take you right to my LinkedIn. Happy to connect with. Folks are usually, you know, I'm pretty active on that channel. For Franklin, go to futureportfolios.com and that is a website we built that I think is really illustrates actually where we think the future of investing is going and especially as it relates to blockchain and crypto. So that's a great way to to see and hear from myself as well as other folks at Franklin, you know, where we really think the future is heading. And it's a really fun ride. So I highly recommend people check it out.
- [61:03]
Brendan (Podcast Host)
Awesome. Well, Max, once again, thank you so much for joining us. And that's going to bring a wrap to today's episode. Everyone, we hope all of you enjoyed and we'll see you all at the same time, same place in the next episode. Take care.
- [61:27]
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