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- [00:00]
Blake Hyman
In terms of, you know, your staples in the market like Bitcoin, that I'll say alternative monetary policy, this kind of geopolitical hedge, store value type of investment profile, it definitely feels like we've kind of sucked all of the surprise, as you say, out of it because even with some of this more bearish news coming out, we're still sitting here chopping sideways around the 85, $86,000 mark. So yeah, this is a period of time where we are seeing some stabilization. Foreign.
- [00:34]
Andy Baer
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- [01:44]
Blake Hyman
Hi Jen, thank you for having me. Hi, Andy.
- [01:47]
Jen
Morning.
- [01:48]
Andy Baer
Of course. Thanks for being with us. Now, we like to start this show off asking our guests what they're watching this morning. What are you watching? What's capturing your eye as we head into kind of shaky macroeconomic waters.
- [02:04]
Blake Hyman
Yeah, so if you just keep track of what's happening in the headlines, a lot of it's very focused on the tariffs that are about to be put in place out of the US So that's causing a bit of a market turmoil and as such leads to, you know, that sentiment kind of deteriorate a bit. So that's the overall sentiment is one area that's in the liquidity of the markets is one of the key things that I tend to look at. So taking things a bit higher level and a step back, we really just are kind of acknowledging how things have shifted more recently with I'll say this macro cloud that has been driven by this higher for longer inflation or this inflation that's been a bit stickier than we've wanted. Some of the US policy that is leading to additional volatility and questions and uncertainty around, you know, what the future looks like for, for assets broadly. And then risk assets obviously have a much higher sensitivity to that. So we're kind of watching all these different factors all kind of being conflated while acknowledging that there are a lot of positive things in the medium to long term that are also kind of underlying this overall are underlying sitting underneath this macro cloud that, that we see as very positive in terms of our outlook.
- [03:20]
Jen
You know, Blake, the macro cloud certainly got off to start with surprises, right There were, there were policy announcements over weekends and things came that were different from what was expected and that brought equity market volatility higher vix, lower crypto. Do you, do you feel at this point, especially given the markets reaction Yesterday to the 25% auto tariff news, that we're kind of at surprise fatigue? We might still be numb, but maybe, maybe it might be harder to shock the market at this point, although you could certainly disappoint it.
- [03:53]
Blake Hyman
I think that that is a very accurate way to position things, particularly when you're speaking about say bitcoin or crypto markets broadly. Now the altcoin ecosystem is quite a bit, I think there's more idiosyncratic moves there and anything that's shifting that liquidity profile of the market or the risk sentiment can really drive those assets around. But in terms of your staples in the market like Bitcoin, that I'll say alternative monetary policy, this kind of geopolitical hedge store value type of investment profile, it definitely feels like we've kind of sucked all of the surprise as you say out of it because even with some of this more bearish news coming out, we're still sitting here chopping sideways around that 85, $86,000 mark. So yeah, this is a period of time where we are seeing some stabilization.
- [04:44]
Andy Baer
You mentioned that medium to long term optimism. Talk to me about any trends that you are watching that you wish more people were talking about right now.
- [04:54]
Blake Hyman
Yeah, I would say a lot of it comes down to the technological innovations that are taking place now. There's obviously plenty of things happening within the, I'll say the more pure decentralized ecosystem with the developments that are happening say within altcoins. But it's quite interesting to see this bridge between I'll say the equity or more traditional business space and say DEFI or kind of this more ground level foundational technological innovations that have been enabled through smart contracts and blockchain technology. So for example, just seeing what Coinbase is doing with there was the rumors around some acquisitions, there's been actual acquisitions taking place with Kraken, so they're enhancing their product offerings. You're starting to see in some processes where you're seeing the developments with tokenization really taking off. So these are just early stages particularly, I'm sure you've discussed it as well in the past. But you know, Coinbase's DEFI or sorry, Bitcoin backed lending protocol, Bitcoin backed lending program that is enabled by DEFI in the back through Morpho. So the, this type of, I'll say, convergence between this traditional economy and the traditional financial services ecosystem, with the DEFI ecosystem that's running on these L1s and L2s, I think is quite a profound shift, particularly given you have this transition to a much more, I'll say, positively positioned regulatory environment in the US with some of the, some of the people that they put into place to help support this asset class and support this technology to maintain that leadership. So I'm very, very bullish on this technology finding product market fit and starting to bridge that gap between what we're used to seeing, which has been this decentralized economy growing significantly. And I still see that being the trend, but I see that convergence taking place between the that and the traditional economy where we can really see some major, major disruption. And I think the underlying technologies and the protocols that are enabling this stuff to happen, as well as even the firms that are tapping into it to really bridge that gap, are set to do quite well going forward. Even amidst some of this, you know, these scares that we're having from the broader level, the macro perspective, now you're.
- [07:22]
Jen
On the front line and we have an expression, at least in my business where we, we call traditional investors trying to allocate to crypto 5 percenters. Right. Because you might get 5% of their portfolio, you're unlikely to get 5% of their attention or research time. How do you find those kind of conversations landing? How do you summarize what kind of themes? Many people recently feel like the technology promised by DEFI is slow to come. So given everything that you've said, which we don't disagree with, how is that message being received and how do you maximize the effectiveness to get people to really commit?
- [08:03]
Blake Hyman
Yeah. So our experience with IT So, you know, we've been in the business for a while and been involved in crypto for five or more years now. And the education and the, I'll say the curve, the learning curve that has to take place from institutional and say your tradfi investors is quite big. So getting to the stage where people understand Bitcoin, understand the investment case by or behind Bitcoin, why people find it interesting is one level. Getting into, you know, Ethereum, the smart contract platforms, is another level. So they can kind of start to differentiate the investment profile and some of the advantages of each and why, you know, they fit in a portfolio and kind of what they can offer through just the technological advancements that they've made. But then taking the third step into say the protocol ecosystem where you're starting to have applications that are serving as a solution, that is another level. Now the beauty of this whole education process is it takes some time to break the Bitcoin barrier. At least we've seen historically. Now I would say most institutional investors have gotten on board or at least understand it to a certain extent. So that's a great step. They're starting to get on board with the layer ones and the altcoins, etc. But one of the things that's really interesting is what seems to resonate quite well is when you start to think about how similar. Some of the, I'll say and there's, we have to be careful with some of the language here, particularly what we historically saw with the SEC in the US but the cash flowing type of capabilities that some of them offer. You know, there was just the announcement with Uniswap making, you know, making another headline around turning on the fee switch. And this is another beautiful thing that traditional investors love. They love their cash flows. So that has been. As we start to bridge all these pieces together, it takes some time, but you can start to see their eyes widen when all the dots start to connect across this ecosystem. And that's when you take them from being that, you know, 5 percenter to, you know, actually being somebody that is a full, like a full fledged advocate for the ecosystem.
- [10:20]
Andy Baer
I'm, I'm curious to hear from you. You know, so many people who've come on the show have called 2025 the year of the crypto IPO. You mentioned Kraken there, which is one of the firms that is expected to IPO this year. Given the macro environment and given the, the need for more institutional investor education. Talk to me about how you make sense of these IPOs. What do you Expect to see should the handful of firms who are expected to IPO in the United States do IPO this year in the current macro environment with this need for investor education, just make sense of that for me. What do you expect to see?
- [11:00]
Blake Hyman
I mean, I think it's, I think it's something that is bound to happen. I mean at the end of the day these firms need more capital and say the private investors and the founders need exit liquidity to a certain extent. So this is, this is kind of the natural evolution. So I think that that is, you know, very much, you know, the next stage for these firms. Now in terms of those investing, I think institutional investors are definitely on board with this because there's many way, like with the investors we speak to, there's many ways that they're gaining access. So for the ones that are still very early stage, they're just getting into say the beta of the ecosystem. So just allocating to, you know, either a broad based index or even just a single asset like Bitcoin being, you know, the one that dominates the market by 60 plus percent of the overall market cap to get you that kind of, I'll say, broad beta exposure as part of that small slice in the portfolio. Now there's others that are expanding to get access in the equity space, getting access in the venture space, even you know, hedge funds and other types of vehicles that are more sophisticated and they're creating these entire, I'll say, alternative sleeves of crypto oriented types of exposures. And that is quite an exciting thing. So I see say the IPOs fitting into that space quite well. And one of the other benefits of that is it's a traditional company so the investors can evaluate the cash flows and look at these things and they're seeing that, you know, if you just look at Coinbase in terms of the overall trading or the revenue they're generating from trading fees, and now they're obviously involved in custody and so many other new things. You know, given what they've done with, you know, the base blockchain, that would likely at some point lead to, you know, more revenue impacting the bottom line. So I think for, I think companies or investors are on board with this, but they're also going to naturally be mindful of what happens with IPOs. You tend to have day one, you might have a pop and then you have a little bit of underperformance. It's in many research papers if you Google them out there. But sometimes, and then over the long term things tend to stabilize and kind of go back to being driven by the performance of the company. So there is that volatility around the event itself. But nonetheless for the long term types of exposure, this is a very, very exciting space. So I'm optimistic for these ip.
- [13:26]
Jen
So you know, there's a lot of work that has to be done to pick winners there. And I guess we all, you know, you, you want your clients to have a good experience and also to not have to question their own decisions. You mentioned indexing and we have a great benchmark index coin S20 that, that does a lot of the things you mentioned. It takes a little bit out of bitcoin market cap weight to give more exposure. Tell us how you think an investor with an index related investment is going to be able to just be in the space but not have to think about timing, not have to think about asset selection.
- [14:04]
Blake Hyman
I mean that's the beauty of the indexes is and being able to trust the, you know, the, the overall methodology and the provider that's, that's providing that and doing the underlying research to ensure that you know, they're investing in reasonable things here. Because you know, if you go down the market cap spectrum you do find, you know, there's plenty of meme coins that even rose to the top. So you know, those that don't necessarily have the, I'll say the strong investment profile from a traditional investor perspective versus something that's more speculative like a mean coin meme coin is an important differentiation. Obviously liquidity is a major important feature here and there are many others that really, you know, you need to take into account that is is important here. So by essentially allowing the investor to focus on, okay, I want to be the traditional investor focused on my asset allocations, my views going forward, my risk pro, my risk return profile. So understanding that and being able to just park that money in a beta product that they know is diversified and in assets that they can trust are well vetted so that they get the exposure they want without having these additional risks that and additional additional overhead that's involved with building out and managing all those positions. So it really is a great evolution for the market and just also helps demonstrate a lot of the maturity that we've seen now that we're having broader based benchmark indices out there that are having so much more assets and volume tracking those indices. So it's a very exciting time. So I flag that as like a key pin and in my market evolution, market maturity roadmap, if you will.
- [15:45]
Andy Baer
Blake, thanks so much for joining Markets Daily today. With Andy and I.
- [15:50]
Blake Hyman
Of course. It was an absolute pleasure. Thanks for having me.