Jen Senasi (3:35)

Let's talk about stablecoins a little bit more for a second, for a while there. You know, stablecoins are really meant for folks who are trading in defi. It's really stepping into the mainstream spotlight right now. Talk to me about how investors should be looking at this. I mean, should we be looking at the stablecoin news and then looking at companies like Circle who just went public, looking at how to allocate part of the portfolio to two companies like Circle? Should we be looking at holding stablecoins? What's the next step?

Rick Edelman (4:03)

Yeah, there are two elements to this conversation. One is you as a consumer, what are your behaviors for managing your money? And then there's the investment conversation. What should you be doing to make a profit out of this? We need to talk about them one at a time. First, the consumer level. Stablecoins, as you noted, were predominantly used for people that, for example, they owned bitcoin and they sold it and they were thinking of buying a different coin. But until they figured out what to buy, they had to put their money somewhere. And instead of taking their bitcoin and sending it back to their bank, which is a pain in the butt, takes days, costs, fees, really a nuisance. Stablecoins let you keep the money in your account. Say a coinbase or Kraken or Gemini or where have you making it simple, easy, convenient and free. That's growing. We are now going to see banks offering their own stablecoins. A consortium of Citigroup and Bank of America and Wells Fargo are all getting together to create their own stablecoin. Amazon and Walmart have announced that they're going to develop their own stablecoin. They're going to make it easier for you to shop. They're going to make it cheaper for you to shop. You won't have to use their credit cards. They're going to offer you discounts. They're going to allow you to avoid those 3% credit card fees. They're going to offer you loyalty, rewards, points. So as a consumer, these stablecoins are going to be a great way for you to do what you do anyway. But faster, cheaper, safer. And if you live outside the United States, there are massive benefit. Instead of you having if you're a resident of Venezuela or Zimbabwe or some other country where you either have an unstable economy or a corrupt government, now you can take your money and put it into a stablecoin, which is backed dollar for dollar by the US treasury or US Dollars, so that you can trade your Zimbabwe dollar, which is worthless, for a US Dollar, which is the strongest, safest currency on the planet. This is going to open up financial security, safety and access to the financial markets for billions of people around the world. Super exciting for consumers worldwide. But now for the investor, how do we benefit from this? Because after all, buying a stablecoin is not an investment. The whole point is that the price never changes. So how do you profit from this? You said it, Jen. Buy the stock of the company that is running those stablecoins. So circle did its IPO, one of the most successful IPOs in history because people are recognizing the incredible profits that Circle earns by operating its USDC stablecoin Tether. This is shocking to people. Last year, Tether earned $13 billion. That's more profit than BlackRock or Ford or GE or McDonald's. This is an incredibly profitable company because of the way they operate in providing these stable coins for consumers. So, yeah, adding to your diversified crypto portfolio, companies that are creating and operating or deploying stablecoins is a great way to add to your crypto diversification.

Jen Senasi (7:12)

Now, I got to ask you, it's Monday morning. You know, a lot of the stories are saying altcoin fever is upon us. Eth, I think, is up 27% on the week. We have Doge and Seoul up this morning. What were you watching over the weekend and what are you looking forward to over the next week?

Rick Edelman (7:28)

Yeah, you know, ETH is the big story, of course, because it has been in the doldrums for quite a while. It fell 50% in value and had stayed down for a long time as Bitcoin recovered and grew with Donald Trump's election and the changes in the new Administration eth languished, it didn't enjoy the party as much, and I was. I didn't quite get it. It was frustrating to me because I've been a longtime fan of Ethereum. I invested in it when it first came out in 2015 and I still own it today. And I've never really understood the story, especially because everybody's excited about stablecoins. Well, if you're excited about stablecoins and you think there's going to be trillions of dollars flowing into them, how do stablecoins operate? Mostly on the Ethereum blockchain. So if you're bullish about stablecoins, you are by definition saying that you're bullish about Ethereum. And I think the marketplace has recently begun to wake up to that fact, which is why we've seen Ethereum skyrocket in value in just the last month or so. And I think this trend is going to continue. Just as a stablecoin story is going to rack it up, I think that the Ethereum story will as well.

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Jen Senasi (9:10)

Pivot now and talk about the story that you've been talking about on multiple different media networks. It is your recent white paper. You are now saying that folks should be allocating 10 to 40% of their portfolio to crypto. And I want to just juxtapose that a second for what you were saying. And I think it was 2021 when you were recommending 1% of portfolio should be allocated to crypto. I know a lot has changed from 2021 to 2025, but just like walk me through that and how we make sense of this 10 to 40% number.

Rick Edelman (9:41)

Yeah, my book the Truth About Crypto Over My shoulder debuted in 2021 at number one on Amazon. And in that book I said that you should most mere mortals allocate 1% to Bitcoin. And the reason that I said that is that back in 2021, even though Bitcoin was at that point 10 years old, we didn't know what its future was. Would the government ban it? The Biden administration was strongly opposed. The Obama administration had done nothing about it. Even Trump in 2017 was opposed to bitcoin. So we didn't know if it had a future. Would the government ban it? Would consumers reject it? Would investors get bored with it? Might there be some other technological innovation that would upend it? It was a highly aggressive, speculative bet. And my attitude was the outperformance potential was there, but so were the risks. So a 1% allocation was enough to give you the benefit of outperformance if it happened. But if it went bad and it blew up and became worthless, so what? A 1% loss of your portfolio wouldn't harm you financially in terms of your future financial security. That was 2021. You fast forward now to 2025, just four years later, and what do we discover? We have an administration that is completely supportive of crypto. Every member of the President's Cabinet personally owns Bitcoin. Every economic appointee, the Secretaries of Treasury, Commerce, labor, the cftc, the sec, the occ, the fdic, all are strong supporters of crypto. We now have majorities of both parties, in both the House and the Senate strong supporters of crypto. And this is why we've seen the three bills going their way through Congress in the House this past week. So the question, is Bitcoin going to get banned? Absolutely not. We also, by extension of this new paradigm in Washington, we now have the opportunity for tradfi. We're seeing, for the first time ever, banks and brokerage firms are allowed to trade and custody crypto. They've never been able to do that before. So it's a massive change that you're going to see by Wall street engaging in this asset class in a brand new way. We saw the first inklings of this 18 months ago with the launch of the Bitcoin ETFs, now $100 billion invested in those things. The most successful ETF launch in history. And on top of all of that, it's getting the attention of the institutional investors. Endowments, pension funds, family offices, sovereign wealth funds, and on and on and on. This is why the amount of inflows into Bitcoin and other digital assets is only just now beginning. I'm anticipating we're going to see trillions of dollars flowing into this asset class over the next four years. It's going to put Bitcoin at $500,000 by the end of the decade, in my view. And this means right now it's very early. And the risk of bitcoin today is not nearly as high as it was four or five years ago.

Jen Senasi (12:48)

$500,000 by the end of the decade. I mean, it sounds like a bold prediction, but the way we're going, it's almost a little conservative. What some of the other guests I've had on the show have said, some are saying, you know, 1 million, 5 million. Talk to me about what needs to happen for us to get to $500,000 in the next four years.

Rick Edelman (13:07)

Yeah, Jen, I've seen those predictions, too, from some other folks, and I've never seen their explanation of why. So let me share with you why I argue for a $500,000 bitcoin. If you take a look at the total value of all the money in the world, all the value of stocks, bonds, real estate, gold, oil, commodities, artwork, cash, add it all up, all the money in the world, it's about $800 trillion. If everybody who owns all that stuff, you, me, everybody. If we allocate just 1% of our portfolio to crypto, that's $8 trillion. $8 trillion added into Bitcoin turns Bitcoin into 500,000 per coin. It's as simple as that. It's just basic arithmetic. And that's a 1% allocation. If you think people will allocate 10%. Now you're talking about 5 million per bitcoin. And that's how Michael Saylor gets there. Michael thinks that we're going to get 10% allocations by institutional investors, governments, sovereign wealth funds, et cetera. And he's right. Bitcoin to be 5 million, not just 500,000.

Jen Senasi (14:20)

Wow. So still, still early days for all those people who think it might be too late.

Rick Edelman (14:24)

Yes, that's exactly right.

Jen Senasi (14:26)

I want to talk about that 10 to 40% number a little bit more. We're saying 10 to 40% allocated into crypto. Are you thinking mainly bitcoin here or are there other cryptos you're considering?

Rick Edelman (14:37)

Well, the first thing to Note is why 10 to 40, that's a really big range. I'm arguing if you're a conservative investor, 10%, moderate, 25. And if you're an aggressive investor, 40%. And I'll leave it to you and your advisor to determine, are you conservative, moderate, or aggressive? And then the second question yours is, what does that mean? How do I invest? What do I buy? And I will leave that to you and your advisor as well. Some people, like Michael Saylor, who I love and adore, is a bitcoin maximalist. Many argue you should just buy Bitcoin and nothing else. Others argue broader diversification, including Ethereum, Solana, Algorand, Polygon, you know, the other major coins. Some also argue that you should do crypto equities. Companies that are engaged heavily in the crypto space, such as Coinbase or Now Circle, a public company today or some of the other exchanges, Bitcoin miners and so on. There's a huge infrastructure in the crypto community building, developing blockchains, et cetera, and so building this out. It's up to you to do this. My point is doing nothing is the speculation. We need to recognize this is a legitimate asset class. It has gone mainstream. It's going to grow immeasurably from here. We're still in the very early stages. And whether you argue for Bitcoin only or a combination of a bunch of coins or adding in crypto stocks, we'll all argue and debate. But guess what? In five years, we will all laugh at the person who did none of the above.

Jen Senasi (16:16)

There are two more things, Rick, I want to touch on from your white paper and one of this chart you have there. It has bitcoin reaching a 19 trillion dollar market by 2030, tokenization reaching a 16 trillion dollar market by 2030, and the metaverse in third place at 5 trillion. And this. I was like, wow, a blast from the past. I was a real Metaverse girl a few years ago. And that narrative has kind of died off. You have Metaverse above generative AI, big data and blockchain technology more generally. Talk to me about the resurgence of the Metaverse you expect to see and what that means, because I think Metaverse means different things to different people.

Rick Edelman (16:56)

Yeah, the Metaverse used to get a lot of big deal. We all know that Facebook changed its name to Meta as a ploy to Metaverse. It's basically the digitization of everything. And we are all. It's all about tokenization and the tokenization of what we call rwa, real world assets. We know that Bitcoin is a digital asset. It only exists on the Internet. But there is a way that we can take a real asset, say an office building, create tokens that represent ownership of the building, the same way we create shares that represent ownership of a company. And these shares or tokens can represent the ownership of a building. And now we can tokenize them, trade them online, and do it in an online environment that lets you visit that building virtually in an online environment, similar to the way you would play a video game. Why would anybody do this? Well, I don't know. Nike last year made about $100 million selling digital pairs of sneakers. So we have Burberry making tens of millions of dollars selling clothing that only exists in the Metaverse. Gamers use it to dress up their avatars. So this is something that people really enjoy doing. It allows them to become owners of their activity. If I've got an avatar in Fortnite, I can dress up my avatar in clothing I buy from Burberry or Tiffany or Dolce and Gabbana. And when I'm tired of playing the game, I can take that clothing and sell it to another player, maybe even for more money than I paid for it. Creating an ownership environment, not just merely a fandom or a player environment. This is something that is going to change everything. And it's all being fostered by by two other technologies, AR and VR. Virtual reality and augmented reality. Meta is already selling Ray Ban eyeglasses that use these technologies. And it's all about the combination of the real world with the digital world. And that's what the Metaverse is all about. And that's why it's going to be a big deal over the next decade.

Jen Senasi (19:09)

You know, we saw Burberry, Tiffany really experiment in the Metaverse. I think we even saw JP Morgan experiment in the Metaverse at one point. But it really feels like now the brands have kind of backed off of Metaverse. It feels like Web3 gaming. While it has had a little bit of a great start, there has been a little bit of a failure to launch recently. What do you think is going to change over the next four years that really brings that mainstream adoption and brings that excitement back into these digitized assets.

Rick Edelman (19:41)

And virtual worlds as other technologies grow and develop and more and more people wear Meta glasses, for example, and you are given reward points for doing this, where you are engaging ordinarily in your activities and you are simply recognizing, oh, I can use this without even trying, because they're going to do an airdrop to me that automatically gives me a digital token that offers me a free cup of coffee at Starbucks. We're going to see this become more and more permeating. You're not even going to know you're doing it. For example, is anybody really paying attention to the fact that we move from 4G to 5G? I mean, I know that I'm able to download movies onto my phone a whole lot faster and that the latency in playing my video games on my phone has gone away, but did I really pay attention to the fact it's all thanks to 5G and that, oh, by the way, 6G is soon coming? No, it's the technology behind the curtain. I don't care. I'm just enjoying my movie. And that's what tokenization is going to be. That's where the metaverse is going to be, the home to this. You're going to adopt it. You're probably not even going to notice any more than you can remember when you didn't have a smartphone. This device is only 15 years old. None of us can remember life without it. And that's what the metaverse is going to be like as well.

Jen Senasi (21:00)

All right, the last thing I want to touch on with you, Rick. We talked about spot crypto. We talked about crypto equities, ETFs, better verse even. I know you made a prediction that ETFs won't exist by 2030. They're instead going to be replaced by tokenized stocks. What do you mean by that?

Rick Edelman (21:16)

Well, we know that ETFs have taken over the asset management world. They have beaten down mutual funds. Mutual funds were an absolutely fabulous invention brought to the US in 1924, 100 years ago, and opened up the access to the stock and bond markets to ordinary investors in a manner never before seen, which is singly responsible for the level of affluency that has grown in the United states. Just as ETFs have made mutual funds obsolete, all the flows on an annual basis are going into ETFs now. There are net outflows for mutual funds because mutual funds are antiquated. They only price once a day. They're only transparent twice a year, six months out of date. They're expensive, they're high in taxes. ETFs solve all of those problems. ETFs trade all day long. Transparency all the time. They're tax efficient, they're extremely low cost. What's not to love? Tokens are coming, the new technology. And we're going to be able to take the shares of ETFs, turn them into tokens, and now make ETFs even better. For example, with an ETF, you can only trade them during market hours, 9:30 to 4pm Monday through Friday. Not evenings, not weekends, not holidays. You gotta wait a whole day for the trade to settle. This is antiquated. Tokens let you trade 247365 with no intermediary involved. It's virtually free. It's totally transparent. And you have all the same benefits of low cost and low taxation. In fact, the costs are gonna be even che. So tokens are going to replace ETFs the same way ETFs have replaced mutual funds. In other words, all the asset managers who used to offer mutual funds and who now offer ETFs, they're going to go from the ETF offerings to token offerings. Franklin Templeton, a $2 trillion asset manager, BlackRock, the world's largest asset manager, are already doing this and now everybody's going to follow suit. By the end of the decade, nobody will be buying ETFs. You're all going to be buying tokenized shares.

Jen Senasi (23:29)

All right, Rick, we got to wrap this up, but I just want to give you the opportunity. A lot of investors listen to the show also folks who are just trying to make sense of what's going on in the headlines so that they can apply that knowledge to their portfolios. Anything that you want to leave them with when it comes to crypto, well.

Rick Edelman (23:46)

Learn about it because it's the fastest growing asset class. I believe it will continue to be the best outperformance forming asset class for the next several years. We offer a lot of education@ DACFP. DACFP.com you can download my two white papers for free. The six myths that are preventing you from buying bitcoin and why you need to have a 10 to 40% allocation in your portfolio today. And you can even get your CBDA professional designation and become certified in blockchain and digital assets. All of that@dacfp.com all right, Rick, we're.

Jen Senasi (24:18)

Going to leave it there. Thanks so much for joining the show. It's always a pleasure having you.

Rick Edelman (24:21)

Good to see you, Jen. Thank you.