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Why Kevin O'Leary Is Betting Millions on Sports Cards While Declaring the NFT Market Dead | Markets Outlook
00:24:13
The latest price moves and insights with Kevin O'Leary.
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- [00:00]
A
I think owning the infrastructure is akin to owning the gene manufacturers and the manufactured picks and shovels. 300 years ago during the gold rush. I don't care if BTC doesn't move at all between now and December. I'm still making money mining and being a shareholder in exchanges.
- [00:23]
B
Hello everyone, this is your markets outlook on Coindesk. I'm your host Jen Senasi. Our guest in is Mr. Wonderful Shark Tank Investor and Chairman of O' Leary Ventures, Kevin O', Leary, welcome back to the show.
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A
Great to be here. Thank you.
- [00:37]
B
Great to have you. We are kicking off the week here. Talk to me about what you're watching in the markets this morning.
- [00:44]
A
Well, I'm obviously intrigued by the pace at which crypto is being adopted both domestically and internationally and around the tonality of regulation. I think that is really spurring all of this on. We obviously, since you and I last talked, went through the genius act and that has been a success, released stable coins into the market and they've been well received and now we have the Clarity act which is really the Infrastructure act which will give us more guidance institutionally on where we're going to go with granddaddy. Bitcoin, of course, Ethereum has had a pretty good move of late. Solana is getting traction. So what I would call putting Wall street on chain is the next theme and there's a lot of derivatives to that. But the market tone is now from one of a more punitive regulatory environment which we saw just 18 months ago, to where we are now seeing a remarkable amount of activity both domestically and internationally around where crypto fits and digital payment systems and B for an alternative asset class. And so that's a lot of change in a very short period of time.
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B
Kevin, a lot that I want to unpack there with you, but you outlined a lot of great milestones, a lot of milestones this industry was waiting for for a very long time. We of course saw bitcoin reach new all time highs. There's been a little bit of a pullback though and it looks like bitcoin is kind of failing to get out of this sideways trading. Talk to me about how you're watching the price of bitcoin as an investor.
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A
Well, we had a pretty big trade but just under two weeks ago, $2 billion kind of made a move out of Bitcoin into ETH and that might have spooked the market a bit. But for reasons I don't think really matter long term at this point in time, if you're a bitcoin investor, even as an individual or an institution, price volatility is baked in. It's just, you got to deal with it. And that's created a new narrative that I'm certainly getting involved in is if I have a 5% weighting in a fund of etc and Bitcoin and it's just sitting there and it goes through its price moves and it always has a lot of my other assets, for example stocks that pay dividends or bonds that pay interest, they sit there and generate money on a monthly basis. Why can't I do the same thing with my Bitcoin? And and so a lot of people say, well that's not the pure reason to own Bitcoin. You want price appreciation very much like gold. But on the other hand, if you start thinking about what you can do, think about it this way. My two largest positions are BTC and eth and there's a reason for that. They're the gold standards. And I've had them since I took positions on at the beginning. And you obviously, if you want to think about the future of Wall street, well, Ethereum really matters. And Ethereum matters also because of the genius act. A lot of the transactions that are occurring with stablecoins are occurring on eth. And so those are the two. And if you actually do the analysis, if you want to be exposed to the price volatility of the entire crypto universe, you can capture almost 90% of it by just owning those two. You don't need anything else. And I'm not saying you shouldn't own other things, but I'm just being pragmatic. And it happens that if you have both, there are strategies by which you can wrap or other strategies or staking and everything else that people are well aware of. Where all of a sudden your portfolio, instead of just sitting there with Priceball, is generating a distribution every month. And that's where I'm going now. That's maturation of managing crypto is what are you doing for me lately, the best way to look at it. And that's certainly the strategies I'm adopting.
- [04:36]
B
I think that's a great way of looking at it. And I want to talk to you a little bit about the defi ecosystem that's being built on top of Bitcoin to offer some of the yield type products that you just mentioned there for Ethereum. But first I got to ask you, what are your price targets for both Bitcoin and ether by the end of the year?
- [04:53]
A
You know, I've learned it's very Very difficult to make any assumptions. The way I've gotten away from just guessing price on both of those, I think it's a quiet answer, but it's, it's factual is I've started to say to myself, okay, I own the asset, I own btc, I own, I own both. And they're core and they're, those are my two big ones. I have some stablecoins as well. But why don't I own the infrastructure that supports those two? In terms of an investment strategy that would be mining bitcoin, owning the exchanges in the markets that are regulated. So that's Canada and the United States primarily for me. So Robinhood, Coinbase, WonderFi, up in Canada, those are the exchanges that have millions and millions of accounts that are making money on fractional basis on every transaction. So for me, in terms of owning a bitcoin miner, I've gone to where the bitcoin min to me is all about power. What are the best power contracts. And right now I'm finding those in Norway and Finland. So my mining operations are in a company called Bit zero in Norway and Finland and we're generating coin every day. Companies are profitable and so that's one core holding. Then I own the exchanges, then I own the assets. And so I'd love the price to go up like everybody else, but I don't really care because I know long term the strategy is about these assets being allocated in funds. And so for me it's 20% in the sector, 5% in any one token or coin. I think owning the infrastructure is akin to owning the gene manufacturers and the manufactured picks and shovels 300 years ago during the gold rush. And so it all fits together, but it's certainly a different way of looking at it than I did a year ago. And I don't care if BTC doesn't move at all between now and December. I'm still making money mining and being a shareholder in exchanges. And I think that's the mindset crypto participants should have going forward.
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B
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- [07:55]
A
I have to admit, this is nascent stuff, a lot of it, and some of it really isn't tested in scale. That's what worries me. If somebody comes up with a strategy that involves a ton of leverage or as a new strategy in terms of wrapping and it's worked for them with, you know, $25,000 worth of any asset, that's great. But what happens when you put 250 million to work? Is there enough liquidity added from an institutional perspective? And so I look at it that way and there's a pretty big community trying to figure this out. I would say the first scale occurring out of regulation in terms of large quantities of money is stablecoins. Since the Genius act passed just a few months ago, you can actually see billions of dollars starting to be transacted. And that gives comfort to many people to see the liquidity, the transparency, the functionality working, and that it is compliant, that you actually can be compliant with regulators. Because usually people are doing this, are involved in many other aspects of financial services as I am. We can't afford to go offside in any way. And so there's a fair amount of hesitation on some of these new strategies because they haven't been tested at scale. It doesn't mean they won't work. It's just for the same reasons that people say, oh, Solana is the future for banking because it's fast. There's been a lot more transactions on ETH than Solana. So even though you might argue it's slower, it's kind of where, if you want to be conservative and for me on eth, it's really about using stablecoins to resolve payments. That's what we've chosen to do. Most of the payments are actually getting larger each month. We're finding more and more situations internationally in multi geographies where a buyer seller will use a stablecoin for the transaction that is new, that certainly wasn't around for commodity purchases till recently. And so it's happening.
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B
Are you surprised at how quickly it's happening?
- [09:56]
A
I'm not surprised on stablecoin because it had been held back like a balloon underwater pending legislation. You know, there was that back and forth between the House and The Senate on the bill I was involved in that. We weren't quite sure. You have to hand it to Senator Hagerty, he kind of helped drive it over the finish line. But that's behind us now. And so now that it's law, the balloon popped out of the ocean and boom, it's, it's, it's a fact everywhere. I mean I, the last month I'm amazed at how many transactions that we have done even in the purchase of assets that have nothing to do with crypto at all. Nothing. They're not even crypto assets, they're old world commodities being resolved with, with, with stablecoins.
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B
You mentioned the Clarity act there. As you know, one of the next big regulatory milestones this week, the CFTC is going to be a one member commission and they really are the regulator outlined in the Clarity act to, to oversee this industry. Does that worry you that the CFTC is going to be down to one member and still not have a chairman sworn in?
- [11:03]
A
Well, I like to worry about everything and I, and I do because you know, as I like to say, poo poo happens. But the tonality and the environment, you have to admit over the last, I don't know, seven, eight months during this administration has done a one, eight. I mean it's completely changed. And so are there going to be some bumps in the road? Yeah, I'm sure. But if, if you ask me where we'll be at the end of the year, I think we'll be farther ahead than we are right now. I'm also interested in tokenization of alternative asset classes, which, you know, the whole theme being Wall street goes on chain is going to be a good outcome because I'm going to participate in all kinds of asset classes that could use the benefits of tokenization. And just in terms of regulatory environment, transparency, auditability, know your client, all of these things will work better. And so I, I think the beneficiaries of that won't be necessarily bitcoin, but it could be eth, maybe. Solana, if you think about how do you get Wall street on chain, it's going to have to be on some level like that.
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B
When you say the tokenization of alternative asset classes, which ones specifically are interesting to you?
- [12:15]
A
All of them. I mean it's, it's real estate has been done with accredited investors already and it's proven to be successful. And if you have a real estate asset that does distribution like a stabilized office tower or apartment building and you are on the chain, you're just getting your Distributions to your wallet. I mean that's brilliant. And if that's, that's, that's really old school. I mean, think about it. Real estate's been around forever and it's the 11th sector, the S and P. Remember this is for credit investors only. I'm looking for a more democratized environment where we can tokenize other asset classes that people are interested in investing in. They could be collectibles, they could be everything. You know, collectible cars, whatever it is. I mean, ownership of baseball cards, I mean those things are trading for $12,000,013,000,000 now. They'd be ideal candidates for tokenization.
- [13:09]
B
You know that all too well. Didn't you just buy one for $13 million?
- [13:12]
A
I did, I did. I, I, I have gone into that space more of an indexed approach. It's not the only card I own, it's the one that made the news. But I'm, I'm quietly buying quite a few. I've done a lot of research in that space for the last 11 years. And it's no different than modern or contemporary art, which is done very, very well over time if you buy the really high end pieces. So that's what I'm doing. And so to me, those will one day be tokenized and they should be. It would be much easier to deal and manage them in an index that way, which is what I'm planning to do. I always like diversification. When I said to you, well, it's not just Bitcoin anymore for me, it's Ethereum as well. And I'm capturing 90% plus of the price volatility and I'm pretty happy that those two together get me yield. So I'm, you know, it's getting a lot more sophisticated. I put a lot more infrastructure into my own operations. A lot more dollars in a lot more clients. A lot, a lot. And I think about how much over the last 18 months has changed for.
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B
Our audience that's listening if they don't know. We are of course talking about the card you bought, the Kobe Bryant Michael Jordan sports card that went for $13 million at auction. You bought it for, with two partners. You have a thesis and a strategy around this. Tell me a little bit more about it and then I want to come back to the tokenization of that. But first just tell me a little bit more. It's really interesting.
- [14:39]
A
If you go back and look over 11 years worth of data, what's called the hobby. That card we talked about, Jordan, Kobe, dual logo man with the golden logo man, which is Magic. It's probably the most coveted card world. It once traded for $75,000 years and years ago. But it shows you the price appreciation that reminds me very much of my Warhol, which I own as well. It was very inexpensive when Andy was alive and look at it today. And so that's the kind of mentality I'm going into this with now. When it came to syndication card, I was well aware at the auction that there were others interested in it. And my whole life I'd been an indexer. And I approached the other two big bidders, including Shine, who's known in the hobby. Matt Allen's his name. He's probably the number one card collector in the world. I said, shine, why are. Why are we competing against each other? Why don't we just form a syndicate and own it fractionally? Because it's going to be vaulted. It lives in perpetuity in a vault. We look at it on our phones all day long. I'd rather own 33 and a third of it than zero. So that ended up being a good strategy for us. We ended up putting it that way. And while we're at it, we thought, wait a second, this is working. Why don't we do more? And we have. And so over time, I'll be exposing our index, as I call it, the cards. But the one thing I'm sure of, and I'm taking this my lesson in contemporary modern art, the majority of the returns over 20 years have accrued to the collectors who bought the piece uniques. When I buy watches, for example, the ones that go up most in value for me are what are called PCBs. One of a kind, one of one. Very hard to get, very expensive, but they appreciate faster than anything else. Well, it's the same in modern art. If you can get, you know, an oil Warhol one of one signed by Andy, that definitely is worth more than one of the 30 prints or whatever he printed on that. Same with these cards. Can you get a one of one as the Kobe Jordan was? That's. There's only one of those. That's it. And so I anticipate over time that will continue to grow as it has in other asset classes. And so the same thing for the other cards we'll buy. So we're forming an index of cards, but every piece has a story. Every piece is extremely valuable. And I anticipate my returns are coming from the fact that I diversified across a lot of piece uniques. So same with my watch collection. I have many, many piece Uniques. And every auction house that approaches me says look, we'd love the whole collection, but we want the piece Uniques. And so it's the same. It's the same all around the world. When you own something that there's only one of good things happen.
- [17:26]
B
Now I want to ask you now about NFTs because you're talking about the tokenization of assets like this. And it brings us back to NFTs. There was a big push behind the NFT narrative, especially when it came to art and collectibles. It feels like that's maybe died down a little bit, at least in the headlines. Although I know that there are lots of builders trying to figure this out. Do you see an NFT resurgence based on what you've just told me?
- [17:51]
A
No. I mean NFTs are another description of going on chain. I'm only buying assets that are physical assets. They may be tokenized in terms of percentage ownership. NFTs turned out to be a fad. It doesn't mean putting assets on class or contracts on chain won't happen. They will. But that Kobe and the Jordan, those cards, they physically exist. They're in a vault. When you own a percentage of that, as I do, I own a physical asset, not something that was drawn pixels digitally. And so you know, I may this is just an opinion, but I won't be collecting NFTs. I'm collecting physical assets that are could be tokenized for ownership claim through contract that that came and went. I'm very fortunate I didn't get involved in that because I never understood it. Where is the asset? Where can I put my white glove on and go touch it? That's what you can't do with an nft. So you know, maybe I'm wrong, but I think really what NFTs prove is that you can put a contract in place and know where the ownership improving. And that in itself is very useful in the digitization of fractional ownership of a physical asset. A baseball card, a car, a watch, a painting, that makes sense. But in the end people want the real thing.
- [19:17]
B
So I want to take that I guess a step forward and maybe confirm my understanding. Maybe NFTs work in a world where you know, you have physical card, you own 30 some odd percent of that card and there's maybe an NFT that represents that. That's the thing you can look at on your phone but you still have that physical object. Is, is that a world where you see NFTs going or is it just a straight.
- [19:40]
A
No, no, I don't see that working in terms of monetizing it. I think for those who want to see the legendary Kobe Jordan dual logo man, the golden, remember that logo, man, was on his body when he played in his rookie year on his jersey. That's the physical asset cut out of his jersey in that card. Full authentication for rating everything else. If you want to see it, you're just going to probably just go to a website where we'll show it to you or something else I'm considering because the demand to see it has been so. You can't believe the number of DMS I'm getting on that card. I'm going to approach a few museums and find out who would like to put it on permanent display. There's so many fathers and sons that want to see it. I think we'll probably do that because I'm never selling that car, and so not during my lifetime. And so it should be in a museum. It should be where the hobbyists, you know, it's, it's. It's a family tradition. Since the 50s, fathers and sons trade cards. I can't believe how many closet collectors have reached out to me, saying, look, is there any way we can bring my son's class to see this card somewhere? I mean, that's magic. So why shouldn't it be in a museum? That's the next discussion.
- [20:58]
B
I love to hear it. I can hear the passion behind the investment, Kevin. And so it sounds like that was a good one, just based on how happy it's making you in this conversation right now.
- [21:09]
A
You're right. And I am passionate about it. I love the fact that I'm a part owner of it, like my partners. We haven't even told you about the other cards we have. I can say this, what we're indexing right now. Grown men are going to weep when they see this, because I realize how many people are passionate about this hobby, but what we're amassing is extraordinary.
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B
Well, it sounds like you won't tell me now, but maybe you can tell me first when you're ready to announce it.
- [21:39]
A
Yeah, I will. I will. I think you'll be quite surprised on our plans here, and many collectors have reached out to me about our strategy of diversification. So I'm very optimistic that we continue to build this, make it bigger. Bigger. It's sort of the way I felt when I was 14, when I bought my first watch. And so when I look at my collection today, it's hard to rival it.
- [22:04]
B
What was the watch you bought when you were 14.
- [22:07]
A
Well, the first one was a Speedmaster, the moon watch that once the moon. I bought it in Geneva in the 70s. I still have it. And the second one was a Cartier that, you know, that I bought on my first deal with three gold bands. I still have that as well. These watches are priceless to me, but they've also appreciated the value. But over time, as I was got to be known by watch neighbors, watch brands watch, they started to create for me a piece uniques. Because I'm a patron, I actually buy these watches and they support young watchmakers. But I never sell a watch. And the value is accrued to me is remarkable in just relationships. But the collection itself is probably. Well, we'll see one day. Although I'm planning, I told my wife, I'm putting them in the coffin with me and taking them with me. I'm going to need them where I'm going. It's a very long time. You need a good watch.
- [23:01]
B
All right, Kevin, we got to wrap this up. I'm holding you to that. That when you're ready to announce those new collectibles, you'll do it here with us at CoinDesk as we just wrap it up. Talk to me about the milestones you're looking out for. We, of course, talked about regulatory movement in the United States, but if you had to pick one big one that wasn't regulation, what would it be?
- [23:21]
A
Well, unfortunately, they're linked together. I think when we get the Clarity act through, you're going to see a resurgence in institutional interest. For all the hype about Bitcoin and people talking about institutions owning it, they barely own any of it. And it's because it hasn't quite cleared the regulatory hurdle. And when that changes, it will take its. Its stand beside gold, which, by the way, hit a new high today, as you're probably aware, and I own that too. And so it's sort of like it deserves to sit beside gold in a digital format. But gold is highly regulated and purchased all around the world, in every geography. Not yet Bitcoin. So we have some work to do.
- [24:01]
B
Kevin, as always, it has been a pleasure. Thank you for taking the time to chat with me today.
- [24:06]
A
Take care. Really enjoyed it.