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A
Today's episode is brought to you by Abra. Abra provides high net worth individuals and institutions with a competitive edge in trading, investing and collateralized borrowing while maintaining full control through segregated account infrastructure. So if you're looking to gain access to additional liquidity, Abra is one of the most competitive loan products on the market. You can borrow against Bitcoin, ETH and Solana at up to 50% loan to value. Rates are in the 4 to 6% APY range and are open term. You can continuously draw down against your collateral as the price appreciates. Abra has other strategies to add yield and their team is happy to help align your portfolio to your risk profile. Reach out today and get a complimentary consult on your portfolio. It's worth seeing if they can help manage your allocation, reach investment goals, manage risk and add some additional yield. Go to realvision.com abra and tell them I sent you. Hi, I'm Raoul Pal and welcome to my show, the Journeyman. The Journeyman is where we travel on that journey to the nexus of understanding between macro crypto and the exponential age of technology. Now, one of my favorite people to speak to about crypto is Jamie Coutts. Jamie is part of Real Vision Pro with me, but he runs the whole crypto side of things and it's always a pleasure to catch up with him, see what's on his mind, what he's working on, because he looks at things a very different way than me. But we have a commonality of understanding and language which makes it always super rewarding. Today's episode is brought to you by Consensus Miami, where I'll be speaking on the main stage with leaders from the White House galaxy, Solana and more this May 5th through 7th. So that's coming up very soon. Unlock everything from crypto at scale to institutional integration and agentic commerce. All the forces driving trillions on chain and reshaping finance forever. 20,000 decision makers, three action packed days. Deals get signed here, funds get raised here. The next cycle starts here. So join me. Get 20% off with a code Raoul R A O u l@consensus.coindesk.com Join me Raoul Pal, as I go on a journey of discovery through the macro, crypto and exponential age landscapes. In the Journeyman I talk to the smartest people in the world so we can all become smarter together. Jamie, how are you my friend?
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B
I'm really good, Raoul, how are you man?
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A
Yeah, not bad at all. I'm pissed off with traveling as I mentioned earlier, but you know, if the show's called the journeyman. I have to journey.
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B
Well, if you've got a couple of kids, then travel just doesn't become an option anymore.
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A
Yeah, that's a good point. What's on your radar screen, mate? Let's talk first. Top down, the markets are sideways choppy. Liquidity by my measures is growing, not hyper accelerating, while tech stocks are having a party. What's going on from your perspective?
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B
Yeah, so look, I mean, global liquidity from my measurements too is also growing. I think we've just experienced a liquidity cycle that has been where global liquidity has grown slower than it has in previous cycles. But that should be expected because the last cycle was just the bazooka. Right. I don't think we'll ever see anything like that. Or maybe we will, but it'll take something absolutely colossal to. To do it.
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A
Maybe they are with that, Jamie. It didn't produce the highest returns either. And they're all nuances. At each cycle. Like 2017, the US was actually tightening liquidity generally, while China and Europe were accelerating. They all seem to be different and they all produce different returns.
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B
Yeah, I think about this a lot as well. We all fall into the trap of sizing the current opportunity against previous cycles and they all are very, very different. But obviously you and I would agree that the biggest or the strongest correlation between asset returns is liquidity. If liquidity is growing generally, or if liquidity is growing and we're early in the liquidity cycle, that's when you generally capture the greatest returns. And as that liquidity cycle matures, even if liquidity is still expanding, generally it becomes a little bit harder. And we sort of go into these sort of five year refinancing cycles that drive the liquidity cycle, which also drive asset prices as well. So we've got to take that into consideration. And I also think for a lot of people in crypto, the sizing of the last cycles versus this one has been problematic just because the competition for liquidity now is so fierce. Right. So the last cycle, if you've got
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A
liquidity not exploding out of the gate, it has to somehow spread across all asset classes and then even in crypto across all tokens. So without large liquidity, there is a competition, I guess.
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B
Yeah. AI wasn't around in the last cycle. It burst on the scene, I would argue, through this current liquidity cycle in 2022, and it really, really ramped up in 2025 as the realization of the impact of AI on many different parts of the economy was starting to be. I guess measured or factored into people's investment decisions. And so we had the scarcity, the AI related scarcity trade really ramp up in Q4, just as in the US liquidity became excessively tight. So that was hard for crypto. And then you obviously had what happened with Binance. You had a confluence of things in Q4 which really undid.
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A
And also China's liquidity, because China's been pumping liquidity the whole time using the balance sheet because they have to. A lot of that flowed into gold and that sucked out China's liquidity as the marginal liquidity driver. So there's always, people think it's a science. It is if you can break it down and look back and what moved it. But it's almost impossible to predict all of the levers moving at any one time.
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B
I would agree. And, and, and let's talk about where we go to from here. So obviously the internal dynamics of liquidity matter. We haven't really talked about the types of liquidity. I now sort of look at the past as being the QE era and now we're in the, you know, the central bank QE era and we're now in the Treasury QE era. That mechanism of liquidity is still liquidity, it's still bullish. It's great for the business cycle, which you and Julian write about all the time and sort of own in terms of the framework that maps to the asset to asset prices or to the global growth or US growth and the asset prices as well. That mechanism of liquidity is also feeding through the banking system like it hasn't before. And I think that also changes how it's channeled into asset prices. Now on face value, you can argue that is bad for crypto because it's going into productive use cases. And I think this is where the market maybe in the next 12 months is going to start to wake up to something. And that is that in the past crypto or blockchains. Let's talk about just the base layer. You know, we both call it the, like the substrate of the new digital economy. The substrate of the new digital economy was being driven by speculative forces. So it was never seen as a productive asset class. That is now changing because of what is happening with payments and what is happening with AI agents. And I think it's fascinating that when you started on this journey before me and I came in a couple of years later, we thought by now we would be at 700, 800 million users, would get to a billion by 2028, where I think we're probably around 500 million, maybe more. But that's not really the point anymore. The point is that what was being built was the foundation for an agentic economy that didn't exist. That certainly wasn't on my radar because, hey, I wouldn't consider myself a futurist. I mean, maybe people like Cathie Wood and even you could see it coming a lot earlier than I could. But really, when 2022 arrived and I was having investment meetings with heads of research and sort of being laughed out of the room, that the agenta economy is just around the corner and blockchains are going to service that. Here we are three years later and I think portfolio managers and asset allocators are going to start waking up to this now. And so the argument about liquidity and the types of liquidity, it's all sort of going to be abstracted away.
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A
I think this a lot. It's like people are going to start to understand that blockchains are the coordination layer for the new digital economy and that it's not the fight about who's got the hardest money. It's not about any of that anymore. It's actually this is the infrastructure layer for the digital economy. That's it. And once people understand that, you understand that this has a very large role to play in the future of the global economy because it literally can't function without it. I know we first would say that and now it's becoming really fucking clear that it's the only way.
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B
Yeah, it doesn't feel as strange to be saying that because we've both been saying this for a couple of years, but now the evidence is stacking up. I mean, you've got corporate chains, or I call them corporate chains. It's probably a little bit unfair, but let's talk about Stripe and Circle and what they actually mean for global payments. These are massive companies with massive distribution, especially Stripe, bringing in the corporates that we always thought would come in, but it needed a stripe with the distribution, with those connections, with the relationships to really supercharge the whole blockchain adoption thesis that's now happening. Circle's going after the FX market with 100 partners now. And so it's looking like it's going to be a massive company of the future. Tether already owns the emerging market sort of distribution channels through Tron and through Ethereum and the other blockchains, and now it's building its own chain as well. It's just the argument for an asset allocator used to Be well, it's speculative number go up. Scarcity on the bitcoin side. Smart contract platforms, they're like utilities now it's becoming a lot more clearer and so the question is not okay, should we invest? It's like, what is the right allocation? Now I might be a little bit ahead of myself. You're speaking to these asset allocators in Geneva, in the Middle East. You tell me what they're saying about in terms of what's the allocation size now.
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A
I think it's between 5 and 10% is what they're trying to.
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B
Is that what they're saying?
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A
Yeah. Right. I mean I've been several of the sovereign wealth funds in the UAE and they're all trying to get to much larger allocations. They're just not able to do it yet because they need to retrain the portfolio managers, they need to understand the research. But that's the top down signal is like 10%. So 10% of sovereign wealth funds assets is officially I think a shit ton of money. But the other thing, I just want to go back to what you were talking about. These private chains or whatever, how do they drive economic activity in the underlying other layer ones that are open source and distributed ledgers as opposed to. They might be distributed, they might not be permission entirely permissioned, but somewhere in the middle, how does that drive into the overall economy, into the crypto economy? Because we've also got the big consortium of banks. What's that one called?
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B
Well, you've got Canton.
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A
Canton, that's the other one.
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B
Tokenized assets which if you look at websites like RWA accounts for a huge amount of sort of repo back office reconciliation. So record keeping, not as much on the trading front, but obviously the partners that they have suggests that that is going to be a significant chain of the future. And so you know, it's, you know, it's permissioned, it's just distributed but permissioned.
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A
And also it's bringing those assets up to machine speed as opposed to human speed, which is where they've been right now. So it kind of makes them so it can then flow through the rest of the crypto economy. I get that, but how does stripe fit in?
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B
Yeah, so I think, I mean stripes white labeling, stablecoins. So I think the, I think the role that they're going to play is that they're going to bring dollars into the crypto economy and so a door dash dollar will be transferred amongst sort of stripe partners on the stripe network. But essentially that is money now that's coming to the crypto economy. And the one thing that we know from conversion to fiat into stable coins is, is that those dollars in the crypto economy become very, very sticky. So there isn't a direct mechanism for a DoorDash dollar into a dex protocol, but it's all fungible. Right. So if you've got a balance or you've got a wallet where you've got doordash dollars, you can exchange that for USDC and do whatever you want on Ethereum or Solana. It's just bringing more capital in. USDC on the other hand is I think is a far more direct and easier sort of interplay into the crypto economy because USDC is already the largest sort of defi stablecoin. Its interoperability protocol is the largest protocol. So it's moving dollars across chains. It's very. So USDC is chain agnostic. The USDC or Circle is building its own chain. And I think that's really. They're going after the FX market and with already sort of 50 to 100 major partners in that space, I can see that growing into a huge opportunity. Because the FX market, as you would know from your days, is where insane
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A
margins are captured by insane margins and insane volumes. I mean stupid la la volumes per day. Yeah.
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B
So the opportunity size is amazing. And look, all these interchange fees, you know, have to go away because agents are going to either route around them or everyone is going to collapse the interchange fees to allow the agent economy to proliferate because it won't accept 50 basis points, 100 basis points for a transaction, Especially when it's going to be dealing in high velocity micro payments.
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A
Yeah, I mean I just, see I've been arguing about this for a while is the whole discounted cash flow idea of looking at chains makes no sense because this new world, it's always going to route to the cheapest, fastest, most efficient, most intelligent, dense network because that's what agents will do. So it goes back to the old Metcalfe's law. And how I started thinking about this is how do you value a layer one? Well, let's talk about Ethereum. The best way to. Yeah, the best way to value Ethereum is, is say okay, I'm going to turn the switch off. That's all of Stablecoins, all of Defi, every layer two, every nft, all going to zero. Okay, that's the value of Ethereum. Do the same with Solana, do the same with. And that's how you get the valuations, you invert it, it's the other way around. So they attract assets, capital velocity because they are dense with intelligence, because Ethereum has the most developers, it's programmable, it has the biggest depth, it's got the whole ecosystem. But Solana Sui, much faster, much cheaper, much more efficient, different feature sets. And that's how I think about it. And the discounted cashflow model, where I've had that argument in the past, it's just nonsense.
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B
Yeah, I agree. And you call it density, I call it intensity, it's the same thing. So you look at the blockchain itself and there is layers within the blockchain. It is obviously the base layer of the digital economy, but the base layer itself has very important sub layers that make up its value. And so you would argue that the base layer of the base layer is the consensus layer. Right. So the validator set how distributed it is, how decentralized it is. Then you've also got obviously the L1 itself. So fees matter, the type of fees matter. But they aren't, it isn't the core of evaluation argument for the chain itself.
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A
Well, because what comes, if I'm right, every agent will self select away from any fee, any chain with fees
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B
will. Fees will collapse. Like we're already seeing like on, on Sui and on Solana, that fees are 0.01%. One other percent or less SW gonna
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do stablecoins at zero cost. So that's zero now, which is the race. Everything digital goes to zero in cost. I mean that's rights law playing out right in front of your eyes.
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B
Is that because they're capturing on the, on the, on the float. So they're basically creating their own stablecoin.
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A
It's the yields and how you get the yield because. Yeah, and what you do with that yield allows them to do that. So you can fund the cost and you know, other benefits. You know, you could buy back tokens, you could do other stuff as opposed to keeping it as a profit making entity like Circle does, you can actually reinvest the yields into the network. It's actually quite smart idea.
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B
Yeah, yeah, I've seen, I've seen what they've been talking about on that front as well. Yeah, I agree. But then you've also got that, that, that final layer, the critical layer, because all of that matters for not if people aren't building or if applications are not being built on top of it. So you've got to measure the application layer, the intensity of that layer, what is the profitability of that layer? Because actually at that layer, profitability does matter because essentially for businesses, right? So you can call them decentralized applications or open applications, but they essentially need to be able to sell above their costs and reinvest those because
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A
they have the end customer, which is the user. You and I don't use Solana, it's just we actually use the applications. So Solana is the infrastructure that makes it happen and nothing would happen if that didn't exist. But that's a very different proposition to pump fun,
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B
right? And look, I think I've spoken to you about this in the past as well. I think the application layer becomes more interesting as the liquidity grows and as that sort of ownership of the end client accelerates. For those protocols which truly have product market fit. I always look at everything on a ratio chart like you, and I just don't see that playing out yet. So I've not made any major plays in the application space because the charts simply don't tell me that. But there will come a time when some of these break out and they deserve an allocation in the portfolio. But for now it's really about the base layer.
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A
Yeah, I just think the layer one bet is just easier. It's the infrastructure layer. There's still excess capacity. We've got plenty of use cases coming in front of us. It's just easier to capture. It might make you less money than product market fit occurring in a applications layer, as you said, but they're much harder to figure out. Well, the base layer is pretty straightforward.
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B
It's pretty straightforward, especially now because the concentration of activity is very clear in terms of the chains that, you know, the chains that are going to win now, there's always going to be newcomers and there's always going to be potential to make outsized returns in chains that exist today or chains that exist in the future. But if you think about it just from an, like you said, like a very simple asset allocation mentality, if you allocate to where the activity is and maybe size it slightly differently, if you're looking for a little bit more beta in the market, that's kind of all you need to really think about within that sliver that you allocate to crypto.
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A
And this, you know, I, I've been thinking a lot about this and you know, we see it a lot on the real vision platform in the discussions. Everybody's hyper focused on either the cycle or the intra cycle moves when the big picture is so fucking obvious. You would never sell if you didn't have to. It's so obvious that this is the infrastructure layer for the coordination layer, for the whole thing that I start struggling with. You can basically just buy basket this stuff and never actually do any analysis ever again. It doesn't really matter.
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B
Yeah, but the problem is humans and their inability to size the position. So the opportunity, be as it may, there still is a question of like what is the right position size for your psychology that constantly trips people up. Like, we're both extremely bullish on this. We probably have far too much allocated towards it. But we also accept that, accept those risks. But I think for other people it's really difficult to see like what happened in Q1. And look, I do trade around my positions on the edges and I think that because we have that community within real vision that are looking at different time frames, we can offer that as well. But for most people, the sizing of the position relative to the opportunity still is the biggest challenge. And they need to sort of also take into account that this is a 3x4x volatility asset relative to what they're used to within the S and P basket. But that's also a measurement of the return potential.
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A
Why do you think that we can't have nice things right now? That crypto underperforms everything else and we're used to being like the beta squared of the entire space and now we're just kicking around feeling like we're holding utility stocks at the moment. Why is that? Well, I think, yeah, nobody shows us any love anymore. It might be the clarity act and the structure of liquidity probably, but it just feels weird. And I know people are. We see everybody now moving to tech stocks, which is great. They're all actually the same bets. People don't really realize that. And the market's going phases. But what's your thinking behind it all?
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B
Come back to? I think the notion that liquidity, even if it's expanding, is still finite and it is now being channeled in more directions. Like people are investing in the hardware names that are exposed to the AI scarcity trade, the commodity names, the chemical names, the component parts. And so they're all going through these waves and they all make sense from a thematic perspective, don't get me wrong. So it's just the competition for capital at the moment is more intense than what we've ever seen before because AI is definitely the largest thematic of all time. It's just that people don't fully realize that it's also by nature a blockchain play as well. So maybe it's just time is time horizon. We are sort of in the, you know, the latter stages of a liquidity cycle as well. So everything's a little bit more volatile. But look, I mean, bitcoin price in a 50% decline, 55% decline from its high from Q4 to Q1. Now, I think that has sort of reset a lot of things within the space. The markers that I saw on that 2-6-low were indicative of a capitulation low that I've seen before. Live dashboards for this and like everything that I was using in 2022, which helped me pick the low in Q4, except for liquidity, because we were coming through the year, the typical year of a liquidity downdraft, whereas this year we're still in a liquidity bull market, but towards the end of it. And so I think it's going to reset and it's going to, quite frankly with a lot of people's models, because it feels like four year cycle and everything. It's like everyone's still attached to it. I don't think they're thinking long term enough. And that the wriggles and the moves in this are now going to be shaped differently. Not only because the time has come. Blockchains are productive assets. AI agents are going to start showing up and activity is going to show up in a very, very structural way, but also asset allocators. Morgan Stanley, Charles Schwab saying that they should have 5% in Bitcoin. And then that fans out into other. These are different buyers than the crypto native buyers of the past that were really cycle orientated. We get a smoother cycle, probably don't get those bigger returns, but we get the investor base that actually understands where all this is going.
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A
And then one of the things I think about in this is like everybody's saying, let's say you should be 5 to 10% waiting. Okay, let's say that now currently you can tell with the market that they're not. So it kind of tells me that if we do start to accelerate from here, that either we put in the low or we're still forming the low. But let's assume it's not going to be in October, November, which everybody thinks in, but it's somewhere around now. Okay, fine. If the market does start accelerating at any point, there's an enormous amount of capital that flows in. Because when you look at the relationship of NASDAQ to Bitcoin as a simple measure, it's right on the bottom of the log regression channel.
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B
It's like two standard deviations oversold Bitcoin, gold, Bitcoin, everything. So unless the relationship and the sort of Metcalfe's law and that logarithmic chart of bitcoin and crypto assets is broken, these are the accumulations. So I describe this year as not an easy year. I don't see a breakout in crypto. I still think that there is a non zero chance that we get one more flush down in some sort of second half sell off which could be due to the amount of liquidity that will be required just to rotate into all these AI names that are going to ipo. That's there's a potential there. It's happened before, it's, it's, you know, it could happen again. So this year is like the accumulation year into the names which I think will have outstanding 2027, 2028, 2029s. So I've, you know, right about this all the time because I do get into the weeds of like where the lows could be and all that sort of stuff that there is a non zero chance that we get one more flush. But where does that sort of bring us down to? Probably you know, on bitcoin it should be low 50s and we are right at the point. Like I just wrote a report, I'm not sure if you saw this, but it was out today. You look at all the onchain cost basis of short term holders and the average or the true mean of the network, it's right on 80,000. 80,000 is where a ton of volume traded on the centralized, on the centralized exchanges but also where a lot of spot traded. This is typically in a counter trend move where things roll over. But it's very clear that if we clear high 80,000 that this is essentially this bear market is technically over. Like it's now broken out. So you know, I'm of two minds but it doesn't really matter because we've got this sort of, you know, a view that looks beyond the next six months.
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A
So a quick break in your regular programming. If you're serious about your future, grab my free report called prepare for 2030. I think you've got five years to make as much money as possible and this guide will help you navigate what's coming. The link is in the description, download it now. I agree with you there's a. The probabilistic outcomes are quite complex right now. And we'll see, it'll clear up. Don't forget we've got fucking war. We're in the middle of a war. After we had the government Shut down, then we go straight into a war. We don't have a clean market. We've not had a clean market. What we've got is a very easy market to allocate capital in towards AI because it's kind of immune to everything.
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B
Very clear. Yeah. And so that's winning the narrative.
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A
Yeah. And narrative is everything really. It's how capital flows. It's what whoever's got the strongest narrative gets the most amount of capital. If you also think about the VC cycle, look at the size of the raises for the latest A16Z crypto fund versus their other funds. The VCs are getting gigantic amounts of capital going into the intelligence part of the equation. Robotics, the biological stuff, the AI stuff, all of this stuff. But they're not raising as much money in crypto. And that a often leads to increased opportunity, but it just shows where capital is flowing right now. It's like everybody's got one focus.
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B
Yeah, look, I mean I hear that data point and that actually makes me a little bit more bullish. What does crypto really need in terms of capital? Like the base layer is essentially built. The, the networks that matter are scaling.
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A
Yeah.
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B
They don't need, we don't need another,
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A
we don't need another layer one in any way, shape or form. Layer twos are just commodity. They're just business pipes that plug into the layer one. A franchise, call it that, call it a franchise business or something built on top of Shopify. It's basically what it is. Right. That's what a layer two is. Fine, that all applies. You can build your business on Amazon by selling products on Amazon. It's all the same thing. These are all network models. So we don't need any of that. We just need product, market, fit to scale. We've seen hyper liquid, but that is really crypto native platform for now and
- [30:47]
B
without any VC as well. So that is your proof that the VC capital cycle is, is, doesn't drive or shouldn't drive crypto any further. And it also led to a lot of the, look, not, you know, slagging of VCs because they play an incredibly important role, but like there was excess capital that was invested in crypto in 2020 and 2021. And the Hangover has been too many tokens, too much supply, too much inflated valuations were ridiculous. These L2s valuations coming out, even the know the applications and what the valuations were and it's just basically hung over the, over the market. So, you know, you get people like my former colleague At Bloomberg Intelligence, Mike McGlon talking about 21,000 or 21 million coins and how that, you know, how that dilutes the value of crypto. He's partly right in that it dilutes attention, but he's very, very wrong when he, when he looks at the activity numbers and see that actually all the activity is concentrated in.
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A
It's the same with equities. Right. It's the same with every asset. There's gazillions of them. The Russell 2000 is not even all the US stock market. I mean, there's so much of this stuff. So you give it the same argument, it doesn't apply. It's nonsense to say that. But you're right. I mean there's tons of. I think one thing we do know is not everything should have a token. Like not every company should be public. It's as simple as that. And they shouldn't have it because they don't have a business model that can satisfy a token.
- [32:23]
B
Yeah, I would agree. I think it'd be fascinating to see what Circle does because they've launched their L1 ARC. The gas or token of the network obviously is USDC, so why do they need a token? But they have talked about the potential for a token. So it'd be interesting to see, you know, in this sort of. Where are we third, fourth generation now, whether a company like that does it and whether, you know, Coinbase does it with base as well. I would argue it's not really all that necessary. We don't really need it. You can buy equity, you can accrue
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A
it to the equity you don't have. You know, you can have all the network effects and all the value. You know, would you spin out Amazon's kind of network structure separately, capitalize it maybe if you're trading at a massive discount, possibly, I don't know. But the issue is issuing Coinbase, issuing a token is. It's kind of one off event.
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B
Yeah, well, it's funny because, well, I did the numbers actually for that last report, looking at what led in the last cycle, what performed, and there's a subsector of the market that no one talks about, I don't talk about it. And that is centralized exchange tokens, they all outperform. They did really well. But that's I think, an example of how to use a token smartly. Because what they're effectively buying is discounts on trading. Makes total sense. You're a centralized exchange, you issue a token, you get the tokenomics. Right. You don't do like air miles tokenomics where they just inflate the hell out of it and destroy the value. Like you keep the tokenomics smart and you allow the people using your exchange to use the token to accrue benefits or discounts or whatever and makes sense.
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A
And people, if you're binance people, access your liquidity by building on your chain. So what you're doing is leveraging your network even further and it flows through to the exchange itself. So it does make sense. And do you need the token or not? I'm not sure. But definitely, yeah, you're right. I mean these centralized exchange tokens tend to work.
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B
Yeah, I mean it's not a call on the equity and don't know enough about them. But it's not like you're getting centralized exchange dividends through the token. It's just sort of a membership benefit token. And look, they've done extraordinarily well. So it's just an interesting data point.
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A
So what other sectors are you looking at right now? What's interesting to you or you just thinking, listen, this is not the time. Let's just focus on the layer ones. There's a bit of the privacy. One is interesting. The whole tau intelligence. One is interesting. Both still unproven. Are they going to get adopted at scale?
- [35:19]
B
So I wrote a paper on zcash. I know you've talked about it. What I found fascinating about zcash is that something, something happened with zcash which I've never seen before and I'm kicking myself that I didn't see it. Was that fees obviously like it's a very vanilla chain. It's just, it's a payment chain. Right. It doesn't have a smart contract platform. So what do people use it for? Use it for either store of value in zcash. In zcash's case because of privacy fees went from virtually nothing in 2023 and it was under SEC investigation. It like 10,000x it became in terms of blockchains like the third or fourth largest fee generating blockchain by midpoint of 2025 the price didn't move.
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A
Why?
- [36:12]
B
Because people were, people were moving into zcash and using the shielded, the shielded pool to protect or to create privacy for their, for their value. And this is the, this is the feature that obviously Bitcoin and other chains don't have. Although privacy now is starting to take hold within the Ethereum ecosystem. So they're going to build privacy into the, to the base chain which is amazing. Right, because this is essentially we have
- [36:40]
A
to get to this. Swe's doing it as well. Oh, yeah, yeah. I was with Costas, who's the co founder and the head of cryptography in Athens. He was at the GMI roundtable event. And that's coming soon. I mean, they've kind of cracked it and just figuring out. Because no financial institution will use chains at scale without obscuring who it is. But it's permissioned privacy. So therefore, if regulators or anybody need it. So it's not like zcash privacy. Zcash privacy is, you know, at individual level, to hide from state, which is, as we know, can be used for nefarious needs, means, or really important means. And it's difficult. Yeah, difficult to separate out. It's like gold.
- [37:26]
B
That's right, yeah. I mean, look at a core foundation of, you know, Western liberal democracies is privacy. I know it doesn't feel like that right now, given everything that's happened in the last couple of years, but to see it restored on chain, I think is very positive. And we've got an SEC now that dropped the charges against zcash, and I think is respecting that need. We'll see how it plays out. It's not without risk. Things may change, administrations change, who knows? But the product market of zcash was critically important. And just as sort of a side note, to go back to what you were talking about.
- [38:02]
A
Yeah, hold on one sec. With that. Is, as I think about it, Bitcoin is basically chasing global savings. It's going to absorb larger and larger share of it until it gets to wherever its natural level is. Zcash is going to take a share of bitcoin's share, which is the people who want a global savings vehicle with the same economics as Bitcoin, but want privacy. And it's very early in that journey. So it just makes simple sense. It's a very clean narrative. The world we're going into. It also makes a lot of sense.
- [38:38]
B
Yeah, touche. That's how I think about it, too. It's a percentage of Bitcoin. What's the percentage of bitcoin that zcash should command? Because I don't think that privacy is coming to bitcoin anytime soon. It's got its own challenges. And we can talk about quantum. Not that I'm an expert, but with zcash, they're very much on the forefront of that development, and they've got a roadmap to get themselves to quantum resistance in the next couple of years. So it's not A chain you have to be concerned about in that respect as well. Shielded transactions around 31%. But the thing that I was amazed by was just this explosion of fees and really not a price reaction. Typically in crypto it's reflexive. The other way around, price moves, fees moves because fees are denominated in the token. But that encourages liquidity to come in and then organic fee growth actually happens as part of it. But it wasn't that way with zcash and I thought that was amazing. I was late to the trade, it was a Q4 trade and it pulled back about 70%. And that's when I started getting interested again. Because if you look at it on a relative chart to Bitcoin, very few charts have broken out against Bitcoin in a meaningful way. And I think that is a tech you technicals that are like our bread and butter. Like that is a meaningful signal. It just needed a pullback. Now it could roll over again. But I think that thesis is playing out 31 shielded transactions, it might, you know, that needs to grow to show that ZCASH is being utilized for its core purpose. So that's the key metric that people need to look at. But I think it's an interesting story and just on the privacy aspect that, you know, SUI is obviously now integrating in, it's like, you know, if privacy was thought about earlier by the existing L1 blockchains, then Canton would have had a harder time launching. Right. Because Canton addressed that need. So it's good that the other L1s are recognizing this and they can do that in the way that you manage that. You explained, it's like, you know, selective privacy. You don't want to see, you know, you don't want to see the counterparty or you want other people to see your trades necessarily if you're trading, you know, tokenized assets on chain. But it should be available to certain counterparties if needed. And that's all programmatic, programmatically possible.
- [40:54]
A
Yeah. So I think it'll be. So that may take. No, in theory it would take away a bit from zcash, but it's not because zcash is purely a non smart contract store of value for individuals. Yeah, yeah. And therefore you've got Bitcoin or that. So that's pretty. And how are you thinking through Bittensor and that ecosystem right now? Because that's been wobbly. We've had a few problems, performed really well, not been doing anything for a bit. It's kind of very early stage to figure out how much Traction, it's getting. What are you thinking?
- [41:28]
B
So it's definitely interesting. I haven't done enough work and I know that you've written about it, so.
- [41:35]
A
Yeah, I've not written a deep dive on it yet. I keep thinking about it but price action, I don't know, doesn't feel right yet and don't know.
- [41:44]
B
The story's getting traction like the tokenomics have been improving the size of the network. You can see the network growth. So these are the things that we would typically look for and it is one of the, you know, the few that are actually growing throughout this whole, you know, downdraft that we've experienced in the last six months. So it's got the ingredients there. I just haven't done enough. I mean, I think looking at the, the profitability of the subnets themselves is kind of like the key thing. Like are they generating real value if that's the case? That's the case for the application layer performing, which is critical to the three prong, sort of the three layer approach that I use for network intensity being a driver of the token value. So it's interesting. Venice is very interesting. Yeah.
- [42:32]
A
I really like what he's doing there as well.
- [42:34]
B
Yeah. I mean, I don't know what. I know you're using Claude, but I'm not sure what your sort of agent orchestration layer setup is and I'm looking into that after using various other alternatives. But I really like. I personally very much like Eric as a person.
- [42:50]
A
Exactly. He's always great. I'm trying to get him on at some point to talk about this because it's super fascinating.
- [42:55]
B
Yeah, yeah. I definitely like to learn a little bit more about it. Then you've got the decentralized computer which always made sense but never was quite clear in terms of how it was playing into the ecosystem. But they are potentially interesting. I don't know the tokenomics on them. Near is doing a ton. I've had a love hate relationship with near because of I guess this massive pivot it took in the last cycle, which I think will pay off in this cycle because they have essentially an agent orchestration layer in Ironclaw as well. They're using Near's decentralized cloud and they're using decentralized compute from a cache and render as far as I'm aware. So everything that Ilya is doing in the near ecosystem is custom built for the world we're moving into and that token is very depressed. It's just hard to understand. There's also near intense which is basically this interoperability layer. It's doing a ton of volume. A lot of zcash is actually trading through the Intense protocol. So if you're able to trade zcash on Solana, for example, the other one
- [44:02]
A
that's discounted that way is Chainlink. I mean, they're doing a lot.
- [44:07]
B
Doing a ton on the RWA side. Sort of murky tokenomics. Not too. Yeah, so I haven't really been able to dig in there. It's not.
- [44:17]
A
But you see the announcement. Literally everybody, the whole finance sector uses Chainlink as the interoperability layer.
- [44:23]
B
Yeah, yeah, yeah. I mean, look, I haven't done enough work on it. It's kind of like xrp, like Ripple's doing partnerships with everyone. But how does that actually accrue to the. To the token? It's very unclear. Like Ripple itself as an equity. As an equity business. That's why Fortress and Citadel invested massively into the Ripple business at half the value of the XRP token that they have on their balance sheet. Which tells you something about the value of the XRP token, I think. Yeah, it's just harder to. It's harder to understand those protocols. And I mean, there's one little pocket which I'll mention is on chain options. So perps have been the story for the last three years. Hyperliquid has done amazingly well and continues to innovate, which is a great story on chain options. It feels like with, you know, there's been a myriad of attempts through AMM structures which just do not work for options. But the same central limit order book approach that Hyperliquid has taken is now you being used by a small token called Derive, which I think is really interesting. Doing partnerships with a lot of the prime brokers in the space. And then we saw Coinbase go and buy deribitation. So there's a huge opportunity on chain options if they can get the tech right. Derive is a very interesting one because the tokenomics is actually fairly strong. They've got a buyback and, you know, it's. It's a micro cap. So like it's, you know, it's way out.
- [45:59]
A
Somebody mentioned it to me at the GMI roundtable as a good trade. In fact, it was one of the trade ideas from one of the CIO from CIO from Switzerland.
- [46:08]
B
Okay, interesting.
- [46:10]
A
There's a couple of. On chain option ones, I think.
- [46:12]
B
Yeah, there's a. There's a couple coming up on. On Solana and there's a. You know, eventually Hyperliquid will get there into options as well. So you can't discount them just being massive in that space. But there's probably given the. The next upgrade for Hyper liquid is focusing more on the prediction markets. It's probably another 12 months before they even tried to tackle that. But it just regardless of the protocols, like onchain options just seems like the next vertical because the technology, the tech stack has improved so dramatically over the last couple of years from the first generation of these protocols, which all failed miserably that it eventually gets there and people want to, you know, want to trade different types of risk and perpetuals are great. You know, they're eating the world but they don't offer institutions the kind of risk exposure that they need. And options will do that. And especially when assets, real world assets, start moving on chain options on chain. Makes a total amount of sense as a complimentary.
- [47:13]
A
Yeah, it just depends how they solve the risk equation of, you know, who settles, who goes bust, who's collateral, you know, all of that kind of stuff. For the option seller side.
- [47:21]
B
An insurance fund. Yeah, protocol insurance funds are critical.
- [47:24]
A
Yeah, yeah. And that's the issue that I always had with Deribit. So standing on its own, being 85% of the entire options market in crypto, I'm like, this just doesn't make any sense because if something goes wrong, everybody goes under. And then having Coinbase bring it and then CME and everybody else bringing options as well, it's kind of calmed it all down because that was an accident waiting to happen.
- [47:46]
B
Yeah, yeah, yeah. I think it, I think it gets a lot more distributed now as well in terms of the activity because Deribit was obviously the main player, but it was and it was independent. Now it's part of Coinbase. What is Coinbase? Coinbase is a multi pronged crypto financial institution. One part is prime brokerage. So obviously it's going to route all of its clients orders through deribit. Now if you're another prime brokerage account, so prime broker you obviously trade with the liquidity is. But you'd want to see competition in that space. So I think there's an opportunity for other protocols to grow on the back of the fact that Coinbase now owns the largest options venue.
- [48:28]
A
So let's just look forwards a bit. Let's talk a little bit about, okay, we've kind of laid out a nice clean structure where we think we're not entirely sure how this year plays out in terms of do we have another low? Have we put in the low? All of that stuff. I think liquid is accelerating. I'm really quite bullish into year end. Let's see. But I said I could see another low. The only thing I can see that's the problem is if this Iran war doesn't go the way that we think, which is it gets solved. And if it doesn't get solved and oil goes up to $200 a barrel, it's going to get pretty ugly again.
- [49:16]
B
Yeah, there's no two ways about it. So it needs to get solved. If it doesn't, I think markets are looking at another pretty sharp decline. Like you can't. The share of the economy resulting from oil is less than it was in 2007, but it's still not insignificant. So the longer it remains at above these levels, the worse it is for the economic outlook and for financial markets.
- [49:43]
A
Yeah, because it may not be the worst for the US because it has all its own oil and all of that stuff, but it's certainly bad for everybody else. So the rest of the world's slowing down. We can see it in the European economic data versus the US economic data. The US is going up like a rocket ship right now. Arguably, high oil prices just bring in more cash into the US for anything they export. But Europe is the opposite and Australia is the same. All of that.
- [50:12]
B
Yeah, I mean, let's not talk about Australia because the economic situation down here is dire. But, yeah,
- [50:20]
A
I'm still surprised you're there, mate. Every time we speak, you're like, this place is so fucked. But you're still there.
- [50:26]
B
Yeah, I guess I'm a glutton for punishment. That's why I'm in crypto.
- [50:31]
A
Your tolerance for pain is so enormous that nothing matters anymore.
- [50:36]
B
Yeah. So that's the big out, that is the big outlier. And it can't be discounted. We all thought it would be over by now, so hopefully it does get resolved.
- [50:46]
A
So, gun to your head, end of the year, higher or lower or same?
- [50:53]
B
I think it's bitcoin can touch high 90s, but I think we go down from here in the short term. I think it's going to be a really bumpy year. And look, I mean, gun to my head, I think we make higher highs from here, but I don't think it's directionally going to go there immediately.
- [51:13]
A
So you're just saying we can't have nice things. We're just going to have to watch the NASDAQ just going up 20% every month as it's just gone up and we just stand There looking at it, thinking, why doesn't anybody love us anymore?
- [51:27]
B
Not this year round. Not this year.
- [51:29]
A
Oh, Jamie, that's no good. Listen mate, fabulous conversation as ever and let's see how it all plays out.
- [51:38]
B
Yeah, absolutely. Thanks a lot, Raoul. Okay, mate, cheers.
- [51:43]
A
So as ever, fantastic conversation with Jamie. Just kind of kicking the tires of what's going on. Where we are, where the attention is headed, where the opportunities lie. I think we're both coalescing on the idea that still the easiest bets are the layer ones, the layer twos, not the layer twos. But the applications layer is still harder to select. I think there's still a disagreement between us about where we are in the cycle. Jamie doesn't see higher prices, I see higher prices. But let's see how it plays out. There's so many factors at play. There's no perfection in trying to forecast things. As everybody knows, it's. You know you're taking your best bet with all the information that you have today. But tomorrow can be a different day. Anyway, stay self out there. Remember long time horizons, that is what matters here. Because where this is all going is oh so fucking obvious. See you next time. Today's episode is brought to you by Abra. Abra provides high net worth individuals and institutions with a competitive edge in trading, investing and collateralized borrowing while maintaining full control through segregated account infrastructure. So if you're looking to gain access to additional liquidity, Abra is one of the most competitive loan products on the market. You can borrow against Bitcoin, Eth and Solana at up to 50% loan to value. Rates are in the 4 to 6% APY range and are open term. You can continuously draw down against your collateral as the price appreciates. Abra has other strategies to add yield and their team is happy to help align your portfolio to your risk profile. Reach out today and get a complimentary consult on your portfolio. It's worth seeing if they can help manage your allocation, reach investment goals, manage risk and add some additional yield. Go to realvision.com abra and tell them I sent you. You obviously enjoyed the episode because you're here with me at the end. But listen, don't forget to go to realvision.com join and grab a free membership. It's an incredible community packed with alpha great investment ideas and the research that you need to help you unfuck your future. So get started now, go to realvision.com join.