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[00:01]
A
Bitcoin is finally, potentially, maybe decoupling from Wall Street. Obviously yesterday the Fed held rates, but many viewed the meeting as hawkish. Markets all over the world, up, down volatility and Bitcoin effectively did nothing. I personally view that as good news. I'm curious to hear the thoughts of today's amazing guest. Co founder of 21Shares. I wore the T shirt. Co founder of 21Shares, Ophelia Snyder. Let's go.
[00:28]
B
That's dope. Let's dope.
[00:42]
A
Good morning, everybody. Happy Thursday. And I don't know where I am. I just never know what's gonna happen. My producers throw up something on the background to surprise me. And today, apparently I'm in a elvish forest with a waterfall. You're not in an elvish forest with a waterfall affiliate. Good morning.
[00:59]
B
Good morning. But I am jealous.
[01:01]
A
Of course you are. Everybody wouldn't want to be swimming in a waterfall while doing a YouTube stream. Yeah, we haven't done this in a long time. We realized before. So I think you pointed out the fact. Obviously there's been a lot, A lot has happened since we spoke last, which was recording and not live. So I apologize in advance, but I don't think ETFs had even launched.
[01:23]
B
I don't think so either. I think it was like right around then. But no, I don't think we'd had ETFs in the US yet.
[01:29]
A
Okay, so since then, obviously you are the co founder of 21 shares. We had the massive launch and you guys sold to Falcon X. So now you're free of your chains and living your best life, I would imagine.
[01:41]
B
Yes. And having a lot of fun because actually, I don't think I've ever been quite this bullish on crypto, which is maybe surprising to people, but I think it is the. Probably the best it's ever been, which is fascinating, given.
[01:53]
A
Let's talk about that because it's such an interesting. So maybe we'll just start with kind of the news. Even though it's.
[01:58]
B
Whatever.
[01:58]
A
We have the Fed yesterday, so many viewed this as a hawkish pause is sort of the term that they're being used. Three Fed governors dissented, which is not something we would see during the PAL era when he demanded consensus. Right. You'd always have a unanimous vote. I think he alluded to the fact that there will be no soft inflation target. We're going to get back to 2%, which immediately sent prediction markets for a hike actually soaring for September. And of course, the Dow was down massively. Oil Was up big. Korea is doing whatever Korea is doing, which is unrelated. If we could, we can get in a minute. But what I want to get at here is at this moment, it feels like we're in the place where what could be viewed as bad news for bitcoin or crypto doesn't really move markets anymore. And we've seen that sort of repeat repeatedly, I think, over the past few months. The best example of that, to me, honestly, was when Sailor sold a lot of bitcoin and bitcoin went up. Right. And so there was no, like, fear of him being the fourth seller anymore. But it feels like the negative narratives and things that should be moving us down aren't, which makes me very bullish as well.
[03:05]
B
It feels like bitcoin's oversold to some extent, and that's why it's reacting this way.
[03:10]
A
Right.
[03:10]
B
Like, the people who want out have gotten out at this pricing. There's a pretty decent equilibrium between people who want in and people who want out. And I think a lot of tolerance for macro chaos is building in the market to some extent, especially around crypto. I think we kind of get it and are maybe more used to it than other parts of the market are.
[03:33]
A
Yeah. It feels like we just don't have the nervous participants that are going to sell on any piece of news anymore. Like, we certainly had them and they sent us 60. You know, I just don't. I don't think they're here anymore. But maybe that's a good segue into what you said before, which is you're more bullish on crypto than ever, which I think would surprise probably a lot of people. So maybe you can give us your premise for that idea.
[03:56]
B
Yeah. So there's a few different things happening at the same time, which are really exciting to me. I think you're seeing around bitcoin specifically, and around alts, there are two different things happening, both of which I'm really excited about, independently of each other, and they're not really related, which is also fascinating. On the bitcoin side, I think you're seeing a rotation away from the dollar in reserve assets. That's why you're seeing growing stockpiles of gold. I think it's something like 75% of central banks and the World Gold Council's reports that they're planning on dollar exposure there. There we go. It is a very weird time from that perspective. But that's interesting because as you start to shift around what reserve assets are being held, it opens the question, like, what makes A reserve asset. And what are the historic conditions that led to the creation of the dollar? A lot of that as this kind of global reserve. A lot of that has to do with the petrodollar. And I think it's really interesting that there have been at least a couple of times in the Iran conflict where the idea of using Bitcoin to pay for oil or pay for fees associated with oil has come up. And if you're going to move away from the dollar, move towards gold, move towards other assets, and then be able to use some of those assets to purchase what government would see of as staples, that's a really interesting dynamic. And I actually think this dynamic that we're seeing of increased gold holdings, some kind of tapering in demand for Treasuries and that rotation away from the dollar, it's just a very interesting time and quite good positioning for Bitcoin as you start to head into a reorganization of like world trade. So I think that's what's interesting about Bitcoin right now. I think on the alt side, America has been the provider of last resort for a lot of technology for the world in defense, which everybody is talking about, but also in finance, right? Visa, MasterCard, American Express, Swift, these are American companies that provide basically the payments infrastructure for the world. And the ECB came out saying, you know, this, this may actually be a national security risk. And you've seen things like the digital euro, you've seen concerted projects towards building more locally grown infrastructure, not just in the military sector, but also in finance. If you're going to do that, it's a really interesting opportunity for capital markets technology, capital markets infrastructure and payments to move closer to neutral rails. Because if not, you're either going to just have multiple versions of proprietary tech operating, or maybe we end up in a world where even if people don't agree politically, they can use the same system very similar to the Internet. And that's great positioning for something like Ethereum and Solana heading into the next five years. Things that are awesome, right?
[06:44]
A
That's interesting because something I've been discussing, and I like your take on it, is that we have this world where tokenization is obviously going to dominate. Things are going to be faster and cheaper and they're going to use blockchain rails for all these systems. But the question of whether that will actually be investable or beneficial to your average retail crypto investor who's been here for a long time, kind of the idea that they could create these things in walled gardens, right? And you'll have JP Morgan doing their private transfers on a blockchain, but that's not going to benefit me. And then of course, the big one, which is the DTCC announcement. They settle 4.5 quadrillion in volume or something a year, and they've made a humongous push. They're actively testing it. They've said that they think it could happen by the end of 2026 to basically move everything onto blockchain rails. But, okay, if that's just the replacement of their plumbing, how does that help us? Right?
[07:38]
B
I think it does. The issue is you can't move capital markets without dealing with all of this legacy plumbing. I think crypto as an industry has a tendency to think about things from a retail perspective, right? So you think about buying and selling stock stocks, because that's basically the only capital markets function that a retail person is going to deal with, right? Buying and selling stocks, buying and selling fixed income. The reality is that plumbing is significantly more complex than that, right? You're talking about, you're talking about rehypothecation. There's repos behind it, there's securities lending behind it, there's collateral management behind it. There's a lot of stuff that happens other than buy, sell, hold, especially as you get into more sophisticated groups. And there's a bunch of reasons why those are important, right? Like leverage is important. When you start to take leverage down, you're going to suck liquidity out of systems. And so that is a reality of financial infrastructure. And so when you see all of this plumbing updates, that's actually really important because right now your average broker dealer is not going to be able to integrate a, you know, fully tokenized system that, by the way, is going to trade on a Saturday. And you need risk management for a Saturday because these positions are now liquid, so some are more tradable. But that also means that you could have a spike on a Saturday. And so now you need to monitor that because your collateral positions are tied to it. It changes a lot about your operating cadence. It changes a lot about your risk modeling. And that all requires significant plumbing updates from things that have, like, very little to do with retail markets. The way that accrues is that at the end of the day, usage is a good thing, right? Transaction fees on blockchains are a good thing for blockchains, demand for tokens is a good thing for token pricing. As people start to put more transactions on a blockchain that is intrinsically good for those chains. And so for the people that participate and hold in them and stake on them and miners and the rest of the ecosystem. That's a tough around it. I think that's the mechanism through which it's going to occur to people. But I think the fundamental thing is it's actually a very bullish sign when you see them doing these things because at the end of the day you need that infrastructure. Central clearing is important for wide range of participants. For a bunch of reasons nobody wants to get rid of it. Seeing it migrate onto this technology is a huge net positive.
[10:05]
A
Yeah. I think the prevailing narrative obviously is that we're in a world where utility matters and people need to actually value things. And that makes a lot of sense. And I think that's probably exceptionally bullish for crypto, just maybe not for 9 million of the tokens that currently exist. Right. Which so I think we're going to see a great culling. I think most people agree with that. But as you said, kind of the top end layer ones I think are going to capture massive value and then there are probably others. I don't own it, but forever regret it. But hyper liquid and things like this that are actually people can look at the tokenomics and understand how to value it. They can look at the volume and understand that it's a real thing. Right. So maybe your takes on what else outside of sort of the layer one blockchains could perform well in this new environment.
[10:52]
B
I mean I think anything that can confidently come up with something like an earnings per token is probably not a bad idea. Right. Like product market fit matters. You can't hack your way out of product market fit. And there's a lot of these chains that are, a lot of this is like early stage vc. Not everything is going to find product market fit. That doesn't mean as an industry it's duped. It means that, you know, Juicero was a real thing, it raised a lot of money, it tried to do something, it turned out you could squeeze the packets by hand, you didn't need this thing. And there wasn't really a product market fit for a $700 juicer. That is a reality. And I suspect there will be similar things in crypto where it's like, yeah, that sounds great, but this doesn't work. Or like another example would be webvan. Right. Like not a bad idea. Delivery actually works really well now. They went about it in like a very infrastructure heavy way with a lot of costs baked in. Didn't work. Good idea. Execution didn't work. Both of them not great. Product market fit Wrong timing, wrong execution, wrong management of their cap table didn't work out. And I suspect crypto is heading towards a reckoning on some of these topics. I think we historically have existed in a world where if you pay somebody to press a red button and they press it, that seems like product market fit. Turns out they may just like making money. That doesn't mean they enjoy pressing that red button or that they're getting value beyond what you're paying them.
[12:15]
A
That is a great segue to the next thing. But yeah, finish up. Sorry.
[12:18]
B
No, no, please. That was the end of it. Is that. Yes, product market, but it matters.
[12:23]
A
It does. And so like obviously Robinhood chain has been somewhat the narrative of the past few weeks and I think that it's interesting that they're taking a lot of the lessons that we just sort of described and bringing it to a non crypto market. And you know that that earned product for them at you know, 7% yield. Six or seven. I think it's 7% yield. You know, they're having hundreds of thousands of customers who just see it in the app and click, yeah, I want to earn 7%. Right. So a great product market fit. And they reported earnings yesterday. And I found this just absolutely fascinating as I dug into it. I don't know if you saw these numbers but, but they basically did 300 odd million on options, which I guess is not surprising. They did 156 on prediction markets which are brand new on there and only 100 in crypto and stocks were in between 130 something. So their prediction markets already, which to me is the most sort of final form of push the red button that you just described, like I can make a directional bet, yes or no, with my actual money and express a view by pushing a button. I don't need to know like the token, the tokenomics or earnings. Right. This is exploding that exact phenomenon which is I want to push a button and try to make money.
[13:37]
B
Yes. I think the difference here is you're not getting paid to push the button. You're getting paid based on like expressing your view in some way. People like making money. Yes. But I think like giving people tokens for free because they use your application is a little different. I think that's what crypto is getting. I think prediction markets. Prediction markets are actually giving. I think it's fascinating that they are. The combination of prediction markets and some of what's happening with Hyper Liquid is giving us this like tiny little viewpoint into what the future of finance really looks like at Scale, which is fascinating. Which is like the line between public and private companies is getting blurred because you can take directional bets on prediction markets or in derivatives markets ahead of things like IPOs. We see that with SpaceX. We're seeing that with some of the big like AI labs. That is fascinating and brand new. You're seeing the line of like where, where is. What is the difference between finance and gambling? That's also blurring, which is fascinating in its own right. Like the idea that you could do things like make directional bets on the weather. I mean that always existed in institutional world because for, you know, in, in insurance on things like crop yields, like these things exist. It's fascinating now to see everybody have access to that. I think the prediction markets are very, a very simplified version of derivatives on almost anything you want to invest in. It's sort of like perps also, which is like a very crypto native thing. And we're seeing those change what finance looks like. This was kind of always the dream. I don't know why the industry's not more excited about this. This was the dream. You want to change the phase of finance? We're doing it. Look at this. We've got perps all over the place. We've got prediction markets all over the place. We've got all the major infrastructures coming, players coming onto blockchain. Like this was the whole point, right. But it somehow doesn't seem to have connected with the industry because price are
[15:27]
A
down, nobody cares about anything. It's literally, it's a very simple. Right. There's no better marketing for Bitcoin than bitcoin going up. Right? So and then everything that we talk about in the depths of the bear market that we say are amazing all of a sudden become narrative six months down the road when prices or higher and people. How did I miss the fact that, you know, perpetual swaps are now on every asset and that was something that was created by Arthur and friends at Bitmex. And by the way, some irony, the fact that Bitmex goes out of business in the very time that their most like compelling feature gets adopted worldwide is really bananas.
[16:01]
B
I mean, I suspect, like look there, I mean you saw that in like tech also, right? Like think about what I just said about webvan. Like, yeah, that that happens. It's like sucks. Like getting the timing right is really important.
[16:13]
A
Yeah, I mean there were, there were ride sharing apps before iPhones that didn't exactly blow up like Uber. Right. So I mean timing and product market fit, as you said, are very Important. It makes me wonder when we have this convergence though. So, right. You know, prediction markets coming together with perps, you can do it decentralized on a weekend, 24, 7, 365 on hyper liquid, but soon on other markets. I mean, the CME, they're going what, 23, 6 and they're offering now individual stock futures contracts which they haven't tried since 2002. Everybody is trying to become the Everything app, right? Robinhood actually doing probably a very good job of it. Coinbase has earnings today and we know that they're going to see a massive decline in trading. What does this mean for Coinbase, who also now is doing prediction markets? I'm really curious to see how much they've grown in the non crypto trading venues in this quarter.
[17:10]
B
And I don't know. The way I see it is I think Hyper Liquid done a really good job of this, right? Which is that, yeah, they, they do stuff with crypto and that's cool. But like most of what they're trying to do is not crypto at this point, right. And like even the way you see volumes shifting like they are, like most of the future of Hyper Liquid, I think is not, I don't think it's, it doesn't. Like bitcoin futures does matter, like that's fine, but irrelevant. I think most of what they're going to be used for is everything else. Because even if crypto is amazing, everything else is still bigger, right? Like, everything else includes every oil tanker in the world, every credit card payment in the world, every, you know, iPhone that's sold. I mean, it's just every toy, every gym bag. I mean, you're talking about just a massive volume of stuff. And all of that is financialized in some way. And so I think one of the things the industry is struggling with, understandably, is it's great if you have a strong presence in crypto, that, that can be a wonderful base to do something. But you need to deal with all this other stuff, especially now that you're starting to see, you know, consolidated players and more efficient capital markets on the back. Like you don't get the same. You know, back in the day, we used to have much bigger pricing discrepancies across different markets, but now you have market makers that are kind of key, keeping that more in line. You're seeing less drift geographically, you're seeing better infrastructure. And so I think we're at a reckoning also there from four exchanges, especially retail exchanges, like, how are you going to compete? Because what is the incentive for somebody to say, hey, you know what, I already have Robinhood, let me also open a Coinbase.
[18:46]
A
Yeah, I think we're. And that I think extends, as you said, to the legacy players in stock market as well. Morgan Stanley just launched Bitcoin, Ethereum, Solana Trading and then they just launched yesterday, ethereum and Solana ETFs which come in, you know, something probably near and dear to your heart. They come in at 14 bips, right? To like undercut the market. Everything is becoming everything to everyone. You know, Schwab has crypto trading, but like they, you know, once money leaves your Charles Schwab account to go to Coinbase because he wanted to buy Bitcoin and couldn't do it on Schwab, that money doesn't come back, right?
[19:20]
B
No, it doesn't.
[19:22]
A
Those institutions have to be cognizant of this massive rise of equipment. So like even we have the prediction markets of perpetual swaps and Robinhood and Coinbase and all these sort of degenerate native and crypto native coming together. But you also have the Schwab's and the Morgan Stanley's, you know, bringing E Trade and Schwab and all those together and needing to compete in the exact same place.
[19:43]
B
But then it goes back to like, how is this good for the average participant in the crypto market? This is amazing. Like you, you want demand for Bitcoin, Think about the number of users that that represents. I mean, Morgan Stanley has some of the largest like wealth management platforms. They're, they're a wirehouse. I mean, that's the whole point is
[20:01]
A
how do you think is 15 or 16,000 and they have 9 million customers on E Trade alone.
[20:06]
B
Right, Exactly. So like, how do you think about onboarding people? It's interesting because it was actually the original premise for 21 shares. Like back in the day, back before any of this was possible nine years ago, what we were telling our clients was like, look, your customers are going to take their money off of your platform to buy Bitcoin whether you like it or not. That is what is going to happen. And so we can offer you a tool to let, to keep that money on platform. And by the way, let your customers come into Bitcoin. We used to tell brokerages this all the time. A bunch of them did it. A lot of those people did not have those assets leave their platforms to the tune of hundreds of billions of dollars or euros. And now it seems like the rest of the world is catching up to that, which is the reality. And by the way, how these big platforms have always worked, right? They, they offer everything, they offer everything to their customers. Doesn't mean they're going to recommend it to them. It doesn't mean they think it's a great investment this minute, but they offer all of it so that they can keep assets on platform. But ultimately that's not a bad thing for retail investors in crypto.
[21:06]
A
It's actually probably more access for everybody. Can't be a bad thing. That was sort of the premise of crypto. I think people just get frustrated if that comes at in a way that they can't financially capitalize from it in the way that they imagine that they would. But yeah, it's definitely good news.
[21:22]
B
And I would maybe go even like a step further, which is, I think the last 10 years have been like the battle for access. That was it. Everything that's done well was about access. Right. Different frameworks of how you define that. But like Coinbase access products, right?
[21:44]
A
Couldn't get bitcoin anywhere else, right? So they, they got you bitcoin and that was their business.
[21:50]
B
21 shares was the same thing. The whole, this is how do we get you access to this thing that you can't buy so that there are more participants? That was the thesis. And if you look at it, I mean, even something like blockfi, like, even things that didn't work, that was a lot of the central tenet, right? The finances of the world. That is what built this first kind of generation of really scaled crypto players, the next generation. And you said this at the beginning, now it's about, okay, that's all really cool. All of these blockchains need to start actually doing the things they said they were going to do. Ten years is a really long time to live on vision. Like, show me the numbers, right? These are now growth stage companies. They're not, they're not series A companies where you can sell a vision. And it's great. This is now like, okay, show me the money. And you can see things like hyper liquid that can actually show that, that are doing really well. But that's a normal, healthy market behavior.
[22:40]
A
Yeah. When you think about sort of the. I've never been more bullish on crypto, which is scary notion that you gave earlier. Imagine when price just simply goes up. If we do like, I think if we're being intellectually honest, you know, people just get excited when bitcoin is higher. It's the old meme, you know, 126,000 bitco, everybody's lined up 60,000 bitcoin, there's nobody at the door. Imagine then when everybody has access to it, the second that they want it for the first time, when price is going up, which we've never had before,
[23:12]
B
we've never had that. And all of this utility stuff, all of this product market fit stuff that we've been talking about, that is narratives, Right? Like right now, crypto doesn't have a super strong, easy to articulate, easy to show proof point points of narrative. It's all really complicated, right? It's all like back end capital markets, infrastructure and global macro. And then you have something like AI, which is to some extent, I think, easier to understand right now. Right. And the numbers are more transparent and you can really see the money and where it's going. And then even that narrative now seems to be cooling. Right. See what happened with Meta, right? The AI spend for AI spend is not being seen as a global panacea. Even that narrative is starting to cycle. And that's good, that's normal, healthy markets. And right now the crypto narratives aren't getting as much traction, but what's happening is the actual work is being built for it. And to some extent I think that's really a good sign. If you can see the real work being done and you can see all of those wins getting notched, that's kind of the foundational positioning for the next bull run.
[24:25]
A
Yeah. The only problem might be that we don't have the South Koreans left with any money assets like they've done in the past. I've been reporting on it. It's so insane that they're having their own full market collapse of the 40%. In a few weeks it'll be 50%. Today their whole stock market is two stocks, to be fair, Samsung and SK Hynix. So there's a reason, but it's really crazy to see what's going on. I don't know if you saw this, but they're weighing short selling ban, which, which we've seen before. I mean, really sad stories. They're putting cameras on bridges so that they can monitor, you know, potential suicides. If you looked, I think it was like 60% of these accounts were people that were 30 and younger. Right. Who have lost everything, including their rent money and the rest of retirees who sold their insurance and were like, it's just so crazy to me that this is happening in a vacuum over there while the rest of the world is still like, you know, dealing with their own financial markets. Crazy.
[25:27]
B
I mean, I think you're seeing, I mean my thesis on that is that you are going to see increasing regionalization. There used to be like a US Umbrella financially, right? Like all of these markets were very locked together, very US Focused. The US is where the growth happened, the US is where the investments happen. US capital markets were the most important in the world. You couldn't do anything without US markets. The issue is that because of some of what's happening geopolitically, I think that's fragmenting, right. You're starting to see countries have their own, more of their own issues. It used to be very like, you know, you'd have a specific meltdown about a specific thing. But I think you're going to see fragmenting of that hegemony we've had for the last 50 years. And you're seeing it in defense, but you're also seeing it in finance. And defense sense gets all the headlines. But the finance stuff is going to be very enduring as it starts to move in that direction. I think you're seeing some of that and you're seeing that regionalization of stock price performance. You're seeing over concentration in technology not being necessarily seen as a positive thing, especially with the amount of AI spend that's happening. I think you're seeing more interest in real assets, more interest in defense, more interest in building homegrown infrastructure across all of these different regions. And it's going to change the way markets interact with each other. It's a really fascinating time to be alive.
[26:49]
A
It really is. I mean it's, you know, and what blew my mind, I think I saw the numbers. It was like, I don't want to quote, misquote it, but maybe 600,000 individual Korean accounts had been liquidated, right?
[27:02]
B
Oh my God.
[27:03]
A
Which is a lot. But on 10, 10 in crypto last year on October 10, we had 1.1 million individual accounts in one day and 19.2 billion in leverage liquidated in a day. Just in crypto, which is like crazy to me that it's almost twice as many as this whole drawdown. We did it in one day. Just how bad that was for the crypto market that people maybe haven't absorbed that yet. Wild.
[27:32]
B
And I mean just a plug for crypto infrastructure that was done on an orderly basis. Oh yeah, that's interesting, right?
[27:41]
A
It hums along. You know, smart contracts actually work. Yes, but they didn't use for selling.
[27:48]
B
Used to. That's new, Right. Like think about the number of times we've had things go like really pear shaped and then you see Our infrastructure be able to handle that. That's again maybe odd. I mean not, not great from an investor perspective, but honestly, impressive.
[28:05]
A
Yeah, impressive. I'll never forget 2020. We talked about BitMEX before. It was March 12, was the bottom that Thursday, whatever it was, when Bitcoin broke below 6 and BitMEX had to scramble to unplug the servers to turn it down. So they didn't send Bitcoin to zero on their exchange that day because their order book was firing so many liquidations into basically an empty order book with no bid. That's not happening anymore, luckily.
[28:31]
B
No, no, that's not happening anymore. And that's a good thing. Means we're doing our jobs. And I think one of the, you know, something I, I think about a lot is, you know, we've moved towards real value in crypto, which is nice and I think it should tell you how big the industry is that like it's bigger than certain nations but than a lot of countries, actual stock markets. It's a big deal.
[29:03]
A
You know, there was, well, going back to the Fed, there was one more take that I loved that I just want to share because my friend Jeff Park July 31, 2007 was the day Bear Stearns liquidated its subprime mortgage portfolios, marking the beginning of the great financial crisis and the eventual birth of bitcoin. Today the 30 year yield passed 5.2%, the highest level of the year. And since that dramatic event, the time for Bitcoin is near. I mean it's.
[29:29]
B
Yeah, to me, yeah it says it all. It is crazy and it's a, it's such a cool for Bitcoin, it's such a fascinating moment. Like people actually care about monetary policy. Like all this conversation about inflation, that's a conversation about monetary policy. Nobody's cared about that before. It's been decades since anybody really looked at those types of things.
[29:52]
A
Yeah, I agree. Is there anything else on your radar at the moment that you're looking at or excited about?
[29:58]
B
I am very excited about a few things. I think I'm skeptical about some of the Fed's new positioning around how much information and how much forward casting it's going to continue to provide. I think that's going to result in more chop around interest rate decisions, which is going to be an interesting change and I think will have some peculiar impacts on dollar demand globally. Very excited about the potential for Bitcoin to kind of step up into that global reserve conversation and I think it will certainly continue to do so and I'm obviously looking at clarity. I think a lot. I think you need that in order to unblock the next chapter. And I am somewhat skeptical of it getting done in time.
[30:50]
A
I haven't I've had it at 5% chance personally since December. Markets have been at like 70. I've been at like 5% that it gets asked. I mean, we're just running out of time now, but I mean, I didn't share the story, but today it was Tillis and Gallego. So you have a Republican and a Democrat and they have come together to renegotiate some ethics language, which was a great headline. But they have to sell it to the White House and the Democrats still, which there's no evidence that has happened. Nobody's seen the language. And we have a week, you know, and by the way, it still has to go back to the House even if it passes the Senate.
[31:22]
B
So I think it's probably, my view is it's probably not getting done with this Congress. I think you're probably looking at the next one. I think it may still go ahead, which is interesting because of the need for the US to continue to own like geopolitically as a nation. The United States needs to continue to own a lot of financial infrastructure in order to maintain its kind of global positioning. So I don't think they're going to let it go that easily because it's important geopolitically. But I think you're going to see a lot more changes to it. And I think the provisions around interest on stables is going to be a major problem. I don't think the US can afford mass withdrawals from bank balance sheets. The deleveraging that that would imply is significant. And it turns out a lot of stablecoin activity is actually domestic, not international. It's not purely written. And I think that's going to open a lot of questions. And so the design and that is part of why I think you're seeing such stringent requirements around what stablecoin issuers can hold on balance sheet as a way of attracting foreign demand for Treasuries while not challenging the balance sheet health of local banks. And I think walking that line is going to be important. And weirdly, I think you can probably look at the EU digital Euro project to kind of see how central banks think about that at scale. There's a lot of parallels between the issues that these projects raise with each other. And I think you're going to probably not see clarity this year, probably see something probably called something else next Year probably put together by the Democrats, assuming that. Yeah, yeah, exactly.
[33:03]
A
That's the quiet part out loud, which I think Patrick Whit was screaming about that from the White House many months ago. And, you know, Clarity sort of stalled. He said, well, do you want the Clarity pact by the. Passed by this Congress or by Elizabeth Warren? And so, you know, if we do see a big regime change in either the House or the Senate or both, the Clarity act, to your point, look very different and maybe more. More like one that would have been penned by a Gary Gensler than a Paul Atkins. Right.
[33:32]
B
I wouldn't. I don't think it's going to go that far. I think the, the era of regulation by enforcement, I think the era of dismissal is done. I don't think that's coming back. But I do think you're going to see a lot of sensitivity around the ethics provisions. I think that will get worse, not better. And I think you're going to see a lot of sensitivity around what do stables hold and how is that going to impact bank balance sheets. And I think that is a, an open question. And a lot of the debate around it kind of refuses to call us Beta Spade, which is like, America needs healthy bank balance sheets.
[34:08]
A
Yeah.
[34:08]
B
It's not because the banks are, you know, holding all your interest and not paying.
[34:11]
A
Revise my statement. It'll look like something written more, more like it's written by Jamie Dimon than Larry Fink.
[34:17]
B
Yes, yes. That I would agree with.
[34:20]
A
The asset managers really are supporting Clarity act right now. The banks on the other side, if you want the kind of wall, Wall street bifurcation, they're not supporting the idea, right?
[34:31]
B
No, not at all. And I think that's going to be, that's going to be the main thing that comes through and it'll be a real challenge for, you know, tether and circle if that happens. But I don't know that it's necessarily going back to the original question of, like, how does that accrue to retail? Like, I don't know that it. I don't know that who your stablecoin issuer is impacts you that much.
[34:51]
A
No, I don't think so at all. All right, I'll feel you. Well, thank you so much for your time and for joining. I'm going to let you go and stay on for a couple more seconds before, but it was great to catch up again. I hope we can do this much sooner than.
[35:02]
B
Yeah, this is really fun.
[35:03]
A
Thank you so much. All right. There's one more thing that I wanted to share with you guys that I didn't want to make her suffer through, but it's just funny. And this video is going wildly viral, and I have some insight on it, so I just wanted to share it with you guys. This is a. Supposedly a South Korean trader, this girl, Ja do I believe is her name getting liquidated. Yeah. I'm just gonna show you the video, which is just crazy, but. All right, well, that's. That was like nails on a chalkboard. Okay. So I just. I happen to have a story. This is. This video is going around as the, like, calling card for what's happening in South Korea. I went to a dinner in Singapore at token 2049 with a certain crypto exchange that I will not name. And this girl to do was sitting across the table with me. She doesn't speak any English with her translator. And I start talking to her translator, and, like, so what does she do? And he's like, oh, she's an influencer. And her whole, like, act is that she pretends to get liquidated, and then she asks her predominantly male audience to send her money or sign up with her exchange link for trading. And she's made, like, I think, to my knowledge, tens of millions of dollars doing this. So this video is one of probably thousands of videos of this same girl doing the same thing. This is literally her entire identity is. I got liquidated, and I cry and I scream and then sign up with my link to help bail me out. So I just like to point out that everything you see on the Internet is not necessarily true. And I just. I had. I did, like, a quintuple take when I looked at that one, because I was like, I know her. That's not real. Because so many people, including John over here, he sent me that video. He was like, can you believe this? I was like, no, it's a lie. She's faking. All right, guys, that's all we've got for you today. A huge thanks to Ophelia for joining and allowing me to wear my 21 chairs t shirt. And I'll be back tomorrow, of course. And we got the Daily Wolf at noon, so I will see you guys soon. Thank you.
[37:37]
B
Watching for.

Summary7 min read

Podcast Summary: "Bitcoin Is FINALLY Decoupling From Wall Street – What's Happening?"

The Wolf Of All Streets with Scott Melker
Guest: Ophelia Snyder, Co-Founder of 21Shares
Date: July 30, 2026

Episode Overview

In this engaging conversation, Scott Melker and Ophelia Snyder explore the current state of Bitcoin, its evolving relationship with Wall Street, the macroeconomic shifts impacting crypto markets, and the broadening scope of blockchain in traditional finance. The discussion traverses recent developments such as the Fed’s stance, Bitcoin’s resilience, the surge of tokenization and prediction markets, institutional adoption, and the ongoing quest for regulatory clarity.

Ophelia shares an optimistic, nuanced view on the future of crypto, emphasizing utility, product market fit, and the maturing infrastructure—while Scott probes into how these trends affect both retail investors and the broader financial ecosystem.

Key Topics and Insights

1. Bitcoin’s Resilience and Decoupling from Wall Street

Fed’s Hawkish Pause: The Federal Reserve held rates steady, but the tone was hawkish, spurring volatility in traditional markets while Bitcoin remained unaffected ([01:58]).
- Scott: “At this moment, what could be viewed as bad news for bitcoin or crypto doesn't really move markets anymore... The negative narratives and things that should be moving us down aren’t, which makes me very bullish as well.” ([02:46])
Market Maturity: Both agree that the nervous hands—participants likely to sell on any news—are mostly gone, leading to relative price stability ([03:10]).

2. Ophelia’s Bullish Crypto Thesis

Structural Shifts:
- Bitcoin: Growing global rotation away from the dollar towards gold and alternative reserve assets, as central banks accumulate gold at record rates. This opens up discussions about what constitutes a reserve asset and how Bitcoin fits in the transition ([03:56]).
  - Ophelia: “As you start to shift around what reserve assets are being held, it opens the question, like, what makes a reserve asset?... That's a really interesting dynamic... quite good positioning for Bitcoin as you start to head into a reorganization of world trade.” ([04:20])
- Alts: Nations and regions seek financial and technological independence. The EU (with the ECB) sees reliance on US-dominated payment systems like Visa, Swift, as a national security risk, creating opportunities for neutral blockchain-based rails such as Ethereum and Solana ([05:40]).
  - Ophelia: “If not, you’re either going to just have multiple versions of proprietary tech operating, or maybe we end up in a world... they can use the same system very similar to the Internet. And that's great positioning for something like Ethereum and Solana...” ([06:28])

3. Tokenization and Institutional Adoption

Tokenization’s Impact: Major institutions like DTCC are working towards migrating their infrastructure to blockchain, promising efficiency, transparency, and new risk modeling—but the direct benefits to retail investors may be nuanced ([07:37]).
- Ophelia: “As people start to put more transactions on a blockchain that is intrinsically good for those chains. And so for the people that participate and hold in them and stake on them and miners and the rest of the ecosystem… That’s a huge net positive.” ([09:34])
The Utility Narrative: There is broad agreement that as utility becomes critical, only blockchains with true product-market fit will thrive; speculative tokens will face a “great culling” ([10:05]).

4. Valuation and Product-Market Fit in Crypto

Survival of the Fittest:
- Ophelia: “Anything that can confidently come up with something like an earnings per token is probably not a bad idea. Right. Like product market fit matters. You can’t hack your way out of product market fit.” ([10:51])
- She draws analogies to failed startups in other industries before they found the right application or market timing ([11:26]).

5. Prediction Markets, Perpetuals, and the Evolution of Finance

Boom of Prediction Markets: Robinhood’s prediction markets outpace their crypto revenue, validating appetite for simple, directional bets ([12:22]; [13:36]).
- Scott: “Their prediction markets already...are brand new and already 156 million...To me, it’s the most sort of final form of push the red button...” ([13:00])
- Ophelia: “The combination of prediction markets and some of what’s happening with Hyper Liquid is giving us this tiny little viewpoint into what the future of finance really looks like at scale... The line between public and private companies is getting blurred...the line...between finance and gambling—that’s also blurring.” ([13:49])
Everything App Race: Platforms like Robinhood and Hyper Liquid are expanding beyond crypto, targeting all markets; legacy institutions (Morgan Stanley, Schwab, E Trade) now offer crypto as the landscape converges ([17:09], [18:45]).

6. Institutional Access and the Crypto Retail Experience

Mass Onboarding: As major financial firms add crypto, retail access improves; this was the original vision of 21Shares ([20:00]).
- Ophelia: “Everything that's done well was about access... that is what built this first kind of generation of really scaled crypto players. The next generation...now it's about, okay, that's all really cool. All of these blockchains need to start actually doing the things they said they were going to do.” ([21:21], [21:49])

7. Macro, Geopolitics, and the Great Decoupling

Regionalization of Finance: U.S. dominance receding, leading to more regionalized markets (e.g., the crisis in South Korea) and a shift in how global macro affects local finance ([25:26]).
- Ophelia: “You're starting to see countries have their own, more of their own issues... you're going to see fragmenting of that hegemony we've had for the last 50 years...” ([25:26], [26:49])
Crypto Infrastructure Stress Test: Reflecting on the massive, orderly liquidations in crypto, Ophelia notes, “That was done on an orderly basis… our infrastructure was able to handle that... that’s honestly, impressive.” ([27:31], [27:48])

8. Regulation & Clarity on the Horizon

Fed, U.S. Congress, and Crypto Laws: Mixed outlook on pending legislation (the Clarity Act), with skepticism on whether it gets passed this year; regulatory debates center on stablecoin reserves and the balance between supporting banks and enabling new markets ([29:57]-[33:32]).
- Ophelia: “I think it’s probably not getting done with this Congress... The United States needs to continue to own a lot of financial infrastructure ...I don’t think they’re going to let it go that easily because it’s important geopolitically...” ([31:21])
- Scott: “Revise my statement. It’ll look like something written more, more like it’s written by Jamie Dimon than Larry Fink.”
  Ophelia: “Yes, yes. That I would agree with.” ([34:11])

Notable Quotes & Memorable Moments

On Bitcoin’s Macro Positioning:
Ophelia ([04:20]): "As you start to shift around what reserve assets are being held, it opens the question, like, what makes a reserve asset... that's a really interesting dynamic and quite good positioning for Bitcoin as you start to head into a reorganization of world trade."
On the Future of Utility:
Ophelia ([10:51]): “Anything that can confidently come up with something like an earnings per token is probably not a bad idea... Product market fit matters. You can't hack your way out of product market fit.”
On Prediction Markets:
Ophelia ([13:49]): “The combination of prediction markets and some of what's happening with Hyper Liquid is giving us this tiny little viewpoint into what the future of finance really looks like at scale, which is fascinating.”
On Crypto Infrastructure Resilience:
Ophelia ([27:48]): "Just a plug for crypto infrastructure: that was done on an orderly basis. That's interesting, right?... that's honestly, impressive."
On Regulatory Headwinds:
Ophelia ([31:21]): "I think it’s probably not getting done with this Congress... the United States needs to continue to own a lot of financial infrastructure in order to maintain its kind of global positioning."

Important Timestamps

01:58 — Fed meeting reaction and Bitcoin’s lack of movement
03:56 — Ophelia’s crypto bullishness and macro rotation away from dollar
07:37 — Implications of tokenization and institutional blockchain adoption
10:51 — Survival based on earnings-per-token and product-market fit
13:36 — Robinhood’s prediction markets—future of financial betting
17:09 — Platforms racing to become financial “everything apps”
20:00 — Institutional competition and mass onboarding to crypto
25:26 — Finance regionalization and South Korean market collapse
27:48 — Crypto’s orderly handling of mass liquidations
29:57 — Regulatory expectations and clarity act discussion

Tone and Style

The episode is conversational, insightful, and peppered with wit and candor—grounded in real-world data and lived industry experience. Both Scott and Ophelia balance skepticism with excitement, never shying from the messiness or complexity of modern crypto and finance.

Conclusion

This episode offers a deep, future-focused analysis of how crypto is shedding its dependency on Wall Street, why institutional and infrastructural integration matters, and what the next chapter of blockchain means for retail and institutional participants alike. Regulatory uncertainty looms, but Ophelia’s optimism about crypto’s evolution, the arrival of real product-market fit, and a maturing industry comes through loud and clear.

Loading summary

Transcript68 lines

[00:01]
A
Bitcoin is finally, potentially, maybe decoupling from Wall Street. Obviously yesterday the Fed held rates, but many viewed the meeting as hawkish. Markets all over the world, up, down volatility and Bitcoin effectively did nothing. I personally view that as good news. I'm curious to hear the thoughts of today's amazing guest. Co founder of 21Shares. I wore the T shirt. Co founder of 21Shares, Ophelia Snyder. Let's go.
[00:28]
B
That's dope. Let's dope.
[00:42]
A
Good morning, everybody. Happy Thursday. And I don't know where I am. I just never know what's gonna happen. My producers throw up something on the background to surprise me. And today, apparently I'm in a elvish forest with a waterfall. You're not in an elvish forest with a waterfall affiliate. Good morning.
[00:59]
B
Good morning. But I am jealous.
[01:01]
A
Of course you are. Everybody wouldn't want to be swimming in a waterfall while doing a YouTube stream. Yeah, we haven't done this in a long time. We realized before. So I think you pointed out the fact. Obviously there's been a lot, A lot has happened since we spoke last, which was recording and not live. So I apologize in advance, but I don't think ETFs had even launched.
[01:23]
B
I don't think so either. I think it was like right around then. But no, I don't think we'd had ETFs in the US yet.
[01:29]
A
Okay, so since then, obviously you are the co founder of 21 shares. We had the massive launch and you guys sold to Falcon X. So now you're free of your chains and living your best life, I would imagine.
[01:41]
B
Yes. And having a lot of fun because actually, I don't think I've ever been quite this bullish on crypto, which is maybe surprising to people, but I think it is the. Probably the best it's ever been, which is fascinating, given.
[01:53]
A
Let's talk about that because it's such an interesting. So maybe we'll just start with kind of the news. Even though it's.
[01:58]
B
Whatever.
[01:58]
A
We have the Fed yesterday, so many viewed this as a hawkish pause is sort of the term that they're being used. Three Fed governors dissented, which is not something we would see during the PAL era when he demanded consensus. Right. You'd always have a unanimous vote. I think he alluded to the fact that there will be no soft inflation target. We're going to get back to 2%, which immediately sent prediction markets for a hike actually soaring for September. And of course, the Dow was down massively. Oil Was up big. Korea is doing whatever Korea is doing, which is unrelated. If we could, we can get in a minute. But what I want to get at here is at this moment, it feels like we're in the place where what could be viewed as bad news for bitcoin or crypto doesn't really move markets anymore. And we've seen that sort of repeat repeatedly, I think, over the past few months. The best example of that, to me, honestly, was when Sailor sold a lot of bitcoin and bitcoin went up. Right. And so there was no, like, fear of him being the fourth seller anymore. But it feels like the negative narratives and things that should be moving us down aren't, which makes me very bullish as well.
[03:05]
B
It feels like bitcoin's oversold to some extent, and that's why it's reacting this way.
[03:10]
A
Right.
[03:10]
B
Like, the people who want out have gotten out at this pricing. There's a pretty decent equilibrium between people who want in and people who want out. And I think a lot of tolerance for macro chaos is building in the market to some extent, especially around crypto. I think we kind of get it and are maybe more used to it than other parts of the market are.
[03:33]
A
Yeah. It feels like we just don't have the nervous participants that are going to sell on any piece of news anymore. Like, we certainly had them and they sent us 60. You know, I just don't. I don't think they're here anymore. But maybe that's a good segue into what you said before, which is you're more bullish on crypto than ever, which I think would surprise probably a lot of people. So maybe you can give us your premise for that idea.
[03:56]
B
Yeah. So there's a few different things happening at the same time, which are really exciting to me. I think you're seeing around bitcoin specifically, and around alts, there are two different things happening, both of which I'm really excited about, independently of each other, and they're not really related, which is also fascinating. On the bitcoin side, I think you're seeing a rotation away from the dollar in reserve assets. That's why you're seeing growing stockpiles of gold. I think it's something like 75% of central banks and the World Gold Council's reports that they're planning on dollar exposure there. There we go. It is a very weird time from that perspective. But that's interesting because as you start to shift around what reserve assets are being held, it opens the question, like, what makes A reserve asset. And what are the historic conditions that led to the creation of the dollar? A lot of that as this kind of global reserve. A lot of that has to do with the petrodollar. And I think it's really interesting that there have been at least a couple of times in the Iran conflict where the idea of using Bitcoin to pay for oil or pay for fees associated with oil has come up. And if you're going to move away from the dollar, move towards gold, move towards other assets, and then be able to use some of those assets to purchase what government would see of as staples, that's a really interesting dynamic. And I actually think this dynamic that we're seeing of increased gold holdings, some kind of tapering in demand for Treasuries and that rotation away from the dollar, it's just a very interesting time and quite good positioning for Bitcoin as you start to head into a reorganization of like world trade. So I think that's what's interesting about Bitcoin right now. I think on the alt side, America has been the provider of last resort for a lot of technology for the world in defense, which everybody is talking about, but also in finance, right? Visa, MasterCard, American Express, Swift, these are American companies that provide basically the payments infrastructure for the world. And the ECB came out saying, you know, this, this may actually be a national security risk. And you've seen things like the digital euro, you've seen concerted projects towards building more locally grown infrastructure, not just in the military sector, but also in finance. If you're going to do that, it's a really interesting opportunity for capital markets technology, capital markets infrastructure and payments to move closer to neutral rails. Because if not, you're either going to just have multiple versions of proprietary tech operating, or maybe we end up in a world where even if people don't agree politically, they can use the same system very similar to the Internet. And that's great positioning for something like Ethereum and Solana heading into the next five years. Things that are awesome, right?
[06:44]
A
That's interesting because something I've been discussing, and I like your take on it, is that we have this world where tokenization is obviously going to dominate. Things are going to be faster and cheaper and they're going to use blockchain rails for all these systems. But the question of whether that will actually be investable or beneficial to your average retail crypto investor who's been here for a long time, kind of the idea that they could create these things in walled gardens, right? And you'll have JP Morgan doing their private transfers on a blockchain, but that's not going to benefit me. And then of course, the big one, which is the DTCC announcement. They settle 4.5 quadrillion in volume or something a year, and they've made a humongous push. They're actively testing it. They've said that they think it could happen by the end of 2026 to basically move everything onto blockchain rails. But, okay, if that's just the replacement of their plumbing, how does that help us? Right?
[07:38]
B
I think it does. The issue is you can't move capital markets without dealing with all of this legacy plumbing. I think crypto as an industry has a tendency to think about things from a retail perspective, right? So you think about buying and selling stock stocks, because that's basically the only capital markets function that a retail person is going to deal with, right? Buying and selling stocks, buying and selling fixed income. The reality is that plumbing is significantly more complex than that, right? You're talking about, you're talking about rehypothecation. There's repos behind it, there's securities lending behind it, there's collateral management behind it. There's a lot of stuff that happens other than buy, sell, hold, especially as you get into more sophisticated groups. And there's a bunch of reasons why those are important, right? Like leverage is important. When you start to take leverage down, you're going to suck liquidity out of systems. And so that is a reality of financial infrastructure. And so when you see all of this plumbing updates, that's actually really important because right now your average broker dealer is not going to be able to integrate a, you know, fully tokenized system that, by the way, is going to trade on a Saturday. And you need risk management for a Saturday because these positions are now liquid, so some are more tradable. But that also means that you could have a spike on a Saturday. And so now you need to monitor that because your collateral positions are tied to it. It changes a lot about your operating cadence. It changes a lot about your risk modeling. And that all requires significant plumbing updates from things that have, like, very little to do with retail markets. The way that accrues is that at the end of the day, usage is a good thing, right? Transaction fees on blockchains are a good thing for blockchains, demand for tokens is a good thing for token pricing. As people start to put more transactions on a blockchain that is intrinsically good for those chains. And so for the people that participate and hold in them and stake on them and miners and the rest of the ecosystem. That's a tough around it. I think that's the mechanism through which it's going to occur to people. But I think the fundamental thing is it's actually a very bullish sign when you see them doing these things because at the end of the day you need that infrastructure. Central clearing is important for wide range of participants. For a bunch of reasons nobody wants to get rid of it. Seeing it migrate onto this technology is a huge net positive.
[10:05]
A
Yeah. I think the prevailing narrative obviously is that we're in a world where utility matters and people need to actually value things. And that makes a lot of sense. And I think that's probably exceptionally bullish for crypto, just maybe not for 9 million of the tokens that currently exist. Right. Which so I think we're going to see a great culling. I think most people agree with that. But as you said, kind of the top end layer ones I think are going to capture massive value and then there are probably others. I don't own it, but forever regret it. But hyper liquid and things like this that are actually people can look at the tokenomics and understand how to value it. They can look at the volume and understand that it's a real thing. Right. So maybe your takes on what else outside of sort of the layer one blockchains could perform well in this new environment.
[10:52]
B
I mean I think anything that can confidently come up with something like an earnings per token is probably not a bad idea. Right. Like product market fit matters. You can't hack your way out of product market fit. And there's a lot of these chains that are, a lot of this is like early stage vc. Not everything is going to find product market fit. That doesn't mean as an industry it's duped. It means that, you know, Juicero was a real thing, it raised a lot of money, it tried to do something, it turned out you could squeeze the packets by hand, you didn't need this thing. And there wasn't really a product market fit for a $700 juicer. That is a reality. And I suspect there will be similar things in crypto where it's like, yeah, that sounds great, but this doesn't work. Or like another example would be webvan. Right. Like not a bad idea. Delivery actually works really well now. They went about it in like a very infrastructure heavy way with a lot of costs baked in. Didn't work. Good idea. Execution didn't work. Both of them not great. Product market fit Wrong timing, wrong execution, wrong management of their cap table didn't work out. And I suspect crypto is heading towards a reckoning on some of these topics. I think we historically have existed in a world where if you pay somebody to press a red button and they press it, that seems like product market fit. Turns out they may just like making money. That doesn't mean they enjoy pressing that red button or that they're getting value beyond what you're paying them.
[12:15]
A
That is a great segue to the next thing. But yeah, finish up. Sorry.
[12:18]
B
No, no, please. That was the end of it. Is that. Yes, product market, but it matters.
[12:23]
A
It does. And so like obviously Robinhood chain has been somewhat the narrative of the past few weeks and I think that it's interesting that they're taking a lot of the lessons that we just sort of described and bringing it to a non crypto market. And you know that that earned product for them at you know, 7% yield. Six or seven. I think it's 7% yield. You know, they're having hundreds of thousands of customers who just see it in the app and click, yeah, I want to earn 7%. Right. So a great product market fit. And they reported earnings yesterday. And I found this just absolutely fascinating as I dug into it. I don't know if you saw these numbers but, but they basically did 300 odd million on options, which I guess is not surprising. They did 156 on prediction markets which are brand new on there and only 100 in crypto and stocks were in between 130 something. So their prediction markets already, which to me is the most sort of final form of push the red button that you just described, like I can make a directional bet, yes or no, with my actual money and express a view by pushing a button. I don't need to know like the token, the tokenomics or earnings. Right. This is exploding that exact phenomenon which is I want to push a button and try to make money.
[13:37]
B
Yes. I think the difference here is you're not getting paid to push the button. You're getting paid based on like expressing your view in some way. People like making money. Yes. But I think like giving people tokens for free because they use your application is a little different. I think that's what crypto is getting. I think prediction markets. Prediction markets are actually giving. I think it's fascinating that they are. The combination of prediction markets and some of what's happening with Hyper Liquid is giving us this like tiny little viewpoint into what the future of finance really looks like at Scale, which is fascinating. Which is like the line between public and private companies is getting blurred because you can take directional bets on prediction markets or in derivatives markets ahead of things like IPOs. We see that with SpaceX. We're seeing that with some of the big like AI labs. That is fascinating and brand new. You're seeing the line of like where, where is. What is the difference between finance and gambling? That's also blurring, which is fascinating in its own right. Like the idea that you could do things like make directional bets on the weather. I mean that always existed in institutional world because for, you know, in, in insurance on things like crop yields, like these things exist. It's fascinating now to see everybody have access to that. I think the prediction markets are very, a very simplified version of derivatives on almost anything you want to invest in. It's sort of like perps also, which is like a very crypto native thing. And we're seeing those change what finance looks like. This was kind of always the dream. I don't know why the industry's not more excited about this. This was the dream. You want to change the phase of finance? We're doing it. Look at this. We've got perps all over the place. We've got prediction markets all over the place. We've got all the major infrastructures coming, players coming onto blockchain. Like this was the whole point, right. But it somehow doesn't seem to have connected with the industry because price are
[15:27]
A
down, nobody cares about anything. It's literally, it's a very simple. Right. There's no better marketing for Bitcoin than bitcoin going up. Right? So and then everything that we talk about in the depths of the bear market that we say are amazing all of a sudden become narrative six months down the road when prices or higher and people. How did I miss the fact that, you know, perpetual swaps are now on every asset and that was something that was created by Arthur and friends at Bitmex. And by the way, some irony, the fact that Bitmex goes out of business in the very time that their most like compelling feature gets adopted worldwide is really bananas.
[16:01]
B
I mean, I suspect, like look there, I mean you saw that in like tech also, right? Like think about what I just said about webvan. Like, yeah, that that happens. It's like sucks. Like getting the timing right is really important.
[16:13]
A
Yeah, I mean there were, there were ride sharing apps before iPhones that didn't exactly blow up like Uber. Right. So I mean timing and product market fit, as you said, are very Important. It makes me wonder when we have this convergence though. So, right. You know, prediction markets coming together with perps, you can do it decentralized on a weekend, 24, 7, 365 on hyper liquid, but soon on other markets. I mean, the CME, they're going what, 23, 6 and they're offering now individual stock futures contracts which they haven't tried since 2002. Everybody is trying to become the Everything app, right? Robinhood actually doing probably a very good job of it. Coinbase has earnings today and we know that they're going to see a massive decline in trading. What does this mean for Coinbase, who also now is doing prediction markets? I'm really curious to see how much they've grown in the non crypto trading venues in this quarter.
[17:10]
B
And I don't know. The way I see it is I think Hyper Liquid done a really good job of this, right? Which is that, yeah, they, they do stuff with crypto and that's cool. But like most of what they're trying to do is not crypto at this point, right. And like even the way you see volumes shifting like they are, like most of the future of Hyper Liquid, I think is not, I don't think it's, it doesn't. Like bitcoin futures does matter, like that's fine, but irrelevant. I think most of what they're going to be used for is everything else. Because even if crypto is amazing, everything else is still bigger, right? Like, everything else includes every oil tanker in the world, every credit card payment in the world, every, you know, iPhone that's sold. I mean, it's just every toy, every gym bag. I mean, you're talking about just a massive volume of stuff. And all of that is financialized in some way. And so I think one of the things the industry is struggling with, understandably, is it's great if you have a strong presence in crypto, that, that can be a wonderful base to do something. But you need to deal with all this other stuff, especially now that you're starting to see, you know, consolidated players and more efficient capital markets on the back. Like you don't get the same. You know, back in the day, we used to have much bigger pricing discrepancies across different markets, but now you have market makers that are kind of key, keeping that more in line. You're seeing less drift geographically, you're seeing better infrastructure. And so I think we're at a reckoning also there from four exchanges, especially retail exchanges, like, how are you going to compete? Because what is the incentive for somebody to say, hey, you know what, I already have Robinhood, let me also open a Coinbase.
[18:46]
A
Yeah, I think we're. And that I think extends, as you said, to the legacy players in stock market as well. Morgan Stanley just launched Bitcoin, Ethereum, Solana Trading and then they just launched yesterday, ethereum and Solana ETFs which come in, you know, something probably near and dear to your heart. They come in at 14 bips, right? To like undercut the market. Everything is becoming everything to everyone. You know, Schwab has crypto trading, but like they, you know, once money leaves your Charles Schwab account to go to Coinbase because he wanted to buy Bitcoin and couldn't do it on Schwab, that money doesn't come back, right?
[19:20]
B
No, it doesn't.
[19:22]
A
Those institutions have to be cognizant of this massive rise of equipment. So like even we have the prediction markets of perpetual swaps and Robinhood and Coinbase and all these sort of degenerate native and crypto native coming together. But you also have the Schwab's and the Morgan Stanley's, you know, bringing E Trade and Schwab and all those together and needing to compete in the exact same place.
[19:43]
B
But then it goes back to like, how is this good for the average participant in the crypto market? This is amazing. Like you, you want demand for Bitcoin, Think about the number of users that that represents. I mean, Morgan Stanley has some of the largest like wealth management platforms. They're, they're a wirehouse. I mean, that's the whole point is
[20:01]
A
how do you think is 15 or 16,000 and they have 9 million customers on E Trade alone.
[20:06]
B
Right, Exactly. So like, how do you think about onboarding people? It's interesting because it was actually the original premise for 21 shares. Like back in the day, back before any of this was possible nine years ago, what we were telling our clients was like, look, your customers are going to take their money off of your platform to buy Bitcoin whether you like it or not. That is what is going to happen. And so we can offer you a tool to let, to keep that money on platform. And by the way, let your customers come into Bitcoin. We used to tell brokerages this all the time. A bunch of them did it. A lot of those people did not have those assets leave their platforms to the tune of hundreds of billions of dollars or euros. And now it seems like the rest of the world is catching up to that, which is the reality. And by the way, how these big platforms have always worked, right? They, they offer everything, they offer everything to their customers. Doesn't mean they're going to recommend it to them. It doesn't mean they think it's a great investment this minute, but they offer all of it so that they can keep assets on platform. But ultimately that's not a bad thing for retail investors in crypto.
[21:06]
A
It's actually probably more access for everybody. Can't be a bad thing. That was sort of the premise of crypto. I think people just get frustrated if that comes at in a way that they can't financially capitalize from it in the way that they imagine that they would. But yeah, it's definitely good news.
[21:22]
B
And I would maybe go even like a step further, which is, I think the last 10 years have been like the battle for access. That was it. Everything that's done well was about access. Right. Different frameworks of how you define that. But like Coinbase access products, right?
[21:44]
A
Couldn't get bitcoin anywhere else, right? So they, they got you bitcoin and that was their business.
[21:50]
B
21 shares was the same thing. The whole, this is how do we get you access to this thing that you can't buy so that there are more participants? That was the thesis. And if you look at it, I mean, even something like blockfi, like, even things that didn't work, that was a lot of the central tenet, right? The finances of the world. That is what built this first kind of generation of really scaled crypto players, the next generation. And you said this at the beginning, now it's about, okay, that's all really cool. All of these blockchains need to start actually doing the things they said they were going to do. Ten years is a really long time to live on vision. Like, show me the numbers, right? These are now growth stage companies. They're not, they're not series A companies where you can sell a vision. And it's great. This is now like, okay, show me the money. And you can see things like hyper liquid that can actually show that, that are doing really well. But that's a normal, healthy market behavior.
[22:40]
A
Yeah. When you think about sort of the. I've never been more bullish on crypto, which is scary notion that you gave earlier. Imagine when price just simply goes up. If we do like, I think if we're being intellectually honest, you know, people just get excited when bitcoin is higher. It's the old meme, you know, 126,000 bitco, everybody's lined up 60,000 bitcoin, there's nobody at the door. Imagine then when everybody has access to it, the second that they want it for the first time, when price is going up, which we've never had before,
[23:12]
B
we've never had that. And all of this utility stuff, all of this product market fit stuff that we've been talking about, that is narratives, Right? Like right now, crypto doesn't have a super strong, easy to articulate, easy to show proof point points of narrative. It's all really complicated, right? It's all like back end capital markets, infrastructure and global macro. And then you have something like AI, which is to some extent, I think, easier to understand right now. Right. And the numbers are more transparent and you can really see the money and where it's going. And then even that narrative now seems to be cooling. Right. See what happened with Meta, right? The AI spend for AI spend is not being seen as a global panacea. Even that narrative is starting to cycle. And that's good, that's normal, healthy markets. And right now the crypto narratives aren't getting as much traction, but what's happening is the actual work is being built for it. And to some extent I think that's really a good sign. If you can see the real work being done and you can see all of those wins getting notched, that's kind of the foundational positioning for the next bull run.
[24:25]
A
Yeah. The only problem might be that we don't have the South Koreans left with any money assets like they've done in the past. I've been reporting on it. It's so insane that they're having their own full market collapse of the 40%. In a few weeks it'll be 50%. Today their whole stock market is two stocks, to be fair, Samsung and SK Hynix. So there's a reason, but it's really crazy to see what's going on. I don't know if you saw this, but they're weighing short selling ban, which, which we've seen before. I mean, really sad stories. They're putting cameras on bridges so that they can monitor, you know, potential suicides. If you looked, I think it was like 60% of these accounts were people that were 30 and younger. Right. Who have lost everything, including their rent money and the rest of retirees who sold their insurance and were like, it's just so crazy to me that this is happening in a vacuum over there while the rest of the world is still like, you know, dealing with their own financial markets. Crazy.
[25:27]
B
I mean, I think you're seeing, I mean my thesis on that is that you are going to see increasing regionalization. There used to be like a US Umbrella financially, right? Like all of these markets were very locked together, very US Focused. The US is where the growth happened, the US is where the investments happen. US capital markets were the most important in the world. You couldn't do anything without US markets. The issue is that because of some of what's happening geopolitically, I think that's fragmenting, right. You're starting to see countries have their own, more of their own issues. It used to be very like, you know, you'd have a specific meltdown about a specific thing. But I think you're going to see fragmenting of that hegemony we've had for the last 50 years. And you're seeing it in defense, but you're also seeing it in finance. And defense sense gets all the headlines. But the finance stuff is going to be very enduring as it starts to move in that direction. I think you're seeing some of that and you're seeing that regionalization of stock price performance. You're seeing over concentration in technology not being necessarily seen as a positive thing, especially with the amount of AI spend that's happening. I think you're seeing more interest in real assets, more interest in defense, more interest in building homegrown infrastructure across all of these different regions. And it's going to change the way markets interact with each other. It's a really fascinating time to be alive.
[26:49]
A
It really is. I mean it's, you know, and what blew my mind, I think I saw the numbers. It was like, I don't want to quote, misquote it, but maybe 600,000 individual Korean accounts had been liquidated, right?
[27:02]
B
Oh my God.
[27:03]
A
Which is a lot. But on 10, 10 in crypto last year on October 10, we had 1.1 million individual accounts in one day and 19.2 billion in leverage liquidated in a day. Just in crypto, which is like crazy to me that it's almost twice as many as this whole drawdown. We did it in one day. Just how bad that was for the crypto market that people maybe haven't absorbed that yet. Wild.
[27:32]
B
And I mean just a plug for crypto infrastructure that was done on an orderly basis. Oh yeah, that's interesting, right?
[27:41]
A
It hums along. You know, smart contracts actually work. Yes, but they didn't use for selling.
[27:48]
B
Used to. That's new, Right. Like think about the number of times we've had things go like really pear shaped and then you see Our infrastructure be able to handle that. That's again maybe odd. I mean not, not great from an investor perspective, but honestly, impressive.
[28:05]
A
Yeah, impressive. I'll never forget 2020. We talked about BitMEX before. It was March 12, was the bottom that Thursday, whatever it was, when Bitcoin broke below 6 and BitMEX had to scramble to unplug the servers to turn it down. So they didn't send Bitcoin to zero on their exchange that day because their order book was firing so many liquidations into basically an empty order book with no bid. That's not happening anymore, luckily.
[28:31]
B
No, no, that's not happening anymore. And that's a good thing. Means we're doing our jobs. And I think one of the, you know, something I, I think about a lot is, you know, we've moved towards real value in crypto, which is nice and I think it should tell you how big the industry is that like it's bigger than certain nations but than a lot of countries, actual stock markets. It's a big deal.
[29:03]
A
You know, there was, well, going back to the Fed, there was one more take that I loved that I just want to share because my friend Jeff Park July 31, 2007 was the day Bear Stearns liquidated its subprime mortgage portfolios, marking the beginning of the great financial crisis and the eventual birth of bitcoin. Today the 30 year yield passed 5.2%, the highest level of the year. And since that dramatic event, the time for Bitcoin is near. I mean it's.
[29:29]
B
Yeah, to me, yeah it says it all. It is crazy and it's a, it's such a cool for Bitcoin, it's such a fascinating moment. Like people actually care about monetary policy. Like all this conversation about inflation, that's a conversation about monetary policy. Nobody's cared about that before. It's been decades since anybody really looked at those types of things.
[29:52]
A
Yeah, I agree. Is there anything else on your radar at the moment that you're looking at or excited about?
[29:58]
B
I am very excited about a few things. I think I'm skeptical about some of the Fed's new positioning around how much information and how much forward casting it's going to continue to provide. I think that's going to result in more chop around interest rate decisions, which is going to be an interesting change and I think will have some peculiar impacts on dollar demand globally. Very excited about the potential for Bitcoin to kind of step up into that global reserve conversation and I think it will certainly continue to do so and I'm obviously looking at clarity. I think a lot. I think you need that in order to unblock the next chapter. And I am somewhat skeptical of it getting done in time.
[30:50]
A
I haven't I've had it at 5% chance personally since December. Markets have been at like 70. I've been at like 5% that it gets asked. I mean, we're just running out of time now, but I mean, I didn't share the story, but today it was Tillis and Gallego. So you have a Republican and a Democrat and they have come together to renegotiate some ethics language, which was a great headline. But they have to sell it to the White House and the Democrats still, which there's no evidence that has happened. Nobody's seen the language. And we have a week, you know, and by the way, it still has to go back to the House even if it passes the Senate.
[31:22]
B
So I think it's probably, my view is it's probably not getting done with this Congress. I think you're probably looking at the next one. I think it may still go ahead, which is interesting because of the need for the US to continue to own like geopolitically as a nation. The United States needs to continue to own a lot of financial infrastructure in order to maintain its kind of global positioning. So I don't think they're going to let it go that easily because it's important geopolitically. But I think you're going to see a lot more changes to it. And I think the provisions around interest on stables is going to be a major problem. I don't think the US can afford mass withdrawals from bank balance sheets. The deleveraging that that would imply is significant. And it turns out a lot of stablecoin activity is actually domestic, not international. It's not purely written. And I think that's going to open a lot of questions. And so the design and that is part of why I think you're seeing such stringent requirements around what stablecoin issuers can hold on balance sheet as a way of attracting foreign demand for Treasuries while not challenging the balance sheet health of local banks. And I think walking that line is going to be important. And weirdly, I think you can probably look at the EU digital Euro project to kind of see how central banks think about that at scale. There's a lot of parallels between the issues that these projects raise with each other. And I think you're going to probably not see clarity this year, probably see something probably called something else next Year probably put together by the Democrats, assuming that. Yeah, yeah, exactly.
[33:03]
A
That's the quiet part out loud, which I think Patrick Whit was screaming about that from the White House many months ago. And, you know, Clarity sort of stalled. He said, well, do you want the Clarity pact by the. Passed by this Congress or by Elizabeth Warren? And so, you know, if we do see a big regime change in either the House or the Senate or both, the Clarity act, to your point, look very different and maybe more. More like one that would have been penned by a Gary Gensler than a Paul Atkins. Right.
[33:32]
B
I wouldn't. I don't think it's going to go that far. I think the, the era of regulation by enforcement, I think the era of dismissal is done. I don't think that's coming back. But I do think you're going to see a lot of sensitivity around the ethics provisions. I think that will get worse, not better. And I think you're going to see a lot of sensitivity around what do stables hold and how is that going to impact bank balance sheets. And I think that is a, an open question. And a lot of the debate around it kind of refuses to call us Beta Spade, which is like, America needs healthy bank balance sheets.
[34:08]
A
Yeah.
[34:08]
B
It's not because the banks are, you know, holding all your interest and not paying.
[34:11]
A
Revise my statement. It'll look like something written more, more like it's written by Jamie Dimon than Larry Fink.
[34:17]
B
Yes, yes. That I would agree with.
[34:20]
A
The asset managers really are supporting Clarity act right now. The banks on the other side, if you want the kind of wall, Wall street bifurcation, they're not supporting the idea, right?
[34:31]
B
No, not at all. And I think that's going to be, that's going to be the main thing that comes through and it'll be a real challenge for, you know, tether and circle if that happens. But I don't know that it's necessarily going back to the original question of, like, how does that accrue to retail? Like, I don't know that it. I don't know that who your stablecoin issuer is impacts you that much.
[34:51]
A
No, I don't think so at all. All right, I'll feel you. Well, thank you so much for your time and for joining. I'm going to let you go and stay on for a couple more seconds before, but it was great to catch up again. I hope we can do this much sooner than.
[35:02]
B
Yeah, this is really fun.
[35:03]
A
Thank you so much. All right. There's one more thing that I wanted to share with you guys that I didn't want to make her suffer through, but it's just funny. And this video is going wildly viral, and I have some insight on it, so I just wanted to share it with you guys. This is a. Supposedly a South Korean trader, this girl, Ja do I believe is her name getting liquidated. Yeah. I'm just gonna show you the video, which is just crazy, but. All right, well, that's. That was like nails on a chalkboard. Okay. So I just. I happen to have a story. This is. This video is going around as the, like, calling card for what's happening in South Korea. I went to a dinner in Singapore at token 2049 with a certain crypto exchange that I will not name. And this girl to do was sitting across the table with me. She doesn't speak any English with her translator. And I start talking to her translator, and, like, so what does she do? And he's like, oh, she's an influencer. And her whole, like, act is that she pretends to get liquidated, and then she asks her predominantly male audience to send her money or sign up with her exchange link for trading. And she's made, like, I think, to my knowledge, tens of millions of dollars doing this. So this video is one of probably thousands of videos of this same girl doing the same thing. This is literally her entire identity is. I got liquidated, and I cry and I scream and then sign up with my link to help bail me out. So I just like to point out that everything you see on the Internet is not necessarily true. And I just. I had. I did, like, a quintuple take when I looked at that one, because I was like, I know her. That's not real. Because so many people, including John over here, he sent me that video. He was like, can you believe this? I was like, no, it's a lie. She's faking. All right, guys, that's all we've got for you today. A huge thanks to Ophelia for joining and allowing me to wear my 21 chairs t shirt. And I'll be back tomorrow, of course. And we got the Daily Wolf at noon, so I will see you guys soon. Thank you.
[37:37]
B
Watching for.

Bitcoin Is FINALLY Decoupling From Wall Street - What's Happening?

Bitcoin Is FINALLY Decoupling From Wall Street - What's Happening?

Podcast Summary: "Bitcoin Is FINALLY Decoupling From Wall Street – What's Happening?"

Episode Overview

Key Topics and Insights

1. Bitcoin’s Resilience and Decoupling from Wall Street

2. Ophelia’s Bullish Crypto Thesis

3. Tokenization and Institutional Adoption

4. Valuation and Product-Market Fit in Crypto

5. Prediction Markets, Perpetuals, and the Evolution of Finance

6. Institutional Access and the Crypto Retail Experience

7. Macro, Geopolitics, and the Great Decoupling

8. Regulation & Clarity on the Horizon

Notable Quotes & Memorable Moments

Important Timestamps

Tone and Style

Conclusion

Podcast Summary: "Bitcoin Is FINALLY Decoupling From Wall Street – What's Happening?"

Episode Overview

Key Topics and Insights

1. Bitcoin’s Resilience and Decoupling from Wall Street

2. Ophelia’s Bullish Crypto Thesis

3. Tokenization and Institutional Adoption

4. Valuation and Product-Market Fit in Crypto

5. Prediction Markets, Perpetuals, and the Evolution of Finance

6. Institutional Access and the Crypto Retail Experience

7. Macro, Geopolitics, and the Great Decoupling

8. Regulation & Clarity on the Horizon

Notable Quotes & Memorable Moments

Important Timestamps

Tone and Style

Conclusion