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The Wolf Of All Streets
Bitcoin Rebounds Massively after Bloodbath | Crypto Town Hall
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Bitcoin Rebounds Massively after Bloodbath | Crypto Town Hall
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- [00:00]
Scott
Morning, Everybody. Happy Tuesday, January 14th here at 10:20am Eastern Standard Time. Welcome to Crypto Town Hall. We do this every single weekday at 10:15am Eastern Standard Time. And what a difference a day can make. Bitcoin rebounds massively. After bloodbath yesterday, we were lamenting price action dropping below 90,000. It had just happened around 9:40am about 30 minutes before the show. And we had calls for 75 and 70 and 80 and 85. Now you go on X and we're quoting Tom Lee heading straight to $250,000. So by the way, both of those things can happen. We could easily see 80,000 this year and $250,000 this year. So I think that it's all about time frame. But incredible to see how fast sentiment shifts in the crypto space within hours. Actually, yesterday we were, I think below 90,000 and then back to roughly 93, if I remember correctly, maybe within one hour. So clearly moral of the story, whether the bottom is in here or not, there was a hell of a lot of liquidity and buying action, just around $90,000. And that's the kind of rebound and reaction you want to see from a level like that if you are bullish and believe that you are in a bull market. Before I jump into the panel, I just want to review a couple news stories. Always forget to do this, but after all, this is supposed to be a news and breaking news show. I think one of the stories obviously was Trump preparing several crypto executive orders on day one. The one that people talking about the most will be the overturn of SAB121. For those who don't remember, that was the absurd memo from the sec. Not even a law. But before Chevron was overturned, you might remember that the regulators in the United States were allowed to just say stuff and act as if they were the law passed by Congress, not the case. But SAB121 was the directive that said that anyone custodying bitcoin, any institution, would have to list it as a liability rather than an asset. Meaning that let's say they wanted to custody an ETF that had $10 billion. If they were going to put 10 billion DOL on the balance sheet, they had to write it up, put it as a liability, which meant they had to somehow have $10 billion in cash on the other side of the balance sheet. Absolutely absurd. Impossible. Stupid rule. Congress agreed, Senate agreed, they both passed and then Biden vetoed it. For those who don't recall, which made absolutely no sense. While Trump saying he's going to fix that on day one with an executive order, some nice house cleaning. That should allow the larger institutions to participate in bitcoin and to custody it. You might also remember that somewhere in there there was an exemption given to bank of New York Mellon. If you were ever curious as to whether the SEC in the United States government picks winners, that was very clear evidence that was happening. Other big stories tether moving headquarters from the British Virgin Islands to El Salvador. We have Meta's board advised to buy bitcoin with Treasury. Nobody necessarily expected that to happen. The largest bank In Italy buys 11 bitcoin $1 million euro €1 million worth of bitcoin. About 1.03 million dol that they're testing it but this is the biggest bank in Italy adding bitcoin to their balance sheet. So we are seeing this happening all over the world. Of course we have BlackRock's Bitcoin ETF launching in Canada. We had a report by BlackRock saying that Bitcoin adoption is outpacing the phones phones and Internet. And of course finally, maybe this is the best one for triggering givings coinbase. Excuse me. Elizabeth Warren encouraging bent to be strict on crypto. Guy hasn't even gotten his job yet and Elizabeth Warren is already is already in the peanut gallery screaming from the sidelines from her place of irrelevance that the treasury needs to crack down on crypto. Of course we had JP Morgan CEO Jamie Dimon effectively saying the same yesterday. Okay, I know that was a lot but it gives us our five minute summary. Let's first dig into what's happening here with the market and then we can move on to some of the bigger issues and the stories. I mean Dave, we were sitting here Yesterday, it was 90,000, depression, it was 90,000. We were excited. It was 89, 500. We were going to $5 immediately. And here we are back, you know, trading 96, $97,000 and in the range.
- [04:42]
Dave
So I can't talk for long. I'm on a boat actually with friends. But we're still in the no wake zone. So you can hear me. But all I want to say is what I said yesterday is still true. We're in a range. We are likely to stay in said range until the inauguration and we see what he does. Panic is silly. Panic is for losers. And people like you who bought on the dip are going to be happy at the end. And in a trading market, this is what you expect. The direction is up until proven otherwise is really the point. I was saying it Yesterday and I was happy. I was in another space in the afternoon and I made the point that I was so glad that all three speakers before me were all bearish saying oh my God, doom and gloom, crowing about their shorts, etc. Etc. And yeah, I mean, you know, when I, when I hear stuff like that I just laugh and it just, it made me feel good. My exact words were I'm happy that everybody's bearish because I always get nervous when everyone agrees with me.
- [05:45]
Scott
His actual words were have fun staying poor. I think is what he said. No, Dave, no, no, I don't like, I'm kidding, I'm kidding.
- [05:52]
Dave
I don't like that. Nobody does. But, but the, but the, but the point for the listeners is listen, if you have a thesis, unless something changes, don't get yourself shaken out of it. Meaning set your stops in a place where, where if you're doing a short term trade then set your stops tight and if you're doing a long term trade then just don't be over leveraged. It's really that simple. And, and you know as many times as we all repeat that people keep falling into it. Look at how much got liquidated yesterday and yet today if you look liquidations on the short side, despite the fact that we're way higher than we were when the liquidation started is still less. So people keep going long and getting liquidated and the shorts are generally smarter and are not quite as crazy.
- [06:36]
Scott
Makes sense. I can hear the captain in the background. So we're going to let you go do your boating while all of us freeze elsewhere in the world. Paul, Fis. The two of you obviously technical analysts watching the market maybe Paul, first give your take and then Fis.
- [06:53]
Paul
Hey Mark.
- [06:55]
Scott
Go ahead Paul.
- [06:55]
Fis
Sorry.
- [06:56]
Scott
Yep.
- [06:57]
Paul
Hey Scott. Sorry. Yeah, no, I, I've been just following the, the, the rates markets and and you know that's where my you know, expertise is and, and my concerns like I just view it as you know, looking at the, I guess federal budget and I talk I said this on another spaces like pre Covid we were out of a four and a half trillion kind of budget post Covid. At Covid we were at seven plus trillion. And the question is what does the new administration coming in? Are they going to go back to that 4 plus, you know, $4 trillion budget or kind of like stick at the 7 trillion. That's really kind of thing affecting rates and ultimately you know, people losing, you know the, the people losing interest in dollar and, and focusing on Bitcoin. So you know it's that kind of. I don't see the government really like stepping back. I just think it's going to be too much. So you know we'll continually see rates higher, inflation higher and then kind of a need for bitcoin. So you know that's the only thing I'm kind of looking at like right now these days.
- [08:06]
Scott
Pause.
- [08:10]
Gaurav
Thanks guy. Yeah, I mean it's a tale as all the time isn't it? You know, people capitulating at what is effectively support range lows weekends transferring money to diamond hands or those who had conviction all along or more conviction at least than those who sold. I mean I said it a number of maybe not the last call but the call before that. I felt like BTC was just setting up for a range. There was an interesting fractal that I pulled a few times going back to January and December of, of just a year ago where we had a very similar thing. It's, it's almost spooky how similar the fractal is playing out where, where we had a range that chopped up a bunch of traders who were expecting either higher or lower followed by a low deviation which kind of knocked out a lot of the long side of the books and then price, price continued to, to chad higher kind of in accordance with the, with the high time frame trend. Kind of seeing that now. I mean really nice buyback off the lows. Someone mentioned, I think it was Dave mentioned liquidations there. Yeah, we had like $900 million of liquidations yesterday. Majority of which were on the long side when we spiked down to 88 or 89k whatever it was. But also quite a lot on the short side then was there was guys trying to short that balance which is never going to be a good idea basically shorting support. But yeah, I mean there's a lesson in there about leverage. There's a lesson in there about conviction. There's a lesson in there about, about. About weekends and capitulate capitulating your bags. I had guys on my stream yesterday asking me whether they should sell their long term spot holdings. This is just before we got the bounce. Now BTC was, was, was bleeding and heading towards sub 90k. Guys were asking should they sell their long term holdings with the expectation that they would be able to buy them back lower.
- [10:10]
Scott
The most dangerous, that's the most dangerous notion in investing by the way. Okay, if you want to be absolutely do whatever you want but I'm going to sell to buyback lower is the guy who buys at 150 every time.
- [10:21]
Gaurav
Yes Exactly. And that's exactly what I said. I said you're playing with fire there because especially in crypto it doesn't take much off the, the Tinder box and to get things exciting again, which we basically saw. So I mean, I advise that guy, I hope he didn't do it in the end, but I said that that's a, it's a, it's a fool's game because you're really looking for tiny percentage gains like on your spot bag where, where, where you might miss a huge upside move. And the last point I want to make is just regarding the AI agent coins. I'm sure many of our listeners will be aware that coins like aixbt virtual a16z, we had just a huge, effectively like a capitulation event on these coins. I think AI XPT was down like 65% or something in two weeks. Virtual was the same down 60% in, in a week. Those coins have bounced so hard to the point where AI XPT now is like, oh, I'm just looking at it now, it's like less than 5% away from an all time high. It has bounced in the last 24 hours it has bounced 75%. And something that I've been saying this month in particular, if you have conviction in the AI agent meta and the AI agent narrative going into 2025, many guys are saying it's going to be the narrative of this year. If you believe that the AI agent economy is going to be worth 10 or hundreds of millions or even billions, then picking up long term positions here is a no brainer as far as I'm concerned. Maybe AIXBT has already kind of moved. But looking at other coins here, these are blue chips that were down 60, 70% their first major capitulation event and bouncing hard. Now I think those coins are a no brainer in terms of long term holds. So we had you on the remainder of January.
- [12:09]
Scott
We should have had you on yet.
- [12:10]
Gaurav
Exactly, exactly.
- [12:11]
Scott
Yeah, yeah, bounce back 75%. I would have loved to have had you tell me that yesterday. I would, I would have bought all that stuff. And for people who are wondering kind of what you're describing, if you're wondering how markets move and why charts quote unquote work or any of these things when you have a key level like a 90, 90,000, the reason you see all those liquidations and then you see all of this incredible buying action is not just because of active traders, but also because of passive traders who have certain kinds of orders sitting. And then of course you might have actually someone who wants to buy pushing price lower to have the liquidity to fill their bids. And I don't think people understand that that's how this often works. But if price is 91,000 and you know that there's a ton of stops right below 90,000, because retail traders tend to, you know, put their stop just below a psychological level. Well, every time someone stops out, that becomes a buy order because they're selling, right? And then on the other side, you're looking for other sellers, which is people who are going to go short when a key level breaks. Those then become liquidity for you to buy. So, like this is when. When you have a big whale who wants to fill a big position, they may actually be the ones selling down into their own buy orders. And to me, that's what this move looks like, a classic sort of liquidity grab, you know. And I just think that when you look at charts, you have to understand that there's going to be areas where there's tons of liquidity with people. It happens. On the upside, if you're looking to sell, you might have to actually buy price up to a point where the opposite happens. But you kind of took us full list into the altcoin market. I think that a lot of people still, even watching all this price action, say, you know, when alt season, we got a couple masters here, Gaurav and Vineet. People might not know this. I don't really talk about much publicly, but Gaurav and I are not only close friends, but actually over the past cycles I've learned the lesson that there's a lot of things I do have time to do and watch the market 24 7, 365 is not one of them. So actually his company, TVMM, handles all of my research and my entries and exits. I don't actually generally do my own buying and selling. He handles that for me and I trust him implicitly. So if you're wondering why he's on stage and I would trust someone like that, well. Well, here he is. Because, you know, if. If it's 3:00 in the morning on a Sunday and something needs to be done, I'm not going to be paying attention. And his team always is. So, I mean, Gaurav, you know, he's talking about AI agents here. I think it's over a lot of people's heads, but is becoming more.
- [14:46]
Fis
It's like, yeah, yeah, it's like. Like up to two minutes before this call started. I mean, the space started. I was with the AI 16Z team and they're launching other products and they're setting up the whole product release sequence and the plan. So they want, they're setting up everything, community support, whatnot. So that's how amazing the space is growing. And I have no doubt that this would be the narrative of the bull run, not because of the memes and not because of all the fun that's happening, but the essential thing that I feel and being a VC for 16 years and watching multiple trends around, you know, coming in and going out, I think we are at the brink of changing UX on Internet. Like the UX of the Internet is changing for the first time, I mean for the, for one more time. And what's happening this time is instead of you trying to get on a website, trying to find what's useful for you, you know, let's say, let's use the best use case in reference to this space, which is, let's say using an exchange. You'll go in and try to find limit orders and try to find what, what this order means and more sophisticated orders means and how options work. What we are looking at is go on this interface and say I want to acquire $2 million worth of Bitcoin and I want to sell it at 200 every time it hits 200k, of course, we all wish. And then I want to buy at 200, sorry, sell at 200k and buy it back at 100k. Or maybe just set up a tracing order. Sorry, I got too technical. Let's just see, every time it does a 5% sell, my 1%, like think of a prompt that wobbles in your head when you go through multiple charts, right? And just type it and that will happen. So this UX is changing and that applies to every single aspect of Internet. And of course there has to be a lot of training and user onboarding. That of course can happen through the means that we are going through and the current cycle. So I have no doubt that we are about to, to enter. We have already entered, but we are about to see a whole new era of AI awakening. Not in just, I mean not just the UX part, but of course a lot of solution and research part. But I think yes, the value cycle has triggered itself. And you know, Vineet, my friend here has a stellar background of investing. His last previous funds have made themselves whole with just one or two out of the 99 or 96 investments. And at this point when he's spinning out a new fund, I think he would have better things to say about it. Vineet passing out to you.
- [17:29]
Scott
Vinit, your new fund lost. Hey, Gaurav, you're launching today, right? Sigma, literally.
- [17:35]
Vineet
The fund got announced just four hours back on coindes again. It's another hunt. So this is my third fund. You know, I did Phoenix VC and I did Cypher Capital. When Gaurav mentioned It was actually one project, which is Sui. Our Sui bag is worth $100 million and the total fund was around 80 million deployed. So, yeah, we got very lucky with that. But we also had these amazing things like SEI Network was part of it, better chain is part of it.
- [17:59]
Scott
So I just, in fact, can you call me Angora? Just call us next time. Sure. Actually, I'll throw you like $1,000. It's great. Come on, let's go.
- [18:11]
Vineet
You know, the fund did a 6x in the last two years, which is a bear market. And if Scott remembers, I was on his podcast when I think the bear market was at its top and everyone was saying it's the end. And he said us needs to come in. I was like, doesn't matter. The market's going to go back up. You know, those 150, 200ks will happen. And Cathie woods is not a fool saying it's a million dollars in the next 10, 15 years. So people are very emotional in nature. As soon as it goes to 18,000, they think it's going to zero. And as soon as it goes over 100,000, they think it's a million dollars. Next. But coming to the AI agent part, I actually had a podcast with AAN just a few hours back. I think, you know, for me, as a value investor, it's all about what are people using and how what will get people on board. You know, when I look at Defi, Defi has not even kicked off yet. You know, when you look at identity, it's still growing. You know, when you look at games, everyone says games are dead. Trust me, let's wait for some time and we'll see.
- [19:07]
Scott
I think they've stopped saying that with off the grid to some degree. I will say it, since we do have finally one example of a legitimate AAA game, I think there in gaming a little more.
- [19:16]
Vineet
So I'm an investor to off the grid personally as well. Again, you know, two years back when you were in GDC and people were talking about building infrastructures where Web three, Web two gamers don't have to think about wallets. And last year when people like my petroleum were talking about IPs, you know, about this rabbit or it was nine heroes talking about these cats. I think gaming is evolving. Six months back when we were in Cypher Capital, we were the top five investors in gaming. You know, people were saying it's a dead thing, but it has bounced back. Now when I come to AI agents, this is a very controversial one where people will beat me up. How many of us have actually used any of these AI agents? Have you speculated with the coins is a different thing. But have you used these AI agents is what I'm asking. And this is what I asked. In fact, in this podcast, I have asked the users to tell me the ones which they have used to do something in their life. You know, I use ChatGPT to build up content, understand. But have you used any AI agents? Gaming AI agents was another thing where you train your AI agent to build a character and the character goes on and wins against. I don't do that in a game. I take the PlayStation and play it myself. So I have controversial views that, yes, it is a fad. Hopefully something good comes out of which we start using. Like in trading, they are saying AI agents will be used to emotionlessly trade for you. But again, you know, it's too early to predict. I'm still more on the consumer focus sides, which will get people, normal people, to do normal stuff. That's my views on it.
- [20:44]
Scott
Yeah. So I think you and Gaurav can both be right. But I think that in crypto, we always see these sort of like, bubbles. Gaming was a perfect example. It was supposed to happen last cycle, and it's actually happening this cycle, but everybody got excited about it last time you saw these massive pumps. Then it goes to this bear market. It's dead. And then you start to see legitimate things. To me, like, my default setting is that AI agents will be like that. I'll see this massive hype around them and then it'll kind of die. And then we'll see the actual use cases like Vineet, to your point, like, where people actually use them. Right. And then we'll see.
- [21:21]
Fis
Absolutely. And I was not talking about the memes anyways. Like I said, it starts with onboarding, with means. But eventually, you know, all this UX part that I explained. Agree will kick in with time. I'm actually in sync with Vineet instead of being. On the contrary.
- [21:36]
Scott
Yeah.
- [21:37]
Vineet
So, Gaurav, one of the things that I see in the cycles is, you know, when you look at the 2017 cycle, you know, people were planting trees in Africa and raising capital. Then you had the 2021 cycle where use cases like AAVE and Compound came and people were saying crypto can be used for something. You know, I was lending and borrowing on aave. Then you have the news cycle where users will come on board. So thing is, you know, AI agent, this is probably the first cycle where everyone's raising capital. Next cycle they will actually start using the use cases and adoption will come probably after that. So it can happen faster as well. So I'm not saying that these are not the future, but they will adapt and build up something new. And that's where the alpha lies.
- [22:16]
Fis
100%. 100%. A lot of things like the amount of just one last thing, the kind of, the amount of projects I'm getting pitched in terms of like established large scale at some point of time, billion dollar company, now maybe not. And super, super well established people in crypto. One of the best use case I'm looking at is all these exchanges coming up with their AI interface. So they just want a single, I mean a chat GP T like interface and people not getting into the trading activity and simply like posting it there, posting the requirements there. That's one. I'm looking at multiple applications around, entertainment and other utilities, even moving coins from one to another chain. So again, I'm all game to the utility thing. Mario and me had this conversation for probably two years when he was trying to push us and convince us for NFTs and we said, no NFT, this shape of NFT is useless. Yes, there will be use case and we'll jump into it, but this is stupidity out in the market. So like again, a decade and a half plus of investment experience. I'm actually not at all into memes and these early use cases and fully, fully bought into the intrinsic economic value of a token. So fully in sync. That's it.
- [23:44]
Scott
Gareth, you had your hand up.
- [23:47]
Matthew
Yeah, I was just going to say it's really interesting that you're diving into AI agents a bit because we had an internal call with some, a very talented team of developers that we're working with and they were showcasing some AI agents that they've been busy tinkering with. And I think this is true. Right now the narrative is very much like it shifted from meme coins into AI agents. And most of the AI agents that we're seeing are simply just LLMs with command prompt ability to go and tweet and post things and interact with people and be an LLM and generate text. That seems like it's a human, right? And right now I'M struggling to see the intrinsic value of that. And I very much agree with both Gaurav and what VB was saying in terms of these AI agents need to get to a point where they like infrastructure and they're doing very useful things, whether that's balancing your actual trading portfolio, you know, or doing meaningful things rather than just, you know, truth terminal pumping up goat and then everyone making loads of money. I mean, it's great to make a load of money, but it didn't really do anything other than automate the management of an X account and use its ability to generate coherent language to mobilize a load of people to buy a token. And I'd love to see, you know, this, this AI agent sort of mania move towards something that's, that's useful. And I would love to see it happen in 2025. And I think there's a lot of people that are obviously building great tools, but at the moment it just seems like it's a trend. And lots of people are jumping on that trend just like they were six months ago, everyone scrambling to launch the latest meme coin with a great community. Now you can leverage artificial intelligence tools to create content that gives you the the illusion of community and a very vibrant and busy community. But meanwhile, it could just be a horde of bots being managed by AI agents. And I'd love for it to be more valuable than that for our industry, specifically because this is supposed to be the future of finance, just not the future of automating and generating content that leads to a certain amount of people making a load of money. And that's just my 2 cents on the AI agents today.
- [26:14]
Scott
Mikkel and Matthew.
- [26:16]
Mikkel
Yeah, I just had a quick note on kind of the gaming tokens, and I guess the thesis might apply for the AI agents as well. It seems to me like a lot of these projects, in my opinion, just kind of go down the wrong structural path. The idea is like, hey, let's launch a blockchain and then build a token on top of it. But the problem is most blockchain users out there and most of the devs in this space, researchers, not a lot of people are necessarily gamers. So it seems like you're creating a game which is already hard enough to do to make a popular game. There are so many different gaming developers who are struggling to even make any kind of popular game right now, let alone one that has all these crazy intricacies to it with blockchain technology involved. But then it's being pitched to people who don't even really game and being like, hey, adopt this game that might not even be really fun, there might not be any users and it's on this kind of micro cap blockchain with not a lot of value there. To me, the holy grail of gaming is like when a game people play has functionality in which you can buy Bitcoin or you can buy something like a top tier digital asset or access some marketplace that doesn't silo you into some smaller community. So to me, it just seems like the most important thing for any game is to be pitching to a gaming community that already likes the game or already has an economy at scale there and already has users and then like bringing cryptocurrencies native assets that have value, that have these deep ecosystems already built out for them. Like, I don't think it makes sense to reinvent an entire defi opportunity for a game when we already have defi opportunities built out and we already have very liquid cryptocurrencies that can be incorporated. Like, how do you get something like Bitcoin or XRP and gta? How do you make it so you can fuel these economies through those platforms and build natively there? Because that's where the users are, that's where the gamers are, that's where people want to integrate. It seems so risky to say, okay, let's create this brand new game that might not even be fun and have a token attached to it. It just doesn't seem like it's a great way to aggregate users and liquidity.
- [28:33]
Scott
Well, I think there were always. Matthew, I'll let you go. But I think there were always two paths for gaming that we looked at last cycle and kind of said neither of these things are happening. And that was either someone creates a off the grid type game that has some sort of crypto native functionality, but that's abstracted away. So like you don't know, it's a crypto game. That had to happen. Right? And I think we saw that. And the other side, Mikael, I think is what you're describing is like when does Fortnite or GTA or one of these just incorporate crypto in some way? Who already has the audience and that side? I don't think it's happened yet. Right. At all.
- [29:05]
Mikkel
Yeah, I think it's a great business just to have a platform you could bring to some of these already developed games for them to be able to incorporate some kind of native economy or some kind of native functionality. That way you're not taking game risk. You're just saying, hey, if you want to be able to adopt a system and you don't want to do the dev work to build it out yourself, like this is how you can kind of adopt a more neutral approach to incorporating this technology into your game, rather than trying to build out a whole game and then wondering if anyone's even going to find the game fun or you even have users for it.
- [29:34]
Scott
Yeah, because that's why that couldn't happen last cycle. Because building a good game takes literally years and tens of millions of dollars, if not more. Right. So it makes sense that it took until now to even see one game that starts to bubble like that. Matthew, go ahead.
- [29:49]
Tal
Hey, good morning. Yeah, to Mikkel's point, I think that Grand Theft Auto is probably going to be, it's wildly speculated to have some sort of crypto integration in it and that would be a pretty big catalyst for adoption just given the volume of people that play it. But on the side of investing with AI and using agents for that kind of work, I think it's really ironic that the group of folks who are so adamant about not your keys, not your crypto, are willing to hand over their crypto to untested, unverified and like sort of new based AI agents that are, that are going to be trading on their behalf. And I would just caution people to be very, you know, very use very small amounts or test these out and try it before you put lots of money into them. Because we really, it's, it's really been so new since these things have come out and we don't really know if they run rogue, if they're any good. Like you can only back test so far and I think it's just really important for folks to internalize. Like you can't get away from the work required to invest. Like you have to do the research, you have to do the fundamentals. You can't just pass this off to some AI agent and hope and pray that you're going to do 6x10x100x better than the person next door. That's just not the way it's going to work. You're more than welcome to try it, but it's a terrible, terrible strategy.
- [31:06]
Scott
It's just the next get rich quick scheme. In case you guys don't know, Matthew is our resident registered investment advisor. So he's going to come on and work you about risk as part of his job fiduciary duty to, to our, to our audience. But yeah, to me that Matthew, I think you really just summed it up. It's the next like what can I get rich really fast on casino, you know, lottery ticket? I'm going to throw in 100 bucks because some influencer said he threw in 100 bucks and became a millionaire. Right. And at the end of the day like it's not going to go that well for you or for 99.9% of people who haven't done the work. Vineet.
- [31:45]
Vineet
In fact, because it was mentioned about AI agents and investing in the last podcast, Eran specifically told me. So is the VC business going to get completely automated again? Yes, maybe in trading, AI agents can help remove the emotions out of the game while you're investing. They can see the trends, they can see the news and build all about investing. But investing is also long term where probably an AI agent can never meet a founder and understand how great that founder is and what is his vision. Is he trying to actually build a billion doll startup? In fact what I see a lot of times with a lot of influencers is that they end up making a lot of bad investments. Sui initially, how many influencers were in those deals? How many were there off the grid? The point is what AI agent can't replicate is me meeting the founder and understanding what he has done in his life and does he have the capability and capacity to actually build what he's promising on? So yes, maybe in trading AI agents are great, but in investing you need a human touch where people understand people and people understand people's capability.
- [32:47]
Scott
Yeah, it's not like, I mean listen, AI adds interesting and potentially beneficial element but it's not like algorithmic trading and taking the emotions out and letting a algo or a computer trade for you is a new thing. I mean what percentage of, I wonder, maybe Dave Tal you might have a guess. What percentage of stock trading do you think is algorithmic and is not executed by a human being? Gorav you could jump into it doesn't matter. But what percentage?
- [33:15]
Fis
Yeah, I mean the first thing is there's, I mean one of the, one of the co authors of the transformer white paper made a quote and I truly agree with that. I think most of us will do who have actually used AI in real life and have tried to solve things with it. AI is a great pathfinder. If you know where you have to go, it cannot lead you or tell you where to go. So having take having that as a basis it won't. I mean that's the current state of it. And by the way the, the CTO not Mira but the, the latest CTO of OpenAI has already published an article stating that we have almost hit a wall in terms of the smartness, adding smartness to the, to the AI, to the LLMs for now. Now having said that platform, it can be trading, it can be investing and you can approach a million job or million professionals and they'll always be able to call out the limitations of AI against that profession because they know or probably have used so they know the difference and intricacies of their job. And that's, let's accept it. That's the reality of AI for now. So it's only a good pathfinder. Like Vinit said, it can remove the emotions but it really really can't tell you where to go. It's confused enough as we call it hallucinated about algorithmic trading. I keep repeating this statement almost three times a day. Being in the business of market making and trading where we say if trading could be solved by AI, Sam Altman wouldn't be busy solving human interaction. He would just use all his FirePower, all his AI smartness team compute and simply solve the trading market and mint money day in, day out. Like is he doing it? Is XAI doing it? Is any of the smarter AI companies doing it? Actually no. And in my almost in the last 10 years I've seen, I don't know, 500 plus proposals of algorithmic trading companies having PhDs and whatnot and whatnot and only 1 or 2% have actually delivered real results. And those results, guess what, are essentially trading strategies of human coded into an AI or an algorithm. Right. So there is a major human element. So to. I don't have a precise or a profound answer to your question, Scott. How much trading has shifted to AI? I don't think the modern LLMs have actually solved much for trading.
- [35:50]
Scott
Yeah, I just meant more like pre AI algorithmic trading. Right. Just high frequency trading.
- [35:56]
Fis
Yeah, let's call it portfolio management with AI16Z kind of shit right now in that I think the major play right now is not real trading. If anyone is following AI16Z, Dao's fun, all of these platform closely, the real value is actually not created in trading. In fact there have been instances where the value of, you know, the drawdown has been 80%. The real value is actually created on the hive where new projects are allocating 50 to 90% and simply donating that supply to AI16Z fund. So that's an information, an important piece of information for those who actually haven't seen under the hood so it's not the trading value that everybody's trading on or betting on. I think, yeah, that's everything from my side. Trading hasn't really been automated by these bots.
- [36:51]
Scott
I don't even think I told you this bad me. But it's funny, someone on my team, guy who, like, helps with a lot of my content and editing and stuff, we have, like, a chat where, like, he throws all this degen stuff at me. And I never do any of it or understand it, but he's deep down this rabbit hole. And there was one of these AI agent DAOs that just launched AICC or something. I don't know if that's the correct thing he said. He literally. He messaged me. He was like, look at the list of, like, influencers on this thing. He was like, you can just throw in like one or two soul and like, these things are popular. Could go to zero. Then another guy jumped in. He was like, dude, this is too degen for you and your audience, obviously. And I was like, dude, I have no idea what we're even talking about. Like, this is the dumbest shit ever. Because that's my natural gut reaction to everything in Crypto until, like, four years later and. But then it launched, I guess. And he was like, if you had put in this, like, people took, you know, a half a soul and turned it into 70 or something, you know? Or like. And he was like, if you put it in, it was like, you're, you know, 10 SOL. You could have gotten. He's like, you should just message them and they'll give you an allocation because you're an influencer. I was like, but you have to. And he was like, you just have to attach your Twitter account and your wallet. I was like, you want me to go? Not that he was trying to. He was just presenting, I guess, an opportunity, but, like, the notion that I was going to go on this thing and attach my Twitter account to, like, some AI agent that I don't know what it does or whatever. Like, seems like a guarantee that I'm going to be getting hacked and tweeting a bunch of scams. Like, but. And then afterwards, like, yeah, whatever you put in would have been like $2 million or something. And then a day later, I start to see all these, like, influencer and bankless. I don't know anything about it, by the way. Just getting. Absolutely.
- [38:33]
Fis
Yeah, for some reason. Last 24 hours on it. Yeah, tell me about it. I know a lot of details.
- [38:40]
Scott
All right.
- [38:40]
Fis
If you want to get into the Whole.
- [38:44]
Scott
I'm not saying any of those people were doing anything wrong, but it seems like it would have just been a cash grab and then if you had sold any, you would have gotten on anyways.
- [38:52]
Fis
Yeah, it's a typical story. The supply was allocated to, of course, quote unquote, right people. And there was like a good plan. Again, of course, I cannot get into the internal strategy. And the entire bankless fud is about somebody sold. I mean, come on, that's what they're supposed to do. They're a fund, right? They're supposed to sell and make money for their LPs, not make money for the holders of the products. Right?
- [39:17]
Scott
So.
- [39:18]
Fis
So they did what they were supposed to do and they made money and eventually they were nice enough to maybe buy back. I have no direct relationships. I'm just saying this is how things work and this is what.
- [39:26]
Scott
Comedians are critical of them at all. I just saw that. Listen, we've all been. If you have a large account, you've been on the wrong side of that kind of situation, no matter what.
- [39:34]
Fis
Clearly.
- [39:35]
Scott
Right? So, like, I'm not.
- [39:36]
Fis
But next time you want that allocation.
- [39:37]
Scott
I'm not criticizing them, but I think, like, the criticism that I saw was like, maybe they had the founder on or something, and the fact that they could, like, be bullish on it, but also selling. But like you said, I mean, people don't. There's VCs, I mean, there's business models where you get paid in tokens and if you want to fund your operations, you have to sell tokens no matter what you think about them. I mean, listen to people like shit on Cathie Wood every time she sells Coinbase stock. How can you be bullish on Coinbase? And you're selling because she has to rebalance her portfolio because of a fiduciary duty to the people investing in her fund.
- [40:09]
Fis
That time you have to say. And at the same time, at the same time, end of the day, if a project is launching today and it's a dao to manage fund, like it's a fund, right? And dao, everything that you see on the launch is essentially speculation. They haven't started deploying, what are you betting on? So it's a speculation. And if somebody is sensible, cashed out on speculation, I think he's only good in investing in exits. And having said that, one of the core elements off of this industry, and I'm sorry, I'm jumping back probably 15 minutes to a topic that was discussed 15 minutes ago. Look, we are in crypto right. We are the degens of finance. You just can't deny the fact there will be more degen people, more degen than you. And there'll be like you are, I mean we are since 2015. We, we like calling NFTs and memes and you know, this stupidity degen. Guess what? People were talking the same shit about us when we got into Bitcoin, right? So yes, there's a modern generation that is trading better than us, right. On AI, maybe. So you can't tell them to not put their money because you put your money in Bitcoin when nobody else was doing that. Right? So they're putting money in AI. I mean, let them do it. They might crash. I mean Bitcoin crashed as well.
- [41:31]
Scott
100%. Matthew, go ahead.
- [41:35]
Tal
The big problem there was that there was no lockups with AICC. Also to your other question, algorithmic trading, according to ChatGPT, accounts for approximately 60 to 70% of all equity trading volume, which I think is interesting. One final point just on the AI thing, which I think really comes back to an interesting point about the efficient market hypothesis, is people need to take a logical step about what happens when everybody starts to use AI together and that's diminishing returns. Because if all AI is used to benefit people's portfolios and it's all AI, PvP, basically it negates any of the price discrepancies or arbitrage opportunities within the market. And therefore there's really just no places to go find additional capital or additional arbitrage opportunities. So it's an interesting space we're in right now because there are people using it and there are people who aren't. But the minute every advisor or every person starts to use AI, I think that there's a big diminishing returns to any arbitrage opportunities or any quote unquote mispricing that you might see in the space, regardless of its traditional finance or crypto.
- [42:38]
Scott
Yeah, I've seen we. I don't know if it was here or on YouTube, it was talking about it, but I'm starting to see the idea of AI exchanges bubbling. You know, like an exchange the order books or market makings, all AI and then your agent trades against another agent. It's still a net zero. I mean still a net zero game, right? Like if my agent is someone's agent has to lose for my agent to win, right? So how is it like an innovation if somebody's buying and somebody's selling and somebody's making money and somebody's Losing it. So is it just so that I can like offload the responsibility emotionally on some stupid AI or. You know, I think it's, I think all these things are coming in, they're brilliant. But the notion that like you're just going to have an AI go do it and it's going to be done well is. It's nonsense. But it's always just like AI producing.
- [43:26]
Fis
Content and AI watching it on Twitter these days.
- [43:30]
Scott
Yeah, my numbers are huge. I've programmed AI to watch my shows. Great. Yeah. Matthew, were you about to say something? Sorry.
- [43:39]
Tal
Just, just to the point that if you take that back to how we can help listeners and how we can talk about communities, building wealth, it comes back to a point that Warren Buffett made, which is inactivity strikes us as intelligent behavior. Low activity, low trade volumes, like lower misses, lower tax implications, like pick a road and stay on it and just be comfortable with it. Inactivity is intelligent in this space.
- [44:03]
Scott
Trade less, make more. It's a, it's like a long said mantra that people in crypto need to hear. Like if you have high, you know, I know people who, earlier in cycles, you know, most of us would be like, pray, praying and spraying, spraying and praying. You know, we got to be in every hot thing. Everybody does it in their first cycle. They FOMO into everything. They buy the top. No matter how good the bull market market is, they're buying all the wrong things at all the wrong times. You know, I had people who would tell me, you know, listen, you just like find one to three things you have high conviction in, buy them in the bear market and just wait. And all those people generally tend to outperform, you know, if you, you have to pick, right? But you know, Mark, Mark Yusko always comes on the show and says, you know, you, concentration earns wealth, diversification keeps it. Right. So you're not going to get rich by diversifying into 100 different crypto assets. Well, I know. I don't know, maybe not. Vineet, you said, you know, that you covered your whole fund times, like six from one of the investments. So maybe there is something to be said in crypto for, for spray and pray, right?
- [45:10]
Vineet
So again, you know, that was not a spray and pray investment, that was a SUI investment. This was a guy who was handpicked by Mark Zuckerberg to lead the technology division of Facebook and later went on to build SUI network. So it wasn't technically, I don't do a lot of spray and pay because.
- [45:28]
Scott
I was being like lighthearted. I Know that what you do is very serious. I wasn't trying to minimize it. Sorry.
- [45:33]
Vineet
Yep. But I have a Dejan angle as well. I do. You know, a lot of people who know me know that. I see. Did a meme Bila in Bali in the summer holidays and we did do some fun stuff. In fact, I was in Baby Shark early on. I was in baby shark at 20 million. It went all the way to 250 million. But that's me on a personal level. On a VC level, it's more about still investing, where the founders have some capability to build. And, yeah, one investment ends up. In fact, the second one we invested in peak at a 30 million valuation. Its peak is about 70x of our investment, so that's another 40 million right there. So two investments covering double the fund so far.
- [46:10]
Scott
I was offered Peak and didn't do it for some reason. That was before Gaurav was looking at my investment. Somebody else was doing it. Yeah.
- [46:17]
Vineet
Did you look at my petroleum?
- [46:19]
Scott
Although I think the round was much higher. I think the round was much higher than that.
- [46:23]
Vineet
You did a 200 million round. We did peak when it was $40 million. And interestingly, peak was nearly going to crash as well because the CFO stole a lot of money. Last token 24. 9 Singapore. But again, as long as some due diligence goes into finding these projects, it's not a spray and pray. It's more of a much better calculated a bet. But again, you still lose a lot of money sometimes when founders lose their way.
- [46:49]
Scott
Yeah, but, yeah, it was. I think you're right. I think maybe it was like a 200 million round. I try not to, like, I get offered all these, like, kol, you need to, like, share things on social media rounds. I just say no to all of them because I don't do that. Go ahead.
- [47:07]
Fis
No, I was just giving Vinit. I was just saying Vinit. Probably it's your first time in the crypton hall. Please don't reveal private deal details of the hosts.
- [47:18]
Vineet
But I. I think it's the second one. Mario was.
- [47:23]
Scott
Wrong and it was actually Mario's team that I think looked at it first. So I don't think there's nothing like. I think we're transparent on that here. I'm just saying I didn't end up doing it, but that probably is about the valuation of a round that was offered to me. Nice to know you got it. 5x. Sorry, you were saying?
- [47:40]
Vineet
No, no, I said. I think when Gaurav said, this is probably the first time Actually it is I think the second time because one of my other projects, Revolving Studios, Amar had done a. I think it was a town hall with Mario and Yat and Sandeep were on board as well. So yeah, it's, it's good to be here. And again, lucky for us, we are the VP guys.
- [48:00]
Fis
It's, it's a joke. We're having fun.
- [48:03]
Scott
Yeah, of course. We only got a few minutes left. We talked about AI agents just since I have both Vineet Angorov here. I think we all agree that there's all of these things are going to have sort of their bubbles and hype cycles. But we kind of mentioned gaming, we mentioned AI agents. For me, like if I'm looking at things that may seriously perform in this cycle, I still think real world assets and big. But are there other sort of buckets that you're looking for? Not just like where you can make a bunch of money on a coin and then it's going to go down and we're going to suffer a brutal bear market, but where we might actually see sort of like meaningful level of adoption in 25 in this year.
- [48:48]
Vineet
So for me, you know, anything that you are going over to you Gaurav first is. And I'll be.
- [48:54]
Fis
Yeah, for me, I think bitcoin is the biggest runner. And if you want to really go degen, go margin or a little bit futures, not go 5x, just a little bit futures. And if you want to go a little bit more degen, go on Doge. And again, a little bit of futures, again not an investment advice. I'm just saying this is what I would do and I'm doing. And then of course industry category, subcategory wise, AI is a good bet for the next three months for sure. Then there will be a larger wave like we had in gaming and nobody's God hair so nobody knows what works and what doesn't and eventually everything will go down. So you can be as sensible as Vineeth is and maybe hold your liquidity to buy it in the dump. And then your investment cycle and efficiency, I mean, will be small and your efficiency will be better and you'll be more liquid. So you wipe off the floor of the, of the markets at the bottom and then you know, whatever, sell it in the next cycle. So that's my quick bit in there.
- [50:03]
Vineet
My part would be, you know, anything that gets users on board, rail users on board and not speculators on board would be important.
- [50:09]
Scott
That's what I'm asking. What are those things exactly? My question.
- [50:12]
Vineet
So that's what they would be RWAs. RWAs in terms of real estate actually going on blockchain and not just some random tie up being announced on news actual users coming board. It would be gaming, it would be identity. You know I have invested in humanity protocol some time back. If he can assign a hash rate.
- [50:30]
Scott
To a.
- [50:33]
Vineet
Year back maybe you know if you can identify I put a hash rate against a person and you know all the benefits go to him. It's a great idea to be on. So you know those three four things. Defi. Defi has still not become that big as it can. So I think those are the four or five things. But one advice that I tell to everyone is everyone's thinking that bitcoin will end up becoming a million dollars in the next six months. Unfortunately that's not going to happen. It will have its ups and downs before it goes to a million. The whole game is if you make 100x how do you take liquidity out to have capital when the market collapses. And if people think that in the next one and a half two years the market does not collapse unfortunately they have no clue how this market works. Inflation is re creeping back up. We are doing the 1970s stagflation. Copy what you call only two more interest rates to go. It's going to be a magical moment again and I would be investing in the next one and a half years left, right and center. We did 140 investments in last two years so that would be me investing again in the next one year.
- [51:39]
Scott
So dare I say people take profits when things are up and then don't go spend that on a stupid watch. Wait till the bear market and buy again.
- [51:49]
Vineet
So what I've been advising is that anything that you make money in the next six months to one year because this time the all time high has no value. It can be 150, it can be 200. That's not the issue. The issue is how long will the cycle last? Take 25% out in solid gold and keep it across your. What do you call lockers wherever in the world you want to keep. Because you need an asset that is highly liquid and non spendable. You know having cash in your house lends you buying a Ferrari which you have to end up selling in a bear market. So have an asset that's liquid and non expendable. So basically having gold bars in your Swiss bank account because the market will come down in the next one and a half two years because inflation has re creeping back up and Go and buy the whole world that. I mean, that's what the fund, you know, Sigma was launched. Sigma was not thought about just one month back. It was thought to years back that we will raise capital when everyone's the Warren Buffet on the street, and we'll deploy when everyone thinks that crypto is going to die tomorrow, that's probably in a year's time from now.
- [52:48]
Scott
I'm very well aligned there. To David just disappear right when he was about to jump up, he did. I was about to invite David Tal to speak, but I think, guys, we got right there at the end of time, sometimes we run over, sometimes we're shorter. But it was an awesome conversation. Want to leave it on a high? Congratulations on the launch of Sigma. I think everybody will be watching. That's awesome. It was, like, announced on Coindesk and everything. Big news. Go ahead. Sorry. You're welcome. And Gaurav, thanks for taking time out of your busy schedule to grace us with your presence. Matthew, Gareth, everybody else who is up here, guys, give everybody a follow. Got a lot of exciting things that are going to be happening in the future, both in the space and with the show and our properties. So I appreciate all of you for listening and tuning in. Really, for me, I can say that people, you know, we don't really monetize to any great deal at this point, spaces and stuff. And I've had a lot of people be like, why do you show up and host every single day? I do it because I learned so much coming here. And I've always sort of framed. The reason that I like to host shows is because it's an educational process for me. I never want to be the one who's, like, telling you what you should and shouldn't do. I want to ask really smart people what you should and shouldn't do do. Right. And process that and take it into account, even for my own investing and the way I approach my, you know, I think we've all suffered through the FOMO bear markets. I'm saying all this not that you care, but because, you know, because Gaurav is here and he handles a lot of this. And, you know, I mean, the guy taught me to meditate, too, right? Not. Not. Not just. Not just my portfolio, but also to, you know, help get my. My brain straight, you know, but you. You do need trusted people, and that can just be people that you listen to on a show that you think are really intelligent to help guide you and control your emotions and make sure that you make good decisions. And so I think to. At the end of the day, let's.
- [54:47]
Fis
Do a meditation town hall one day.
- [54:49]
Scott
We should. At the end of the day, Gorav's guys, Gorav has the craziest story of any human being you've ever met. We got to do another, like, full podcast and we're not even going to talk about crypto. I'm just going to talk about meditating and doing tricks on motorcycles and stuff. But it's very important that you have trusted people around you, which we try to facilitate here to help help, you know, keep you in check and give you very good guidance on what's likely to happen. So that's what we're trying to do. I'm always learning as well from everybody here and appreciate that I can show up every day and get to do that. It's like going to college and having the best professors answer all your personal questions without having to pay. It's awesome. So that's crypto town hall in a nutshell, guys. We'll be back tomorrow, 10:15am Eastern Standard Time. Once again, give all our guests a follow. Vineet, congratulations. See you guys tomorrow. Bye.
- [55:36]
Vineet
Thank you, guys.
- [55:37]
Matthew
Cheers all.
- [55:38]
Scott
Bye.