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- [00:01]
Dan Tapiero
That's dope.
- [00:15]
Scott Melker
This is Scott Melker, host of the Wolf of Wall Streets podcast, here with the CEO, CIO and co founder of 10T&1RT, Dan Tapiero. And Dan, when I want to know what's happening in markets, you're the guy I call. And I don't understand what is happening in markets. We've got nothing but tailwinds for the bitcoin and crypto industry, the perfect regulatory and legislative environment, and nothing but down in prices. How do you explain what's happening with the market right now?
- [00:44]
Dan Tapiero
Okay, well, when you say the markets, you know my background of course being in the old world for so many years. I'm always going to ask you like which markets you talking, you're talking about bitcoin.
- [00:55]
Scott Melker
Let's, let's talk about bitcoin and crypto specifically. But I think we all know we need to put that in context, context of tariff mayhem and the current Trump effect.
- [01:06]
Dan Tapiero
Look, I mean 80,000 on Bitcoin, 2,000 on E. Those are decent prices. And I know people don't want to hear that. You know, everyone wants up only all the time. But if I think about where we were even just, you know, 18 months ago, before Larry Fink's pivot in the summer of 23, before the launch of the ETFs in early 24. Yes, the Trump administration catalyst is, is huge. I would say that the about face that's happened in the US is probably the most dramatic, most important development of the last 15 years. We've never had the US the largest government of the wealthiest country in the world, become full on, not just crypto supporters, but active in crypto. You know, it's, it's unbelievable. From the Treasury Secretary to the Vice President to all sorts of people in the cabinet, we have people who really believe in the future of cryptocurrency and blockchain and so digital assets, web3, however you want to call it. So, you know, I think this was becoming obvious in September and then October, November and markets are discounting mechanism. So we went up, we went up to 100,000. I always said, and I've said this on Twitter on X many times, we were always going to stop at a hundred thousand. There was there no matter what news was going to come or happen, it's a big round number. It's the big round number theory of markets. Just like gold, I think is going to stop at 3,000 just like when you have NASDAQ stopping at, you know, 3, 4, 5,000. So I, I always Expected us to spend months consolidating around 100. I think we're going to chop up back and forth between 70 and 100 to digest all this news, Tom. And at some point we're gonna head back up. And I've had this 180 target in mind for a while. I know some people have been more aggressive, but I think this bull phase, we can hit that this year or potentially early next year, but I'm thinking more this year. So it's just the way markets work, right? You've got 85% or 90% bulls up at a hundred thousand and now you're down at, what is it, 15% bulls. And people are despondent. They think the world is over, Tom. And yet it's at 80,000, which is still up 2.3x from 18 months ago. It's pretty incredible.
- [03:45]
Scott Melker
Yeah. And I think bitcoin was trading in the 60,000 six or seven months ago. So it's still a tremendous rise, especially when you have markets generally dropping. I mean, do you think that the reason that bitcoin to some degree is chopping around here with all these tailwinds is because of all of the market uncertainty in macro markets right now? Or do you really think that it was, we hit 100, consolidate for a while, it goes back up, we look back and say it was as easy as that.
- [04:11]
Dan Tapiero
Yeah, I don't know if we're going to say it's as easy as that. The volatility certainly churns up a lot of people. And I always say, you know, I don't think the difficulty is suggesting, let's say, is the price of bitcoin and some of the other digital assets going to be higher, let's say five years from now. I don't think that that's a difficult call. I think the difficult a call and the difficult action is to actually hold through the insane volatility of the space. And so I said months and months ago that we were going to stop at 100. So I think that's, that's what we're doing. There is uncertainty in the macro landscape. The doge and the fiscal tightening that's going on I think will eventually get offset by interest rate cuts. So I think we're going to be fine. In terms of the economy, we have, you know, we have a 4% 2 year note. I don't see that we're going to have a lot of problems buffering a slowdown that we're going to see. And I suspect the unemployment rate, you know, Heads up to north of 5%. I've been a little wrong on this. I thought it would happen already. It hasn't. You know, China has been very weak. Europe has been soft. I don't think there's any inflation problem in the US So it's just about, you know, having a bit of consolidation here. But in no way are the positive fundamentals that are coming along with, you know, potentially a clear regulatory framework, you know, stablecoin legislation, other things like that, those things aren't discounted. It's just that you can't have everything all at once. Right?
- [05:48]
Scott Melker
You definitely can't have everything all at once. And one thing that surprised a lot of people, I think, is that bitcoin did reach 100,000 and start to consolidate, but altcoin have continued to bleed. There really hasn't been much performance of significance in the rest of the crypto market, which those who look at the cycle would have anticipated happening by now. What do you make of that?
- [06:09]
Dan Tapiero
Well, I think a lot of those things deserve to go to zero. And I think their venture investments, I think that they're still searching for their use case, some of them. Look, I also think it's a problem that there seems to be an infinite amount of, let's say, meme coins on Solana. You know, even the, the Trump coin and other coins, they sapped a lot of liquidity from the market. But look, I, I, you know, the old coins, there's infinite supply. So, you know, if you've developed a use case and there's network effect, I mean, if you take a look at some of the, the larger ones, you know, Ripple, for instance, and, and other ones that have been around for a long time that have, you know, very high market values, they've sort of held in. Okay, I think just the most speculative end of the market is speculative and 99% or 99.9% of those speculative tokens will end up going to zero. So I don't see anything different happening than has happened in any other cycle that we've been in.
- [07:20]
Scott Melker
I tend to agree. Now, you mentioned Doge and fiscal tightening before Elon Musk floated the idea of putting the treasury on the blockchain. We've seen people talking about putting multiple different government agencies on the blockchain. Do you think that with this new government coming in, with technologists in all these positions, that outside of bitcoin becoming a reserve asset or becoming a legitimate digital gold, do you think that we'll actually see some adoption of the underlying technology for uses by governments and larger institutions in the coming years?
- [07:54]
Dan Tapiero
Well, I don't, I think it goes to that question. I, I actually think for the next election they're going to figure out how to put voting on a blockchain so that, you know, I mean, it's strange that we have this great democracy and the voting methods are still so archaic. You know, you go into a little box and you flip a switch. I mean, it's extremely weird. I mean, it's not hanging chads anymore, but it's still, you know, it's, it's still terrible. So I think that, yes, that that distributed ledger is going to be applied across the, across the board. And you've got Andreessen as well, Mark, who's been vocal along with, you know, Elon and the other technologists. If anyone can figure out how to do it, they're going to. So I could you imagine, just think about all the eventual productivity gains coming to the U.S. i know short term we're feeling some pain here. People feeling, you know, the uncertainty, what are they going to do? Tariffs, this, that, the other thing. But the bottom line is, I think medium term, everything we're doing is very.
- [09:02]
Scott Melker
Bullish for the U.S. now, your first fund, I believe was called 10T. Right. We've discussed many times why that was the case. Because you believe the market cap of crypto space would go to 10 trillion. Obviously that became far too boring for you because now you're on your fifth fund and it's called 50T. Is that a hint as to where you think this space is going?
- [09:23]
Dan Tapiero
Yeah, I mean, again, the idea for 10T I had in the middle of 2019 and the fund didn't launch until early 21, but in the middle of 19, the space had a value of 300 billion. And I thought, okay, well it can 30X over the 10 year life of the fund. And no one's going to believe that. That was actually my view. So I have to put it into the name of the font. So 300 billion to 10 trillion is a 30x. Now here we are in the space five years later, has a value of 5 trillion and that's bitcoin. All the old coins and then all the equity in the space and launching the fifth fund now it just seems a little, you know, this not a lot of upside left. If you think it's 10t. And as we sit back and I think about the next 10 years, I think Bitcoin definitely can 10x from here. That would take the 20 trillion. The altcoins probably another 10 trillion, and then I would have the equity value in the space is going to head to 20 trillion. You add those up and that's 50T. I think the big change coming now over the next, let's say one to two years, is that we're finally going to see many of the private companies that we own and others, of course, to go public. And I think, look, the Trump administration has a goal to make the US the crypto hub of the world. Crypto blockchain of the world. The easiest way to do that is not to try to get people to understand why different blockchains have different use cases to parse the code of certain chains versus others. The easiest way, I think the best way is, yes, okay, we have Bitcoin etf, that's wonderful. But we only have one large crypto blockchain public company in the world, and that's Coinbase. The way to make the U.S. the hub is to get 30, 40, 50 of these private companies, you know, later stage companies public. I think you've seen the announcements of some of the companies announcing their intentions. Circle and Etoro and Kraken. Just recently, Gemini, there was a story about. So I think that the US Administration should be focused on with the NYSE and nasdaq, how do we bring some of these companies that are making hundreds of millions in revenue public so that the American investor can get exposure to businesses that are building this new digital asset ecosystem?
- [11:46]
Scott Melker
Yeah, you mentioned a 5 trillion valuation. Obviously the tokens themselves are about 2.6. So I guess that puts the capital markets or the publicly traded companies at 2.4. I agree with you. I think we're going to see 10, 20 companies in the next two or three years going public. But I don't think that's unique to crypto either. It seemed like there was an entire freeze on companies going public over the last four to five years, not even just in crypto. So you'd have to imagine that we're going to see a just slew generally of direct listings and ICOs and SPACs and people going public in a variety of different ways in and outside of crypto in the coming few years. Get it while it's hot, so to speak.
- [12:27]
Dan Tapiero
Yeah, but I think it's different for crypto because as I said, there's only one. Right. There are a lot of tech companies out there. You know, there are a lot of, you know, even AI. You know, I'm just saying, I, I think one is just as a small number, it's a low number. And so I can't really speak to, you know, the, the broader interest. It just strikes me that this is a real gap in. And I think a bunch of them are going to eventually be in the S P500 Coinbase. I think they just passed over, but I think they're coming, you know, they'll be in the NASDAQ 100 if they're not already.
- [13:14]
Scott Melker
So how does this affect the way that you approach your fifth fund? Because we're obviously in an environment where a number of these companies will be going public or might look for different strategies. You obviously spend most of your focus on private companies in this space and on equity investments, not necessarily on tokens.
- [13:33]
Dan Tapiero
Right. Well, this is a bit of a departure for us. About 60% of the fund will be in earlier stage and growth stage companies, you know, generally looking for companies making more than 40 to 50 million in revenue. We're also going to have a sleeve for what I call growth stage protocol. So cryptocurrencies where the revenue accrues to the cryptocurrency rather than to the equity in the business. And these are, you know, things like let's say radium or lido or tokens that are aave that are, you know, more defi. Defi focused. I do think eventually over the Next sort of 10, 15 years that all value is migrating on chain. So on the one hand, you know, we're equity focused but on the other hand equity is the most common and accepted way for investors to, to, to take positions. I think that in the future they'll be much more comfortable also owning tokens where there is no equity. And then we're going to have a bucket of 25% for that. We're going to hold back for the next bear market for 27 I think is when it'll hit and that'll be for distressed opportunity special situations. One of the reasons we've pivoted a little bit into this growth stage protocol area is that we operate one of our companies now, which is a complete departure. We bought a company out of administration and we operate. It's now called Zenrock and Zenrock is about to launch its first product actually this week. Zen btc. It'll be the first decentralized, eventually to be yield bearing wrapped bitcoin product. So you know, we have our own token, the rock token. We moved from just investing in the growth equity to actually operating a company. Very esoteric. It had built over the previous four years decentralized multi party computation technology, which is the next level of Security after multi sig for digital assets. So having built that company from the ground up and launched our own token and gone through that whole process, we really do have a skill set now to make fundamental value judgments about tokens. But it's not going to be these early stage tokens. It'll be tokens where, you know, there's at least, you know, 40, 50 million in revenue that accrues to the token holders. So I know that was a bit of a mouthful, maybe a bit esoteric, but after, you know, doing this and only this for the last five years, you know, the team has grown and the skill set that we've developed is sort of beyond anything that we, you know, we had even like two, three, four years ago.
- [16:19]
Scott Melker
Well, the product that you just described, wrapped BTC yield bearing product, alludes to where I think many of you the puck is going, which is to tokenizing real world assets and unlocking everything that comes with that. That is a multiple huge market versus anything that could come from native crypto adoption. In my opinion. If you think about tokenizing everything, you're talking about tens of trillions of dollars in unlocks. When do you think? Yeah, hundreds of trillions. I mean, at what point do you think we start to see that really happening? I mean, you have BlackRock tokenizing treasuries and others doing those things. So I think we're getting the first iterations of that. But once you have bank of New York Mellon and State street and all these companies custodying bitcoin, they're obviously going to want to turn it into an asset like any other that can earn, yield or be used as collateral.
- [17:15]
Dan Tapiero
Yeah, I think it's happening now. It's just, you know, we've all sort of dreamed about this, you know, for years and it just happened more slowly than we, you know, anticipated. The tech is a little slower and also look, I mean, the regulatory framework has been very unclear I think with the SEC and their crypto task force. You know, the, the treasury has a crypto focus group. You had that meeting last week at the White House. We had some of our CEOs of our companies present. It's just a whole, you know, change, a change of worldview. So I think it's maybe not too crazy to say it's going to happen over the next four years. You know, you have ondo, you know, tokenizing treasuries. You have, you know, Apollo also has a few things that are tokenized figure a company we own is focused on this as well. But you know, it's slowly, slowly and then hopefully all at once. And we have companies in our portfolio and in the 50T that will be in the 50 portfolio that will benefit from this trended tokenization.
- [18:24]
Scott Melker
Is it a positive or a negative for bitcoiners to have this much involvement from governments and institutions? I think the original cypherpunks would have said we created these assets to have parallel systems so that we could avoid governments and institutions. But then the sort of adults in the room and those who maybe want the number to go up are cheering the blackrocks in the United States government and such coming into the space.
- [18:51]
Dan Tapiero
Yeah, I mean that really is a tough question to answer because you know, the ETF really changed things it in terms of awareness, you know, bringing, making it easy for people to just punch a button, you know, push a button and all of a sudden in their equity account they're, they're long bitcoin again, they're long etf, they're not actually long bitcoin. I think it sort of reminds me a little bit of the way gold financialized. I mean you have physical gold bars and there are lots of people who still want to own gold bars and there's that group self custody. But then there are a lot of people who are just happy owning futures or owning the gold ETF and who want to trade it more. So I think that there's the, the world is big enough for both the people who want to self custody bitcoin on their ledger, walk around with it in their pocket or have it, they're safe and never touch it, don't care about using it as collateral or yield or anything else. I think that's always going to be there and that'll grow and it'll grow as some percent. But the overall pie in terms of people understanding bitcoin, cryptocurrency, digital assets, Web3, I think that the technology as you call it underneath is going to seep into everything we do. So I think it's net net a positive. I still think you'll have those people self custodying and, and they'll be off the grid. So I think you can have both. I know it's a bit of a strange answer, but that's my thought.
- [20:37]
Scott Melker
I, I think that's actually the right answer. I totally agree with everything that you just said. So listen, you're obviously looking to deploy an entire fund here as we discussed, which means that you're probably getting a bit of a glimpse into the future of what's coming for the space. What's being built, which areas people are spending their time and efforts on. What's the most exciting things that you're seeing built right now in the crypto space?
- [21:01]
Dan Tapiero
The thing that's really taken off, I think, is DEFI and revenues from DeFi. If you look in as early as December, January, you had $200 million of revenue coming from various DEFI protocols. That's up from 20 million 18 months ago. So remember, I'm a growth stage investor. I'm looking for, you know, businesses, projects that already are making a decent chunk of money, not venture. Just because I'm in this space, people think, oh, you're venture capitalist. You know, this whole area is very speculative. I think it's incredible that we finally have significant. That's monthly revenue coming from defy. So I think that's sort of the big focus, you know, the expansion L2s, but then also potentially Bitcoin L2s staking and restaking, I think become something that's growing tremendously. And then as you mentioned before, if we can build out that world with RWAS and then stablecoins, I think you're looking at a world there that's just become digitized. That was not just five years ago. I also think, you know, we've done a little less work on this, but NFTs aren't going away. I know they've been in remission and they've been in a bear phase, this and that, but I think that NFTs will still, I think, prosper. You know, it sort of touches a little different part of the world, the media, you know, the, the media sort of web3world. I mean, I. I don't know how to say it. I mean, it's not, it's not as much about value storage as it is about community building and hobbyists and gaming. And I know that's been a little bit in remission, but I think that'll come back as well.
- [23:01]
Scott Melker
I agree. I know we're coming to the end of time here, but you talk about sort of the growth of DeFi. It's interesting because we had DEFI summer and that was the most speculative side of the crypto space. But now DEFI is actually boring. It just kind of ticks along and it works and nobody talks about it anymore. What do you think it takes, I guess from a risk management perspective for the largest institutions to participate in the decentralized finance protocols that we have now? Or will they have to sort of build their own that are walled gardens to make sure that they're Secure.
- [23:32]
Dan Tapiero
Wow. That really is a good question. I think that, you know, some of the businesses out there, the more forward. I call them web 2.5 businesses already are using stablecoin and crypto rails. I think it was Stripe that announced the other day, was it Stripe that over the weekend they do settlement on stablecoins? Yeah, stable. So I think that's starting. I don't know that bank of New York is ready for that, but yeah, so I think it's. I think it's already starting. But again, you know, there's still plenty of people and institutions out there that have no idea about even Bitcoin. I mean, they've heard about the ETF and this and that, but they don't really get it. They don't understand it there. There's still a huge percentage of the world that is way, way behind. So do I think, you know, you know, a, a bank in the, in the Midwest or something is going to all of a sudden be active in defi? Probably not, but it's all early signs. And I love the fact that you said defi has been boring. I mean, the revenues coming out of Defi dwarf what they were during Defi Summer. And I mean, literally, are I More than 10x more? I think more than 10x that time. So you just have to wait and be patient and not. Not get destroyed by the volatility and, you know, survival really. Here is a lot about risk management. Even this sleeve in our new fund for. It's only going to be 15% of the fund and it's only going to be in four or five of these protocols. It'll be very controlled because, you know, as you know, having been in the space every three, four years, everything goes down 50 to 80%. Right. And as you said, now the altcoins, there's. There are altcoins now that are down 90% in the last year. Right. So you really, you know, have to know how to manage risk.
- [25:42]
Scott Melker
Well, I'm just hoping, Dan, that your next fund is going to be called 100T because we're already at 50, and 50 is way too boring.
- [25:50]
Dan Tapiero
Yeah, it's too boring.
- [25:52]
Scott Melker
No, I'm saying I'm hoping that we get to 50. Okay, let's say you have to name your next one 500T just to give us.
- [26:00]
Dan Tapiero
Yeah, I hope you're right.
- [26:04]
Scott Melker
Me too. All right, Dan, thank you so much. I know we're up against time. Really appreciate the conversation as always.
- [26:09]
Dan Tapiero
Great to see you. Great to see you. That's dope.