← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin’s August Curve is Here - Will This Time Be Different? Matt Hougan
00:57:09
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- [00:01]
A
Bitcoin's 4 year August curse is here. I have no idea who chose that headline, but here we are. More interestingly, the hundred million dollar bitcoin cold storage hack. Bitcoin didn't move at all. We are here to talk about it with the guys from Bitwise, Matt and Ryan, CEO of arch public, Tillman Holloway. Let's go, let's,
- [00:41]
B
Let's do.
- [00:44]
A
Well, here we are. Welcome in to Tillman, Matt and Ryan, the perfect group for Tuesday's show. Thanks guys for being here. I appreciate it.
- [00:55]
C
Excited to be here. Yeah, let's do it.
- [00:57]
A
Yeah, you guys are really at the, the nexus of what's going on right now. Talk to me about why in the world we have $100 million sort of core shaking bitcoin cold storage hack and bitcoin doesn't move at all. It just, it doesn't do anything. There's no response. I mean it's extraordinary. I mean everybody's talking about the hack, everybody that's crypto, Twitter, and yet price goes nowhere. This happened three years ago, five years ago, seven years ago. That doesn't happen. We're talking about 10, 15, 20%. So why, what's going on? Somebody tell me why.
- [01:41]
C
Brian, you want to take a first stab?
- [01:42]
B
Yeah, yeah, I'm happy to take a step. I think it's a sign that the market has matured significantly away from individual Bitcoin holders to institutional allocators, investors that gain access to Bitcoin via ETFs or maybe use third party custodians like Coinbase or Anchorage or Kraken or something like that. And the market's gotten bigger than these instances. And that's not to say this isn't a big deal, but I, but I do think that today the market looks materially different than it did five or 10 years ago. And just the number of people or percentage of Bitcoin owners affected by this hack is just significantly smaller. Most new entrants to Bitcoin are getting exposure through the ETFs or through a centralized exchange and they're not going to have any idea what is happening in, in terms of the, you know, this, this hack. So I think that's the reason why it hasn't moved markets.
- [02:41]
C
I would say.
- [02:41]
A
Well, it's a material change even from three years ago to, to, to be truthful.
- [02:47]
C
Right.
- [02:47]
A
I mean even three years ago the, the space was very, very different. ETFs had not found themselves in a position to even take a dollar from anybody on the bitcoin and Crypto side. So big shifts there. Matt, you know, you're the man on the ground having all these conversations, right? And so I would imagine that you've had some interesting conversations over the last couple of days. What have those been like in regards to this issue? Or maybe, interestingly enough, have there not been as many conversations as you thought there would be? So. So I'll give you the floor.
- [03:22]
C
Yeah, certainly from the institutional crowd, there have not been as many conversations. I think towards Ryan's point and towards your point, we're in a different place than we were three years ago. Three years ago, people would be asking, well, how can I safely store Bitcoin now? Because of the ETFs. They have an answer. The other thing I would say is that this has actually changed, I would say from three months ago. We're in this unique part of the market cycle where it's like the Matrix when you can just stop all the bullets and they fall to the ground. Where bad news isn't affecting bitcoin at all. You have this hack. The market doesn't care. Sailor sells bitcoin, the market doesn't care. Stretch trades 75. The market doesn't care. There's a huge AI reset. The market doesn't care. I think there's an element of us being at the end of a bear market cycle where bad news stops affecting you. So it's still bad news. It's less bad than it was three years ago. But bigger picture, the market's just exhausted. All the sellers have left. Everyone else is sort of ride or die bitcoin. And you're not shaking it out of their hands. I think there's an element of that.
- [04:28]
A
Yeah. No, Fantastic. Tillman had a very. He's got a long history as a miner in bitcoin, you know, a decade more ago. And so understanding the inner workings that I don't understand, frankly, associated with Bitcoin's code, bitcoin improvement protocols. You put a, a couple posts out on LinkedIn that were lengthy yesterday. Kind of walk through some of that as it relates to this particular hack and, and, and kind of where we go from here, given that we've got guys here that are probably the solutions to this particular problem. Right.
- [05:06]
D
Well, I think I agree with Matt and Ryan wholeheartedly. I think that there's a, a passing of a torch that's taken place and you either knew that it had or now you're aware that it has. Same thing happened with miners. Honestly. Miners drove the price. If miners were holding price was going up. If miners were selling price was going down, then it was the exchanges. So this is just a, a true indicator that Wall street is the lead horse. They're in control of the market at this point. The paper drives the fundamental product and that's what we want. In, in honesty, I mean, the passing of the torches is the changing of the old guard. This isn't making big news across Bitcoin because the community that is Bitcoin now has grown to be such a large populace of people, they don't even recognize the old guard. They don't even know who the old guard is. They don't even understand what the old guard concerns themselves with or even talking about in most cases. And honestly, it's a breath of fresh, fresh air to see a little humility come into that community. Because this wasn't a, this wasn't a hack, this was an oversight. This was literally like a bad product and bad update if you will, at the simplest terms. So when you look at like the people who are supposed to be the smartest people in the room or self acclaimed to be the smartest people in the room and, and have been in opposition to Wall street claiming that they know something about financial markets too, I think you're seeing now kind of this aha moment of, you know, self custody does carry its own risks. And the risks, you can choose to ignore them because of arrogance and say that they don't apply to you, but that's no different than someone who is lackadaisical with gun safety saying it's never going to happen to them. You know, the older you get, the, the more you are paying attention to catastrophic risk and the potential of that because it becomes less about what you can make and more about what you can save and keep. And I think we're seeing that in spades. And I, I don't think the market cares because again, $100 million and these, these are the people that, you know, are, are the experts in the room on this subject. So let's let them kind of figure it out for themselves. But you know, my broader point to everybody that's kind of talking about it on crypto Twitter, to the gentleman's point, before this problem's been solved a long time ago. I mean, BITCO has a 5 million dollar insurance coverage guarantee on your deposits. Let someone who's able to carry the risk from an insurance perspective actually be the custodian. Like that makes sense to me. And it's, I don't see why this is such a hard concept outside of really, the maxi community grasping it.
- [08:06]
A
So, so since it brings up a couple points and it's not something that we've talked about probably in a long time since the, you know, the launch of the spot Bitcoin ETFs, it probably should, we should probably remind listeners the level of security associated with Bitcoin held in spot Bitcoin ETFs or spot crypto ETFs of all kinds. You know, Matt or Ryan, why don't you, you know, give just a short, you know, explanation of what that looks like from Bitwise's point of view. You know, what, what, what does that entail associated with, you know, quote unquote. Right. Risk given what we're, what we just dealt with.
- [08:52]
C
Yeah, happy to jump in. I mean, they're like, they're like 19 layers. You're an asset manager. The one thing you definitely can never ever do, it's a, it's a company ending event, is lose people's money. And so the way these are set up is with all those layers of protection. Where it starts is you only use a qualified custodian which are Capital Q, Capital C, that's a regulated category. They have to be federally chartered or state trust chartered. It's a very select list. There are only a handful that meet that external criteria to have that. Those qualified custodians toward Tillman's Point have insurance in place from folks like Lloyd's of London to back up against loss. So you're protected there. People usually spread their crypto amongst multiple individual wallets, not because any one wallet is unsafe, but just as a belts and suspenders thing. So you have isolated buckets in different wallets within the same custodian. When we go to trade a Bitcoin, it can only be sent to a handful of pre approved whitelisted counterparties. So it can't go from Bitwise to someone in the Cayman Islands. It can go from Bitwise to like five market makers that we have institutional relationships with. There are multiple layers of video checks involving people from Bitwise, people from the trading party, people from third parties. We don't pay the trading counterparties until the bitcoin hits our account and is verified on chain at our custodian for multiple different blocks so that it can't be moved. Before that we keep the cash. So we're always 100% covered. When you've been doing this for 10 years, it wasn't this good when Bitwise started in the market eight or nine years ago.
- [10:37]
A
Right.
- [10:37]
C
There weren't qualified custodians you weren't dealing with large public financial institutions. You were dealing with scrappy startups like Kingdom Trust for a while was the largest custodian in crypto. But the systems have emerged, they've had 10 years of putting redundant protections in place. Bitcoin can only move to a few different places or other crypto assets. And I feel it's one of the safest ways that you can hold, hold Bitcoin. Right. It's an established trusted process.
- [11:09]
A
So 19 different layers, qualified custodians. I mean, that sounds a little bit better than some, some rolling dice. Dice rolls, right? Like that sounds a little bit better than some dice rolls or 100 dice rolls or again, the explanations that have come out over the last 48 hours. I've been in crypto a long time. We've all been in crypto a long time. They sound insane. Like they, they sound like that sounds like something that I'm nearly certain that I would screw up like, like that. I, I think I would screw that up somehow. Right, so default to Ryan, give us some names of qualified custodians that, I mean, again, people need to peel the layers back here. You know, who are some names that people would know, Right?
- [11:57]
B
Yeah, well, Coinbase is the, is the one that most people know they're qualified custodian. You have, you have Anchorage in Gemini and Fidelity for instance. Now, not all of these custodians custody every single crypto asset. Some custody only two or three. Some custody a very wide range of crypto assets. But Coinbase is probably the, the best well known qualified custodian across the crypto asset community. That's why you see majority of the Bitcoin or Ethereum or other single asset spot ETFs using Coinbase because not only are they a qualified custodian, Capital Q Capital C, as Matt mentioned, but they've been doing it for a long time. Right? We've been working with Coinbase for many, many years. They've been professionally custodying crypto assets on behalf of institutional investors for over a decade. And I think that's really, really important when you're talking about tens of millions, hundreds of millions or billions of dollars worth of assets here that sit in these, these ETFs. These aren't small amounts and there's a reason that you pay management fees for funds like ETFs. Part of those management fees go to the qualified custodians who are safeguarding these assets and putting all of these different protections and redundancies in place. It's not just bitwise keeping these management fees or the other asset managers keeping these fees, we are keeping using service providers, the best in class service providers, the regulated service providers to help protect investors from these types of catastrophic events.
- [13:31]
A
So Tillman, it's funny, it's like you know, bizarro world, right? The last two days have felt like bizarro world because instead of, you know, let's just call it influencers saying get your coins off of exchanges, it's now put your coins on exchanges, right? What a that is again, that's extraordinary to hear. So break down why it feels like okay, my, my, my Bitcoin, my Ethereum is safer on these exchanges than they are on a cold storage wallet because there is some real technical stuff going on here that, that, that makes that an actual true statement with a coinbase or a Kraken. Right?
- [14:20]
D
Well, I mean the simplest way to put it is that at the end of the day you're trusting someone. And I think in the hardware wallet space we've ignored the fact that we're trusting hardware wallet providers and you know, their firmware updates. I think that that's now obviously front, front and center and center stage for everybody to recognize the, that these devices have a lot of complexity to them, that they can age out as well. I don't know if you've been in crypto long enough and you have had a hardware device and you've plugged it in five years later, sometimes it doesn't even recognize the device and there's a path to get it, but it's not for the layman and it's not for the average user. And so cold storage again is something that has to be managed just like anything that has risk attached to it. When I heard Matt and Ryan just say it's like risk has to be siloed, right, so that it's not catastrophic, so it doesn't sweep across the whole board. So it's like we, we still have risk, we incur risk every day and everything but you know, the risk is siloed to one specific little vertical maybe that's interrupted, maybe there's some disruption there. But the aggregate value that's represented by the entity can easily cover those losses, right? It doesn't have to be the day I can't remember which exchange got hacked, but there's been exchange hack hacks too, right? What was the one that they got hacked for over a billion dollars in eth this last year. They, they covered it.
- [15:51]
A
Yeah, they covered it.
- [15:53]
D
They self insured it. Now, I don't think that they did a Wall street job of insuring it because they were on the phone all weekend calling their friends, going, send me eth. That's not the way to handle it. But you know, to the points that were made earlier, I mean, it would have been refreshing to get on Twitter spaces and hear this dialogue versus, you know, get the Parcheesi board out and start roll finding how many dice are in your neighborhood to figure out if you've, you know, it's nuts. It really is honestly nuts. And it's an example of, in my opinion, there will be a Wall street fork at some point. Like it just depends on when they decide to put their foot down because there will be certain feature sets that they decide, no, we're not doing this, or they'll be. And you know, he who has the gold makes the rules at the end of the day.
- [16:43]
A
So. So Matt, you know, tell me what kind of conversations you guys are having out here because there, there are, there's a, a difference or a dichotomy associated with the kind of conversations you're having with, you know, institutions, wealth management organizations versus, again, what we see the dialogue is, let's just call it the bowels of our industry. One of the examples that I want to use is, and apologies for talking about a current competitor, but for example, Morgan Stanley's spot Bitcoin has not had any outflows. That speaks to the architecture associated with. This is a wealth management product. Wealth management works a certain way. And so in the context of kind of the examples that we're using today and what we're talking about today, what do conversations look like just around Macro, Bitcoin and crypto on a day to day basis over the past couple of weeks? Given what you initially said on this show, like, nobody cares about sailor selling, nobody cares about a hack, nobody cares about. You know, when's the last time we even talked about Quantum? Right, like that? That's come and gone. Right. So talk to me about the conversations you're having and what you sense out there.
- [18:05]
C
Yeah, absolutely. It's such a great question. One clarification on Coinbase, it's Coinbase Custody, which is actually a separate entity from Coinbase the Exchange, which makes the custody bankruptcy remote. So that's maybe the 20th layer of protection. It's really hard to impress on people what these conversations are like because if you're in the bowels of crypto, Twitter, it's the era of despair. Bitcoin is over. Never will it rally again. All Our principles are being crushed. This is the end. And I keep trying to find ways to convince people that when you go and talk to Morgan Stanley, to use your example, or Wells Fargo or UBS, or Merrill lynch or anyone else, it's completely different. They started reorienting around bitcoin two years ago and they move in decade long cycles. And so they're now just pointing their guns at this industry and starting to move ahead. That's why Morgan Stanley is launching Solana ETFs. When Solana is down, whatever it is, from its all time highs, it doesn't matter to them. One way to view this perspective is imagine we're six months from now and bitcoin has rallied crypto. Twitter, which is in despair right now, will recast what's happening, what's happening today. They'll be like, oh yeah, bitcoin is maturing. Look, our pullback was only 50%. It was 75% in the last drawdown. This is exactly on trend. And you can almost see that conversation taking place in Twitter. That's the story at Wall Street. They're like, bitcoin goes in four year cycles. This cycle looks a lot better than the last cycle. There's a clear reason to believe we'll enter a new bull market. Of course we're going to turn towards this, of course we're going to allocate. So it's almost as if there's no worry in Wall Street. They are used to this. And I think thinking about that framing, like what will crypto Twitter say in six months is actually sort of what the conversation is right now on Wall Street. It's like, this is a nice pullback. It's a good entry point.
- [20:21]
A
Ryan, is that dynamic associated with the reality that across Wall street, let's talk about wealth management, your average financial advisor that's running a four person team is like 60 years old. And some in the bitcoin community may see that as a negative, but in the wealth management community that means they've seen, you know, 1987, they saw 2001, they saw 0809, they've seen.combbles burst. And what they've also seen is ultimately we go higher, ultimately we go higher. Ultimately assets that matter go higher. Are they applying that same type of thought process to bitcoin and crypto in the conversations you're having?
- [21:07]
B
Yeah, they, they definitely are. I mean, I think that's a good way to think about this, is that these are veterans who have been watching financial markets and studying financial markets, often for 30 or 40 years. And what that means that they've seen this happen before both in terms of Bitcoin and crypto having these four year cycles where they it runs up significantly and then pulls back, but then it doesn't die, it actually recovers and goes higher. Then it pulls back to a, to a higher low than where it was before and so on and so on. And so when they see that has now happened several times, they now can access it easily through things like ETFs. You have the largest financial institutions in the world talking about you should have a 1 to 2 to 5 to 6% allocation to Bitcoin. Like these aren't shops like Bitwise who are crypto specific asset managers recommending these allocations. These financial advisors, these are Wells Fargo and Charles Schwab and some of the largest financial institutions in the world and their research team saying you should have an allocation to this in your clients accounts and it could be as high as 6 or 7%. And what I would add on top of that is a lot of these wealth managers on Wall street have seen technology cycles happen and they've seen new technologies come about like payments moving online and credit cards and tech and mobile revolution and now AI and crypt crypto. And so while at first it's hard to know what technologies will actually take off, accelerate and dominate a decade from now, when you've seen this happen before, like these wealth managers have, it makes them less scared to allocate and it makes them more scared particularly now that it's been de risked from a career perspective. Many of their peers have allocations cryptos in the benchmark like the S P500 via companies like, like Coinbase and like MicroStrategy. It's been de risk. They actually need to get off zero and they realize that and they're less scared to do that because they've seen this type of thing happen before.
- [23:12]
A
So Matt, you're seeing again we've had a shift over the past year where most financial advisors at the biggest wirehouses weren't really, really allowed to solicit positions into spot Bitcoin crypto ETFs. That's completely changed now. So what narratives do you hear them using with their clients to actually solicit a 2, 3% allocation to the asset class. What does that sound like for your typical advisor now?
- [23:41]
C
Yeah. One is diversification is a non correlated asset that boosts your risk adjusted returns just like any other asset. Right. Most clients don't dig into the weeds, they just want to know they have A diverse portfolio. And the statistics on this is great, right? There's still never been a three year period in bitcoin's history didn't significantly boost your risk adjusted returns. Try finding another asset for which that is true. I have, there is not one. So it looks pretty good. So that's one of them. The second is I think the world is waking up to the idea that finance is moving on chain. Right? Enough people have said that. Chair Atkins has said it, Jamie Dimon has said it, Vlad Tenev has said it, David Solomon has said it, Larry Fink has said it. Those are the biggest names in finance. They tell you that it's all moving on chain and so they want exposure to stable coins and tokenization and the growth of on chain finance. And yeah, you could buy Robinhood, yeah you could buy Coinbase, but you're getting very partial exposure if you don't have any exposure into the crypto stack. The base case for institutional investors is an important point is to own everything. When you deviate from owning everything, you're making an active bet and if you get it wrong, you get fired. What Ryan was saying is now crypto is part of everything. So the default case is you have a little bit of crypto and if you're at zero, you're deviating from that. And if David Solomon and Larry Fink and Vlad Tenev are right, you get fired because you miss out on this huge growth thing. And I think that's been a huge shift for a while. Crypto was off piste, it was like outside of consideration. Now it's part of the capital stack and that means the default is a couple percent. And when you multiply that by $30 trillion, you get a lot of money that has to come into the space over the next couple of years.
- [25:37]
D
Well, I would add to that in my conversations. You're spot on here. The most sophisticated investors, the largest capital pools, they look at bitcoin as a
- [25:50]
A
good rapper, a great rapper.
- [25:51]
D
They look at it as a great rapper with a 15 year track record. That's just starting to become interesting. The old guard looks at it as the greatest thing that's happened to humanity in the history of humanity. And there is the gap that we're seeing, you know, come to fruition right now or be recognized. And I would also say that, you know, it's a self fulfilling prophecy from a markets perspective. I don't know if you guys saw the massive AI hedge fund manager and that got liquidated and that, you know, I think it was $45 billion
- [26:24]
E
we
- [26:24]
D
love as human beings volatility. It gives us the illusion of making a lot of money quickly and we want to play in those games. And so as markets present volatility and depth of liquidity, it brings everybody to the table. And, and bitcoin is just compounding on that. It was, it was good enough in that department by itself just with the spot, but now you have bitwise creating infinite number of products that represent different types of exposure and you know, different Venn diagrams as to what you're trying to accomplish and what's the overlap. And, and I think, you know, if you look at a lot of the stuff that they've been talking about that we've piggybacked on a lot, a lot of our shows is this vault phenomenon that's taking off that, that plays right into this. It's like a better system of management across an asset. A lot of asset classes that traditionally couldn't have been pooled together. That's the future. And you know, you can recognize it and want to be a part of it and recognize that bitcoin between AI agents is going to be the ultimate settlement layer for, for digital wealth. And so it, it holds a special place and will hold a special place in that economy going forward until something changes materially.
- [27:41]
A
So, you know, Matt, just a few minutes ago when I asked, you know, what are financial advisors? This is proof that he spends an enormous amount of time with financial advisors because his commentary about finances moving, you know, on chain and then naming seven scions of traditional financial markets, like I, what he literally said is, is what he said to probably thousands of advisors who have asked him the same question, how should I be positioning this? And that's what he says and then that's what they're saying. Like literally it sounded like I was hearing from the heavens. That's what Matt, that's the conversations literally that he's having across the country on a daily basis. And again, kudos to Bitwise. You guys have done such enormous, you know, trench digging work for a decade. Like, like, kudos to both of you guys. Kudos to Hunter and, and you know, leading the charge across the board. It is extraordinary to see your growth. Where are you guys at in terms of total aum at this point? Where have you gotten to?
- [28:57]
C
Yeah, it, it changes over time, but it's, it's in the 10, 11, $12 billion range. And, and we think the best days of growth are ahead of us. But yeah, it's been in the trenches. I used to say that the the future of crypto is being built over salmon lunches at Capital Grill. I still think, I still think that's true. We do a lot of those. That's, that's the work it takes. There are a lot of these people you have to talk to.
- [29:23]
A
Yeah. And well placed bagels before the bell rings at offices across the country. Thanks guys for being on the show. We're gonna let you go and get back to the work of, of, you know, doing the evangelism that is bitcoin and crypto. Appreciate the time from you guys today and keep up the good work. Fantastic. Thank you. Ryan and Matt, thanks guys.
- [29:48]
B
Thanks for having us.
- [29:52]
A
Wanted to, wanted to dig in Tillman with you again. The, the stuff that you put on LinkedIn I think is important. I think it's important to talk about you. You mentioned that this really wasn't a hack. This was a failure, a tech, a technological failure by a specific company. Unpack that a little bit more before we get into arch public and some of the stuff that we've got going on. I want to hear more about that. Go ahead and.
- [30:20]
D
Yeah, listen, I. Let me tell you this. I'm a amateur compared to most people out there, but I am inquisitive and I like to find the answers to things. So what I'm going to tell you is the best I can deduce what happened. This is not gospel. This is not me having some, you know, secret relationship that I can pull. This is just me figuring out because I've been in the space a long time and I've read now a lot of smart people's assessment of what happened. And the best you can tell is that there's a cold storage wallet provider called Cold Card. They provided bitcoin only solutions. And so that was kind of the first point. And you know, that I took notice of as it pertains to the development of this product in the code was there was a lot of shunning of, of wallets that serviced or, you know, offered solutions for, for other coins, altcoins specifically. So there was a pretty hard stance taken on that front and I think it drove away a lot of developers that saw a broader market that they could serve and kind of the future of blockchain versus just the future of bitcoin. And it was a, it was a division. But that is not new. That Mick Maxey group of people have been arguing and being divided and dividing themselves honestly on altruistic notions of what satoshi really wanted from the chain and their interpretation of that individually and the perfect example of that's the bitcoin cash revolt and what happened there. But this has happened a lot and it was actually going on. There was a ton of infighting within the community about BIP110 and Bitcoin Improvement Protocol 110. And what kind of the division was about is should the network allow for spam or what people consider to be spam, or should we put filters on that that keep that from happening? Well, the story wasn't in the argument. Technically you could make cases on both sides like logical people could make really strong cases. The. The story was in how immature the both expert groups kind of took the argument. And it was almost like they took it on as their own identity. And if they were wrong, that they were bad bitcoiners or that they weren't the OGs of Bitcoin. And anytime you get identity wrapped up with investments and with decision making from a business perspective, I, I think it's a bad idea. So that would be my first thing. Red flag, if you will. Second red flag is, is that a lot of people looked at that community as the experts in the room and blindly got involved in a wallet that has a lot more technical functionality than some of the other wallets do. But case in point, it also, you know, is a lot more complicated and it requires people to get involved at a deeper level of cryptology. I mean, to the point where the wallet itself allowed you to choo choose whether you are going to develop your own entropy through dice rolling. And entropy is basically just creating a series of random events that then you translate into a code or a password. That is what your seed phrase is. Right. That's how we protect our wallets, is through a seed phrase that's supposed to be randomly generated. That's kind of step one when you're creating a wallet. Like literally step one if you're not. If you're going to create a wallet and you're going to generate seed phrases for your customers, the wallet holders, I would think that it would be incredibly important that the seed phrases that are generated are done through a random gen number generator and done at a very high encryption level. Well, from what I can tell, there was a patch, a bitcoin improvement protocol patch that was released that defaulted the hardware device back to essentially a very weak encryption level and left a bunch of wallets vulnerable. And the sad thing, and if you dig into, there's a lot of things that went wrong, but the worst is a lot of people that thought they did everything right. Yeah, that didn't give their seed phrase out, didn't take a screenshot of it, didn't tell their friend about. Didn't do one thing wrong. Their money's gone. And that's a hard pill to swallow. That is almost like the every of the unknown.
- [35:12]
A
You know, everything that you just described is the reason is, is in a, in a tradfi world, in a wealth management world is the, is the reason why people of actual meaningful asset means. Right. That's a, that's a way of me trying to not use the word rich. Rich people use financial advisors at ubs, Morgan Stanley, JP Morgan, Merrill Lynch. Why? And they spread out, say if they're worth, you know, 50 million bucks liquid, right. They spread that out across three of those organizations. They work with three different teams there. Oh, they also probably have a schwab account with $2 million in it.
- [35:54]
C
Right.
- [35:55]
A
So that's the version of cold storage versus Exchange versus now being managed at Fidelity or Schwab. Like a guy with, you know, $60 million who also wants to keep a spot bitcoin position may now keep 200 grand on a cold storage wallet, $2 million at Fidelity, and then also have a little extra exposure at UBS and Morgan Stanley through a Bitcoin ETFs. What he's not doing is keeping $40 million on a cold storage wallet. That's, that's gone. That's. That's done.
- [36:36]
D
Like I would argue that even like if, if you've bought into the cult culture of bitcoin, you're into coldware, cold storage wallets and self custody on all that. But most of the narratives that, that drive people to that decision is, is kind of the emergency fund argument. You know, it's like I need thing I, if I need it now and I don't want to have to go through anybody to get it and I need it at midnight on Christmas Eve. And yeah, that's kind of the most of the logic that I hear people. Well, that's a very small amount of money. That's. That's to your point. That's not like your life. You don't need access to your life savings at midnight.
- [37:15]
A
By the way, cash also works pretty, pretty well.
- [37:19]
D
There's all sorts of things like your cars work, for instance. Liquidity.
- [37:24]
A
Yeah, but here's the point.
- [37:26]
D
They just want to be in the cult. And it feels good to be like that's. And I think that people are going to have to weigh the risks against that. And I don't think that they are. I Think with technology at this level, the risks are a lot bigger than people acknowledge. And it's going to continue to, you know, gravitate people towards custody. And if insurance is the answer, if a hardware wallet provider wants to put their, you know, their code up to really the snuff, then you go, okay, I have a hardware wallet and I have an insurance company that's backing any deposits that get stolen. You know, $90 million, $100 million insurance claim is not that big. I mean, they're $100 million insurance claims across real estate development all the time. Right?
- [38:14]
A
Yeah.
- [38:14]
D
And so, you know, why are we even talking about this? We're talking about it because the people who were at the helm of this ship have ignored common practice for a very long time. That's the truth.
- [38:27]
A
Yeah, it's a big, it's a big shift in the space. And long after this is talked about and it's gone away, that shift will continue. People will have moved assets directly to bitwise, directly to BlackRock, directly to Fidelity's Bitcoin spot. Bitcoin, like think about that, think about the, the, you know, ecosystem associated with Fidelity. Fidelity is a name everybody on the planet trusts. Oh, they happen to have a spot Bitcoin etf. Oh, you can actually do spot Bitcoin on their platform as well. So, so. Oh, you know what, I'm just, I'm going to move everything to Fidelity.
- [39:07]
D
Well, and they're, they're, they're, they're capsule, encapsulating the risk. Like you look at Robinhood's token right now, right? If you dig into why people own it, right, it's for the yield, which, you know, to the point earlier with the other two guys, everything's going on chain. So yield is going to go on chain. And if you look at Defi and the risks that it involves from a self custody and interaction perspective, they're the same. They're even worse than wallets. Like you. How, how are we going to have the, you know, utility of DEFI reach the masses if they aren't being managed under the wings or under the guise of central custody providers and then allowing them to deal with the DEFI protocols and with the yield production of, of the capital placement and then you're just getting the benefit of it through a simple mechanism of some sort like that is the future. And more exchanges, you know, have seen that and they started to, you know, bring that management services underneath their, you know, their, their offering and we're going to see continued, you know, it's, it's
- [40:16]
A
just what people are, are comfortable with. They want to offload risk and, you know, dice rolling and it's all been, you know, meaningfully sound and actually feel risky when you're doing it. Like, you know, the amount of conversations I've had from time to time with bitcoin people, even the hardest core bitcoin people are like, let me send you a 24 cent test transaction before I do anything else, because I don't want to, I don't want to make a mistake. Right. Like, that's never gone away in the whole, you know, moving of bitcoin space. So putting it in a position where you don't have to worry about it or think about it whenever you see a headline.
- [40:56]
D
Well, the simple solutions are what Matt talked about. Like those 19 or 20 layers that he was alluding to. Just think about it. Like, if you're trying to send bitcoin, let's just say you're sending bitcoin to somebody. Is it good to send it to some. To an address that you've never sent it before without a third party saying, are you sure this is the right address? You know, that's what the white listing process that he was talking about is. When you white list addresses, you test them.
- [41:29]
A
Yep.
- [41:30]
D
You succeed in the test. And then those are your addresses you can withdraw to if you want to add one to it. It's a big pain in the process. And you can add layers of approval through management and all sorts of. And then guess what? You know, if, if money moves to a wallet, other than those, guess whose fault it is and problem it is, it's the exchanges. It's not yours anymore. And that's, that's where we're going. That's where we are, honestly.
- [41:58]
A
Well, we, we, we are sitting here with the CEO of Arch Public. And so it's important that we talk about Arch Public. But more importantly, let's talk about the Arch Public giveaway that's happening right now. So if we can pull up that giveaway and kind of walk through it. So, so we've done this before. We've done this a couple times before where we've, we've done a big giveaway. We've given away a couple watches before. We did the bitcoin conference last year. We gave a Rolex away. It was really fun, really cool. Everybody enjoyed it. We've got video on our YouTube page and our Twitter page showing Tillman and I standing there like a couple of gorillas, you know, handing off the, handing off the Rolex. To the guy that won it. We're doing the same thing here and I want to show off how easy it is to, to sign up. It takes, I don't know, maybe about 15 seconds or so to shine up, to, to sign up and I'm gonna do that right now. So Tillman, you fill the space while I sign up, because I can't.
- [42:59]
D
The purpose of this is that our automation, our suite of tools, is exceptionally different than what you think they are. If you've not used them, there is nothing else that you've used that you can compare it to. And so, you know, the idea is, is to, you know, continue to build awareness of those and bring people into the ecosystem where we can show you the difference and we can actually give you the attention that's needed on a human to human basis to walk you through the advantages that are now available to you through automation. So, you know, this comes with a lifetime algo license. We have a lot of people that are customers of ours that are looking at that as the prime prize and that's what they're focused on. But again, those are people who have used the suite of software and they know the value of it. If you've not used it before and you're just attracted to the Rolex, fine, that's great too. All we want is a shot. We want a shot to have a conversation with you and show you the difference and show you what we've built and show you exactly how it can interact with you and give you the time value that we've seen it give every one of our other customers. And what I mean by that is that, you know, managing market conditions, managing volatility across one market is exceptionally time consuming and highly emotional. This is a tool that allows you to set traps across multiple time frames, across multiple markets, multiple symbols. And you set it and forget it. And when the market conditions present that volatility that fits your parameters, you have trades that trigger. And so it's this empowering moment of realization that you can have your will represented for you in the market through agentic agents and through trading. And we want to show it to you. And, and, and the best way to do that is to book a demo with one of our guys. And if you enter the competition, you don't, don't. We will, we will be reaching out to you. We want to show you these tools. So please be proactive, reach out to us and get on one of our group calls. We do a weekly call with about 100 folks that are customers of ours. And referrals and it's a lot of fun and we go through charts and we go through different setups and kind of continue the, not only the educational process but the fellowship process. Our community has grown exponentially this year. Up to about 30,000 customers and it's the who's who. It's like captains of industry and we, we love to hear from you, we love to have the interaction with you and we love to showcase the tools.
- [45:36]
A
Hey listen, we, we a couple points of of interest to, to people watching the show. We have people that work on Scott show that reach out to us and say hey, I want to get set up on this stuff, right? So that happened last week. We, we, we got him set up our team, worked with them, got them set up. And then this week he's sending, you know, Tillman and I messages saying this is, this is incredible. I'm using this on this stock. It, it put an entry in for me and I'm up big time based on the price movement. So people that use these tools are blown away when the tools work the way that we say that they're going to work. So a couple of other points. We're the biggest agentic algorithmic trading community in the world. We've got 25,000 plus folks that have joined our community and are using these tools. Another point of reference. So Robinhood announced, you know, agentic modules and trading. If you want to come in here and build Python this and do that and build your own stuff. So they've got, you know, almost 30 million users and 100,000 people are, have attempted to do that. That's like less than 3/10 of a percent of their, of their users. Why? No different than the rest of our conversation from this show today. People want to have a team, a person, people that they can talk to, get help with, speak about recommendations. What about this? Should I do that? I saw this case study, I saw this recipe. Do you think, what do you think this is how much I'm going to allocate. They want to have those conversations with people and organizations that have been doing it for a long time. We've been doing this for six years at this point.
- [47:25]
B
Right?
- [47:25]
A
So come and have a conversation with us as opposed to learning, coding, putting it on Robinhood and hope for the best.
- [47:32]
C
Right?
- [47:33]
A
And we're going to help you work through it. You know what I mean?
- [47:36]
D
An example of that unique not only service but also offering is like we are I think the only company in the world to offer self custody. Iraq Automated trading Strategies. And so through Gemini and through directed ira, you can open up a self directed ira. You can lean on them for all of the financial counsel that you, you need and you lean on them for all the compliance. You have Gemini as your custody provider and as your exchange. And then you're using our tools to harvest volatility within that account. I don't know of another place that you can get that. And not only do we have it, but we love to see people have that light bulb moment go off because there's, there's a lot of volatility in these markets and that's what people are attracted to on Wall Street. That's what you know, if you ask Larry Fink, what are you upset about Bitcoin being down? He doesn't hold bitcoin. He's trade, he's, he's harvesting the volatility. It's about the fees, it's about the volatility. Why? Well, because that brings the users and he's about the users. And so if you want to get on the same side of the boundary as the people like Larry Fink, which is like this market presents a lot of volatility that if I lay my traps correctly, I can harvest them. And so, you know, these types of tools are the first time that really retail has ever had the ability to lay those traps. And we want to show you exactly how to use the tools and then watch that aha moment where you know you're doing it. These are self made, these are self used tools, these are user based tools. You set them up with our help, you get to know how the feature sets work and then once you get to that point, you set it and forget it. And you manage that going forward very seamlessly.
- [49:37]
A
Yeah, our strategies can accumulate positions for you. Our strategies can generate cash yield. Our strategies can do a little bit of both at the same time. They can do all sorts of stuff. But, but here's a number for you. So I just opened an email that we sent out to all the people that, that, that work with us and it was a, it's a cash yield conversation today. And so everybody's been talking about micro strategy, everybody's been talking about their preferred shares, right? Stretch paying 12 and a half percent. But if you just use the volatility with our tools in MicroStrategy, over a three year period with just $100,000, you generated $260,000 in cash yield.
- [50:19]
D
Just ask yourself these simple questions. How are, how is Stretch able to pay a 12% yield? And they're top blasting every price appreciation. They're literally doing the worst job of accumulating the bottoms of any treasury company in any company we've ever seen. And they're doing it at scale. So if they're leaving all that delta on the table and they're still able to give distributions of 12%, what do you think the real potential of that volatility is if you can get ahead of it? I mean it's, it's staggering. And that's what people, when we were talking with Matt earlier about the rapper being the key. You know, when you talk to really sophisticated people, they say, so you know, if bitcoin goes to $300,000, I don't need more than like 2% allocation because they don't care about chasing the massive upside. If they allocate 2% and get a 3x on that, they've made 6% on that and come, you know, compacted over the rest of their portfolio. It may be the difference between they may be the edge is the point and that's why the rapper is attractive to people.
- [51:29]
A
Well, and, and Again, these are 50,000 foot points. As it, as it has to do with working with us. Once you get set up, it's hands free.
- [51:39]
E
Yeah.
- [51:39]
A
Used in crypto. You can equities ETFs, hands free. You don't have to touch it. You just let it do what it does. We have people that'll get set up with us come under our concierge program. We don't hear from them for a year. For a year. Because they set everything up and it's all happening the way they want to do it and they don't have to do anything. Also, all of these tools are free to use. If you're not going to join our concierge program, come in, start using our tools for free. Start with $100, $500 thousand bucks, 200 bucks, whatever it is. Start to see how this stuff works, how it, how it feels like magic when it happens. You know, start with a little bit of crypto and you're going to execution at 2:30 in the morning. You woke up and you're like, holy smokes, I've already made 4% today. And it happened when I was sleeping right this, these are the epiphanies that people have when they work with us and they think, well, how much should I allocate here and what platform should I use to allocate? And they get involved in our community, they end up on the private webinars we have every week. They end up at the events that we host a couple times times a year where we meet with people and, and have dinner and Scott, Mel, all these things inside of our community people absolutely love. And it starts with the fact that, you know, we have tools that, that matter, that really matter and are going to be at some point ubiquitous across finance. Well, even three and five years from
- [53:06]
D
now, even large funds like we've announced publicly with, I think they've changed their name recently from Digital Wealth Partners DWP to Digital Ascension Group. But they're big XRP guys over there and they have a lot of XRP funds and they use our software for their institutional fund. And so there's, there's a, if you are looking at allocating capital, you want to do it on volatility, that gives you a price advantage. You want to do it on asymmetric moves to the downside and you want to buy when there's blood in the streets. That's very hard to do emotionally and very hard to do from an attention perspective and from a time commitment perspective. And the more you want to manage it, the more apparent the benefits become. Because once you set like for example, we have a lot of customers that have volatility traps on four hour candles, 12 hour candles, 24 hour candles, you know, three day candles, and let's just say there's a blip of volatility in a day that qualifies for the 4 hour candle, the 12 hour candle and 24 hour candle. But they don't get the last trigger event. Well, they, they got three out of four, let's say one of the four triggers. You don't know what's going to present itself from a market perspective. And so the analogy I like to go back to for people is like if you're not catching rainfall right now and repurposing it, I can't tell you how much it's going to rain tomorrow. I can't tell you how long it's going to rain. I can't tell you whether it's going to rain tomorrow. The weather is unpredictable. But I can tell you in certain regions of the country you should expect an annual rainfall of about X. That's the same with volatility. In certain asset classes you should expect a volatility of X. If you don't have tools in place to harvest that volatility, you will be amazed with with our tool set. So come reach out to us. Like Andrew said, free to start on the complete package. So you can literally get trading immediately with no no cost whatsoever.
- [55:08]
A
As we sign off here, I just wanted to thank everybody in the comments, YouTube and Twitter that said they like the show better when I host it because I'm so much better looking than Scott Melker. Thank you. See ya.
- [55:19]
E
Today's video is sponsored by Securitize. You've heard the word tokenization. Putting assets like funds, bonds, Treasuries and stocks on chain. Securitize is the regulated infrastructure the biggest names in finance build on. They're the tokenization partner for BlackRock's on chain, Treasury Fund BIDL, working with new York Stock Exchange, Vaneck, Hamilton Lane and Apollo sec regulated entities nearly nine years running, most money still moves through slow decades old systems. Securitize puts the real asset on chain itself, not a synthetic or wrapped token standing in for it. And regulated in the United States. It's the institutional grade bridge between traditional finance and crypto. They didn't just build it, they just proved it. Listing their own stock on the New York Stock Exchange and simultaneously tokenizing it on chain on Solana and Avalanche. The first and only public company built entirely for this. Their mission? Tokenize the world. Learn more@securitizeio this is a paid partnership, not investment advice.