← The Wolf Of All Streets
The Wolf Of All Streets
BlackRock Outflows Explode! Is Crypto About to Crack? #CryptoTownHall
01:16:49
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- [00:00]
A
Good morning, everybody, and welcome to yet another crypto town hall. Every weekday here on X at 10:15am Eastern Standard Time. And by every weekday, I mean when the technology on X works and when the Internet and Cloudflare are not entirely broken and we need to cancel shows like we did yesterday. Unbelievable that a single company can basically sync the entire Internet. Any one who was trying to buy the dip on Coinbase, Kraken, et cetera, yesterday was unable to do so because you couldn't access it because of Cloudflare. And you also couldn't go get bad financial advice on whether you should be buying the dip on X because that was also broken. So.
- [00:47]
B
Yeah, well, not everybody, Scott. I mean, people, professional traders that use platforms that have direct connection. Well, not just us. I mean, you know, there are, there are others. But the truth is, is that the professionals were able to play and retail was kept out, which was not intentional, obviously, but it's. These things keep happening and it's, it's. This is not the first time that we've had a Cloudflare outage that's caused all this. I mean, one would think at a certain point that single points of failure would start to get addressed, but hey, you know, my engineering skills are a little rusty. It seems pretty obvious, but, you know, hey, it is what it is. I, I wouldn't be surprised to see Elon loses shit enough to say, you know what, screw it, we're going to build our own, our own platform to screen out humans, you know, like Cloudflare does. So, you know, it's. We'll, we'll see. But I think the market has basically done nothing in the last three, three days. I mean, it's moved up and down a little bit, but it's more or less the same place. It stabilized around the same level. And we saw these outflows and we picked this title just to get people's interest. The answer to the short answer we can make with a really short space. Is crypto about to crack? Well, if the question was, is Bitcoin about to crack? The answer would be definitively no. Crypto is a different story, because there's stuff in crypto that might very well be about to crack.
- [02:22]
A
I don't even think we can say about to crack, because if we're talking about token prices, I think they cracked long ago.
- [02:29]
B
Well, I mean, you know, our good friend Mike McGlone, who let himself get quoted with his 10,000 stupid prediction, you know, he's not wrong in that there's a lot of value that is, there's very high market caps in a lot of tokens on crypto. That should be zero. And I mean zero. I don't mean 10 cents. I mean zero. Right. You know, things that have absolutely zero utility, zero use case, not even supported by their foundations anymore. But, you know, hey. And we don't have to go through the list. But what's interesting is, is I heard you talking about it this morning. You know, is. Is what's happening on the regulatory front. I see Perry Ann here, so I kind of want to steer the conversation to her. I didn't take a whole lot out of the exam priorities from Paul Atkins, not including crypto, because effectively, what that saying is, he's not seeing crypto as their purview from an enforcement point of view. But digital assets and coming to regular rules is not exam priority.
- [03:38]
A
Is.
- [03:38]
B
That's policy priorities. That's how I read it. But maybe I'm on drugs and I'm wrong. So I'm curious of how other people read it. Am I right or am I wrong? I'm happy to either.
- [03:51]
C
No, I don't think you're wrong. I'll give you a little bit of background here. So I was really excited to see him give a speech around Project Crypto, which is now going to work on a token taxonomy. That body of work goes back to when we started it in 2017. So, I mean, it's really surreal to kind of see where the evolution has gone. So, as I've shared here on crypto Town hall before, our SEC chairman, Paul Atkins, was on my advisory board at the Digital Chamber. I brought him in in 2017 and worked hand in hand with him on crypto policy on behalf of the industry. That was really a critical time for the industry, for policy, because that's when we had the whole initial ico, like the original ico, boom and bust. But, you know, because it was just a couple years after Ethereum had launched and ERC20 tokens the market, the industry figured that out. And then we just started seeing all these. We called them ICOs at the time. Now we call. Now we have new names, like token launches for them. But everyone was. Everyone was doing an ICO and everyone in D.C. was like this. This kind of feel like ICO IPO, like maybe the securities laws are implicated here. And we were like, yeah, we should probably be thinking about that. So that's why we brought in Mr. Atkins, now chairman Atkins, to help us think through that. And we published the industry's first best practices on ICOs. Or our token issuances and we called for a token taxonomy and we, we actually wrote it. That document still lives on the Digital Chambers website under our report page. We added to it over a number of years. We included best practices for not only token launches but also so KYC and AML best practices, best practices for stablecoins. We really covered the full gamut of the token ecosystem. So that speech that he gave where he talked about token taxonomy, that was I believe really a nod to that very big body of work that we did together a number of years ago. We had advocated for the SEC to put it into law. They didn't. But now that Mr. Atkins or Chair Atkins is there, it looks the position we've taken and where I believe this is going to go is that no, most tokens are not in the SEC's jurisdiction. Some are. We have intentional digital asset securities. These are tokens that have been issued to tokenize equities. RWA is now kind of in new phrase people are using to describe that. So there's of course some that will be in the SEC jurisdiction but there's also many that that will not be. And the issue that's really plagued our industry since you know about that time is well which ones are in and which ones are out. And getting that clarity has been the most important thing to solve for our space so people can build, investors can invest here in the US Can I.
- [07:53]
B
Ask you the key question, Perrienne? Because the reason it's such a big deal is because there's a set of rules, a few of them and I'll list them in two seconds that the SEC has on the books from basically the 70s. Actually some of them date back to the 40s that preclude any real time trading. The thing that you know, instant liquidity that crypto gives you the ability for and completely open access are precluded by the accredited investor rule, the seasonings rules of the way the three quote rule is written. There's just a whole bunch of just antiquated rules that were written before there was technology. That effectively is why if it's security, it's a death sentence. Because he means he can't trade it right away. You can't do none of the processes in crypto work. I know Paul knows this and I know Jamie Selway knows this. The question is are they looking. Do you think there's any thought process of using the sandbox idea or the safe harbor idea for so called crypto digital asset securities to work and get, you know, exemptive relief or something around these rules which we know make them essentially non starters.
- [09:15]
C
My personal view is yes, I mean, obviously I can't speak for the commission and we don't have any direct statements from the commission as of today. But Chairman Atkins has talked about this a little bit. He has talked about that he wants the financial markets to go on chain. And I, you know, I know he knows that, that, you know, in order for that to happen, they do have to update and review and revise many of the regulations that are going to allow for that to happen. So that is a big part of what crypto project crypto is. That's a big part of what their focus is per what they've, they've stated publicly. This is not inside information or anything. I'm going by what everybody else has access to in my read on it. So yes, I do think so, but I, I don't think, I think that's coming next. I think the number one priority is get the clarity out for the token in the crypto space and then we'll move on to traditional equities, traditional financial markets and moving those on chain as well. And then the other really fun like nugget that he put in his speech is he talked about the super app. He also said there should be a super app, a place where you can go, where you can buy and sell and trade crypto as well as your equities, your stocks at 24 7. So that's another piece that he's talked about publicly. And now we're starting to see some of the biggest players in the game. It looks like they are all vying to, you know, become that super app. Everything from X. What we're on now we have Elon Musk who is, I don't know if you guys saw it, but yesterday we integrated end to end encryption in our messaging platform here. But there's a lot of, of folks who are thinking that, you know, maybe Elon Musk is going to integrate payments into X. You know, he was the founder.
- [11:38]
B
He said. Well, he did say it. He wants, he wants, he did say that. I mean, I want to go back to one, one thing, just get one more question. So one of the things that we always gnash our teeth about on these spaces and I don't see Gorov here, but I like to poke him on this one. I know he kind of agrees is where the value is to token holders. And one of the things I've posited over the years that is a big deal or would be an enormous deal for institutional adoption of project use cases is if tokens, while they may have utility and they may have use and they may work out, it might be the actual revenue driver to people. But if tokens were able to clear clearly pass through revenue, clearly confer ownership in the case of failure, and the classic case there is eos. So just imagine in a world where EOS token raised $4 billion worth of stuff. The token itself went to 14 billion. Now it's worth effectively really zero. It's not being supported, it's not being used, but the original collector of the ICO proceeds, the company has invested in other things and pivoted and it's still worth a fair amount of money. Imagine a world where when you issue those tokens, you say, well look, if the token is abandoned but the treasury is still alive, it could revert to equity under certain, certain things. That would be a very powerful thing for founders now. Well, how do we know this? Well, we know the VCs, what's the predominant VC see vehicle these days? And I've asked several VCs on this space and the answer's always been the same. Well, it's kind of drifted more toward equity with token warrants as opposed to token only. And so the ability to handle those sorts of hybrid requires that next step. Once again, I'm quite confident that chair Atkins knows this. I'm just curious, is that even being talked about or is that just something that people are saying, look, let's get this other shit done first? But you know, it's a, behind closed doors things.
- [13:54]
C
I haven't seen it. I don't, that doesn't mean it's not being talked about. I, I, I think that's probably maybe a phase two issue.
- [14:06]
D
Okay.
- [14:06]
C
I mean we have like very big picture issues, low hanging fruit to get done. That's, we know what the number one priority is getting clarity for the crypto markets. It's, it really shouldn't be as, as difficult as it's become to be. I don't think it needs to be that complicated. But of course it has been complicated. But I think that's probably a bigger conversation for the next phase of their work and hopefully they'll have time to get to it.
- [14:38]
B
Okay, cool. I'm done grilling you. So Scott, you can you take back over? I see Austin as his hand up.
- [14:47]
C
I saw Austin on 60 Minutes on Sunday. Great job.
- [14:53]
E
Yeah, we'll leave off that one for now.
- [14:58]
A
No 60 minutes forward?
- [15:00]
F
Nope.
- [15:01]
A
But no, not leaving it off.
- [15:04]
E
All right, well, so One of the fascinating things that I've been seeing in the the media is, you know, 2022 era, if we were looking at these sorts of stories being run, the headline would have been crypto bad. Everybody in Crypto evil like Dave Scott Perry. And all of you would have been swept in and bed. Like everybody in this space is functionally equivalent. You are a part of a drug cartel. And one of the interesting turns in journalism is when whether you love or hate the fact that 60 Minutes is running a story on World Liberty and Binance is that they're actually keeping it significantly more narrow. Now you don't have a piece where like Coinbase is catching strays for absolutely no reason, or people are saying things like Bitcoin is only used for buying. God, what was it Krugman said? Drugs and assassination? I think it was somebody. Fact check me on that. I know Neeraj has the tweets somewhere, but it's been a very interesting path I was on there. And you know, one of the weird things about 60 Minutes is you're gonna tape like 30 minutes of interview with them and then they're gonna clip two sentences and use it to tell a story. And this, this is sort of the nature of media for those who haven't done this before or. But I would say sort of behind the scenes. There was a lot of evolution on the discussion of that thing away from, you know, call it previous themes of Crypto bad to narrowing in on some specific app action. So to kind of. This is to Perian's point. Previously on the sec. Actually, it's still way more complicated than it should be, but it's getting better. My fear with the SEC's action in the market structure enough to leg off. Something Dave and I have discussed before though, is this is just sailing into waters that are still filled, filled with like rocks and sharks and like unexploded undersea mines and you know, whatever bad thing you can put in there that are just the remnants of Dodd Frank. Right. Like, before we talk about the SEC and CFTC cooperating on crypto, can you guys get your act together on securities based swaps already? Right. Like, I'm just saying there's a lot of things in there that are a complete goddamn mess where there's a lot of regulatory complexity because we have this incredibly fragmented space that have absolutely nothing to do with crypto. But like, the super app thing was what triggered me is like, God, we would all love, love to have a single venue where I could trade like Futures and FX and like just even, like IBKR is probably the closest we've got and even they had to pledge this thing together from like 80 platforms. So I would just say to some extent this is a welcome to the big leagues for crypto and that congrats, now you're at the same complexity as everybody else.
- [18:17]
B
Yeah, it's funny, Austin. You know, people talk about consolidated audit trail. They've been talking about that since May of, since, you know, the flash crash in 2000, May of 2010. And even, even it's still not done. So here we are 15 years later, still being argued about. I've made lots of arguments as to why they complicated it. I know it's a whole story and it's ridiculous, but the funniest part of the whole story is even if they finished it completely, it still wouldn't include futures. Anybody with a pulse who's rail any of the reports from those days knows that the entirety of the issue was connection between the futures and stock market. And yet there's no way that the thing that was supposedly being built at many, many billions of dollars of cost, that's still not done after 15 years, even when complete, would still be completely useless for the case that it was built for. And that that's the status of regulation in Washington. So if you think about crypto, you know, giving the CFTC responsibility for spot and derivatives is a huge step to where it is arguable, in fact, almost not, not even hard to argue that crypto, when done, will have a more coherent regulatory framework than, than traditional financial assets. And it's funny, but it's pretty well understood that I'm probably right about that. So, you know, it's, it's kind of amusing if you think about it.
- [19:51]
A
Austin, are you implying really quickly, Austin, are You implying that 60 Minutes is not exactly factual news and that they're crafting a narrative? I'm shocked.
- [20:03]
E
I mean, I would, I would go one step further. For anybody who hasn't read the book, trust me, I'm lying. You probably should to understand how the media operates, which is to say we're sort of in this degenerative state of incentives where you get paid for getting attention. So you're supposed to do the things to get attention. And the reality is really impartial rate the clicks. And I know this because I'm like a pedantic things on X and tens of people read them. So I, I would tell you, the whole media ecosystem, you know, if you're looking at it and you think it's anything Other than entertainment, you've misunderstood what's going on here. And that's not an insult of any show in particular. That's a statement about media writ large.
- [20:53]
C
I thought your meme pretty much summed up all of that. If, if you guys haven't seen it, you should just look at Austin's timeline. But was perfect.
- [21:11]
E
Yeah, and, and this, this is kind of the point I'm making, right? Like everything is over, simplified for clicks at some point. You know, I mean, look, if we want to be totally honest, you gotta at some point blame the audience. Like that's what people of course demand.
- [21:30]
C
Yeah. The other thing that was super interesting about the 60 Minutes piece this Sunday and the one last Sunday, because they kind of teased the big reveal this week, last week, is that this is the one year anniversary of President Trump, or I guess then it was candidate Trump suing 60 Minutes for deceptively altering a interview of Kamala Harris. I don't know if you guys like remember that from back on the campaign trail, but she gave like this very terrible word salad that just didn't say anything. And they like chopped it up to make her sound like she maybe knew what she was talking about. And they paid $16 million to settle that lawsuit with Trump. And this is the one year anniversary of that. And like now they're, they're, they're at it again and they're, they still hate Trump. You know, the person they brought in to run is like very, forget her name, but she's, you know, very liberal, clearly out to get Trump. And you know, the whole premise is like, Trump is corrupt and CZ did deserve his pardon. And the person who said that they brought in Biden's pardon attorney, the person who was there when Hunter Biden got his pardon, that's who they're like saying, oh, CZ's pardon wasn't fair. Per the person that was there for Hunter. Like, the whole thing was just like, wow, this is ridiculous. Ridiculous.
- [23:19]
E
One, one of the, So I, I talked to them about this while we were shooting the thing. And one of the things, you know, this is my opinion, obviously 60 Minutes can do what they want. That I thought was important context was I told them, if you want to say that CZ doesn't deserve the pardon, you probably also need to say, which by the way, I believe that a bunch of bank executives belong in jail. Right. Because Perry. And to your point, I think it's intellectually consistent to say TD bank, hsbc, Citibank did some pretty egregious things and people did not go to jail, therefore CZ shouldn't have gone to jail and deserves a pardon. Or you can go the other way and say N. CZ deserved it, but then so did all of them. Right. Like one of these two is a big problem because it can't be that it's illegal when crypto does it, but it's legal for banks to do it. You've got to pick one.
- [24:19]
B
Funny. Didn't we have this conversation and literally we, the two of us agreed on exactly that statement the day after the pardon.
- [24:28]
D
Yes.
- [24:29]
E
On here, in fact.
- [24:30]
B
Yeah, I'm pretty sure, I'm pretty sure that's what. Because look, you know the funny thing about crypto, look, we all understand a lot of the crap that goes on, but I think most of the people here understand and consistency at least, you know, it's, at least admit it, you understand where it's coming from. But look, I think we should get back to the topic is so yesterday was like a record in terms of, in terms of flows at blackrock. I personally think that that is a. I hate call making calls because you know, trading calls are one of those things that much more of a long term investor but from a, from a swing trading perspective that feels way more bottomy than toppy. Again. And the reason I say that is because the type of outflows are retail outflows as opposed to institutional who really don't care about this stuff. Retail and momentum hedge funds and they're following momentum and now we have a few days of. Well, it's not doing anything. Yes, it's possible that there could be another leg down assuming there's another shoe to drop. But if you. Someone did an article and I can't remember the post because I was away from my desk, but someone basically put the yesterday's outflows being small. Right. And so I'm curious what other people think but to me it feels like the kind of thing that we're. Look, we're seeing. We're in this choppy market, we're flirting with 93,000 again. Yes. Maybe we break 90 and maybe that panics people but in IBIT that doesn't translate to as much of a round number. So I guess we'll see. But it feels like the market is kind of like chopping around in here until there's some sort of catalyst one way or another. I think there's still enormous fear in the market and so I'm curious what people think.
- [26:31]
A
Go ahead, Matthew.
- [26:34]
G
Yeah, hi there. I think I agree completely that the market is most likely at the bottom of this current move down. Got some beautiful Elliott wave stuff where we've got the C wave equaling A wave which is the most common relationship. So move up from the very top. Also ETFs, they tend to be reactive. So you know, I think they're just reacting to what's happening in the market. They don't lead the market. So I think that that's not evidence that the market is, you know, is selling off. But there's lots of other signs as well. Actually a really good proxy is the pound against the dollar. That looks as though it's actually completed a correction down as well and it's headed higher. Then we've got interest rate expectations. So if you look at the Fed Watch tool, it was actually well in favor of a hold just a few days ago and this was when the market was really, really dropping and it actually swung to the likelihood that the interest rates would hold on December 10th. It's now swung back, it's almost 50 50. And I also checked on Poly markets as well and they're actually saying there's 56% chance now of a 25 basis point cut. So things are now swinging back in favor of crypto and we've had really good corrections across the board but they're very satisfying from an Elliot way perspective. And we're starting to see some very nice divergences as well. So I think that we are probably, as you say, there may be another leg down, but I think we're there or thereabouts before we get a really substantial recovery. Bitcoin I believe, to new all time highs. I'm also looking the S P had a very satisfying ABC correction down as well. So I'm also expecting that to push up again and the rest of crypto to follow suit. So we'll see I believe all time highs for bitcoin, for Ethereum, for quite a few others and others climbing as well. Maybe not all time highs for everything. As, as we said, a lot of tokens don't even have utility. But in general I think things are just about to turn around. So hopefully if things don't spill over too much with this Epstein thing, we'll might get a really nice Christmas rally. So you know, normally traditionally we get a good valley towards Christmas. So that's what I'm looking forward to and hopefully we'll all enjoy it.
- [29:13]
A
Yesterday we were, you know, berated with posts about how Jeffrey Epstein is Satoshi Nakamoto. So you know, I don't Think you can ever escape him? But Yago, go ahead.
- [29:26]
F
I think this is the most interesting time to be watching Bitcoin's price performance in maybe ever, certainly in the last decade. I, you know, Scott, you know, I'm not particularly interested in price action most of the time, but I think we are in the cusp of, of a huge revelation one way or another because the paradigm that everyone who's experienced in this market has been trading at for years now has been that we have a four year cycle and that that cycle tops somewhere between October and December, a year and a half after the Harvey we are now in that October December period. We're actually right in the middle of it, year and a half after the last haring. And the market has so far behaved very much. You know, it, it's behaved in this sort of weird aberration where it has approximated what a normal cycle would look like, but has been just different enough to leave everyone guessing the, the price started rising substantially before or the halving something we hadn't seen before. The price over the last year has been mostly fat. When you usually what we would see is as the, as we get closer and closer to the October December period, the price volatility goes up instead of down.
- [31:21]
A
And.
- [31:24]
F
And so I think at the back of every, everyone's head right now who's trading this market is whether or not the four year cycle is supposed to continue. And so the fact that we had in October the, you know, this peak and have, and are down effectively 30 from them from then seems to indicate, it seems very, very much like a normal four year cycle. And now we've got another two years to wait before price starts to appreciate significantly again. Not to mention the fact that we have potentially another 25%, 50% to go down. And, and so I think the, the market is extremely muted now and there's relatively little volume, little interest in trading this market because everyone is holding their breath to find out what kind of market are we in. Has the four year cycle broken or are we still in that paradigm? And if the four year cycle has been broken, I think that will only be confirmed in 2026. I've, I've previously said January, February at the earliest. If the, if we continue to see drawdowns through January and February, I think pretty much the, the four year cycle will have been confirmed. But if it isn't and, and, and if the, the, the market breaks from that four year cycle, then I think we're set up for basically a, a degree of discovery that and price discovery that we haven't seen in well over a decade in crypto.
- [33:12]
A
I think we could argue, Yagu, that that wouldn't even be confirmation of the four year cycle though, because there was just no bull market.
- [33:20]
F
Yes, so, so that's exactly if we.
- [33:24]
A
Continue to draw down in January and February, February and all of 25 was a down year even for bitcoin. Now it's down, you know, in 2025 and from a year before and altcoins never performed. It's just like there was a nice bitcoin move in the midst of a crypto wide winter that has been there since 2021.
- [33:46]
F
So I think there are two substor. First of all, crypto itself is one substory. Crypto has underperformed bitcoin every single, always.
- [33:58]
G
The.
- [33:59]
F
And so that's like a, a relatively minor substory. The big substory is that bitcoin itself has consistently seen diminishing returns across, across every single cycle. And if this was our cycle with a $126,000 peak price with a very, very weak dollar, then we're seeing significant and continued, you know, decline in the appreciation that you get per cycle. And so it's actually a really, really important moment that we are in now because if we get confirmation of the four year cycle, then we also get comfort information of diminishing returns and we actually get strong confirmation that these diminishing returns are significant and continuing. And that puts a lot of bitcoin's future price appreciation in question in my mind. Even for me, as you know, the hardest of hardcore bitcoiners, I would be forced to reassess my expectations for bitcoin going into the future. On the other hand, if the four year cycle is broken again, I am forced to significantly reassess how I think about the way this market plays out. So I think we're at the most interesting and exciting time and, and it's exactly because we're at the most interesting and exciting time that no one wants to trade this market. One last thing in terms of the substories, another big part of the substory which hasn't come out yet, it isn't yet public, but I think more and more people are becoming aware many, many, many funds on October 10th when the perps market crashed, effectively went bankrupt or became insolvent. And we're going to start seeing the corpses float, float up to the surface over the next few weeks and months, especially as the price continues to decline. And that I think has relatively little impact on Bitcoin, but has a continued and deep significant impact on general crypto prices. Alex?
- [36:18]
D
Yeah, absolutely. So I wanted to chime in here. You, you mentioned something Scott, that's really, really important is were we truly in a bull cycle when it comes to crypto as it its own asset class and own sectors and we're stocks truly in a bull cycle. And I really crunch the numbers because this is a very good question that you're asking, Scott. And it's not a question that many answer with great research and fresh data. And when I what I was looking essentially guys, is if we look at 2025, you know, from January 1st to today, November 19th, essentially we look at the performance of the NASDAQ 100 and S&P 500 100, they have pretty decent performances. How however, if you remove the AI stocks, both of these indices are, are down 60 to 70% of its actual performance annualized returns. And just for everyone to know, like for a stock market to be considered a bull run, how to cope quantify that, how do you measure it? Right. And it's usually when you have an annualized return of 21 to 30%. Now let's go back to the entire stock market rally. Without AI and without AI stocks S&P 500 is only up 9% this year. And so that's not even even half of the 21 to 30% a year annualized return. And the Nasdaq is only up 13% without companies like Nvidia, Palantir, Meta, et cetera, et cetera. And the historical average of NASDAQ is 18%. So my conclusion, when it comes to stocks and a lot of people talk about, you know, exaggerated P ratios which, which are absolute bullshit. I mean we had p ratios of a th000 at sometimes some absolute euphoria that is even remotely close to a 28, 30, 40 or 50p ratio. So my conclusion is we didn't even actually have a full blown stock market rally. It was just purely sectorial. It was just AI. And every single metric on the macro side reflects this. You know, the, the GDP growth is from AI, it's from energy, it's from the infrastructure that supports AI, it's from the investments in AI. And also one last thing, you know, like Scott and by the way, I think the four year cycle is absolutely going to be proven wrong. I do not believe in four.
- [39:02]
A
I think it's already proven wrong is my point. But yeah, go ahead.
- [39:06]
D
Yeah, I'm 100% with you. It's proven wrong because technology goes through three core stages. You have what we call the innovation stage, which is the boom and bust, the bubbles and bursts and you know, all of the technology that does not solve any problems that become irrelevant, disappear and die. And then real technology surfaces. And then from innovation we go into what we call growth. And growth stages are when technologies are actually generating revenues, they're no longer in a bubble and they manage to, to grow earnings a bit. All the metrics you want to use to calculate the profitability and the health of a company and then they go public through IPOs. And then eventually the third stage is the maturity stages. And that's every time software, even hardware happens, it goes through these three stages. Number one innovation, number two, growth, number three, maturity and then maturity. Eventually it dies off and new technology replaces the previous technologies. So I don't believe in this four year cycle. I think it's just in the beginning, the early stages when you're going through the innovation stages. But once you go through growth and you become a mature asset class, there's no such thing as a four year cycle. It's just there's a bull run and there's corrections and there's a bull run and there's corrections. And so, and we see that with.com stocks, by the way, guys, you can really see how it was very volatile. It had its cyclicalities, but as soon as we reached the maturity stages, then all of a sudden we had the longest bull cycle in the history of stocks which is 12 years long. And I think that bitcoin is going to go through a 12, maybe not 12 year. Let's see how quantum computing can affect Bitcoin. But until it gets vulnerable to attacks, I think it's up only with corrections along the way. So I don't this is going to last. And one last thing, Scott, just for the altcoiners out there who are suffering, I also managed to dive deeper into the data and essentially if we look at total altcoin market capitalization all time high of 2021, it was roughly around $1.5 trillion, Bitcoin excluded because I think bitcoin is really decoupling from altcoins. It's really its own world. But now today, Scott, we're at $1.2 trillion, which is, you know, 3, $300 million, $300 billion lower than the all time high, 20, 20, 21, saying that all coins have not managed to surpass the previous all time high despite four to five, five years of innovation. So the whole coin cycle is just Completely. And let me, let me explain to you guys why it's even more than we think it is, is guess what guys, it's not just excluding bitcoin. What if we excluded stable coins? Do you guys know how much USDC has gone up in terms of market cap since 2020? It's gone up 10 times. Do you guys know how much tether has gone up since 2020? It's doubled its market cap. So if you really dig like dive deep into this, Scott, like the all coin cycle has been absolute disasters because you have to remove bitcoin. It's its own world. And then number two, if you, if you remove state bull coins then we just realize how we are. I just wanted to comment. It's really important.
- [43:01]
A
Bitcoin's trading below 90 for those enthusiastically watching. So. And I think stocks are up. So correlation my ass. Anyone else thoughts specifically on what we were discussing here with the cycles and such?
- [43:20]
B
I mean, yeah, I mean look.
- [43:25]
F
You.
- [43:25]
B
Can'T have a cycle.
- [43:26]
A
You come in so hot, Dave. I love it. Usually it's a big sigh or a, you know, hot take.
- [43:33]
B
Well, look, there's two things. You can't have a cycle and claim that there's a four year cycle with bitcoin based on the halving, which was traditionally the halving happens. People panic because they think miners aren't going to sustain itself, network growth is going to slow and yada yada, so it kind of softens, et cetera. Then they realize after six months that no, actually the network is alive and well and it goes on a rampage. And then after that bitcoin gets to its plateau and people take the money and they push it into altcoins because the people who are buying bitcoin are crypto enthusiasts and don't trade equities or other sort of assets. And if you think that that is has any chance, I think even the slightest chance of repeating and it wasn't, they weren't one off for two reasons. You just, I mean you're fooling yourself. I mean you literally, you're just, it's delicious delusional. That is done.
- [44:30]
H
Now.
- [44:31]
B
Could there be cycles and waves and et cetera from any other way of looking at it? Of course there could be. Is there a political business cycle? Sure. Is there a political cycle? Yes. Is the euphoria of Trump fixing and undoing the devastating attacks of choke point, et cetera and the attempts to crush an industry from the Biden administration. Did that go, you know, did that, did that go and then stop when it became obvious that half the country didn't trust anything that Trump did. Is there anybody who thinks that the damage to the crypto market of Trump Coin and Melania Coin can be overstated? I think that those were they hugely damaged it. I think it damaged it institutionally, et cetera. So there's a lot of cross currents here but none of this has anything to do with with a four year cycle based on having risk or based on rotation from Bitcoin to altcoins. That's just silly. There is a meta cycle going on and actually Chris Perkins from. Just basically posted there's an article on the Time Financial Times and it is incredibly important. This may be one of the most important stories that nobody's talking about yonder. I'm sure you care about this. The the the chair of the Basel committee admits that global crypto rules for banks need reworking the the key literally the final boss for Bitcoin to become the form of pristine collateral. Because for for people who don't understand it, collateral has two variables that people care about when they decide how to haircut collateral, how much LTV you can give against it in the long and the short term and that's liquidity and volatility. Bitcoin is arguably the best from a liquidity point of view, certainly at the sizes that people will care about and from a volatility point of view is perfectly reasonable. So all of a sudden instead of the banks literally not being able to be counterparties and not being able to use crypto and having to keep it completely separate and outside the system, it could go inside the system. The demand driver for that is massive. And that's literally a Financial Times article from today. And of course when the market gets in extreme fear like it is today and people dumping and thinking that you see the FUD accelerate. So you see our articles about Quantum and this and you know, et cetera. I mean yeah, there's a risk from Quantum, no doubt primarily to some of the older wallets, which includes the Satoshi wallet. And can that be absorbed immediately? If that were to happen tomorrow, then yeah, you probably take a 25% haircut. 5% of the supply coming on the market could knock it down 25% but that's pretty much that would be kind of the most that any rational person would look that's not a reason for it to already be down 25%. So you can make an argument that it's priced in I don't know or care. I'm just saying that when you get to these levels of extreme fear. You start to see people selling just because everyone else is selling. And we've seen the meme before. It's your favorite one, Scott, you know, along with the, the everyone piling up to buy Bitcoin 25.
- [48:09]
A
And I love it.
- [48:10]
B
And at 90, nobody ever. It's empty. Oh my God. What the hell am I going to do?
- [48:15]
A
Well, myself, my wife and my kids are in that buy everything that's not nailed down line right now. So you can, guys can go ahead and buy bitcoin when it's at a new all time high. I've been heavily deploying whatever dry powder I have at this point because I just don't see how we don't trade much higher than this in the future.
- [48:39]
B
Right.
- [48:40]
A
I don't know if that's next week, next month or next year, but I have a strong conviction where bitcoin's going. And I'd much rather be buying at 89,000 than 126, to quote the infamous Mike McGlone.
- [48:52]
B
Selling when they're yelling makes sense, but you want to be buying when they're crying. And there's no doubt anymore with greed. And all sentiment indices are showing crying. It's that simple.
- [49:05]
A
Can I just say that Jim Cramer, like this morning said that it feels like there's a cabal keeping Bitcoin over 90,000 and that cabal must have read his stupid tweet and pushed it down below just to spike him.
- [49:17]
B
Well, I mean, Kramer, I actually, I responded to him and I reposted it, but basically his tweet showed nothing, literally nothing. That it was exactly upside down. I mean literally upside down. He's thinking he likes bitcoin, but he thinks it's being held up. The truth is that if you like bitcoin, then you understand that all the macro wins are there. You don't look at it that way from a cabal. That way. If anything, there's a cabal that's been the one conspiracy theory that's consistent, that I don't necessarily believe, don't believe, is that those people who want to accumulate bitcoin are scaring the shit out of all the weak hands to try to be able to buy it cheaper. That I've heard from many people, but not the other way around. I have not heard any human being in the crypto space or anywhere else saying that there are people who are trying to keep the price elevated. That just doesn't even make sense really.
- [50:19]
A
Obviously.
- [50:20]
B
First of all, they would be terrible anyway. Carla You've had your hand up for a while. So sorry. Yeah.
- [50:27]
I
Good morning. Good morning, Scott.
- [50:30]
B
Good morning.
- [50:32]
A
My mic's not working, but good morning, Scott.
- [50:35]
I
Well, yeah, I can't disagree. I think what Dave just brought up about the OCC letter that went out to banks, that, that is essentially green lighting banks to now be able to custody small amounts of cryptocurrency assets for purposes of paying things like gas fees, is a nice little crack in the door that gives banks exposure to crypto, something that traditionally, obviously they couldn't do and now makes it a more appealing addition to their suite of services and gives bitcoin and other assets like Ethereum institutional credibility. Because now that banks can actually hold them and actually use them without fear, because all of this was the result of the prior administration scaring banks that if they custody though there will be consequences because it's such a volatile asset and that it will, it will impact their regulatory compliance. And this turn by the occ, I don't think is priced in and I don't think is fully absorbed by the market yet. And thank you for coming to my TED Talk.
- [52:04]
A
It would be awesome if my mic worked. Sometimes you just hit it and it stays mic off. So here we are. I think Buzz was on stage, wasn't he? Up here?
- [52:15]
H
Yeah, I'm up here. We have a great sponsor today with Yago and bitcoin os. Just before we pivot here to our sponsored segment, just a disclaimer that Mario's company, company ibc, does marketing, incubation and investing and sponsors on the show are sponsors associated with ibc? Not necessarily Scott, Dave or myself. So Iago, as we're getting started, I.
- [52:42]
A
Will just say that in this case, I happily associate with myself with Yago anytime.
- [52:48]
F
I didn't even know we were sponsoring. I don't know how that happened. Glad that we can help out.
- [52:58]
A
Awesome.
- [52:59]
H
Well, I, I associate with the two. I love bitcoin os. So for people who are tuning in, this is going to be a, a great, a great segment here for the AMA. But Yago, why don't you give the 101 to people if maybe they haven't heard of Bitcoin OS, of what you guys are all about?
- [53:17]
F
Sure. So I've been working on bitcoin now for 15 years and the primary thing that I've felt about what sort of makes bitcoin different from everything else that we're seeing in crypto is that bitcoin has been built to last. It's built as the ideal substrate in which to have property rights and assets for the entire world because it doesn't change, right? And the challenge I've had with most everything else built in crypto is it is built like software. It is constantly being upgraded. It constantly has to have a team managing it and setting out new roadmaps for it. Ethereum has a new roadmap every six months and, and, and has a new narrative and, and then new technologies need to be built for it. And most other systems that have come since Ethereum look like Ethereum. And that's great for software, but it doesn't make sense for the system which is supposed to provide digital property rights across the world, across borders, for everyone. And I think, you know, I, I sort of had to deal with the fact that I, that was my argument for close to 15 years and, and, and, and, and the entire crypto world sort of disagreed with me. And it's been really over the last four years that we started to see Bitcoin has really detached from the rest of crypto. And it's clear that what institutions, governments, high net worth individuals, sovereign individuals, cypherpunks are looking for is Bitcoin because it will actually protect their property rights and doesn't behave like software. At the same time. I was also arguing with bitcoiners throughout this entire period because many bitcoiners have come to believe that Bitcoin can and perhaps should only be a ledger for btc. But we do see that there is huge demand from individuals, from institutions and really from everyone for things like stablecoins coins, for things like decentralized finance, for things like privacy and for things like scalability which currently can't exist in Bitcoin or up until very recently were not possible in Bitcoin. So myself and a number of other people who have been working on Bitcoin for many years we've been working to solve this problem without introducing any change changes to Bitcoin or introducing any for to Bitcoin. And last year we were able to demonstrate something groundbreaking which most people thought was impossible, which is the ability to bring any kind of compute to Bitcoin. So the ability to have any kind of asset on Bitcoin, the ability to have privacy natively on Bitcoin, the ability to scale Bitcoin. And we did it by integrating zero knowledge proofs into Bitcoin. And we first proved this in block 853626 when we, we were able to verify and validate the first ZK proof in Bitcoin. Ever since then we've been building out what we call Bitcoin OS or bob us the operating system which allows developers to build anything that can be imagined on Bitcoin, building defi stable coins, new kinds of digital assets, real world assets and we and perhaps most exciting, actually turning BTC itself into a fully programmable asset. And so BUS has brought programmability for the first time to Bitcoin. It's brought scalability and we will soon be bringing privacy. And we now have entire chains like Litecoin, Cardano and and and multiple others integrating directly into Bitcoin. Through boss we have the first roll ups on first true Bitcoin roll ups will be launching over the next couple of months on Bitcoin bringing new levels of functionality and scalability. And we've also introduced programmable btc. We've started to see people introduced dao tokens, meme tokens and we ourselves have introduced the BOSS token which is a way for paying for compute on Bitcoin and that has now started trading across Dexes and the largest sexes in the world, Binance, Kucoin, Kraken, etc just a few weeks ago. And so this is a for me a deeply personal mission. It's something that I'm building for myself so that I can use it building for the people I know who are interested in using these things and building for the world. It's something that I've been working towards with the people I'm working with it on now for almost a decade and a half and it's an extremely exciting period for me because this thing that I've been dreaming about and building towards and going through sleepless nights for is now becoming a reality. And so BOSS is bringing programmability to Bitcoin and allowing Bitcoin to become a system on which we can have all types of property rights and into which we can integrate to the rest of crypto, allowing crypto itself and all of the cool things that have been built across Ethereum and Arbitrum and Avalanche and Cardano to now rest on the most solid trusted foundation in the world on Bitcoin.
- [60:06]
H
Iago, I always appreciate interviewing you because you succinctly answer pretty much all of my questions in one answer. You're so eloquent speaking about Bitcoin, so props to you on that. But there's a couple things I want to unpack because it was a long answer. I guess the first one that I'll go to is the first ZK proof that was on Bitcoin Mainnet. Can you explain what that actually Unlocks for Bitcoin. Is it sort of a key privacy layer now that's available to Bitcoin? Maybe speak in layman's terms some people who might be tuning in.
- [60:49]
F
Yeah, so privacy is not something built into the system yet. It requires additional effort. But effectively what we've done is actually quite simple in that what we've built is a system which allows for ZK proofs to be written to Bitcoin and then verified as Bitcoin transactions. And then the, the, what this allows us to do is to take any type of compute, any, any software program, any dap, any type of programmable token and to, instead of actually writing the entire piece of software, the entire smart art contract to the chain, which is the old paradigm, the old way of doing things, to actually just write the proof that you've correctly run the software. Now this is huge benefits from a scaling perspective because instead of having every single node and every single validator and every single miner rerun every single computation that wants to interact with Bitcoin, they actually only need to verify tiny little proofs. So basically you can now take any piece of software, turn it into a verifiable proof using cryptography, and then turn it into a smart contract on Bitcoin. And the first example that we have of this using the bus system is programmable token. So people have heard, you know, we've had, since 2023 we've had tokens on Bitcoin, we have BRC20 and we have runes, but those are not programmable. They are very, very limited in, in what they can do and, and in many ways are actually more limited than btc. For example, they can't truly be fungible, you can't easily transact them. A few months ago we introduced the first programmable tokens onto Bitcoin and we've seen people use them right now, mostly in little experiments, but also some have been used by institutions as, as ways of representing real world assets that they're transacting with OTC using Bitcoin as the final settlement layer. And we've, we've been seeing on, on a daily basis as much as 40000 transactions a day of these types of new programmable token tokens transacting on Bitcoin, representing a significant portion on some days of the total volume of transactions on Bitcoin. And so I think this is really exciting because we're, we're seeing people utilizing this technology even though it's still very many ways, some of which we hadn't initially anticipated. Or imagined. And we've introduced a new era where Bitcoin itself becomes a general purpose ledger instead of just the ledger for BTC that can be fully programmable and can represent any kind of asset.
- [64:16]
H
So Iago, why do you believe that programmable Bitcoin is necessary rather than just interesting? Why do you think it's such a logical next step for Bitcoin?
- [64:31]
F
Well, I can speak sort of from two perspectives. One is my personal perspective. I haven't sold Bitcoin and don't intend to. I would like to be able to continue to hold the Bitcoin that I have and continue to accumulate forever and let my children and their children, their children's children inherited. For that to be something that I can do and still see value in the btc, I need to be able to utilize it as collateral. I need to be able to generate yield on it ideally. And so I need to be able to, you know, lock it up, borrow against it, stake it. These are things that today without boss, you can only do. I can send my BTC to someone else, hope that they keep it safe and borrow against that, but I've managed to studiously avoid losing my Bitcoin in BlockFi and Celsius and Voyager and all of an FTX and, and all of the many things that have collapsed since even before Mount Gox by, by refusing to do anything like that. So my BTC and like me, you know, millions of BTC actually would like to be active, but no, but the people who own that bitcoin, they own it because it allows them to own something directly and not have to trust anyone else. That is the superpower of Bitcoin. And so until they have the ability to programmatically do it from their own wallet, they're not going to put their Bitcoin at risk. And so this opens up for me and for people like me a huge new opportunity and, and makes Bitcoin so much more valuable and so much more useful. Beyond that, over the last year in particular, I've been speaking to a large number of institutions who now own a significant part of BTC, somewhere in the vicinity of $300 billion of, of BTC is currently owned by institutions, are actively managed by money, by professional money managers. And they for different reasons also want to be able to put the Bitcoin to work. And for regulatory reasons and for mandate reasons, they also cannot use third parties and sort of own a security instead of actually directly owning the btc. So there's a huge demand from sort of people like me Sort of retail who want to be able to put their bitcoin to work in defi. And also there's a huge demand for a new kind of defi, which I think of as more like BTC focused institutional DeFi which we haven't even seen develop yet.
- [67:34]
H
But yeah, I made a note from a previous discussion that you and I had that there was almost a billion dollars of institutional Bitcoin that was pre subscribed to your system. Is that still active?
- [67:46]
F
Accurate? Yes. And we've also seen the first several millions of dollars of institutional Bitcoin being used via BOSS right now. The use case is sort of what we envisioned as the most simple and powerful early use case, which is institutions that are borrowing against their Bitcoin. Today if you're an institution, you want to borrow against your Bitcoin bitcoin, you have to go and, and, and, and provide your Bitcoin to a third party who will effectively escrow the Bitcoin for you and then lend to you. And this introduces huge regulatory and legal hurdles. And so what the first sort of institutional, the first institutional players who've been using BOSS have been doing is they've been program dramatically locking the BTC as collateral in their own. In other words, they can programmatically commit, they can no longer move the BTC until they pay back the loan and then against that are taking loans. And so the BTC actually never has to leave their custody. And at the same time the lender can be assured that the BTC you see is there available as collateral and if the loan is ever defaulted on the action, the BTC would programmatically be sent to them. And so it's a, a much cleaner from a technical, from a security perspective and also from a legal perspective, a much cleaner way for them to, to use this. And we've started to see the first tens of millions of dollars of BTC being used in this way.
- [69:33]
H
What does the BOSS token do and how does it work within the ecosystem?
- [69:40]
F
So one of the things that we realized about a year and a bit ago as we were building this and we started to talk to people about the use cases that they would need is they require a network which is able to generate the proofs for them, do the compute for them and verify the proofs. Anyone can do that themselves, but in practice the vast majority of people don't want to, aren't technical enough or have no interest in running an operator in order to do this. And so the BOSS token emerged from those conversations and is basically a guest token for Bitcoin on Ethereum or on Solana Eth or Soul are used as gas tokens in that you basically pay for compute and, and most of what you pay for, most of the transaction cost is based on your computer, not on the specifics of, of the, you know, not on the value that you're transacting. So that's what a gas token is. A gas token basically is a way of paying for compute. Bitcoin natively has not had a gas token is something that we've had to add and so that's what we've done with the boss token.
- [71:01]
H
What do you guys have going on in the next few months that we, we can let the audience know about or maybe a call to action of how they get involved or anything like that as we're wrapping up?
- [71:13]
F
Well, certainly if you want to get involved in many ways you probably the easiest points of entry is to check out the Bitcoin OS build website, the discord, the telegram, the, the Twitter account. So btcos, we are going to start soon being able to announce the first roll ups that will be rolling up to Bitcoin. We're also going to, we've already seen transactions between Cardano and Bitcoin occurring trustlessly. We're now in the process of integrating it so it can happen natively with Cardano and Bitcoin wallets. So we expect that in the near future. And then similarly we're integrating BOSS with Litecoin so that we can turn Cardano, Litecoin, Doge, Monero and Bitcoin as sort of the first line of UTXO chains integrated with Bitcoin, turning them into a single unified super chain. And from there we will be integrating other chains as well. Ultimately our goal is to integrate all of crypto so that Bitcoin can become the trustless hub across which you can have Solana interacting with Ethereum, Sui, Cardano, all transacted via this, the central hub of trust, Bitcoin. Have I lost you guys?
- [73:14]
A
It was super. I can't tell if I'm here, but I thought maybe Buzz was speaking. I just didn't hear it.
- [73:21]
F
Well, I'm glad I wasn't just talking into the void.
- [73:26]
A
Oh, it's always so awkward, man. All of a sudden you don't know if somebody's gone or if you just like are having one of those glitches where you can't hear anything. Buzz, are you back?
- [73:36]
H
I'm back now. It was. I knew you were about to finish speaking Yago and I was like oh, crap. I got, I got rugged. But just another day on. On X. I did pin up for the audience one of the posts from the boss account. So there's. Their handle is at btcos. So I, I know, Iago, you were calling out how to get involved in the community. We just urge people to go directly to the profile and then there's obviously the website in the bio there so people can follow official links. But I, I always, always appreciate talking with you, Iago. I think I definitely encourage the audience to follow Yago as well. You can tell that he's obviously highly knowledgeable about bitcoin and what he's building. Any final thoughts here, Iago, as we wrap up?
- [74:26]
F
I think this is. This year has been the most exciting year for me in bitcoin in many, many years. Everything seems to be coming together at the same time. I do, like Scott, believe that we're about to perforate the four year cycle and kill it dead. I think that we're seeing institutional adoption and bitcoin becoming a mainstream asset. And at the same time, I think bitcoin is not just maturing as an asset, but is maturing as a blockchain. And the technologies that we're developing are playing a key role in allowing Bitcoin to become the Internet of value that we've spoken about for so many years and haven't delivered. And I think if we play our cards right, we're going to see all assets in the crypto space. We're going to see the crypto space integrated into a single system rather than many different fragmented and tribalistic chains. And I think this is the beginning of the next wave of our renaissance where ultimately all value will be transacted via crypto.
- [75:42]
H
Well, I like the sounds of that, Iago. You definitely have me in a better mood. Seeing bitcoin hover below that 90k range and seeing builders like yourself building on bitcoin definitely puts me in a better mood and I'm sure for a lot of people as well. Appreciate you joining Iago. I know is a. It's kind of a surprise ama, but this was awesome. Hope everyone in the audience has a great day and hopefully we get thanks a nice surprise.
- [76:10]
F
Thanks very, very much.
- [76:12]
A
I was surprised. I was surprised. I like.
- [76:14]
H
It's better than our usual ama. Scott. I like these ones.
- [76:21]
A
Yeah, of course.
- [76:23]
H
All right, cheers everyone. Have a great day.
- [76:26]
A
Have a good one. Bye everyone.