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The Wolf Of All Streets
BTC Skyrockets Post-CPI: $100K Incoming? | Crypto Town Hall
00:48:19
BTC Skyrockets Post-CPI: $100K Incoming? | Crypto Town Hall
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- [00:01]
Scott
Morning, everybody. Happy Wednesday. If you hear background noise, it is because I am watching my wife play a doubles tennis match. Doing this one on the road. I'm usually obviously in the office, but trying to multitask here and host this show by myself. As you can see, Bitcoin skyrockets post CPI 100k incoming question mark. We're pretty damn close. I checked a few minutes ago. 99,500 now sitting at 99,253 or so. Ethereum at 3,332 XRP. Absolutely pumping up 15% in 24 hours. Almost 3 bucks, $2.96. But at the moment, when I looked briefly this morning at bitcoin dominance, it was dropping. So good to see a risk on environment where altcoins, even just slightly seemingly are outperforming bitcoin. On this move to the upside, obviously the catalyst here, apparently cpi, we can unpack what that means. I kind of laugh at these numbers. We know that they're cooked. And you know, we had 2.7% CPI going up to 2.9%. So actually a rise in inflation, which you would think would be bad news, but it's good news because the expectation arbitrarily set by Wall Street, 2.9% meeting expectation, meaning good news, markets get a little more certainty and they go up. Now, I think core was down slightly, so that was kind of the good news. But every single day, we seemingly get new financial macro data that's conflicting. It's good news, it's bad news, Markets react and then we revise later. Anyways, Dave, does that about sum it up? Did you hear that? You were coming up on stage, so I'm not sure you heard Bill. We got to go to Bill. I mean, what do you think of what's happening? And now I just show Bill dropping to a listener. I don't know if we're in the glitch. Can. Can everybody hear me? Lou Amateo, either you guys want to jump in? I'm not even sure if Dave and Bill are on stage anymore.
- [01:59]
Dave
I'm still here. Can you hear me? I can hear you.
- [02:01]
Scott
Stop. I can. Perfect. Okay, now I think Bill's back. I just see people dropping on and off as usual. We're living in the glitch here. I mean, Amato, what do you think of the market generally today, this move to the upside?
- [02:14]
Dave
I agree that the CPI, when we're talking about basis points here on a micro level is a funny reaction. But we also saw some news. I don't Know if you saw this, Scott, that there was an announcement, I haven't been able to confirm it, but Trump's SEC to overhaul crypto policy may freeze enforcement actions. Trump's SEC reviewing some crypto enforcement cases pending in the courts. So, you know, we're a week away from Gary Gensler resigning. We have Trump's SEC team looking at this and freezing enforcement actions. I think we obviously had this positive CPI read that inflation's headed in the right direction. I think this coupled with the SEC news and the SEC revolving chair looming, I think this is adding to the risk on environment we're seeing for alts.
- [03:08]
Scott
Yeah, I think that is a great summary of where we're at. I'm not sure if you guys saw Joe squawk Joe Kernan yesterday interviewing Gary Gensler, but man, he dunked on him hard at the end of the interview. He was kind of pressing him on bitcoin, as Joe likes to do. And Gary Gendler said, and Joe joked something to the effect of, well, clearly you own bitcoin and you hate all these other assets. Kind of like clowning him and saying he's a bitcoin maxi. Gendler said, I've never owned any of the, any of these and I've been consistent on that for seven to eight years. And then Joe responded, well, now you can because you won't be an SEC chair anymore. It was a pretty gratuitous dunking on national TV on Gary Gensler on his way out the door. I mean, there's nothing better than watching the door hit this guy's ass on the way out the door. Right? I mean, it's just on the way out of the office. It's amazing. Go ahead, Dave.
- [03:57]
Bill
Yeah, I mean, I think the biggest move today is that to looking at is the 10 year. I mean, you know, a 15 basis point move in is, is quite important and it's a. And technically, I mean, it'd be interesting because I, I didn't see the section where you were talking with Chris this morning on charts. If you went over the ten year chart. But yeah, we did. It's a very, very serious rejection off of, off of that yield level. And that was what was making people worry. I mean, pretty much all the bearishness that you heard earlier this week was, oh my God, the 10 year is going to spike back up over 5 and you know, it's going to grind everything to a halt, et cetera. So, you know, that off basically just takes out the rest of the narrative. You know, as far as bitcoin is concerned. I mean, until we take out 102 with authority, we're still in a trading range. But you know, you know, this is still that period of time before we see what actually happens. I think it's, I still think it's a buy the news deal. Next.
- [04:52]
Scott
Agree. But you know, I think it's important to note just. I'm not telling you this obviously, but the 10 year doesn't drop in a vacuum, right? So like, yes, everything's reacting to the ten year dropping. No, I'm just saying. But unpack it. But the 10 year is dropping because of something that's fundamentally happening. Yeah.
- [05:09]
Bill
Oh no, there's no doubt, no doubt. I mean, you know, it looks, we know you and I talk about this all the time. I mean the avowed policy, or certainly the unwritten but very clear policy of the Federal Reserve is to promote asset inflation and keeps the consumer inflation down. That's what they want to do. They want to help assets and they want to have that go into more productivity and things that keeps consumer inflation under control. That's what they want to do. And to the extent that they can accomplish that, they're, you know, they're feeling pretty golden and it will open the eyes. The other thing is like even I hate to give any credit, but I hadn't noticed it. You know, Peter Schiff pointed out that things like Empire Manufacturing and all the other data is showing more softening in the economy. Which perversely, as you like to point out, is good for risk assets as well. But from a bitcoin perspective, I mean, it should be. It's not just a risk asset, it's an asset that is, it is designed to be a hedge against this government foolishness. And it's becoming more and more apparent. I mean, even Ray Dalio talked about it in his most recent missive. Larry Leppard joked that he must be reading Lyn Alden. And so when you get Ray Dalio parroting Lyn Alden on what's going on on the fiscal side, you know that Bitcoin is starting to gain some pretty serious adherence.
- [06:30]
Scott
Yeah, and Amito, I haven't, because I'm kind of on the road. I haven't been able to unpack that SEC news but aligns with our expectation. Right, but I think it's just the best, best possible scenario at the end of our expectation. But I mean if you see Kraken case go away and the Coinbase case go away and all of these enforcement actions, you got to imagine that just all systems go in the United States for crypto. Right. I mean, if it's one thing they don't pursue them or they just pursue parts of them or they decide. But if they just wholesale drop all of these cases and focus on more important things, I mean, I don't think you can have much more of a bullish catalyst short of the strategic bitcoin reserve.
- [07:14]
Dave
Agreed. I think that we're in the super timeline. You couldn't have dreamt this up better. It's actually pretty strange. Maybe simulation confirmed, but we're going to have a pro crypto policy. There was rumors circulating that in Trump's 150 executive orders he's going to sign in day one, there's many involving crypto. You know, we have Loomis pushing for the bitcoin reserve. We also have a critical mass building with bitcoin reserves across different corporate companies. Pressure and tech, you know, obviously sailor generated. But I mean when you cook all this stuff up and the rise of AI on top of it, it's starting to get really fascinating. We're also seeing compute becoming such a big primary resource as this like tech trend accelerates. And the actual utilization of this compute for rendering happening on chain is becoming a standard service. We're standardizing stablecoins. I mean, kind of feels like this is the time where all of this infrastructure that's been built becomes the actual functional Rails plugging into the real economy rather than just speculation. And that's a little spellbinding.
- [08:45]
Scott
Yeah, I mean it's like the movie Almost Famous. You know, it's all happening. I mean it's literally all happening. Go ahead, go ahead.
- [08:50]
Tom
Bill, hey, good morning. So, yeah, I mean, obviously good news all around this morning. I think that my impression, and I'm still digging in a little bit, but my impression is is people were looking for confirmation of no bad news. And I think really what's happening is, is M2 is bouncing off the bottoms. And we've seen that in the last week. I think China is going to be pumping significant liquidity into the global supply chain and I think that's going to basically have a trickle down effect globally on risk assets for a while, I think. Let's keep in mind that Q4, 20, 23, we didn't know who the President was going to be. Q1 24, we didn't know who the President was going to be. And bitcoin was ripping. Obviously a lot of it was ETF driven, but I don't think all of it was ETF driven. I Think a lot of it was bouncing off the multi year lows on liquidity tightening cycles and I think that's what's happening now and I think the markets are applauding the fact that there's no really bad news from, from an inflation perspective that would temper that anytime soon. And you know we had bitcoin higher in light of you know many SEC attacks so, so I, I, I'm, I think the loosening of the regulatory purse strings is, is actually going to be more for better for adoption which, which will obviously affect price long term but, but I think liquidity is the most important factor as if, if, if all you care about is price right now. It's not all I care about. I care about adoption just as much but I think the regulatory new regulatory tailwinds huge for adoption. I think need to reset long term rates lower which is going to lead to you know more loosening from China and quantitative easing probably in you know late Q1, early Q2 in the US is going to basically create a, a massive run on alts and you know I don't think there's really anything that anyone can do to stop it at this point. Save some catastrophe that creates just massive inflation. I think LA is going to lead to about a trillion in cost to the economy. I think they're grossly underestimating the impact of LA. It was 10 billion a week ago now I'm hearing 100 billion. I said day one I'm like this is a trillion dollar mess and I still stand by that. So you know it all just basically points to significant quantitative easing across the entire global economy.
- [11:24]
Scott
Yeah, I like all coins. I think the governor is kind of off that SEC news if that's true sort of caps off the it can also be an altcoin and not just a bitcoin rally you know in the United States. I think that's what's coming. It's possible honestly if we had no news, if we had no news and you just looked at the four year chart, that's what's supposed to happen this year. Everything's happening exactly as it should have. Even if we had amnesia or we're in a coma for the last four years, we're right where we should be.
- [11:52]
Tom
You have to wonder with M2 spiking did and obviously we won't know for a few weeks but, but did the alt season start today? I don't know. It's possible it did. Who knows you know definitely possible.
- [12:04]
Scott
Tom, love, love you and Lou Tom, you guys both obviously Deep in the sort of Web3 altcoin space. I would love your thoughts on all of that.
- [12:14]
Lou
Yeah, just briefly on the macro side, I think the biggest thing to watch for me because the liquidity perspective is going to be very positive as the speaker just outlined. But what we really have to look at is rates. This morning was great for rates in terms of a soft CPI print, but tariffs are going to be the big thing to watch. If we have very strong tariff policies from Trump like he did in his first administration, it's going to be bad for yields, bad for the dollar and bad for risk assets. In this first administration, Trump imposed tariffs on about 4% of imports and across the year that rose yields about 50 basis points. So it's like two rate hikes just from the last tariff policies. I think people will point to that and say he used that stick the first time and he's already even walking back some of the tariff discussions he's had. I think he's unlikely to proceed with those policies and we're going to see some favorable tariff related things across the year which should be good for yields and good for risk assets. In terms of what that means for altcoin season. People are calling the top on this already like Anselm and a bunch of others saying the cycle is over and altcoins are dead and blah blah, blah. We're just getting started, man. This is like if you think we have AI growing and traditional Web two, you don't think it's going to continue to grow. Web three this is just like the exploration play phase. Right now all these tokens and the altcoins AI in particular are back to levels they were when they first took off. So I think we're just getting started here. We're going to have a AI summer like we had Defi summer in the past. And altcoins are going to be going to be very volatile, but just the beginning to me.
- [14:04]
Tom
By the way, check out it.
- [14:05]
Scott
Lou, I would love your thoughts right now on where we're at.
- [14:07]
Carla
Yeah, I actually totally agree that we're in AI season. It might be altcoin season just over the last couple days helped by the rising rates. And I think there was actually a big announcement by OpenAI of their new product called Task, which is their AI agent. And just in the last couple days virtual protocols is up 50% and I think there are a number of tokens there that are just beginning their massive runs.
- [14:40]
Scott
It's funny, I tweeted something to this effect. One of the huge narratives we've had, obviously, in light of the proliferation of AI, has been proof of humanity, humanity protocols coming out world mobile, all these things to prove your identity basically online that you're human. I think maybe I'm just not a technologist, but it feels like we need the other side of that as well, which is proof of AI to prove that some human being isn't just larping and pretending to be an AI agent to capture like the upside of this trend. Like how. But like, you know, all these AI agents, they're obviously trading, they're making money, people are following them. Like how do you know that they're purely AI and not just some human basically like doing the classic manipulation of the market.
- [15:24]
Carla
Yeah, that's a, that's a great question. You know, there's a number of projects that are working on, you know, the inference problem, you know, making sure that if you're actually, you know, renting CPUs that the CPUs are what they say they are. So, you know, it's early days, there's still a lot of issues to problem and you know, issues to solve. And it's not just, you know, for, for Web3. I don't know if you read about, you know those Amazon stores that use AI. They don't have anybody in this store.
- [15:54]
Scott
It's in everything.
- [15:55]
Tom
Yeah, yeah.
- [15:55]
Carla
And it turns out actually that, you know, they weren't using AI. There were just a bunch of cameras there and a bunch of people in China tracking everything that people were picking up. So.
- [16:08]
Scott
Yeah, their version of AI.
- [16:11]
Bill
Exactly.
- [16:11]
Scott
Yeah. So I think it's, it's going to be very interesting. I mean the AI agent side feels to me like one of those like things that happens next cycle. We get a big bubble on it this time. Some of the things last and then we really see the like major impact, you know, a year, a couple of years down the road. Just like with Defi or Metaverse which hasn't come back or any of these things.
- [16:33]
Carla
Yeah, I mean, could be, but you know, it, it really feels like AI agents are, are poised to be the biggest thing ever.
- [16:41]
Scott
Yeah, it does, it does, yeah.
- [16:45]
Dave
It's funny you mentioned the AI agent verification because we launched a AI agent. In the process we realized how many of these kind of reply guy and AI agents were actually just posting from their creators. It was just human content and they're just doing human engagement. It wasn't completely automated, even if it had an automated tag. So there's actually a lot of truth to that. There's an agent like Serif that is doing agent verification. So you're kind of right on track with the trend there, Scott. But I think when it comes to agents, we are still very early. I mean, I think the benefit is that we're essentially getting all the best of Web2 open source that then gets wrapped and filled into crypto. So by proxy, any advancements or big leaps that happen. And you know, the thing with AI is we sort of just see these giant jumps that happen that have been being built behind the scenes and everyone catches up and builds around it. But there's a lot that's happening there that we then get to utilize in turn. Right. So I think this is just accelerating really fast. I do agree that AI agents and AI agents and infra is the play for this cycle. I think obviously many of them will repeat the altcoin or the NFT cycle of before, but I think when it actually comes to like. Yeah, but I think when it comes to the core utility function and what they can actually do and execute, I do think we're early, but I do think we're going to see that manifest in this cycle because the engineering and the development effort is moving so much faster using AI. I don't think we have to wait till next cycle to see it.
- [18:30]
Scott
Right. I mean it should also, it should also lend to exponential growth and gains in everything that's non specifically AI agents. Right. Because whatever is developed there and whatever and however parabolic it goes and fast it's developed is going to be incorporated to everything else in crypto and web2 one way or another. So I mean, whether it's like the AI agents themselves that fly or AI tokens, it feels like this is one of those things where everything's going to sort of become an AI token some way shape or form.
- [19:01]
Dave
That's right. And we have been talking for years about onboarding and improving the UI UX of the crypto experience and how shit it is for people to actually participate in this economy. AI agents are just going to solve all of that through chatbots that perform transactions and trading. It is the onboarding mechanism that I think a lot of people have been looking for.
- [19:23]
Carla
And I think Also importantly for Web3, the two biggest problems, the two biggest problems that Web3 needs to solve for that they've made actually very little progress on in the seven and a half years I've been 24 7. Crypto is token economics and governance and consensus and AI is going to have a massive impact on those.
- [19:45]
Scott
Yeah, I think. Carla, go ahead.
- [19:48]
Amato
Yes, good morning. Scott, you know, I wrote about this this morning because it was something that kind of fascinated me to see the evolution of how AI meme coins in particular are kind of merging from attention tokens to actual engines of innovation in certain existing sectors and products. And there was a heated debate yesterday with Raul and a couple of people from the NFT crypto world.
- [20:18]
Scott
Not D gods.
- [20:20]
Amato
Yeah. And it got pretty heated. But I think at the end of the day, the consensus is, yeah, there's. There's probably going to be a lot of vaporware that's going to go to zero. But in the ashes of that, you're going to see a lot of breakthroughs and runners. I liken it to the dot com era, you know, the dot com era. Anything that had.com at the end of it saw massive funding. A lot of it went to zero. But then you look at what's happening with like Shaw and AI16Z and this Eliza incubator that they're putting together where they're essentially creating a launch pad for people to build over this mainframe. I think we're just scratching the surface here. And this is going to exponentially change the use cases for blockchain in ways that we still can't really imagine.
- [21:12]
Bill
Yeah.
- [21:16]
Scott
Even before AI made that, I always comparison because you would hear sort of mainstream media call crypto a bubble and say it's just like the dot com bubble. Everything's going to explode. Everything will go down 99%. But you made the most important point of the dot com bubble as it gave us Amazon and Meta and Google and the largest companies on the planet. It so all the ones that fail doesn't mean they're disingenuous or scamming, as people in crypto like to think of Anything that fails, they're just advancing the ball forward and then you get the big winners. Right. I just wonder if we're going to get the big winners now or if that's going to take a couple of years.
- [21:48]
Amato
Scarlet and it, and it also gave us incredible network adoption of the Internet itself. You have to have experimentation, you have to have sandboxes where innovation can grow in order to attract mass adoption of AI. Just like mass adoption of the Internet, you can't have that without a lot of speculative investment because there's just no other way to fuel and stoke the fire of innovation.
- [22:16]
Scott
Yeah, that makes perfect sense. I mean, Tom, do you. We kind of got here. Go ahead. Jumping. Go ahead.
- [22:22]
Carla
Yeah, I was just going to say that I think one of the interesting things that nobody knows the answers to about AI. We all know it's going to have a massive impact, but we've been living for the last 10 plus years in a world of increasingly powerful monopolies where more than 70% of all market cap over the last 10 years has gone to six companies. The question is, are these new technologies just going to increase their power or are we going to get potentially some new incredibly powerful companies that are even bigger monopolies like OpenAI or is this going to be more spread around and instead of having just six wildly successful companies, we could have thousands of successful smaller AI companies?
- [23:14]
Scott
I think OpenAI is going to get smoked, personally. Go ahead, Tom. I don't see how they end up competing with the Googles and such of the world.
- [23:20]
Lou
I totally agree. Especially when all this stuff is open sourced. I mean we've sort of already reached the limits to a lot of the trading data and if you were to bet on someone who had the most trading data, you're probably betting on Google because they barely tapped into the corpus of information from something like YouTube. So you know, and everyone's open sourcing these models now. So what we're moving to is more specialized local models that can move quicker and that is a perfect recipe to launch these things quickly on things like blockchain rails. So I think this cycle we're just going to see a proliferation of all of these bots. We're already seeing it launched and for investors it's like, okay, where is the opportunity then? So for me, I mean the way I'm thinking about it is just betting on these frameworks. Right. So there's a few major tokens out there that are launching their own frameworks and open sourcing them and using it to whatever revenue derived to buy back their token or measures like that. But it's really hard when one of these things is going to be launched every day, probably 10 a day, to really capture the upside. So that's really going to be the tough part. You could say AI is going to go up, but okay, how do you benefit from that? You're not buying.
- [24:29]
Scott
Exactly. RWA was the same thing. It's like it's going to be the big narrative, but that doesn't mean that you know which token to pick so that you as a retail investor can make money.
- [24:38]
Lou
Right, Exactly. I mean you're already seeing like virtuals has bounced back a bit, but I think that ecosystem is really challenged with the fragmentation of actually having to, to hold that coin. And you know, you've seen actually folks Migrate off of it. So I, you know, that, that one's a tough one. I mean, there are other ones out there, Cerebro, AI16Z, others that could be interesting. But you know, it's, it's really hard because all of us are already way in deep waters here trying to understand, you know, these complex topics like cryptography and economics and everything that's the center of crypto. But now we have to understand like AI to a level that even the best PhD researchers don't understand that try to differentiate between these things. So I think the smartest thing to do is take a basket approach to 3, 4, 5 of these and just don't try to get too cute.
- [25:28]
Scott
Like anything else. I mean, the first ones are not going to probably be the winners. Right? These are just the test nets for whatever's yet to come. But I'm sure that, that doesn't mean the tokens will go down. But I mean, we're going to see a lot more than virtuals and AI 16Z in the coming months. Bill, did you have your hand up? Yeah.
- [25:45]
Tom
I was just gonna say if, if you really believe that smart contracts are going to power AI, especially AI agents, the agentic web, which I do. You know, my biggest bets personally would be Solana and Sui right now, unfortunately, probably base as well, but, but certain, certainly in terms of things you could buy, you can't really buy base, but, but thank God, why? Unfortunately, base is just decentralized crap being marketed as a blockchain. I mean, it's just a coinbase wrapper on a Oracle database, if you really want to know what I think. But more importantly, I think that These next gen L1s are really going to power agents and they've got the scalability. Thank God we've got these meme coins that are putting them through their paces right now and they're working right. And it's really remarkable. I mean, the amount of revenue, the amount of real world usage that's being generated by these alternative L1s, which are, I think, perfectly suited for next generation AI transaction processing. Right. No off switch. You know, uptime is increasing dramatically as we go and you know, it's, and clearly the roadmaps are thinking AI centric, you know, and we love to see it.
- [27:05]
Scott
Bill, you and I have literally had this conversation for years. I feel like that it's, I'm having deja vu. But I would go on like, you know, national tv when people would say, how do you invest in crypto? Last cycle I'd say, just buy the L1s because you're not going to be smart enough to buy the one thing that does 100x in gaming, but you can have exposure to whatever chain ends up having gaming adoption. You know, and I still think what you just said is accurate. Just have exposure to the L1s that have the most activity and you will, you may not hit the 100x, but you should do exceptionally well. And the value of anything built on that you accrues to the token and you get the benefit.
- [27:44]
Tom
Totally agree. Now we have a fund that does invest in some of the tokens Tom was mentioning, but we have people that focus completely on that and do nothing else. So if you're not doing that all day and you're not sitting in front of your, your charts all day, I, I don't think you're going to be successful versus just like you just said, just buying the, effectively the Visa and MasterCard and Oracle of, of the crypto space. And it's clear that at least for the next few years we know what those are going to be, at least on the, on the base layer. I'm, I'm very worried about the L2 shakeout to come and Ethereum doing a pivot on its roadmap, which might kill L2's ultimate together. But, but, you know, maybe, maybe Ethereum, but, but right now it's clear to me that these alternative L1s are going to be the kind of Oracle and Visa of, of crypto and, and artificial intelligence.
- [28:39]
Scott
But that's interesting, bill. So Ethereum L2s obviously were a huge narrative I guess last cycle, but we haven't seen much movement in like, you know, Matic Polygon, any of them. I mean it really just hasn't happened this time. You're saying that you think that those actually might kind of be.
- [28:57]
Tom
Well, I, I, they're getting usage for sure. I think the issue right now is Coinbase, right? I mean Coinbase is basically incentivizing everyone to move to base. Not being clear where, where Ethereum is, is going right now. And so if, if, you know, I liken it to what Twitter did in the early days. Remember Twitter had these APIs, you had all these VC funded apps that were basically using Twitter APIs. Twitter basically killed all of them by bringing all those features in house and turning off the APIs. Right? So I think the Ethereum roadmap could do a 180 and basically try to compete at the base layer with Solana and Sui, which is what I would be doing if I was them and then you have base at the same time, which is, like I said, my personal opinion on it doesn't matter. Its usage is exploding. Right. So. So I would not be bullish L2s right now in general, but you know, that's also. I don't spend a lot of time on it, so. So I can't really say that I'm. I'm an expert on the tokenomics of L2s either, but, but just from a macro perspective, it doesn't make a lot of sense to me.
- [29:59]
Carla
Just real quick, per, there's a great site called Cookie Fun that has a lot of data on AI agents and today Solana's AI agent ecosystem is just a little smidge over 10 billion and base is 7.4 billion.
- [30:17]
Tom
That's awesome.
- [30:17]
Carla
Those are the two big players today in the space.
- [30:20]
Tom
Yeah, totally.
- [30:25]
Scott
I would love to further explore everyone's opinion on this L2 conversation and where Ethereum is going. Tom, what do you think?
- [30:34]
Lou
The old Ethereum roadmap question, do we want to get destroyed in the DMS or not? I think generally there's going to be some interesting upgrades to Ethereum this year. I think in March is the Petra upgrade, which should provide more functionality in wallets, make transactions even cheaper, higher throughput on L2s, among other things. But you're still competing against these faster ecosystems that are growing Mindshare. So Sui obviously has been growing and Solana has Firedancer coming up which should ramp their speed and transaction throughput up to 11, on par with even the best high frequency markets in the world. So I think Ethereum's problem is still really a social coordination issue internally at the Ethereum foundation on if you want to be able to run a node at home on a Raspberry PI versus if you want to be able to run a node on a thousand $2,000 laptop. They're optimizing for the most extreme scenario, which naturally introduces a ton of latency, a ton of fragmentation, and I don't see those problems changing anytime soon. So certainly less bullish Ethereum versus the other assets that we just discussed. But generally I think it's really hard to see in my mind still, if that Bitcoin hits these lofty price targets, we're seeing 200, 250k and that Ethereum is going to lag materially. I just think it has too much mind share, the ETFs have too much momentum and it's just going to be bid up with a lot of this other stuff and it's in all of the Coinbase 50, the Bitwise whatever, as the second largest asset. So I'm not bearish Ethereum, but it's really hard to find a very sexy bull case for Ethereum at the moment.
- [32:16]
Amato
Carlo, this is a question I posit to the panel is the problem. I mean Ethereum is obviously a very secure chain. It is definitely the preferred chain for digital art because of that and the smart contract execution. But is its disadvantage that it's too decentralized when you compare it to Sui to say to Solana, which are building fast but are not so preoccupied with the hyper secure smart contract layer that Ethereum kind of got bogged down into? Has it just become too decentralized where it's not quite Bitcoin, which we love because of its truly decentralized nature, but also not centralized enough to get that mass adoption that we're looking for? I'm just putting that out there as kind of in the flow, kind of.
- [33:08]
Tom
I can comment on that. I mean it's a great question and it's well framed. I mean look, we're a large liquidity provider in Ethereum, so don't misunderstand my comments as being just like Ethereum's dead. Ethereum is not dead. My comments are more about L2s and the future of Ethereum itself. I, I, I think that, you know, if institutions right now will continue to use Ethereum wherever they're, you know, basically focused on Defi, I think Solana and Sui are going to basically be the, the, the chains of co of choice for consumer apps and probably for AI out of the gate just because of the scalability.
- [33:45]
Scott
Right.
- [33:46]
Tom
You can't have a question mark as to whether or not your transaction is going to get processed if you're running a consumer app and you also can't pay, you know, if everything spikes again, you can't pay $40 transaction fees to process transaction for an agent.
- [34:00]
Scott
Right.
- [34:00]
Tom
So those point to the other L1s. But Ethereum is still where it's at for most large scale Defi.
- [34:11]
Scott
Is that the name brand or just the fact that they have such a massive momentum?
- [34:14]
Tom
I mean that's just where the money is momentum. Look, I, I do think in the next, I think one of the stories for 25 is going to be the, the, the emergence of Defi on Solana in particular. Right. I'm extremely bullish on, on, on Defi, on Solana because you're going to see a lot of Neo banks globally build on Solana because you can do Stablecoin transactions effectively for free or for a penny. Right. And, and so, you know, you're going to see things like Athena on Solana, hopefully decentralized, but like that. Right. And so will it have the volume of the institutional money on Ethereum now? No, not anytime soon, but in the aggregate it might get there in the next cycle, who knows. But to your question, I think the momentum is clearly still with Ethereum. We don't really do anything for our private crypto clients outside of Ethereum. When it comes to yield that I'm aware of, we test all the time. But, but you know, the numbers just aren't there yet to support anything of real volume. We'd love to help facilitate that if we could because it is very compelling, you know, on the other chains and the competition is great, but it hasn't, it hasn't materialized yet to numbers that institutions would trust. I think consumers would, but I don't think institutions would yet.
- [35:40]
Carla
Yeah, I think, I think you've got to ask the question, where does the value accrue to L1s? Is it, you know, does it accrue to the, to the L1 with the, you know, most transactions per second, the most uptime, the most security? You know, there you can have debate this, but in my view, by very wide margin, where long term value is going to accrue, in my view, are the L1s with the best communities. If it's not about community, then just go to Facebook or Google. If it's not about community, and by wide margin, Ethereum has the dominant community in crypto. So I remain a massive Ethereum fan. I like Solana.
- [36:26]
Scott
Yeah, also allude to your point. Sorry, yeah, go ahead.
- [36:29]
Carla
No, that's it, I'm done.
- [36:32]
Scott
Yeah, sorry, I didn't mean to interrupt. I thought you were done. But to your point, like there's a lot of people who will care about certain things, but at the end of the day, I think most people are just gonna either care about community or fast and cheap. And that's why still the bulk of USDT transactions are on Tron, right? I mean at the end of the day, everyone else will catch up with fast and cheap. But that has been fast, cheap and easy. And your friend Venezuela says, dude, I want to send you five bucks, download this app. You don't know it's Tron. They don't care what it is. Right? You just, it's the cheapest, fastest way to send tether. And nobody like crypto native is like passionate community member of Tron. So it's sort of these interesting buckets of why people care or use.
- [37:12]
Tom
I've been in crypto for over 10 years and if somebody could explain to me why XRP is $300 billion, I would be grateful. I don't, I don't get it.
- [37:23]
Amato
That's actually a question I have because I want to build on what Bill just said. Bill, you're talking about Solana maybe being the defi and the transaction low cost kind of begs the question. You have a very centralized chain XRP that just hit $3 for the first time. I think since 2018. It's been touted as the banker's chain. Fast, super low cost. How does that play into this? Is that going to be the pivot point for Trad5 banking? Are they going to go all in on XRP or are they going to actually gamble on things like Solana?
- [37:57]
Tom
I think XRP is a meme coin for the banking system.
- [38:01]
Amato
Yeah.
- [38:02]
Lou
The really simple reason it's gone up is the ETF approval, the pump on TikTok and then it's actually held in a large number of these blended indices as like the fourth largest holding. So like the Bitwise 10. It's actually a bigger holding than Solana. So you know, you just have these, these like legacy dyno coins that are still entrenched in these systems. I don't think it's actual people saying like, you know.
- [38:30]
Tom
Lost the connection.
- [38:32]
Scott
You guys can hear me? Amitau, go ahead.
- [38:35]
Dave
Okay, cool. You broke up for a minute there, Scott.
- [38:38]
Scott
Yeah, sorry.
- [38:39]
Dave
Yeah. I also don't understand XRP because when you have issued stable coins across networks and if you're enhancing the settlement time by 10x even on Ethereum and reducing fees, then I mean, there's no reason to need a faster chain. You're going to rely on security. But in general, I think we have to think about the. When it comes to the kind of L1 L2 debate, we have to think about where this is going. So right now we have say roughly 100 million if that users in crypto are active. If I was to make a hot take, it's that we'll actually have more AI agents by the end of 2025 in crypto transacting, transacting processing transactions, automating things than we do humans. And so it's not about whether it can handle, in my mind, the actual human transactions processing power, it's whether it can handle the agent transaction processing power. Because these are going to be micro transactions are going to be moving in and out of things extremely quickly. There's going to be a lot that's automated. I think that traditional Rails won't be able to keep up with this. I think the basis points of those transaction fees are also not going to make sense. So I think when you actually look at the Web2 adoption of multiple different transaction systems with the implementation of AI agents are going to be looking at these things as a solution. So I think you have to look at that. We've got, you know, it's not about whether we bring a billion people on chain processing, it's what are we going to do when we have a billion agents in addition to the people and how are they going to handle that. And for that I think you have to look at some of these chains like solana, like base, etc. But I think we're going to also see a lot of improvements built around this idea.
- [40:37]
Scott
Dave.
- [40:39]
Bill
So if you had told me, you know, a couple months ago that I'd be the XRP bull or laying out the bull case, I would have laughed at you. But here we are. You know, I think the answer is rooted in my experience that I've actually seen and what we, what I know of the traditional banking sector and having been in it for a very long time is relationships matter. People do what they know and they, and when it comes to understanding regulation is particularly on a global scale. Xrp, because of Ripple Labs positioning and the relationships that they have with banks all over the world, is in pole position to gain actual use cases within traditional banking. Now will it be as efficient as a Solana based one? No. Do I own as much XRP as I own Solana?
- [41:30]
Scott
No.
- [41:31]
Bill
But do I think that XRP could easily grow into a valuation? I mean I went back and forth with Mickle who is on the show every once in a while and if we get to the kind of problem, taking a probabilistic analysis of how much of global payments are they likely to get and what's the burn and making the assumption, which is admittedly an assumption, that Replacement Labs is not going to change their escrow schedule, I came out with around 750 as a reasonable valuation. Now for crypto people, you know, what's now not just a little bit more than a double is hardly a ringing endorsement. But you know, I personally like, you know, doubling my money and I, I think that it's a reasonable thing to do. So I think that you can come up with a case for that. But, but what the previous, I think it was Amateo was saying I also agree with, I think that the traditional banking sector, you know, when we look up and see the dust in 20 years is not going to be the traditional banking sector. I mean, I think that quite a few of the intermediaries that we have in our society that are just extracting economic rent are going to go poof and they're going to get out competed. But we got a long way for that to happen. And if we're talking about 20, 25 investment theses, looking for adoption of, of a token which is finally gotten through regulatory clarity, I mean, when, I mean, even though the sec, I guess can still file their appeal against them, you know, today or whatever, I don't think.
- [43:01]
Scott
Yeah, but then even if they file today, nobody's going to care.
- [43:04]
Bill
Yeah, exactly. We think that, you know, when Paul, you know, get, you know, hits the seat, I think he's going to look at this stuff and say, okay, we've got to stop the foolishness. We only have so much budget and I'm not going to waste my, my, my people's time filing cases that we don't think make sense. And so, and that's a very clear from the top directive anyway, which I know he personally agrees with. So I don't really think there's much to say there. The fact is it's not surprising. So I just tweeted back at John Deaton that people who were buying when it was at 50 cents thinking you'd go to three and, and I should sell someone, I'm at three. It's like, well, okay. But you know, when it was at 50 cents, its odds of getting to 3 were a hell of a lot harder than its odds of going to something like seven from where we are here, particularly if we think as I do that Bitcoin is going to go up by even more into, in percentage terms that XRP is going to go up from this point. So it's all a question of relative. But there is a use case and there is a investment case for it. And that's really the only point I wanted to make.
- [44:04]
Scott
Yeah, that I'll make. Bill, did that give you your answer?
- [44:08]
Tom
Sure. I mean, look, I think Dave's right in terms of, you know, I might look at, I might paraphrase that as saying XRP becomes a gateway drug for decentralization. But you know, I think ultimately you're either decentralized or you're not. I came to Bitcoin 14 years ago for the decentralization. And I, and I remain, and I stay for the Decentralization, the fact that I've made a career out of it and you know, can make money is actually secondary. But, but you know, so, so a lot of these other things are just a distraction and to me, and I actually own some Ripple by the way, just to be clear, you know, like I do own some, but that's, that's from a purely trading perspective that's about making money and has nothing to do with my core beliefs on, on decentralization. Right. I'm, I'm, I'm here for the decentralization and I'm going to stay for the decentralization and everything else in that regard is a distraction and either it's decentralized or it's not. And I'm going to continue to state my opinion when I think things like base are not, especially when they're with being marketed as, as decentralized. You know. And I think Ripple is, is, is, you know, is probably going to take advantage of their position with the banks and more power to them. I'm all for it. You know, let's have lots of software companies out there, you know, trying to help the banks and be better banks. But you know, just if you start marketing your, your stuff as kind of the, the decentralized platform for the banking system, I'm certainly not gonna not call bullshit on it.
- [45:40]
Scott
Yeah, the, just going back before we wrap quickly to the, the speed obviously we're talking about L2s. The last time I talked to Tolle, which was quite a while ago when Fire Dancer was kind of just being introduced, I sort of asked him the question, you know, last cycle of the narrative was interoperability that all of these chains are going to exist and speak to each other. And I said but you know, could you do everything that needs to be done everywhere in Blockchain on Solana? And he very quickly said yes. So I mean I still believe obviously all these chains are the main ones. A few of them will find major use fits whether use cases, even if it's just one is a gaming chain and one ends up being an NFT chain, whatever it is. But I mean do you think we really get down to where it's just very few winners because these chains are actually fast and cheap enough and secure enough to accommodate everything being built.
- [46:31]
Tom
I mean I think the two points are mutually exclusive. Right. I'm super bullish on Thor for example as a way to do cross chain transactions in a, in a generally decentralized environment. I think the way they've figured it out is very Clever. But on the other hand, I do think that there's not going to be a massive number of base layer winners. I think they're, you know, let's say, let's say there was 10 in 15 years, right? That, that's, that sounds like a reasonable number to me. Right, because you've got, you know, future applications of real world assets, network states, you know, just banking, neo banks, governments, unfortunately, CBDCs, most likely. And so, you know, all these things are going to, to have their own wants and needs and who's to say how different chains will, will support them at scale? But it does feel to me like it's a less than 10 model at, @ huge scale and it's probably a long tail as you get closer to the 10. And that's just more my experience over the years than any kind of real data. But. But it feels right. Yeah.
- [47:40]
Scott
Yeah, totally agree. Anybody else have a take on that before we wrap? All right. Well, we made it. We did it. If you were here at the beginning, you know that I'm watching a tennis match. My wife won 6160. So I'm here. I get to go celebrate this momentous victory in life. Everybody in the audience, please give a follow to all of our amazing guests. It was a really great conversation, guys. I love this show because I never know what direction it's going to take. And that was really interesting. I learned a lot, as I always do. So everybody give these guys a follow and we'll of course be back tomorrow at 10:15am Eastern Standard Time for yet another installment of Cryptotown. Thank you, everybody. See you tomorrow. Bye.