← The Wolf Of All Streets
The Wolf Of All Streets
Crypto at a Crossroads: US Debt, Inflation, and the Future of Bitcoin | CryptoTownHall
01:02:59
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- [00:01]
A
Morning everybody. Welcome to Crypto Town Hall. Every day here on X at 10:15am Eastern Standard Time. We actually were not going to have a show because we didn't have anyone to host it from the Crypto Town hall account. But luckily we were able to get that together and get a show. So glad to be here. Although obviously an interesting day to be talking about bitcoin and markets when so much else is happening in the world. But generally our view here is that we like to show up, look to the future, discuss the things that are happening even in light of other events happening obviously around the world, which I'm sure we will discuss more, more thoroughly. Dave, I know that you were vacillating on even wanting to be here today or not.
- [00:51]
B
Well, it's a ridiculously tough day. I mean, I was 10 blocks north of the towers when they fell. You know, was it 24, 24 years ago? I was there, I had friends in the building and I know what happened. I've seen all the conspiracy theories since then. And being an eyewitness to watching how it fell and understanding it, the point never forget is emblazoned in my head. And to be blunt, it's very, very clear that quite a few New Yorkers have forgotten and don't understand what happened at the same time yesterday. One of and it's hard. It's really strange to say that a 31 year old who's half my age is someone who is almost a hero of mine. But the truth is is that while yeah, there are, there are things that Charlie Kirk and he was a bitcoiner. So I agree with him about that and I agree with him on a lot of his positions. I totally disagree with a lot of his conservative religious positions. But why I say the word hero is he was one of the only people that I've ever seen who was willing to debate as a gentleman far better than I can because I tend to get angrier than he did, keep his cool and listen to and work through actual discourse. So someone who is literally emblematic of the importance of debate and free speech in society was who was killed yesterday. I can't express. Words are simply not enough to express how, how important it is that his ethos doesn't die with him. And so yes, you know, Bruce Fenton had a great post this morning. I hope he joins us. But where he said that, that you know, he has been muffling himself and holding back on issues because of fears and that he's not going to do that anymore. And to be blunt, I'm not going to either. You know, people can go themselves if they think they can cow and chill my free speech. And, you know, frankly, I hope even people who disagree with me completely take the same view, because the more we get the views out, the better off we all are. But here we are in a bitcoin space with yet another round of relatively weak economic data and bitcoin once again pushing back from the bottom of its quote, range towards the middle. And, you know, we'll see how things go. You know, I don't want to hijack the space, but it is. It is a tough day, Scott. There's just no other way around it.
- [03:10]
A
It's worth hijacking and speaking. Obviously, anyone who has shows on days like this has to be conscientious of the way that they approach it. I ob. Did my YouTube show at the end, but then I let the guest go and kind of said my piece at the end, which I guess I can say very briefly here today as we go into the show. Is that a. I'm a very apolitical person. I know much about Charlie Kirk, so I can't speak to it the same way that you did. What I find always so disheartening is that this level of violence has existed for a long time, and I've had my doubts that it will ever change since Sandy Hook. And nothing has changed. You know, in the United States, there's no meaningful change in emotion or policy or really anything, even when children die. So I don't think that anything will surprise me from that point on. But I do think that it's still important that we show up and talk about things that we're all passionate about moving forward into the future. Because, you know, I believe that we have a bright future. I just think it's incredibly sad. But what happened to Charlie, to some degree, happens every day all over the country. And it's just. That's just incredibly disheartening.
- [04:18]
B
Well, I mean, I'm sorry. I mean, you and I are friends, and we can have a friendly disagreement. I view what happened to Charlie as. And you know, what has been happening as very, almost eerily parallel to what happened in the 60s. In the 60s, leftism was counterculture, right? You know, the against. And by the way, I actually agree with the motivations that were going on back then. Against the war in Vietnam, et cetera, et cetera. But if you look at who was murdered in the 60s, whether it be JFK or RFK, Martin Luther King or Malcolm X, they all had some One thing in common, they all were against the prevailing narrative of control. I would make the argument, and this is going to be, you know, this is something not really for a huge discussion now, but I'm happy to hash it out with anybody who wants to. That individual freedom, whether it be via bitcoin or whether it be via other means, is the counterculture now and statism is. Is with the enemy. And I think it's very similar now. If you know what happens in the aftermath of all of that, between Vietnam and Watergate and Nixon closing the Gold Window or whatever happened, you know, it was. It was definitely a major change. We need a major change now. I don't know if we'll get one. But, you know, as bitcoiners, I think all of us believe that there are systems in place that need to be. Need to be changed. And I don't think you can just rationalize violence as violence. I think sometimes there's a point to it, and sometimes it's. It's just evil. But, you know, and that's where I disagree with you.
- [05:55]
A
Yeah. Like I said, I didn't know nearly as much about him as you do. And your point is well taken. I wasn't trying to minimize it. I was just putting it in context of how many of these things we've seen, that nothing ceases to amaze me, unfortunately. Mark, I saw you're about to jump in.
- [06:12]
C
Hey, guys. Yeah. So, you know, bringing this back to markets and the freedom point that you were talking about, you know, this morning, my. My wife just yelled over and said, hey, did you see that? I won't mention his name, but you know, that Jack read the names down at. Down at the tip of Manhattan today. You know, 24 years ago, our neighbor didn't come home, and his son was, I guess, six, seven years old. And today he's. He's reading his dad's name and others. And I guess the point is, on that day, it was. And for long days after, it's very difficult for a lot of people, still is. But, you know, the sun persevered and we all individually do what we can do to go through whatever it is. And I think what I love about bitcoin is that it gives you that ability, the resources to stay sovereign, to try to resource yourself and give back to the community and where you can make differences every day. So that's why I love this town hall. We can all speak about it. And I'm not mitigating, you know, the death of Charlie Kirk at all. It's it's, it's an abomination and, and it's an assault. But thanks for having this space because since I lived and my friend didn't, I want to give witness to the opportunity for all. And that's what I love about having this open dialogue.
- [07:37]
A
Thanks for having me. I also have friends who sadly died on 911 in the towers. Obviously that was, it was two years after I graduated college. All of my friends had basically gone into finance. So obviously never a Good day. On September 11th. I actually just pinned above the story for those who don't know because I've brought it up so many times. Everybody knows Howard Lutnick from Cantor Fitzgerald and everybody obviously knows his positions on bitcoin and as Commerce Secretary. But I highly encourage that all of you read his story from 911 because Cantor Fitzgerald, I believe, took up five floors at the top of one of the towers and he lost. If you listen to the story, it's immeasurable what he lost. I mean, his brother, his best man, his best friends, his family, his. Into every person who ever worked for him. Talk about perseverance. I think that, you know, as we kind of transition here into his talk about markets and bitcoin and self sovereignty, as Mark said, that's a story you must, must read if you've never heard it. So I did tag his tweet just above. But let's actually talk about markets. Obviously we have bitcoin breaking above a level I think that many people were watching at 112 showing signs of strength. And all of this, I think in the light of mixed CPI and PPI data and expectations about the Fed. Mike, I don't want to put you on the spot, but that's always why we have you here, because you're watching this stuff so closely.
- [09:08]
D
Yes. Well, thanks for bringing back the memories. If there's any day that I always like to say that you got to really appreciate the aging process, it's today. I got off that Wall street subway with my good friend George Spencer. I went the right way and unfortunately he went the wrong way. Never saw him again. But that's the way it is and we all have to just appreciate. So anytime you hear people complain about aging, those of us who got close to 911 don't have a lot of sympathy for it. But back over to what's tilting that over. Even mentioned Sandy Hook the weekend before my son had a basketball game there.
- [09:38]
B
So I remember going there.
- [09:39]
D
But the key thing to think about now is I remember very well hopping in the car in a minivan with much of my colleagues and driving to Chicago and being feeling quite confident. I was way overweight Treasuries and gold and underweight risk assets. It was just a feeling I got in 1999 and I was early and I had the same feeling in 2007. And I have the feeling more now than ever now. The gold is the key thing I think to think about here. It's really worn, it's really scary. I mean the last time we had gold up 40% on one year was 1979. CPI was running 10%. The bond yields peaked two years later and that was it. That was the big end of the big inflation. Now what we have today is okay, CPI is still running 3%. The numbers were a little bit weaker than expected. Claims have, still claims are completely solidifying what happened to ADP and what's happening in payroll numbers that we're seeing a weakness in the labor market. And the bottom line is a year from now, fed funds are priced to be at 3%. Now we've seen this before. The last time we had 12 months out, fed funds priced at 3% on the way down was two cases, 2007 and 2020. And that was at the same time that the stock market was breaking down versus gold. Now the difference, the stock market was going down then and gold wasn't really going up. This difference is gold just taking off. So I'm really concerned about the next few months. And this is one of the kind of things that you have to hope I'm wrong. And as a strategist, I have to say what I think and I think the risks are that we just get a little bit of normal pickup in stock market volatility. Right now it's Vix is 15, 200 day moving average is 19.2. When Trump got elected was 15. Obviously the new president coming in, he's very discombobulating. You don't want that VIX at least pop up to 19. And also we've known this year that bitcoin has almost been completely inversely correlated with the vix. The low for the year in bitcoin in bitcoin was when the VIX reached its high in April. And the high for bitcoin this year in August was when the VIX reached its low. Now it couldn't be slower. The key thing I want to point out here is last week that 30 year reached 5%. I think that is a demarcation line for the guys, people on the planet seeking duration that can't really go above that level. And there's just people looking to buy it. Right now it's 465 and the 10 year note now is banging on 4%. That's good support. My fear is the next big trade. And Scott, you know I've been saying this for forever and I've been wrong for two years is going to be T bonds and there's one key thing for that to happen is US stock market to go down. And right now it's not showing any signs of that. And the key leading indicator for all that is bitcoin and crypto. So I did have to sometimes in my job you have to antagonize or agitate as Frederick Douglass said. And so today I did a little bit. I published that, you know that whole thing we all agreed UP Bitcoin Supplies Ltd. At 21 million it yet had to go up increasing demand and adoption. The whole key thing that Michael Saylor picked up in 2020 but it has gone up and there was only one crypto in 2009 as a Bitcoin and now according to coinmarkcap.com there's 21 million crypto. So I had to put that headline. And with this I think what I'm seeing in this space is the co bitcoin crypto space is becoming much more of highly speculative commodities and less digital gold and stores of value. And I'm seeing that in the price of gold so far. So I'm hoping, I think most people in this space hope I'm wrong but I think are well prepared. It should be well prepared. If I'm right by the end of the year, if we just see a little downtick in the equity market up 12% in the year that could tip the scales for quite a while. So here's the key thing I'll end with. I think it's possible that bitcoin could at least revert toward 100,000. You have to as a trader you have to buy it and make you stop you out. I think at least the bit vix by the before the end of the year is going to reach 20 and as a trader you're supposed to sell it and make it prove you're wrong. And to me the bigger picture is that we're more likely to see reversion of risk assets as we get towards the end of the year.
- [13:37]
B
Back to you Carlo.
- [13:42]
E
Yeah, not a good morning today Scott, but we carry on touching on what Mark said. I think the entire global economy is kind of waiting to see what happens to the Dollar. I have been kicking around this theory that I think that the dollar is in a very precarious position right now because of the amount of debt we're carrying and the continued devaluation of it. And I think Scott Besson has made a huge gamble that fully regulated stablecoins are going to create dollar demand and treasury demand, which he desperately needs. And if he's right about that. And look, Russia just the other day pretty much said the quiet part out loud. The United States is going to flood the global market with fully regulated stablecoins in order to eliminate its $34 trillion debt. And if Besset can pull that off, and Dave and I, we talked about that the other day, we had a kind of impromptu discussion about this, then he will have masterfully bought more time for the dollar while we wait for that to play out. Risk assets like gold, silver, and bitcoin all seem to be very appealing stores of value until we understand where the dollar is ultimately going. Now, can the dollar be saved? Can it continue to hold its position as the world reserve currency? Or will Bitcoin start to be the preferred reserve for nation states, for companies that want to have it on their balance sheet as a hedge against dollar volatility? I really am becoming increasingly convinced that I think all of this hinges on what the treasury market looks like. And I think Mike had said that. And I think it's important to note we need to keep a close eye on how Treasuries look, because there's an inverse situation that can happen, too, which I'll say in closing, if we see demand for Treasuries and if we see rate cuts, as we all are anticipating aggressive rate cuts, well, the yield that is made on these stable coins is tied to the treasury return. And if that treasury return goes down because of rate cuts, well, that's going to cut into the bottom line of stablecoin issuers. So I am trying to look at this at a very macro level to understand how this is all going to fit together. But I really am starting to become convinced that everything is kind of sidelined right now, waiting to see what happens with the dollar. And I think the United States has made a big bet on treasury demand and the dollar continuing its position as reserve currency based on that treasury demand. So that's kind of where my attention.
- [16:31]
A
Is, which, by the way, is a natural conversation about stablecoins. I mean, you even had the Russian minister say that the United States is going to utilize stablecoins to export their debt.
- [16:45]
E
Basically, with your permission, Scott, If I could, I'm hosting a roundtable tomorrow free on Live on X. Can I put that in the nest?
- [16:54]
A
Yeah, please.
- [16:55]
E
I think it's important because there are definitely and I'm seeing it in the timeline, there are more questions than answers about how stablecoins are going to work, what the yield aspects are going to be about it. And you know, we see what's going on with hype and all the craze about jumping into stablecoins. I think this is an important conversation. I was able to get a rock star lineup, including Caitlin Long to be on this panel. So thank you for allowing me to share that, Scott. I appreciate it.
- [17:18]
A
Please, what time is it at tomorrow.
- [17:21]
E
During we're going to broadcast it live as an X video and there's a Luma link in the comments for anyone who wants to sort of register so I can kind of have a running headcount. But I appreciate it, Scott. I think it's an important.
- [17:32]
A
Yeah, feel free to join here right before obviously we'll probably cross over for 5, 10, 15 minutes, which is no big deal, but you can come tomorrow and make sure to remind everybody and jump over there.
- [17:42]
E
Thanks, man, I appreciate it.
- [17:43]
A
Of course, Mike, I see you got your, your mic lifted.
- [17:49]
D
And then Mark after Mike, just quick comment. I completely. The thing about stablecoins is this is one delightful thing that both the Trump administration figured out. I mean the first administration, they were just not getting what we were all seeing. That this space is overwhelming, the technology is amazing. The key thing now that they tilted. The thing I like to point out is you just don't mess it up. The whole world is going organically to crypto dollars. People call them stable coins. I love them call them organically. So what does that do for those other hundred other currencies that are not the top 10? I mean they're worthless. Less, less worth, less value every day when you can get access to peer to beer cash on your phone that in India you can get now for $12. This is overwhelming. It's just delightful that our administration's fig versus a couple years ago when you know, they were the opposite. But that to me is the key. The most enduring trend in cryptos is the technology, the tokenization and what it's doing for the actual value of the dollar. So I think, yeah, sure, our government wants a weaker dollar, wants a better trade deficit, but there's not much you can do about the world saying what's this thing called CBDCs? When we can get organic money markets through a stable coin. And once they figure out that we, you know, figure out how to get that earning yield. I completely agree. When these things were $2 billion and at almost $3 billion now, I fully agree with Bassett that they're going to go to 3 trillion. What stops it? It's just what's happened in futures and ETFs. It's just a better technology. To me that's the key thing to remember, but also what it does alleviate. One key thing, the headline of Satoshi Nakamoto's white paper, Peer to peer Cash. Why bother with that? With highly volatile bitcoin we can do it through a stable, a stable coin arc.
- [19:31]
C
Hey, yeah. The stablecoin dynamic is absolutely self serving for the US it was there to be had. And it's just shocking that Johnny Yellen didn't pressure. It just shows you how much they want to, you know, stay into the, into the fiat without even potentially expanding the cryptocurrency markets and, and Bitcoin's opportunity. But I'm going to go pivot back to what Mr. McGlone said on markets. I agree this feels like late 19 when we had that September 2019 repo failure when there was regulation. JP Morgan took their 300 billion out of the repo market. The New York Fed was in transition of leadership. People actually were mutinying against Williams and they scrambled. And I know that when I was on a desk there that people did not fund and they were failures. There were failures overnight in the market that were masked by the Fed. They changed things. The Fed was on a two year reduction of liquidity at that time, almost two and a half years and they stopped. And then we had Covid. So there was a double boost of liquidity. We're going to have a reversal. It's going to be more than 15% in the market I think between now and year end. And the federal treasury is going to step in. Mike, I think we're not going to see a material, a recession from a, from a market standpoint. There's no way we are too levered. The deficit's expanding. The beautiful bill still has to be materialized. We are in a full political policy driven economy funding jobs that aren't even happening. So I, I've been quiet about trying to like really assess things, sticking to markets and very narrow. But I'm making this broad assessment because I think the data lines up and I don't think you trade it. I think it's been very difficult to trade. You have to stay with the horse right now that you like, you guys know, obviously we're here with like bitcoin. There are other trades maybe you can put on. But that's what I wanted to follow up on was, yes, I do think that there's going to be a crack. The move index is quiet as it's been in five years at 79. And I think that the long end is telling you we still have problems.
- [21:51]
B
That's.
- [21:52]
C
That's about it.
- [21:54]
B
Hey, Scott, can you hear me now?
- [21:56]
D
Yeah.
- [21:56]
A
You're back.
- [21:57]
B
Yeah, sorry. I was talking and no one can hear me. I was listening to Mike. I mean, I don't want to jump into what we'll talk about on macro Monday, which will be more in depth, but I'm going to tell say something that'll make everyone be surprised. I agree with Mike. I think there's a lot of danger here. But I look at it differently. I mean, there's some game theory, you know, the last time the last massive bull market in bitcoin was triggered off of the COVID lows, if there is a major stock market break, and there easily could be. Right. I mean, it's. Everything he says is true, that there easily could be that risk assets are crazily overpriced by every metric. And the sole question in my mind is the denominator. If basically what's happening is the dollar is being devalued, then these metrics are kind of meaningless. But we'll see. But the point is bitcoin tends to follow gold, not the other way around, at least in what I'm saying, at least in terms of its ceiling. And the question that as bitcoiners we have is, will a major gold bull run and a major divergence between gold and risk assets, where will bitcoin go? And my answer is most likely down, then up. And the down will be sharp and there'll be some volatility. The up will be sharper and could be even more volatile. And I think you have to be ready for that in a situation because there's very little doubt that if there was a decel, if the stock market started to fall significantly, that they're going to pull out a bazooka of liquidity because they can't afford it to go anywhere other way. And that's really the question, you know, in all of this. You know, the market is clearly reacting to things slowing down, but inflation is persistent. So, you know, what the hell did they do? And we'll see. I mean, there's that rock and a hard place. So we've been Talking about that for three years now. I see. Goro.
- [23:48]
A
Yeah. You bring me back to one of my favorite points I used to make whenever I used to have to go on mainstream media and discuss the bitcoin crashes and all the issues that we had in the past and always used to say, listen, we all know that all correlations tend to go to one when there is some sort of black swan event. So your points down then up I like a lot. But if you go back to March 2020, you know, Bitcoin dropped below March 12, 2020, because we'll all never forget that. I believe, you know, we saw bitcoin drop below 4,000. It would have literally gone to zero on BitMEX if they hadn't have just turned the exchange off because there were no bids for the liquidations firing. And what happened from there on out to your point about the bull market, what asset do you want to be in after the event? And Bitcoin went up 17 times from there to the peak of that bull market around 70k while everybody cheered and lauded the stock market doubling.
- [24:45]
B
Right. And not to steal Gurav's thunder, because I'm sure he's going to point this out, well, bitcoin went up 17 times. There was an entire range of altcoins and other assets that went up hundreds of times times. And so it's really.
- [24:58]
A
And then down. And then down 99.
- [25:00]
B
Yeah, yeah, yeah. I mean, you know, you got to take the bad with the good. Right. You know, there's some real. And there's some, some. But the, the real question that you have to ask yourself in the market, if you look, I mean, there are some coins, there are some assets that are, are doing extremely well right now and, and have very, you know, the technicians would say very good looking charts because essentially, you know, money has to find a home someplace. And if you're printing more of it and assets that are going down, are they going to put it, be putting it in money market funds while they're likely cutting rates? I mean, not really. It has to go somewhere. I mean, some, some wealth will be destroyed. It has to go somewhere on that end. Gorav, you had your hand up and I'm sure, you know, we're going to talk about that sort of divergence. Right.
- [25:45]
F
I have like two statements for everybody, but I'll of course start with my favorite person here, Scott. So as a brother and being very close to his investment decisions and his investment mindset, I know one of his life's biggest regret is not cashing out when all the alts went up in 2021 because he was at its peak performance of his portfolio. So you'll always hear that rant from him you just can't escape. It's his personal vendetta against bull markets seizing the opportunity. So just take it with a pinch of salt and that's it. He will keep ranting about it it his biggest regret. So that's the fun part. Second, soft fun and no sarcasm of course. All appreciation for Carlos and his upcoming in his upcoming panel tomorrow. Yes you need to create some session, some sensation and yes you need some negative points against positive points to create a good argument and to set up a place that people would be excited to and like have the right entertainment. But I think if like, if Dave, you and Scott, you and especially everybody would agree largely to Mike's point which is like look at the administration's history of how they operate, like the current administration's history and then also US in general has been shipping not just currency but also stock, which is a great way to move value and American value around the world. So I don't think I have have to preach this to the choir here that the whole DAD stock and the.
- [27:31]
A
Whole.
- [27:33]
F
USDT and stablecoin movement is meant and built with a core thought process of bringing the global monetary value to U.S. stocks and U.S. instruments of finance. And the only way, and even the dog on the Wall street knows this. And so I'm sure the administration understands that it has to perform initially.
- [27:55]
G
For.
- [27:55]
F
The global liquidity to get into those instruments. And so the the best way, even if I was to advocate, by the way, I'm absolutely non political even in India being an Indian. So don't expect political statements from me for us but I'm just talking about a theory that's evident which is they have to introduce this liquidity, this injection of liquidity for so many political reasons, but more so to bring this real value to these instruments. If the DAX begin to perform, if the stable coins are doing well but the economy crashes. What are you talking about? Like everything goes down. The American financial value goes out in that case. And so I'm not even an economist, I can understand but if these instruments and the American economy begins to perform and hence these stocks of hundreds of DATs that are being registered every day and now NYSE is opening up for that. I just spent the last two days with NYSE officials around that and the policies. So it is just, just about obvious that the markets just can't go south right now. They have to perform for the next good nine to ten months until.
- [29:09]
A
Unless that's basically the Matt Hogan thing that he said on my show that I always repeat, which is that governments have made recessions illegal.
- [29:18]
F
Exactly, exactly. It'll only. It'll only be a massive crash. You know, something beyond recession. The depression, the great depression, the greatest depression or something like that. And that's definitely not happening in the Trump reign. We all know that. And especially when we are in the fight of the. The power of the worlds, so on and so forth. I don't think there's a point of happening. Of that happening now. So that's. I think I covered everything I heard in the last 15 months since I joined.
- [29:49]
A
That's a lot. Yeah, I mean, it's always impressive how many levers and buttons they can push and pull to keep the economy afloat and the market afloat, I should say. But I mean, Mike, you hear. I know, Mike, that when you hear those kinds of things, it just makes you want to sell everything and run for the hills.
- [30:11]
D
Well, these things can last a long time. As sorrow says, define a bubble and join it. I mean, it's just kind of like Irving Fisher said in 1920, 1929, you know, the permanently high plateau. The things I remember hearing in 99. I started a business in 88 covering Japanese clients. And I remember that humor from the Japanese clients in 1989 and 90, and it lasted until they got all stopped out. So it's the things that happen. It's the key things I've learned from you, Scott, I really like is the spidey sense and humans will be human. These are statements that you. I've learned from you. I love that these things last forever. And I just look, you know, have to always look forward. As a strategist, you got to risk being long. Predicting the future is obviously dicey, but you got to risk doing it. And that's what I point out. I'm still sticking with the rock, unfortunately. I gosh, I wish you could show that stock market's better. I mean, obviously another record high today, but so same too, for the rock. And that's why I just point out is we're at 2.3 times GDP. There's only two times in history a stock market valuation's been that high. And that was, you know, 1929 U.S. 1989 Japan. And not just that, it's. We're at. If you look at the same measure of U. S. Stock market S P500 versus the MSCI, which was 1 to 1 for 20 or 30 years, it's the same thing. It's 2.3 times too. It's just great. If we can stay that way, it's great. You just look for alternatives. You wait for it. Just a spark for reversion. And when people say it can't happen, that's usually when it does. And that's why I'm sticking with gold and just got a bottom line point out. The riskiest assets are cryptos and they're more, they're more highly correlated now to the stock market than ever. Just 48 month correlation or something like that. So just, you know, hoping it's different. And I just can't worry that this next few months are really going to define the next few years.
- [31:50]
A
Yeah.
- [31:53]
G
Really.
- [31:54]
A
You know, such divergent opinions everywhere you go now as to where markets are headed. I mean, I guess it's still constructive for us to talk about Bitcoin. I mean, Gaurav here, let me say this. Gaurav, you obviously brought up DATs there. And for those who don't know, those are digital asset treasuries. I don't want to take for granted that everybody in the audience knows all of the lingo. That trend isn't stopping, clearly. As for buying pressure for the crypto market, we had an announcement, I believe it was today of billion dollars from the Avax Foundation. That's going to be. So this one was interesting because it's not. When I first read it, I said, oh, cool. Or you know, an Avax treasury company. Not really what it is. The announcement was basically that they were raising a billion dollars by selling OTC Avax at a discount to fund other treasury companies, to my understanding. And we all obviously had the 1.65-ish billion dollar multi coin jump crypto galaxy Solana Treasury Company. So I think fair to say that large holders of altcoins are finding creative ways to exit or utilize those positions where they otherwise would not be able to. Doesn't actually mean buying pressure. A lot of people see $1.65 billion Solana Treasury Company and go, wow, that's a lot of money coming into Solana. To my understanding, that's mostly multicoin jump and Galaxy transferring their Solana. Right. And this Avax one I've seen people talking about, but that's going to be people effectively buying Avax at a discount and probably locked up investing for a few years. So, you know, not all treasury companies mean massive buying pressure. Nick, I see your hand up.
- [33:39]
H
Hey guys, thanks for having me on. Yeah, I just wanted to talk a little bit about the correlation of stablecoins and potentially BTC and the price movement there. You know, we're working daily on use cases for stablecoins. We've seen stablecoin adoption and market cap go from 150 billion at the beginning of this year all the way close to 250 billion. So I think we've spoken a bit about the impact that has on treasury demand. I think that's a little bit of a separate convo, maybe even above my pay grade, but wanted to draw that correlation back to btc. We're seeing more and more use cases around BTC collateralization now that you have stables on chain, you have MasterCard being used at merchants that accept stablecoin seamlessly. So I think that entire flywheel is really moving now, which then leads back to buy pressure on btc because you can now, instead of selling, use that BTC as collateral, get that Stable coin, go use it to buy your coffee. I think it's a really interesting movement and it's becoming more and more common.
- [34:48]
A
Brav. You were jumping in, I think. Yeah, Nick, I, yeah, I agree with that, actually. So listen, I, I, we actually sue just jumped up from Eigen layer and I want to talk to him more about this because the treasury company and how they're going to grow and what they're going to do with those assets is a very interesting conversation that I'm sorry he has massive perspective on, but we'll do that in a minute. Go ahead, Gaurav.
- [35:09]
F
Yeah, I mean, now that you know that, Scott, you know, I, I've been literally staying in the, in the, in New York for the last few months, just working on dash day in, day out, not just my own, but helping like a whole bunch of them with so many details and like sitting in the banker's office and dealing with their traders there, there. It is fair to see that it's just about a massive circulation initially. But every single deal. So to, to, to make the right references, the multicoin jump galaxy, yes, it is just them transferring their Solanas from one wallet to another. But that is probably, you know, publicly mentioned about 350 million of Solana and then maybe another, another 300 million, but the rest is still cash. And let's not forget the fact that one like a dad is like a smart contract, but better. Which is like, it's a burn smart contract, but better. Right. So these assets wouldn't be sold actively for the next three or five years. They can be caveats But I'm just sort of repeating the public narrative or the compliance narrative on the top surface level. So number one, all these Solanas got trapped into a burn like contract, right, which is definitely a positive thing for the circulating supply and the price action too. The instrument did raise institutional capital and a lot of that. And that will rush in sooner than later. So that's still a lot of buy pressure. Avax, while the devil in me wants to laugh on the point, but the crypto advocate has to stay sane. So I would say yes, it looks like a big cyclic siphon altogether of avalanche liquidity, but it is indeed a positive siphon because the tokens in the treasury will get into long time lockups, which is a lockup of circulating supply which was supposed to hit one way or the other to feed them, to feed the treasury. And then the money given to datcos will eventually acquire Avax from the market and lock them up as well. So you're talking about locking up and then. So let's understand that for a second. The problem or the pros and cons on a chart comparison on a one to one mark comparison between equity and token is that tokens are finite in numbers, but equity is not. But you know, so equity is only created when there is a positive economic demand, but tokens are pre calculated and created on the first day. The problem is not everybody, but almost rarely we have like a top notch economist sitting in the tokenomics or especially when most of these tokenomics were made to perceive the fact that these tokens are to last for thousands of years. And so yes, indeed, we are living in a pool of, we're swimming in the pool of large and unprecedented liquidity of these tokens that was supposed to come over hundreds and thousands of years as these projects would proceed with their real economic value. And if I'm getting too deep into economic systems, I'll just stop there and come to the point, which is now the DATCO movement is indeed bringing that to rest, if not rest, at least to a little balance because now all of these coins are getting logged and the extra coins and they'll be released slowly over the next five, ten years or whatever. So the retail has a chance to participate in this movement and they don't have to suffer the ignorance or the innocence, whatever you might want to call it, of all these token projects that didn't hire the best economist in the world, or at least a fairly reasonable economy to create their tokenomics. And by the way, even if they did hire our crypto dear industry and the venture capitalists that were just like drinking in the bar one day and got bitcoin and then announced themselves VCs, they also weren't accepting these incredibly tight tokenomics. So that's my two cents.
- [39:42]
A
Yeah, it makes perfect sense. So listen, I invited sue here from Eigen because we continue to have these digital asset treasury conversations. And as I said, I think that he has quite a bit of color on what's going on behind the scenes and how these are being used. You guys have kind of watched my own personal journey with understanding and digging into treasury companies. When I first went to Vegas in May and was pitched about 30 bitcoin treasury companies in real time in the first 10 minutes I was there, my first gut instinct was, yeah, this is a concern obviously, and you've heard me talk about it. And through doing a lot of research and thinking, it sort of came to me that bitcoin treasury companies are very difficult because there's no native way to really beat Bitcoin. Using Bitcoin, to me, you have to take on some kind of risk to outperform bitcoin. But regardless of whether you view them as treasury assets or not, if what you're trying to do is to have a benchmark asset as your treasury and beat it, there's a lot of assets that it's much easier to do that with and that can be with staking or restaking. And Sue, I know that you guys at Eigen, I'm going to go ahead and assume are working with a lot of these digital asset treasury companies to offer them ways to have a sustained yield that justifies a premium. Is that fair to say?
- [41:12]
G
Yeah, in a way. Thank you, Scott. I just want to. Can everyone hear me all right?
- [41:17]
A
Yeah, we hear you. Great, thanks.
- [41:19]
G
Nice. Yeah, just a quick introduction of myself. Hi, I'm Sue, I'm general manager at Igon Cloud and you know, now previously Eigen Layer. So prior to I again I was a founding member of a market making firm and also I started my career on Wall street with Morgan Stanley. So yeah, I think there is a lot of buzz about the DAT space and to be frank, like at first and I look at it as well, like it remind me a lot of the, about the SPAC back in the day. But yeah, like I think for us we see a lot of interest in DAT vehicles, especially for Ethereum BTC and now I think Solana is hopping on the trend. But yeah, you're right, BTC really, you know, there's not really viable kind of native staking or restaking function so that they can, you know, BTC Holder can earn more yield but Ethereum has that. So we recently have seen, you know, a lot of vehicles are looking to deploy their ETH into restaking protocols. So if you follow seen the news on Ethzilla actually they just deposited 100 mil worth of eth into liquid restaking protocol that is going to funnel the ETH into Eigen Cloud as well. So I do think, you know, people are looking for additional yield opportunity while being a large cap holder and Eigen layer is really uniquely positioned to capture that growth and capture this buzz around the DAT space. And also just outside of that, we are also actively exploring a potential, you know, vehicle. We have seen a lot of interest, a lot of parties have reached out to us. So yeah, we potentially will be interested in doing something ourselves as well.
- [43:18]
A
One second, sue, you mentioned Eigen Cloud. Can you speak more specifically about what that is?
- [43:25]
G
Yeah, exactly. Yeah, sure. So Eigen Cloud really has been in the motion for a long time. We started as a restaking protocol that everyone knows about, but very soon we gathered a very big TVL. So IonCloud really is to kind of bring it, bring our mission to the next level. It is a developer cloud platform that lets developer build any application on chain or off chain with crypto economic trust. Why we're kind of venturing into the cloud space, it's really because, you know, with AI taking the main stage now, we see that the trust and verifiable element of using AI tools, AI agents to be very, very crucial. So we want to be the platform that offers this trust between users and these AI tools to enable them to verify all the things that they are interacting with with AI and asking AI agents to do so. Really we are trying to be the platform that enable all the app builders to build on top of it, build on top of us and enabling all AI apps to have a verifiable feature. So kind of this is a very high level picture of what we're doing right now and we are launching a few product very soon this month. So would love to share more then.
- [45:06]
A
That's really interesting. So I had no idea that you were wholesale pivoting into effectively being a cryptographic AWS competitor with AI. I mean, is that correct? A summary of what you're basically saying?
- [45:20]
G
Yeah, yeah, you could say that. Yeah, that's a pretty good one.
- [45:23]
A
And so right now with all the digital asset treasury companies and obviously the size of the restaking market, how big is that? What's your what's the current tvl? You know how much of the I guess restaking market does Eigen control?
- [45:41]
G
Yeah, so we're currently securing over 23 billion TVL which is a crazy amount really. Like we're the number one US protocol in TVL and this is also like more than 90% of the restaking market. We created a term, you know, we're still the leader in this space and then adoption is also at all time high. So I think you know, with ETH growing and adoption from institution, you know the long only funds are potentially you know gonna come in as well more actively into the space. The ETH PI ETH token holder is going to grow and for eth, you know then we're looking at like yield generating opportunity and then that's going to take us to the next level. Everyone's going to start looking at like staking and then restaking to put their ETH into use. Because I think really I think the rest taking platform to financial institution is a great way to create that capital efficiency. So yeah, the sky is the limit. I honestly can't even put a number to that. But yeah, we're very well positioned to capture the overall ETH growth trend.
- [47:00]
A
I mean that's a pretty astounding number. You said 23 billion, right? And almost the entire resthiking pie is yours. So with this explosion of Ethereum interest over the past few months, how much of that would you say generally is coming from retail versus institutions versus new institutions that you're speaking with and are interested in testing it? I would also imagine there's some sort of learning curve, right? I mean people don't just naturally like say I'm buying eth. I understand restaking, right?
- [47:35]
G
Yeah, yeah, that's a good question. I would say definitely see a lot more on the institutional side. I think a lot of the momentum on crypto adoption and Ethereum adoption, you know they all took a pause after ftx. So we do see, you know, with the new new president we do see that the, the risk appetite of all the institution have been a lot more risk on. So we have been talking with a lot of the traditional asset managers and you know banks about kind of what we are doing. They just start to show interest in learning more about you know, not just Ethereum but also like hey, like what does it mean by restaking like how much yield am I going to get from this? So yeah we're, we see a lot more institutional than I would say additional net new probably mostly coming from institution retail Really? I think as you know I was listening to the, to the discussion that you guys had previously. I do think this is a bit of an odd, you know, it's kind of like a sideway but obviously ETH is doing well. But we can't really, you know, everyone's kind of cautiously optimistic. So I do see that the retail is still more or less cautious in general. I haven't seen, you know, my, my uncle start asking me hey, like what token to buy. I think that that's not the case yet, but that also might be a top signal and that happens. So a lot of institution adoptions coming and we are talking to a few players. We couldn't really name name right now but you'll see a few announcements that's coming out soon and then you know, a lot of the traditional asset manager have already covered us like Franklin Templeton, etc, they're all had research paper written on us. So yeah, I'm really excited. I think this is the year and I think to capture the institutional flow into the Ethereum network and really we are ether line since day one and we're really happy that we're seeing this trend now and to help kind of the overall ecosystem growth.
- [49:55]
A
So I mean speaking of ecosystem growth, obviously ETH was like the most beaten down asset for so long and we had this massive mean reversion and then Tom Lee obviously kind of coming out as we like to joke, became sort of the Michael Saylor of eth and all of a sudden ETH is back in vogue. You've been there the entire time. So assuming that this momentum continues for eth, like how does everything you're building continue to like leverage and contribute to the Ethereum ecosystem?
- [50:27]
G
Yep, yep. I think if we look at the adoption now in Ethereum when it comes to traditional institution, not just financial service provider but also AI companies or just tech companies in general, their first choice when it comes to building something on the blockchain is still Ethereum. So that give us a lot of opportunity to present kind of the stack that we have for them to build on. So for example we see this year a lot of L2 being announced. All the exchanges are building L2 to, you know, Robinhood's going big in crypto and we have our in house DA product data availability product to really offer this faster and also E secured solution to enable more transaction for the, for these L2s that are built by like you know, traditional institutions. And then when we look at like some of the tech space, some ride hailing companies you know, they're, they're also looking at how do I, you know, increase kind of leveraging the crypto security and then utilizing some of the verifiable feature that we're doing. So there's this Ry Helen company that we spoke with that's based out of kind of Asia that is really interesting. I think this is the first time we see tech companies showing interest in features that is kind of the bridge between the web2 and the web3 space. So our verifiable stack is start to see a lot of traction in that. So really I think not just financial institution but also tech companies as they are utilizing AI more there's going to be a lot of concern on AI safety or just like questioning whether AI is actually giving what you need or doing things that is following your instruction. So I think that verifiability and verifiable feature that how do we trust the AI is going to be super key and we're here to solve that problem. So yeah, Ethereum really, I think it still remains the number one choice. When everyone look at crypto space if they wanted to kind of utilize that infrastructure of blockchain, this is the place they come to and we have the product that suits kind of different kind of clientele that could be utilized. So yeah, I think that really optimistic about the future.
- [53:11]
A
Yeah, I love, I love doing research. While I'm having a conversation, I didn't realize that you guys were backed by a 16Z and I'm finding articles about the White House talking about you guys. So clearly you have this major league lead here I guess sort of like finally there's a token. You have the token, you have the, you know, the cloud, the restaking, all these things. You're talking about how, how much competition do you think as this grows will come in and how do you I guess maintain like the market share that you already have?
- [53:44]
G
Yeah, I think definitely, you know, the backing from A16Z and recognition from Lighthouse are, are great stamp approval and it kind of shows that we're not just another crypto project. It's actually, you know, the infrastructure that matters to crypto industry at a highest level. So to really maintaining this market share and where we are today, our team is grinding very hard. We are really continuing to ship and innovate at a product protocol level. So that, that includes our restaking, that includes our Eigen compute, Eigen AI, these in house developed product suites that could be suitable for all the different clientele that I was mentioning before so that we make sure that Eigen cloud remains the most trusted place for all the developers to build. So we already have more than 200 AVSs, which is our ecosystem projects in the pipeline and we really just accelerating everything ahead. So our future focus, I mean right now really it's very simple. We wanted to expand the cloud offering deepen institutional integrations with all the partners and more that I mentioned and also keep delivering the infrastructure that Web3 and AI will both be able to run on. So yeah, if we do that, I think there's no doubt that Eigenlayer is going to be here for the long term. Eigencloud, you'll see Eigen cloud everywhere, not just in crypto, but in the web2 space as well.
- [55:30]
A
Love that. Gaurav, I know you were trying to jump in before and I got super carried away talking to sue, but sue sounds like honestly every single digital asset treasury company that's eth involved should be taking utilizing these tools. I mean, just as a kind of a final thought that, that seems what should be the pitch basically for them like I said, to sort of justify a premium and to put their assets to work. Right?
- [55:58]
G
Yep, totally. Yeah. I mean we have so many calls like these few weeks as well. Like just with the Solana that's been created, I think the Ethereum community, you know that, that, that, that, that, that tension between the two racing ahead. So the Ethereum community definitely, you know, is, is getting a lot of more interest again. So yeah, we're, we're really here to capture the growth of the dad, capturing the growth of AI. So both on financial institution side, both on tech AI side, we're very well positioned. So I can't wait to share more with all the audience here. So do give us a follow on the Eigenlayer handle. So it's justlayer and then you'll hear more about our development in the future.
- [56:51]
A
Sue, please stick around. We'll go for a few more minutes. We usually kind of wrap here, but Gaurav, I know you had some thoughts and we were sort of already on this topic, so it's perfect since you're sitting there in New York having these meetings. Gorav.
- [57:04]
F
First of all, there's no name dearer to me than sue because that's the name I give to my daughter. Pleasure connecting sue for that reason. And then second, yes, there's an incredible interest in Ethereum dats. And Ethereum is the only DAT where you don't have a token discount. And so you can actually trust the market beyond Bitcoin, which is also which is also the reason it is observing the strongest price action because the money is only raised largely, I mean yes, in kind Ethereums, but a lot of money is raised in cash. So Sue, I'm just trying to understand if you guys are launching your own dad like a foundation sponsored that or are you facilitating? Because I have a whole bunch of DATs that want Ethereum with them and like not just in the US around the world. And we are also discussing the first New York stock exchange that Altcoin d after Ethermine of course that can, that can get into Altcoins. So let me know about that. I mean just cover up if you can for a minute.
- [58:18]
G
Yeah, for sure. Well first of all, just kind of to be clear, we are still exploring. There's you know, we're not committed to anything right now, but definitely see a lot of interest. And yes, you're right. I think for Eigen token really if you look at a token itself, it is a value accrual token that is capturing, you know, the AVS yield and also our future compute payment. So you know, our revenue motto is basically, you know, in the future we are going to take a cut from all the restaking token, sorry Restaking guild that is on our platform. So if you think about it, if you restake eth into our protocol and your ETH is earning yield of course, but then that yield and then the platform take a cut and that revenue is actually given back to the token holder. So in a way like by holding Eigen you are capturing that kind of eth restaking yield rewards. And then of course a lot more like the AI compute payment that will come through later and then the AVS security rewards payment as well. So that is kind of the differentiation point I think like if you, you know that that's why it will still make sense if we create such vehicle of our own. So not just you know, another Altcoin which I to be frank, I see a lot of the token is kind of, I have no idea what the token does, but our token does have a very clear vision on what it, what the value it will will capture to be. So, so that's kind of a short answer to your question. I'm not sure if that answers everything, but yeah, let me know and would love to connect offline if you're interested in exploring more on this with us.
- [60:22]
F
But yeah, yeah, the question would be more specific. So I've sent you a text, a dm but thank you for that. And I do think for the same reason what you said I do think it's going to be an incredible product because I am literally sitting with the largest institutions every day, like 14 hours these days. And for them like they, yes, they identify Bitcoin, but for every Altcoin they had just the same response. Oh, okay, it's a crypto, right. So they don't know if Ethereum is more incredible than Solana or Solana is more incredible than a shitcoin. But what they love is fixed yield income. And so because Eigen is literally the reincarnation of yield itself on a billion dollar scale that can actually absorb large institutional capital injection which also talks about large scale, I think it's an incredible place to be for Eigen layer and also for a DAT on that token.
- [61:24]
G
Yep, definitely, yeah, would love to chat more and yeah, that's why we need people like yourself and all of us sitting here to educate everyone else more on what Ethereum is and what's the difference. And I'm sure with the current strong momentum we're going to have a lot more adoption from all partners in the world.
- [61:51]
A
That's it.
- [61:51]
F
Thanks Scott for giving me the time share.
- [61:54]
A
Yeah, yeah, we'll connect you guys offline. Obviously some conversations there to be had. For everyone else, thank you so much for joining today. I know this is one of those strange days once again to be hosting a show but it's important we keep keep the conversation going on markets and talk about all the positive and incredible things that are still being built tier and more than anything to remember that crypto and specifically bitcoin give you a still give you the opportunity to opt out of all of it and really have personal sovereignty and freedom which is more important these days than ever before. And Mark articulated that exceptionally well earlier. So, so thanks for that Mark. Everybody else will be back tomorrow 10:15am Give Sue a follow and IIN layer and and also yep, Goravan Sue, I'll connect you offline. Thank you everybody. We will see you tomorrow for another crypto tunnel.
- [62:46]
B
Bye bye.