← The Wolf Of All Streets
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- [00:00]
Marcus
Good morning, everybody.
- [00:01]
Scott
Welcome to crypto town hall. This Tuesday, September 16th. We are here every weekday at 10:15am Eastern Standard Time. I'm hearing rumor, Dave. I'm in a lot of trouble for my skepticism on bitcoin. Treasury companies behind the scenes.
- [00:19]
David
Well, you know, the funny thing is if you, you know, you and I both share that add and you know, we took things that come in, come into our heads pretty quickly. But the basic story which you and I agree about is that if you have a sustainable business model, it makes sense. If you have cash flows, you should be saving it in bitcoin in many, many cases. And if you have a competitive advantage, then you should leverage it. I mean, the reason I bought some NACA yesterday is because as much as I think Bailey screwed the pooch yesterday in his letter, this morning was much better. And you know, maybe he listened. I don't know. I'm sure a lot of other people said it. The fact is that he is at the epicenter of the bitcoin ecosystem. And so if there are ever going to be opportunities to be able to buy assets cheaply and people want to give him a credit line to be able to do so, I think he could, he could actually do it. And so buying something at MNAV or at a discount, it just makes sense, you know, that said, most companies that are just trying to use it on the balance sheet, it's. And it's going to blow up. And people who are dumb enough to pay multiples more than two and even two is kind of difficult, but paying multiples more than two are going to get burned. And you and I have said that and I don't understand why anyone will give you a about that.
- [01:40]
Scott
Because, you know, friends in the industry and listen, the problem once again is a very human but crypto problem and that. David, I'm gonna mute your mic. It's really crunchy, but is that we just get caught up in these massive hype cycles. Like everybody should cheer for treasury companies that trade at NAS or a slight premium if they're decent. Nobody should be buying something that launches without owning any bitcoin. That's at the 20x to Naftuli. It's just like all coins, just like the altcoins.
- [02:19]
David
Look, I get a lot of shit, you know, I got, you know, Binance, you know, did a read a news report off of one of our crypto town halls when I made the point that XRP is trading like leveraged beta to bitcoin. Well, if you look at the chart, that's exactly what it looks like. That's not saying that XRP is Bitcoin or anything else, but you know that, you know, a lot of people gave me crap. Of course Binance also said that I was the CEO of Coin Routes, which is a nice, annoying since Ian Weisberger is running Coin Routes and I am merely a senior advisor and shareholder. But you know that that's neither here nor there. I mean, you get news stories, get a life of their own. I mean, you, you had a, in your show this morning. I know, I couldn't, I was in the gym. So I don't know if it was Andrew or Tillman. They made the point that a value cycle is starting, which by the way, is the single healthiest thing that could happen for all of crypto, which is things with value are going to get recognized and people are going to pile in. That is the most important thing. Now Bitcoin has its value proposition. We've talked about it. It's dramatically undervalued. The problem that we have in crypto is people look at it, they suffer from problems, they suffer from unit bias and they suffer from this kind of belief that a 10x gain is good, but it's not really life changing. So why do I care about it? And anyone in traditional finance, you talk about 100% gain and people, traditional finance are like, wow, this is like amazing. And you know, people in traditional finance, if you can get a 5% gain and lever it up to 50%, they're ecstatic. In crypto, people scoff at 10%, at 10x gains, as 1000% gains. That is more like lottery tickets. That is not investing. And eventually these things will, will, will come together. So when the treasury companies, if you ask me a question which is, does David Bailey and NACA have a potentially sustainable business model? The answer is yes. If you ask me the question can they grow via debt accumulation, etc. From where they are now to a multibillion dollar company? The answer is yes. If you ask me the question of should I be investing at a net present value as if they're worth $20 billion right now? The answer is are you out of your fucking mind? And, and that's kind of the problem in crypto. So people interpret what you say through that lens, right? I mean, am I saying anything wrong? I just, I, I, you know that I've been dismissive of much of this for a very long time, but I think that, that there's value. And that's why I said yesterday I, I really hated the way he approached it yesterday morning. But I actually went and bought some. So you know that.
- [04:54]
Paulus
And.
- [04:55]
David
And told people I was going to do so, and then told people in a later space during the day that I did. So people thought that I was nuts. And I'm like, guys, you give me something that could. That. That I think is a double from here, I'm going to take it every time. Right. It's just that simple.
- [05:10]
Scott
It could be a double today. Well, I'm not saying it will. I'm not saying by any stretch or that anybody should expect that. But these have that level of volatility. So if you think that everyone who was going to sell sold yesterday, it makes a lot of sense.
- [05:24]
David Bailey
Hey, Dave, if you want to get leverage on naca, they now have options trading.
- [05:30]
David
I mean, one of the. How do they have options trading with. With the price so low?
- [05:34]
Scott
Is that true? I don't even think you can buy. I was hearing rumors yesterday. A big problem was that people were actually putting in bids on Fidelity. And Fidelity didn't allow naka trading or something.
- [05:43]
David
Well, Schwab did. I know because as I said, I did so. So I know Schwab did. But one of my recommendations to David, to be blunt, if I were recommending him, is he should do a 10 for one reverse split. And if you ask, you ask yourself why. It's very simple. It's because there's a lot of plumbing. And David, I think you know this. There's a lot of plumbing in the financial system that doesn't allow margining, for example, of anything less than $5. It makes it very hard to short, makes it very hard to do options, makes it very hard to do lots of things. So eventually, if he can't grow the company to be, you know, that's why nobody IPOs at a price, you know, close to this. I mean, it just doesn't make any sense if you're in traditional finance because it means you literally are outside of the plumbing. Now, we could talk all day about whether that should be the case. The answer is, of course not. It's. It's an anachronism. It makes no sense, but it is the way it is. And so that's why companies do reverse splits. They do it because they. People need to be able to. A lot of accounts, a lot. Fidelity, that. What, what your friends on Fidelity probably happened is there's probably a level of your account access which doesn't allow you to buy what they call penny stocks. And anything below $5 is a penny stock. So that's probably what it was, Scott. But yeah, you know, but, but it's something that people on this crypto town hall don't know. So that's why I'm imparting the information. I said it yesterday on a space in the afternoon and people were like, no, that can't be true. And of course then they looked it up and they said, oh, okay, well, I guess he's right.
- [07:13]
Scott
Yeah, that makes, that makes a lot of sense. So what do we think? Before we get into other topics, What I've been getting in trouble for is saying that this is the quote unquote end of the bitcoin treasury trend. And so I think I should clarify. I think it's the end of the hype around the bitcoin treasury trend and if every company launches a bitcoin strategy and trades at a one point, one or one to Nav, I don't think it's the end of that trend. I think it's just the end of the initial hype cycle around these and nobody's going to buy it anymore. But maybe I'm wrong. Maybe I underestimate humans humaning as I like to say.
- [07:50]
David
Well, I mean look, there's two points here. Point number one, it's never the end of a cycle. Bitcoin's volatility is still ridiculously low. Its price isn't moving, it's sitting in the same band. All the technical doomsayers are being non plussed by, well, why isn't it down at 100 now? And all the bull guys are saying, well, why are these old fashioned OGs selling? The answers are in a distribution phase. This too shall peter off and end and volatility will reassert itself. When volatility reasserts itself, companies like strategy which have the ability to monetize that volatility will outperform. The M navs will go up. Companies that have access to governments or other things that they can buy assets at a discount will go up. Companies that have no special sauce will continue to languish it around at a small discount to M Nav and that'll be bad. But I do think that there is one trend and I don't want to shill for arch public, but they're doing a very interesting thing and you could talk about that if you want later.
- [08:49]
Scott
I'm a part of that for disclosure, so.
- [08:51]
David
Yeah, right. No, I know you are, which is why you don't want to. We don't really want to go there, so I won't talk about them in specific. But what I will say is that companies which are cash flow generating companies opting to save in Bitcoin rather than in an asset that's being depreciated by 8% per year by the US federal government, or if you're in other countries, potentially more opting to get rid of that 8% depreciation and get positive real estate, expected returns for your cash flow hoard should create higher multiples for companies. And so I think that the notion of a bitcoin treasury company is just going to be defined as companies because companies don't want to be stupid. And I'm not making up that 8% by the way. That's what the CBO is projecting our deficit to be. And look at what the projected money supply is going to be. And that's what it is. So even if Bitcoin does not gain a kicker on its investment value based on adoption, and whether you can read Bastian Sinclair's book on the adoption S curve, if you want to get an idea of what that looks like, but even if that doesn't happen, you would expect it to outperform dollars by 8%, which is a hell of a lot better than where most corporate treasuries are getting.
- [10:07]
David Bailey
Hey Dave, you made a point yesterday about basically the dollar depreciation. If we look at the long run, long run rate of return for the s and P500, about 10%. If you look at forecasts over the next 10 years, it's more like 5 to 6. And that's before anybody comes in from a Treasury standpoint and buys crypto to try to enhance their balance sheet. Your argument here, if those points are right, would be that companies should be doing to this just to stabilize their value, correct?
- [10:38]
David
That's exactly right, David. That's exactly the point. And by the way, that 10%, if you look at the track the S and P performance divided by the depreciation of the dollar by the increases in money supply, particularly after the pandemic, looks a lot. You know, those charts are very similar. And, and if you actually look at it, the equal weighted s and P versus that, it's actually underperformed or slightly underperformed. But the MAG7, which has generated additional value because of a massive surge in AI and technology and hype around that, has outperformed. And the thing about that, the thing that drives me crazy about a lot of analysts is a lot of analysts only look at averages. Of course, in a world with hundreds if not thousands of viable investment options, some are going to outperform and some are going to underperform. The aggregate is going to be almost by definition the sum of depreciation in the currency and increases in GDP in real GDP caused by productivity, et cetera, et cetera. This is axiomatic. I'm not saying anything that people don't know, but most investors don't ignore, ignore that. That's really the point. Does that make sense, David? Oh yeah, Scott, you got that?
- [11:50]
Scott
Yeah, I do. I mean listen, it's the same overarching theme I just want to reiterate that I've, for me that I've said from the beginning is that I'm very comfortable with institutions, governments and individuals all approaching Bitcoin the same way, which is a hell of a lot better than holding cash. If you make money, take that money or some of that money and put it into bitcoin and hold it very long term. The money that you don't need to sell that to me is the Bitcoin that should be what a bitcoin treasury company is called, not financial engineering. I mean to your point about arch public, it's a private fund, not a publicly traded company, but it's an existing businesses with massive cash flow with triple and leases and effectively franchises taking the money that they're making and putting it into bitcoin using an algorithm to buy it at superior prices. And because of the big beautiful bill, being able to entirely depreciate that the first year, that's the kind of thing that's going to be exceptionally sustainable. If you made a million dollars this year in capital gains and income, you can put $3 million into the fund entirely. Buy bitcoin in a cash flowing business and not pay the government the taxes. Doesn't that make sense? Something like that?
- [13:04]
Marcus
Yeah.
- [13:05]
Scott
These are the kind of things that I think will be the future.
- [13:07]
David
But it's logical it just as a, as a bitcoiner, just the entire notion that there's, that how we play with the tax code to incentivize certain investments and the corruption in our government to do so pisses me off. But that said as a, as an individual, of course it would make sense to take advantage of it.
- [13:27]
Scott
It's only for accredited investors. I should be very clear. But like it's not, you know, everybody has heard obviously about, you know, a billionaire buys a private jet on December 28th because they can fully depreciate and get the tax write off. So you basically get a jet instead of paying taxes, right? Well that's pretty systemic and There's a lot of ways to do that. And if you can gain Bitcoin and investment in the cash flowing business, those are the kinds of things I don't really give care specifically, but those are the kinds of things that are going to be very successful in my opinion. Utilizing Bitcoin as Treasury, but we can move on from there. Yeah, I mean Gary, I mean Gary Grant is doing that as doing real estate and bitcoin. Right. With the full depreciation. It's a similar model, I would imagine.
- [14:12]
Grant
Yeah, you're, you're. He's going to end up arbitraging the depreciation, amortization. If Bitcoin goes down, it's going to allow him to sell the Bitcoin, take a loss, take that loss against the capital assets, write them down and then rebuy Bitcoin and reset your basis. It's just, it's an option tool. Like we've forgotten how much optionality Bitcoin really affords somebody that's really looking at it as a business instead of a scam.
- [14:44]
David
Hey, just, just to amplify that. Scott, every time I use the words, people always ask me what the hell do I mean when I say monetize volatility. What Grant is doing is a perfectly classic example of, of monetizing volatility. Of course, at the same time as being intelligent on tax strategies. Right. You know, this is a very, very well trod path for I won't even say Wall street, let's say, you know, banking worldwide and smart people worldwide. I mean, you know, we were doing this in the city of London, a Citigroup in the, in the 90s, you know, on dividends. You know, there's so many variations of this, but when you take it into account Bitcoin's unique volatility characteristics, it makes so much sense.
- [15:30]
Scott
About some knocko while we were talking.
- [15:33]
Marcus
So I'm a little higher than you, Dave.
- [15:37]
Scott
I'm convinced for not financial advice. Good, good.
- [15:39]
David
I mean I, I mean, listen, you know, pretty big, I'm not gonna, I'm not gonna play games. It doesn't, doesn't really matter. It is what it is. There's one other story that, that you know, that we put it as the title here. Right. You know, and I just find it interesting, you know, do we, why do we care about cheerleaders so much anymore? I mean, is there real, is there something real? I mean, you know, Saylor and Lee going to bitcoin. I mean, look, I have lots of respect for both, but you know, they both have such, they're both wearing jerseys now. I mean big jerseys, bright orange jersey. And I don't know what color Tom Lee's jersey is, but they have so much vest, fuchsia, whatever. They have so much vested interest. Do, do lawmakers care? I mean, unless they're donating money, in which case, of course, then they care a lot because that's what lawmakers care about most.
- [16:30]
Scott
Well, it's a double edged sword. We should go to the panel here. And Dan, I would love your opinion. So we don't have you here very often. Spoiler. But I think it's a double edged sword, obviously, because we want the industry in the room right when they're talking about legislation. And this is for those who've missed the story. 18 crypto industry executives, I believe are in a meeting to talk about the strategic Bitcoin reserve. And two of those people are Sailor and Tom Lee. Dan, did I get that right? I don't even want to, I don't want to butcher it. But so, yeah, I mean they're, they're cheerleaders. But we also definitely don't just want a bunch of congressmen and senators in there without any representation from the industry.
- [17:11]
Dan
Yeah, no, that's, that, that's about right. I mean, it's, listen, I mean, this is today. I'm glad they're doing it. I mean today is probably not the day to do it though. I mean, listen, it's shutdown season in Washington right now and we got 16 days until the government shuts down. Congress has yet to reach an agreement on continued spending. Big parts of the government are likely going to shut down October 1st. And the Republicans, they want to, the Democrats want Republicans to extend those. But Biden era tax credits for Obamacare, there's no way the Republicans are going to want to do that. So this is like, I mean, honestly, small potatoes, I think, on the grand scheme of things. And so timing of it. I mean, again, I applaud them and I know they're going up to New York tomorrow for that Bitcoin Treasuries conference. I'm going to swing on up to that too. I just want to do a deep dive on this whole Treasuries conversation too, which we could probably talk about later. But it's an interesting time because really the focus has to be on the Clarity act and market structure that is a world more important, frankly, for our ecosystem than the sbir. And I hope the SBIR gets done on the legislative standpoint. But I, I just don't see it happening. I don't think they have anywhere near the votes, but by all means, Tom Lee Sailor, I think they can spend as much time they went on the Hill right now. I'm glad they're up here with a lot of the other executives in town. But it's, you know, I, I don't think there's going to be much happening after today on that. There's bigger fish to fry.
- [18:35]
Scott
So it's a, it's a good lick, bait, press moment, or it's just a natural step on a very long process that we should not expect much progress on immediately.
- [18:49]
Dan
Well, yeah, no, I think, I think there's, there's going to be some aspect of the SBIR that's going to come out, but it's likely going to be that for now, it's going to be that digital asset stockpile that, you know, they're still working on. And there's other measures that the federal government, particularly the executive branch, can take. Whether that's again, continuing with the seizures, continuing with the asset forfeiture, if you will, and they stopping the auctions, what they've been doing for the last like six months. But now that bo's out and now they're, listen, we have three and a half more years to get this done. And so Wit, who we've met with his Bose successor and Harry Jung and a lot of these other folks on the team are now taking a lot more industry meetings to expand on the, there's two of them, right? The U.S. digital asset stockpile, the USDA and then the strategic Bitcoin Reserve. The legislative fix would be best. But again, that is such a long shot. I mean, it is such a long shot.
- [19:38]
David
So.
- [19:40]
Dan
Yeah, we could talk more about it. I don't want to steal the show here, but I just, I'm just giving.
- [19:43]
Scott
You my show still.
- [19:48]
Dan
Let me see. Well, I'm curious to see, I mean, what your audience has to say about it, I mean, especially when it comes to the market structure because this is what we're working on right now, the sausage making process. And this is again, vastly more important because if we don't get this done, certainly over the next two or three months before the midterm year kicks up, we're gonna have a real big problem next year after the midterms, especially if the Republicans lose the House. And then we're looking at a long, long way to go. And as long as Paul Atkins is in there, you know, we'll be fine. But hypothetically, President Gavin Newsom Comes in in a few years, you know, who's to say he's not going to bring in Gary Gensler Jr. Or 2.0?
- [20:25]
Scott
That's why this market or just Gary Gensler himself?
- [20:29]
Dan
Yeah, maybe. I mean, maybe he'll be Treasury Secretary. I mean, that's, that'd be a nightmare scenario. So what I mean is, like, that's why this bitcoin SBR legislation, again, I love it in spirit, I'm a bitcoiner. But I just, if we're going to use some horsepower, you know, we got to work together on the Clarity Act.
- [20:48]
David
All right?
- [20:49]
Scott
So it's good that they're in the room, but we got to get them.
- [20:51]
David
In a different room, the Clarity Room.
- [20:54]
Scott
Not.
- [20:57]
Dan
A lot of these companies are doing a lot too behind the scenes. It's just, this is not as extreme, exciting. It certainly doesn't get the same press as Sailor and Latam Lee come to the Hill to talk about the sbir. I mean, that's a lot more exciting, trust me. I, but the, the real truth is we need to work on this RFIA discussion, the rulemaking with the Genius act and then getting the Clarity act done, and I think we will, but that's really where we're heads at for the next few, for, for the next rest of the year. But for the next couple weeks, you know, I, I would encourage everybody here just to really keep an eye on that shutdown because if you, the, they, if they can come to an agreement that's going to make, I mean, market structure and certainly the SBR a whole lot harder.
- [21:39]
Scott
Yeah, that all makes perfect sense. And luckily we also had Ron here to kind of give us the breakdown yesterday. So we love having you guys to give us the actual information on what's happening on the Hill. I, I just totally. Total pivot. I just read a story that actually made me laugh out loud while my mic was off, which is one of the ones that was shared with me. For this group, Citigroup forecasts ETH to fall to 4300 by year end. Last I checked, it said 4500. Big prediction. Big prediction. Down $200. But listen to this. With a bull case of 6400 and a bear case of 2200. Talk about bold takes from the Citigroup analysts. Ethereum could trade at any price by the end of the year. Where do they get these things? That's news.
- [22:24]
Dan
It's clickbait.
- [22:26]
Scott
It's unbelievable. It's unbelievable. And now I'm going to put Folis on the Spot, since you're here and we're talking about price action, is ethereum going to 4300 by the end of the year or maybe 6400 or maybe 2200 or maybe 15,000? As Tom Lee said, what's going on?
- [22:43]
Paulus
So many hot takes, I don't know where to start. No, but Ethereum is an interesting one. It's almost one of those charts where in times like these. I.
- [23:00]
Scott
Lost him. Did you guys.
- [23:02]
Carlo
Yeah, lost him too.
- [23:03]
Scott
I'll chime in here, literally dying to know what happens at times like these.
- [23:09]
Carlo
I was just gonna say, you know, somebody asked, I think maybe you asked a minute or two ago about why we need these figureheads. I think, you know what, what Lee's been able to do over the last few months is just that price action that investors want. We want number to go up. Like you can't discount how important having these guys on CNBC every day chiming in is to the, to the price of the coin and token. And so I think, you know, you know, Lee's been obviously very important for Ethereum. That's just hearing that that's the gonna be our price action makes me, you know, shake my head a little bit. A little bit as a, an eth bull. But we'll see how it goes. But I, I do think it's very important. I think we're, you know, doge the ETF got approved. That's happening. They're still looking for their figurehead. I don't think MUS is going to do it anymore, you know, but you need somebody big to be on the shows and talk about it. I think that's just the way forward.
- [24:08]
Scott
Paulus, are you live?
- [24:10]
Paulus
Yeah, sorry, my Internet dropped because apparently living in a first, the first world country isn't good enough to have regular Internet that doesn't bug out.
- [24:19]
Scott
Sorry about that.
- [24:19]
Paulus
But yeah, just talking about Ethereum.
- [24:20]
Scott
The Ethereum foundation was listening and cut you off. Yeah, they knew 2200.
- [24:26]
Paulus
They knew I was going to give a hot spicy bear take. No, I, I think that, yeah, I mean something I've been telling my guys all this month is effectively there's, there's a lot of. There are so many fundamental drivers in the market this month. We had PPI CPI last week. We have FOMC tomorrow in like 24 hours. And the market has so far been, you know, it's been rallying into this news event. But I still think there is a certain amount of indecision in the charts in, in the markets and we kind of see that in the price action. I know at this point the 25 bips rate cut is like 96 or something like that. CME group are giving that kind of likelihood. So the, the question isn't whether or not we get rate cuts. The question is, you know, to what extent they're priced in. And I think that the fact that BTC and ETH have had these huge rallies kind of this month, more so more so looking at BTC running off its, its lows should kind of tell you what the market is is, is looking towards in terms of risk appetite and how people are positioning. And I think this sell off that we're seeing the last couple of days is, is also indicative of that on high enough time frames. I I think that you know we're setting up for a pretty bullish Q4. I think that there are a lot of risk on indicators that are flashing. We have Dixie weakness. We have obviously rate cuts impending and, and presumably a dovish pivot from the Fed. We have you know, and something you were talking about at the start of the, of the, of the discussion, you know the, these DATs and treasury companies. I might have a slightly more bullish leaning than certain, certain other panelists and that's okay. Long term rates down, equity strength. We had NASDAQ S P all time high in the last week. So I think that we're kind of setting up for a bullish Q4. And speaking on Ethereum specifically potentially continuation and proper price discovery. I know we put in a new all time high. Was it at the end of August or actually yeah, end of August, but it was like a daily SFP type thing and we didn't really get to enjoy any sustained price discovery. But I think that might change. I think that FOMC itself is going to be a sell the news event. I think that the next week or two we're probably going to see choppy price action at least. But I wouldn't be surprised to see a kind of a pullback as a lot of altcoins are kind of, you know, putting in very high open interest numbers and seeing a lot of leverage longs in the system a lot of late longs trying to make money, trying to capitalize on a move that is definitely slowing down some momentum that is definitely waning. I think that sell the news event tomorrow, I think that we get a few days, maybe a couple of weeks of sell off but I think that that turns around in October and I think we're setting up for a bullish Q4.
- [27:17]
Scott
Speaking of Tom Lee. He made headlines today by saying that he thinks that rate cuts are going to be, you know, spark a massive, I believe was the word, bull run for Bitcoin and Ethereum. So I think consensus is that this week's rate cuts are going to be bullish for Q4.
- [27:33]
Paulus
I mean for sure. Yeah, that's certainly worrying I think because how often do we see these consensus takes and inevitably the market does the thing that hurts the majority of people or that hunts the most amount of liquidity and knocks the most amount of people out of their position. I think the fact that it is consensus is why we're kind of seeing. Because if it was consensus bullish then ETH will be trading at 5k right now and BTC would be putting in new all time highs as well. But the fact that we're seeing this kind of uncertainty, this, this sell off, I think that should tell you that the, the positioning has already happened, the move has already played out to an extent and these, this is, this is people taking profit on that bullishness on, on, on, on that 25 bips rate cut outcome. I do think that long term it's very bullish for the markets looking forward but I don't think that the low and medium time frame, you know, 15 minute chart scalpers are going to necessarily see that in their intraday price action.
- [28:39]
Scott
Somebody else had their hand up but they went down. So I can't see. Dave.
- [28:45]
Marcus
Can you hear me now? Yeah.
- [28:49]
David
Oh, you finished A little bit, but.
- [28:52]
Scott
Yes, I hear you.
- [28:53]
David
Yeah. Okay, cool. Yeah. There was another story which I thought was interesting that people don't really understand which is, you know, people complaining or worrying that institutional holders, you know, funds and, and companies are now somewhere in the 15, you know, ish percent of Bitcoin holdings. Was that the number? I mean it was in our thing I'm driving so I can't look at the number and I just find that interesting that people will be concerned about that because if you look at, if you look at gold and you take and you include central banks in it, it's way, I mean it's way higher. I mean, you know, individuals own less than 40% of gold. But if you, even if you take the central banks out, which is a big, big piece of it, it's still significantly more than that amount. And gold isn't generally something that individual companies do. And when you include the gold miners and the stocks etc. It's, it's more than double this amount. If you look at equities that same kind of cadre owns close to 80% of equities globally. So it really is, it's fascinating how people get worried about these big distributed pools of capital of providing access to, owning Bitcoin to individuals, as if that's somehow a bad thing or, or makes it toppy. It's, it, in fact, it's just silly.
- [30:19]
Scott
David, your mic is up. I don't know if you're trying to talk or if it's just your mic.
- [30:22]
David Bailey
Rumbling D It's my mic rumbling Sorry.
- [30:26]
Scott
All right, Sasha, Carlo, you guys haven't jumped in today. Any thoughts here in the conversation? Sasha, go ahead.
- [30:33]
Marcus
Yeah, yeah.
- [30:34]
Sasha
So, I mean, two, two things on my end, I think, yes. I mean, looking at the FOMC meeting and, you know, I think, yes, consensus is there's way too much consensus on how much the rate cut is going to be and what it's going to do to the market. So agree with, I think, Dave and a number of others who brought that up. The thing I wanted to point out too is there are massive also option open interest for both Bitcoin and Ethereum expiring in on September 26th. So that, I think that's, that's going to be an interesting thing to follow. And it's mostly on, it's mostly call options. Not much, much less put options.
- [31:24]
Scott
Now my mic is messing up.
- [31:26]
Adam
Good morning, Scott.
- [31:26]
Scott
Good morning, Carlo.
- [31:27]
Adam
Good morning. So on the, obviously on the bitcoin strategy approach rumbling through Congress, I have to agree it's ambitious, but probably not going to make it over the goal line because of where Congress is at right now as far as rate cuts, I'm fully prepared for a 25 bips cut and the ensuing disappointment and sell off that will follow because I think people are still not zooming out and seeing the big picture here. The Fed is inevitably going to capitulate because it's, it's programmed that we're going to have a new Fed Chair in May. So again, I stick to my thesis. We're going to have an extended cycle here. We're going to have a lot of rate cuts coming down because the next Fed chair will be sympathetic to Trump's agenda. And I think that's going to be a massive benefit for risk assets, especially bitcoin. And I also think we're going to see an alt season. So I enjoy the chop. It's an opportunity, if you're dollar cost averaging, to continue to do that. It's boring and it makes us talk about things like digital asset treasury strategies in the absence of, you know, market movement up and that's fine. I'm happy to have these conversations. It's great. But I don't think it changes the fundamental nature of this. We've broken the four year cycle and I don't think we're coming back. I think this is the way it's going to be going forward.
- [32:54]
Scott
Anyone else thoughts on that specifically?
- [32:58]
David
Yeah, I saw Adam, so let him jump in first.
- [33:01]
Carlo
Actually I wanted to just touch on, I don't know if you all guys saw the news about Google with their stable coin like AI payments rail that they just talked about today with partnering with Coinbase and Salesforce. I just wanted Carlo's opinion on that, if he'd, if he'd seen that and what do you think it, it means for, for stables in general?
- [33:22]
Adam
Yeah, I just saw that. Thank you for the dm. Can I touch on that, Scott?
- [33:27]
Scott
Yeah, please do. There's, I mean there's stablecoin news every day, right? We got MetaMask stablecoin launches.
- [33:33]
Adam
Yeah, I, I think it's picks and shovel season for stablecoins and anybody and everybody in fintech is looking to launch and looking for clarity. I, I am not at all surprised by tech companies integrating payment rails and partnering and consolidating in, in response to this. It basically is going to disrupt the way we transact on the Internet. There's not going to be the need to go through all the trouble of connecting a credit card and putting in your account number, your billing address, Your expiration date, your 3 number digit on the back of your card. All these web providers and all these online e commerce retailers are I predict all going to have seamless stablecoin integration. And I, I mean I'm, you're, you know, you're, you're, you're, you're kind of talking to the, to the person who's the most bullish I think in the entire space on stablecoins. I think this is all a net win. The thing we need to be mindful of and continue to push back against is this notion that there is some kind of a loophole here that is a threat to banks. I think that's a protectionist agenda from the banks. I think they're totally misreading the narrative here because they're threatened about what stablecoins are going to do to their traditional fee extraction model and they would love to see that quote, loophole closed so that only they can make yield in their own creative ways but deprive the consumer of having options to the traditional banking rails. Things are changing, and those that fail to adapt are going to get left behind. That's really my bottom line with all of it.
- [35:11]
Dan
I got to agree with that. There's a massive push from the American Bankers association happening. It's mostly been behind the scenes of. It's becoming a lot more blatantly obvious now. And part of the concern we're also facing right now is with the Genius act, there's a state option, right? And so all the bankers have associations throughout all the different 50 states. And so they're going to be leaning on state treasurers and state banking commissioners offices to cut their own favoritism down there as well. So I think this is going to be a major battle on the horizon. It's already gotten up and running, but beware. And I think this is an area where we need to stick together as an industry to stand firm, if I can.
- [35:55]
Adam
Scott, I wrote something this morning I think is timely to put in the nest that talks about that exact thing. Texas bank association came out before the stablecoin bill was passed, voicing these concerns about how this would impact community banks. And it's the same protectionist agenda that we're seeing now from the bank lobby. So I'd love to share that just to kind of build some traction behind this narrative, if I could. I think we lost, Scott.
- [36:23]
Carlo
I think we lost.
- [36:24]
David
Which means you can.
- [36:24]
Carlo
You can put it up there, Carlo.
- [36:26]
Adam
I'm gonna put it next. Okay, Look. Look at me. I'm the captain.
- [36:29]
Scott
Go ahead, Carlo.
- [36:30]
Carlo
It's all I was asking.
- [36:32]
David
Me.
- [36:32]
Adam
I am the captain.
- [36:33]
Carlo
Carla, what's your feeling? And this actually feels a lot like. I don't know, this feels like Libra. Honestly, this feels like Facebook, you know, partnering with all these. I mean, I get that kind of creepy vibe in the same way that this is just like Big Tech's big grab.
- [36:49]
Adam
Yeah, man.
- [36:49]
David
Look, it's.
- [36:50]
Adam
It's inevitable. We're gonna have centralized entities when it comes to stablecoins, because by nature, they are. They are centralized.
- [36:59]
David
They're, They're.
- [36:59]
Adam
They have to be fully regulated. There's just no way around that. Libra. Libra was ahead of its time. Libra was an attempt to do something very ambitious. The team that tried to build Libra is now building sui, and I guess that's a net positive for their. For their ambitions. But that's not going to stop the tech companies from wanting to get into this. And I don't. I don't think you can put that genie in the bottle. I Just think this is the way it's going to be going forward. Is it going to make it more and more centralized? And it's probably more Web two than Web three ethos. Yes. But I think that kind of comes baked into the Genius act because the Genius act is a highly centralized piece of legislation. You're not going to break the traditional PEG requirements because that introduces too much volatility into the dollar system and that plays into the bank narrative. So we have to be careful here that we maintain that and we don't get too over our skis with how we build on stablecoins because that's only going to cause a contagion effect that we want to avoid. We want this to be smooth.
- [38:08]
David
Yeah. I mean, Carlo, you and I have talked about this a million times. I mean, the technology is ahead, both adoption and, and people's understanding of models. So, you know, we already know that anyone in crypto understands how easy it is to move money. The issues that people will have to come to grips with in business models are things like, okay, I'm willing to pay something for being able to call my credit card company when someone screws me in and reverse a transaction. I'm willing to pay something for, you know, credit. Right. But am I willing to pay 3% in a world where these guys are making, you know, 95% profit margins on that? And then there are a lot of people who say, well, I don't want to pay for that. I just want to have my money, you know, move quickly and I want to pay anything. And people forget that the rewards systems are based upon the fact that there's such huge margins. Right. And all of this will get sorted out. And that's where this stuff is all fighting. And that's where it gets complicated.
- [39:13]
Scott
Can you see me, Dave? Because I got. I got kicked.
- [39:17]
David
Yes, we see you. You are back, man. And I know, you know, you have three minutes to spare.
- [39:22]
David Bailey
Hey, Scott.
- [39:23]
Marcus
Yeah, go ahead.
- [39:24]
David Bailey
Just wanted to apologize for earlier. I was putting on my NACA options trade anyway. That all worked out well. In any event, I'm going to hazard a forecast here. If you got Google putting up payment Rails, we're going to have one of the Mag7,000 companies come out by the end of this year and announce a crypto treasury strategy. And arguably that might take the air out of a lot of these DAT co that are out there.
- [39:48]
Scott
Say that again.
- [39:51]
David Bailey
I think by the end of the year, One of the Mag 7 companies is going to come out and announce a crypto treasury strategy. I mean, all that cash they got sitting there earning what, you know, less than Dave's 8%. Right.
- [40:06]
Grant
So David, who would be your prediction?
- [40:09]
David Bailey
Well, you know, Google's kind of gone out there with the Rails and the Stablecoin, so they're at least putting more of their toe in the water. I'll go with, I'll go with Alphabet.
- [40:21]
Scott
Going with Zach Zuck. Meta.
- [40:25]
Grant
Wow, Interesting guys. See, I go with Nvidia. I think Nvidia is in a perfect.
- [40:32]
David
Position to support Bitcoin.
- [40:33]
David Bailey
Either that or symbiotic. Tim Cook tries to win back Wall Street. Love Apple's cash crypto.
- [40:41]
David
I think that in five years they're all there.
- [40:44]
Scott
So that's really, that makes more sense.
- [40:45]
David
That's really the point. Think about what that means for price though. That's why you get people like Fink and others saying 500,000 plus, because what does it look like with the largest companies in the world all saving in bitcoin? I mean, you know, there's an S curve to adoption that, that's the, the parabola. And, and if you look at bitcoin hash rates, by the way, it, the, my, it's sort of anticipating that, you know, people don't talk about it, but the, the network just keeps getting stronger and stronger and stronger.
- [41:21]
David Bailey
I mean, look, you got all those data farms out there that they've got, you know, the older ones, they can depreciate and have them go, you know, mining, why not?
- [41:31]
Scott
And I, I love rapping towards the conversation with the huge hot take. I think it'll be Zuck, but what do I know? I think he just wants to get so close to Trump. You know, he like dresses like Elon now and he tries to hang out and he wants to be, you know, one of the cool bros and buy bitcoin, bro. You know, I think it's, I think it's going to work out perfectly. But to transitioning, we do have XYO up on stage. Marcus, is that you behind the account?
- [41:59]
Marcus
Yeah, that's me. Hey everyone, how are you doing?
- [42:01]
Scott
How many times, how many times do you think we've like had five minute conversations at conferences?
- [42:09]
Marcus
I don't know.
- [42:09]
Adam
Over.
- [42:09]
Scott
Under 10?
- [42:11]
Marcus
Yeah, a lot.
- [42:12]
Scott
Yeah, I'm a bit off the conference circuit for the moment. Not going to Singapore for the first time in four years. It's just too big of a trip, man.
- [42:23]
Marcus
That's probably a good call. You know, there's so many people there. It's a whole city traffic jam and you know, it's Formula one at the same time. It's exciting. But what makes it slow, there's like more than a thousand side events. It's going to be crazy.
- [42:37]
Scott
That's awesome sight to have you here for this part of the show. The sponsor section going to give basically a 15 minute ish interview and dive into what you guys are building. Every time, obviously I bump into you, we get into this conversation about XYO. Maybe you should just give us the TLDR because you've been around since 2018. Deepin has been a huge narrative, but I think you were arguably first.
- [43:01]
Marcus
That's right, yeah. We were the first TPIN. We didn't realize it in 2018, of course. Misari coins a current, coins a term in 22. But yes, it looks like it. Yeah.
- [43:16]
Scott
So dive more into it. Maybe you could tell everybody what it is, specifically why it's important, why you built it. Yeah.
- [43:24]
Marcus
So today we are a data company on blockchain, basically. But how we started out is we are. We realize that location gets easily spoiled to hack. Right. You can download the cheapest spoofing app, for example, and pretend that you are in Dubai right now and you're actually in Los Angeles. It's a problem for most apps on your phone lots for self driving cars and smart cities and so on. So we build a network of connected IoT devices where those devices confirm each other's proximity and location. And that way you can have relational maps and you can have supply chains and automated tracking and automated RWAs and data from the real world and things like that. And we had difficulty scaling when we launched in 2018, only 2%. So yes, population was using crypto, but we were like, you need to have a wallet and you need to, you know, pay us in XYO if you want anything from us. And it was difficult to install the software, you know, the beginning of deep end, basically. And it was just hard. And so we launched subsequently an app called Coin, so you can Download it on CoinApp Co, which also lets you collect not only is this a geomine for location, but also collect other data from the real world, be it like sensory data or offline data, like POI data and so on. And we validate and verify it and then, you know, set it to Web two and Web three companies and we have like a very broad data set.
- [44:58]
Scott
Yeah, go ahead.
- [44:59]
David
Sorry.
- [45:00]
Marcus
Yeah, we managed to grow that to more than 10 million nodes and which makes us, I think one of the largest depends as well. And we are, because we saw data, data, data, data, data, you know, we tried not to build a layer one or layer two over the last seven years, but we built so much technology for it. And so last year we decided to. Now it's time we built a data focus layer one, because nobody else is doing it. And so we launched Today our XYO layer 1 data chain, which makes not only data storage and data certainty more accessible and more crypto native, but also analytics and usage of databases.
- [45:46]
Scott
So talk more specifically about what you launched today.
- [45:52]
Marcus
Yeah, so the chain today is for example, if you look at other chains, they are about transaction penalty and about transacting token value. And in our case it's about transacting data value and storing data value, getting certainty for it. Let's say you have a Deepin and you collect that data, right? You want to first make sure that that Deepin and all that device at the location where it's supposed to be. So we have proof location technology to do that. But then for example, we can prove that the data came from that device was stored, let's say in a database and then put into our, our layer one and you can, you can prove that path. And so, and that data hasn't been with the problem in dbn. Of course, anywhere where you create value, people are and are able to earn, right. They try to achieve, right? So someone might have 10 weather stations in the basement and pretended to be all over the world where they can, that earns most money. And our data chain of course goes beyond deep in, you know, we are in the AI age. So it's about data for AI and other applications as well. You know that for example, AI hallucinates and with our chain you are able to, you know, prove for example where that data comes from or can have AI go and tell the deep network collect some data where there lack of, of knowledge.
- [47:30]
Scott
Marcus, that's what you call proof of location and proof of origin. As I did my research, I saw those.
- [47:34]
Marcus
Okay, yeah, yeah, yeah, that's right, yeah. Thank you. Yeah. And, and so with it we, we have for example, blockchain have blowed, right. They're growing infinitely. Right. As you create more blocks, the, the blockchain is growing and the nodes become difficult to run and we build a lot of technology to reduce blockchain bloat and makes the chain much more efficient.
- [48:03]
Scott
So XYO has obviously been around for years, but now there's also XL1. Correct. So what's the dual token system? How is that structured? How do they work together for the ecosystem?
- [48:17]
Marcus
Yeah, yeah, you're right. We have two tokens. Now one of them, we call them the Yin and the Yang. Basically the XYO token is external to the XYO layer one. It's for the deep end rewards and the contributor rewards, the ecosystem staking, governance, security and so on. And you can stake the XYO token in the xyo layer one to earn XL1. So if you stake producer or validator nodes or something, causes a step reward pool which is basically something like Nodulus staking, you earn that XL1 and XL1 is for the Gaussian transactions and Dapps and inside the layer 1 and XL1 some of it gets burned. So every transaction on the XYO layer one, so it's basically creates this codependency and the network gets secured with the XYO token.
- [49:10]
Scott
So XYO obviously will be largely staked or is largely staked, correct?
- [49:18]
Marcus
That's right, yeah. Like we just opened the second contract, there is a, is a big incentive to stake. Now in the first month we put up as a first challenge, 100 million XR1 as a special bonus to stakers who come in early, which can grow depending on how much XY1 gets staked. And so yes, we anticipate a lot of the XYO to be staked and that there's going to be some scarcity for XYO in the market. And for, because that's basically the only way to get XR1, the X1 token for our investors and partners and team and advisors and so on. The tokens are locked up on very stringent terms and we did that. So because community comes first for us, you know, we proved that in like 2018 and 2019 when we raised 40 million there from the community. And today it's, it's the same story where we, we said, you know, we don't want anyone to dump on the community, you know, no investor and no nobody else. Right. And, and, and we want the communities to succeed here. And for the community also they don't just get airdrops, you know, because we thought about that long and hard. Maybe if we should reward our first XYO users with some drops. But then I think long term that's not a good model because you know, the people who dump, you know, ruin it for the people who want to stay in. So this way, you know, the early holders of XYO and everybody else who has XYO or buys XYO can stake it and earn the XL1 in our network. And that's basically the only way you can get.
- [51:08]
Scott
So let's zoom out a little bit because obviously you built this in 2018. We've seen deepin narrative somewhat grow. So like which industries do you think benefit the most from a blockchain that's purpose built for data? Where do you see the earliest adoption? Where do you see sort of the puck going for a blockchain that's specifically built for data like why do we need this and who's going to use it first?
- [51:35]
Marcus
Deep in itself it's going to grow massively. The World Economic Forum just forecast that it's going to grow from its current just under 100 billion right to three and a half trillion by 2028. 2028 is in a little more than two years. All these depends generate data. And so what we are we going to create deep in marketplace basically where you can tokenize your data and sell it and where you can prove that the data is true and correct. So that's number one. And then number two, the overall data market for AI and others obviously is much larger and we are able to validate and verify that in the address of market is huge. And then thirdly, we do real world interactions where for example we are working with someone on connected clothing. Right. Where you can put chips into the clothing. Right. And then you can Prove, you know, 10 friends for example, go jogging together afterwards they earn some nft so some, some points for a leaderboard or something. Right. Or real world try to hunt real world games so you can prove the location someone was in the soccer stadium for example. Right. And then they have the right to meet Messi for example. And, and so it's, it's, it's a lot of ways our data blockchain is going to work. And we're going to start with our own Deepin network, we're going to put that on chain, then start with some first deep in brands and then we have some but two partnerships which are working with proof, location and data.
- [53:20]
Scott
Really, really, really, really interesting. So you kind of mentioned AI before and it's hard to have any conversation without talking about this intersection between AI and crypto obviously. So is that like a real use case for you or is it a buzzword at this point? I mean where do you intersect with AI beyond what you've described before?
- [53:41]
Marcus
Yeah, you know, we have $9 million revenue last year. I think it's one of the best earning deep ins as well. And we are intersecting already with AI. So our data gets acquired or gets used by AI companies and geolocation companies and real estate and advertising and many, many different ones. And AI is part of that but we want it to be much more than that where you know, an AI can connect to the XYO Layer one, for example. As you know, I like a piece of data, right? Find me the opening hours of restaurant for example and then you know, you can dispatch the people in our deep network to collect that data. And as you have more than 10 million nodes, that's pretty, pretty easy for us. Or it can say, you know, like verify some data if it got, you know, feedback that it hallucinated or other things. Yeah, so yeah, it's definitely more than a buzz word and it's going to be growing in usage massively I think within the next three years.
- [54:51]
Scott
So I guess kind of in the last few minutes you're looking forward. What's your vision for XYO layer one over the next, let's call it year or two and you know, what should the community and your potential partners be watching for?
- [55:04]
Marcus
Yeah, we look to onboard a lot of partners on the chain to give them the round capabilities of our deepen network as well as layer one. And we are building out more and more features. It's going to take a few months to do that and as I said, we're going to onboard our system first. We're going to create a lot of transactions on the chain because of our massive number of nodes, but also it improves the network and then we're going to onboard those partners over the next few years which need a data focused blockchain versus a transaction focused blockchain.
- [55:47]
Scott
Makes perfect sense. Any like final thoughts, anything else I might have missed?
- [55:51]
Marcus
No, Go stick now because it's the early bird catches the worm because of the special incentives and we just launched our XL1 token a few hours ago, so you might want to be able to catch that as well and then follow us on on our X account. You see me speaking from it right now so you don't miss official xyo.
- [56:17]
Scott
Yeah. Is there anywhere else people should check you out? Where can they go for the staking all that or can they find all that information by following your X?
- [56:24]
Marcus
Yeah, go to X Network. It's going to give you easy to understand download of what we're doing. And if you're interested in partnering with us in any way, just send an email to partnerships at Xyoto Network. We have an ecosystem fund for example and yeah, we'd love.
- [56:42]
Scott
Okay, thank you so much, man. I'm sorry I won't see you at this one in Singapore. I'm going to break the streak.
- [56:47]
Marcus
I'm sure I'm going to see you.
- [56:51]
Scott
The next one in the US probably. The international travel is killing me I'm getting old. All right guys everybody please give Xyo a follow it's on stage as you said Official Xyo. Marcus, what's your X account? I don't have it off the top of my head.
- [57:05]
Marcus
Yeah it's funny I have mine is Official Xyo. I don't have one.
- [57:08]
Scott
This is you perfect. See See what he did there? You. You that that shows true, you know, faith and commitment. You are. You are Xyo.
- [57:17]
Dan
I love that.
- [57:18]
Scott
That's how I think of you guys so it's perfect and otherwise guys so give them a follow I'm sure and you're welcome to join you know as a guest anytime man it's great to great to catch up otherwise we will be back of course tomorrow 10:15am Eastern Standard Time. Thank you everybody. See you tomorrow. Thanks Marcus. Thank you to the rest of the guest bye.
- [57:40]
David
It.