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- [00:00]
A
Good morning everybody. Welcome to crypto town hall every weekday here on exit 10:15am Eastern Standard Time. And here we are once again talking about the market. Obviously we're seeing wildly increased bearishness across the board as bitcoin tests the bottom of this range, although in my opinion holding 100,000 is a pretty decent indicator for the moment. But a story blog post from Wintermute saying that muted inflows are actually reversal or plateauing of stablecoin. Issuance of digital asset, treasury demand and ETF inflows has left crypto once again as a player versus player market with the same washing machine of capital going token to token and market to market with no at the moment new inflow of capital. Crypto Quant wrote an article stating that bitcoin is testing, I think they called it 365 day moving average at 102 and it closed below that as pretended previous bear markets. I think a lot of people also watching the 50 Ma on the weekly chart which is kind of in the same area price currently trading right about that level. Not a surprise that we're seeing increased bearish takes as price drops. Obviously a lot of this also has to do with a pause in liquidity from the government shutdown and a lot of things happening in the macro weakened job market. A lot of indicators that that has slowed massively if not actually reversed to more firings and less jobs added. There's a lot going on at the moment, especially in the context of the S and P effectively sitting right near an all time high. Dave, does that give us enough fodder?
- [01:47]
B
Yeah, there's lots of fodder. I mean, you know, the Wintermute article is, it's, it's funny to me, you know, I find it amusing when the company that most people have associated with the proximate cause for the drop, you know, writes articles that are effectively self serving claptrap. I mean they're right in a sense. I mean there's no doubt that the hot ball of money that generally is on the edges of the crypto market left for gold and silver months ago. That is absolutely true. It is absolutely true that, that, that tether is trading at a little discount which you know, generally portends badness in the altcoin market and not constructive for bitcoin, but it's not significant. So effectively their, their statement that at this instant in time that the, the crypto community is marginal sellers is clearly true. I mean it's been true for weeks. It's been honestly true probably for as Yago said on for most of the last eight months. And so, you know, yeah, okay, fine, that's true, but that doesn't mean a damn thing. That's backward looking, not forward looking. In fact, you know, when you get all of these things happening and the price is, is where it is, it's telling you something. And generally, you know, the last person to sell is the. The most unhappy. And you need to understand that. That's why, you know, you and I always talk about this. I am much more bullish when everyone else is bearish and when the entire crypto community is so decidedly bearish with every single indicator, that is not the time to sell. That is the time to buy. You buy when it hurts you to buy and you sell and it hurts you to sell. So I saw some takes on Meta Planet. Now, we know, we personally both know the people involved and so Meta Planet doubles down yesterday and people are out there calling them dumb and they've imploded and all sorts of other things because they're slightly underwater on their purchases. But the truth is, if their capital base is, is solid, it doesn't matter. They're. They're basically telling you, look, they think that this is a good buying opportunity and they're going to play it that way. As opposed to Sailor who doesn't trade, he just acquires and just blindly continues to do so and has been doing so through multiple bears and multiple drawdowns. So, you know, I look at all of this as, as, as somewhat noise and I'm curious. We got a lot of people up here. I mean, we could talk about, about Bitcoin, but you know, you could also look at Ethereum and you can look at the alt market and you see, you know, rather dramatic differences in terms of what's going on. Like there's at least one coin that I own that Goro doesn't own, but, but talks about that's actually up over the last few weeks. Right. Which is, you know, bit Tensor. That's why, that's why I mentioned it. Gorov, I always love to try to ping you.
- [04:45]
A
Way up too right.
- [04:46]
C
You idea about my relation with Bittensor.
- [04:49]
B
Now, yes, I always love, I always love poke you. But the truth is, is that investment narratives are starting to. Starting to assert themselves and value is something that matters and people will. And I will continue to say that and you know, get the XRP army to hate me and, and I do think we need to talk about that story because there's, I mean, I, I've seen more bad takes over the Last two days than. Than usual on both sides. It's just, it's kind of crazy. But, you know, let's talk about valuation in the markets and what's going on with, with the alt market. I mean, Gaurav, you obviously have an opinion. What do you think's going on?
- [05:27]
C
But first of all, let me do the obligations as always. Guys. This is Gaurav reporting from SALT London. I'm the official host of the Crypto Town hall in the world's leading event. I represent all and I only join.
- [05:42]
A
When I, your official guy on the street are on site report reporter. This all started when I, I had him on my literal YouTube, on my YouTube show. And you were literally standing in the streets in Davos with people walking past you live on my show.
- [05:56]
C
The very standard method of, of TV reporting of Davos. Right. And so, yes, so, so I think, yes, I'm fulfilling my obligations to Crypto town Hall. That's 1, 2. I, I'm on the stage in the next 25 minutes. So let me give me more chances to do what Scott calls as a monologue and never a dialogue. But I will quickly take on Dave's take. Dave one, I know you're incredibly intelligent and smart when it comes to capital markets and the general investing. You've just got 25 more cookie points for telling us that you own Tao. And so I am an insanely big supporter of TAO and what they're doing and it's it as the currency of AI and we are getting into a deeper partnership. Just so you know, Send me your WhatsApp and I'll give you an idea and you'll love it. So that's that. And I don't think there's been a better opportunity to buy tao. Not a financial advice, but just saying because they have pushed an update which seems like has caused a colossal drop. But it's all worth it end of the day. They can always upgrade it in the next week. I don't know what's happening, but I'm just saying that it might get a new upgrade. So that's about TAO and then alts and then lastly, I definitely support Dave on the idea of these indicators in the market, which is the biggest indicator is when everybody in crypto is bearish. That's the time to buy. In fact, across capital markets and investing, the best time to buy when it hurts and the best time to sell is when it hurts. So this is definitely a good buy. But my other question from my lovely crypto community would be, do I even have money left to buy because we have been buying all through. There have been massive cash crashes. Last bit that I would like to add as a salt, as a pinch of salt to this conversation is there is definitely a decline in market confidence with the precedent being such a manipulative, I don't want to use words but let's say manipulative leader where capital markets and liquidity is sort of losing trust to even exist out there. And I think there is a seizure of that based on the confidence. And if somebody would want to talk about that, that is something that I want opinion from the people who have seen multiple waves like Gary Cardone's hair and maybe Carlos, these guys should probably educate us on what has happened when the market lost trust because of the leadership, the political leadership or something like that. I think we genuinely need to learn about these patterns that have probably occurred twice or thrice in the last 50 years. So yeah, that's where I rest.
- [09:04]
A
Dave, you want to run with that? You were the bittensor spark.
- [09:09]
B
Well, I mean look, you know bitten are non withstanding. I think that what, what is interesting is conversations about value. I think that as far as you know, market confidence, I mean it is exceedingly clear that the four year cycle types and the, the crypto quants and all the crypto people who look at markets like crypto is its own unique ecosystem and not related to the rest of financial markets are I think they're wrong and it, I think that yes there are, I don't, I mean look, I live through the Internet bubble like rather viscerally as running, running a program trading desk at the time. So you know, I understand you know what we've seen, seen these sorts of things before and the Internet bubble is, is such a great analogy because so many firms that were worth enormous amounts of money crashed to nothing and yet the entire value of the sector is, is 10x today what it was back during that quote bubble. And so when you look at that you need to understand that the same thing is going to happen because history and technology does repeat I believe that there are, there is enormous value being created. I just don't know which are the value which, where the value will be. And so you know if you look at what's happened over the last eight months, I mean is it constructive or destructive that the meme coins without real you know, attempts to market the value of their brand have fallen significantly? Yeah, it's incredibly constructive because I mean I, I, I laughingly look at the fartcoin bitcoin ratio and you know, it's, and as, as is as a sign of health. Now farcoin still has a value, right? But it's down to 0.26, you know, compared to, you know, where it was at a dollar. So it's down 75% in the same time period that bitcoin is essentially flat. So that's, that's very constructive. And when you look at money flows, you have to understand the marginal price setter, this whole rally, the whole rally was from long term buyers that are new long term buyers. And the marginal price setter ceased to be what it was in all the other cycles which was the hot ball of money trad perss. And we know this because every time the people who have tried to go long on the per side they've gotten their, their, their news, their nose smacked with a newspaper called liquidations and not for small amounts of money. And what we saw on October 10, to think that that wouldn't cause a pause in the market for a few weeks at a minimum. I mean, of course it had to. Right. And, and we said it at the time. The real question and, and, and I, I'll go back is I remember what I said the day after it happened. I said listen, if a few weeks from now we're at roughly the same levels that we are today, that's incredibly bullish for what will be in the intermediate term. And that's I think what's happened. And you know, so yeah, it's taken a toll on all the hot money, all the KOLs who, you know, say wait until Bitcoin gets to 50,000 and alts are down 90% and that will see you again in six months to a year or a year and 18 months. I mean if you listen to those people because of their wonderful track record of three data points. Well, you get what you pay for. That's all I'll say. And I've been saying that for a while. I mean, you know, Gary, I don't know if you're behind the microphone, but this must feel very similar to you about some of the waves of commodity trading that you've seen over time and, and looking at value. And you, you did a post about your brother the other day which I think is exactly right. Right. I'm sure you agree.
- [12:55]
D
I don't know what post you're referring.
- [12:56]
B
To, but the 1 billion Bitcoin versus 1 billion real estate.
- [13:01]
D
Yeah, yeah, yeah, man. I mean these markets, I think they're, I think people need to be, you know, very aware of what's going on here. Personally, a little nervous. Not so nervous about bitcoin. It's the rest of the market. Hey, can I. And I may not be answering your question, but I would like to talk about the Ripple thing. I just made an offer to Brad and Chris. Look, I'd like to do 25 to $50 million, same deal. If. And I may understand it incorrectly, Dave. You may.
- [13:41]
B
I mean, I think you got it right. If I had $25 million sitting in my pocket, I might say the same thing.
- [13:47]
D
It's going to be very interesting because I see that as them being able to back XRP or Ripple being able to only being able to sell XRP at about A$20 in a 230 market.
- [14:00]
B
Well, it's better than that.
- [14:01]
D
That makes every other. Oh, is it? But that makes every other.
- [14:05]
A
Should we just quickly hear. Really quickly, Dave, before you respond. It is a show where we don't want to take for granted that 5,000 people have any idea what we're talking about.
- [14:12]
B
Yeah.
- [14:13]
A
So the deal is 500 million. Ripple announced at Swell that they've taken a $500 million investment led by Fortress, I believe, and Citadel Securities. Also, I know Pantera and others who have been in most of their rounds have participated and basically took a $500 million investment at a $40 billion valuation. I think the point where Gary is starting to dig in here is that ripple holds $80 billion worth of XRP. This is a $40 billion valuation. Obviously, everybody knows they can't sell $80 billion of XRP on the market and get $80 billion. But they also have acquired Hidden Road and a number of other companies that all have meaningful value. So if you include the current value of xrp, plus all their acquisitions, everything else they hold, you're talking about 100 billion dollar company valued at, you know, 40 billion.
- [15:07]
D
See the deal? The story gets even worse when the XRP people think I'm attacking, which I'm not. Man, I hope everybody gets rich and I hope every one of these projects work because that'll be great for the whole industry. They're not all going to work, but they're beating me up going, hey, you're not even valuing the other parts of the company. I'm like, dude, that's why I just made your CEO an offer. Like, I, I don't know shit. The BM&Rs in the world are suffering right now, right? You're able to buy it at like 50, 50 cents on the dollar. Assuming that XRP's more correctly yeah, but.
- [15:43]
A
More, more even compelling than that, Gary, is that those digital asset treasury companies that you're referencing have to actually raise capital to buy the tokens. XR XRP has the tokens with no capital outlay to get them and in fact has used the token. And this is, I don't think this is a criticism, this is just an objective fact. And use the token obviously to build out the rest of the business.
- [16:07]
B
I think that, that you guys are thinking too small. I watched Brad's speech at Swell yesterday and I thought it was interesting. I mean look, I am a critic of xrp, the token, even though I do own it, I own a token amount of it. I think that you know that, that the XRP army is massively delusional and overly emotional which are two very bad things for investments. I mean arguably, if you ask me, one thing to avoid, if someone put a gun to my head and said you can get, you can utter one sentence of investment advice, it would be don't get emotional about your investments. So and so I've just described the XRP army and it is beyond annoying to deal with them. But let's understand, and this will be a little bit of a monologue, but I'll give you the benefit of the fact that I literally had a job for 10 years. Among my other things was one of the primary deal evaluators from inside both. What was Solomon Smith Barney, then Citigroup and then Two Sigma. I was the designated skeptic on most deals. This is a deal I would be would have been pounding the table to invest in were I there. So understand what are the key aspects of this deal. First of all, it is non trivial that it was Citadel securities that led this, not Citadel Investments. Right. So this comes from the securities arm because they understand the potential value of a institutional prime broker built on crypto rails. They understand that the most important aspects of that, that prime broker are to be able to make money on from distributed methods that have lots of collateral to deploy and may be very profitable with that collateral.
- [17:55]
E
Hey Dave.
- [17:56]
B
They get that.
- [17:57]
D
Not to interrupt the narrative, but I think that's clear. They still only paid $0.40 on the dollar for the, for the company though. I mean they got a great.
- [18:07]
F
They paid.
- [18:07]
B
They paid probably. They probably paid less.
- [18:10]
E
Less.
- [18:10]
D
Okay. And that's what I'm trying to help the audience with.
- [18:13]
B
Like buying the money machine. They're buying the house. Right. You know, what's the value of the prime brokerage franchise at J.P. morgan and the securitization franchise? It's very large.
- [18:23]
D
Yeah, but, but they're, they're, they're. That, that's my point. If it's so large and, and I'm thinking so small, why did Citadel pay such a cheap price for it?
- [18:33]
B
I'll tell you why. It's because if you look at, and, and if you look at, in, in, on, on X. I had a little conversation with Scott and I brought in Maurizio who often comes up here. If you look at where the LTVs are, even at Bitcoin, which has no.
- [18:48]
D
Constraints, right, that's the lifetime value.
- [18:53]
A
No, the, the loan to value ratio. Okay?
- [18:55]
B
The loan to value ratio. The haircut that you're going to take to get clean Coll. To get, you know, clean. Valuation on Bitcoin today is if you're lucky, you're getting 50%. Right. If you looked at, in other words.
- [19:08]
A
For people who are listening, if you have a million dollars in Bitcoin, you can only take $500,000 against it as a.
- [19:13]
E
Correct.
- [19:13]
B
And so XRP is obviously not as pristine collateral as Bitcoin. Plus Ripple's stake in xrp. Their holdings of XRP are locked in escrow to be dribbled out every month, which means it's much more constrained. So it's significantly more constrained even than GBTC was which traded at a 55 discount and only came back when the, the, the ability. Because you can buy XRP in the open market if you want, it only came back when there was an ETF and you could freely move in and out of it. So taking a massive haircut against a collateral position is perfectly reasonable. And if you think about it from a prime brokerage perspective, if you can, if they could basically say, Listen, we have $40 billion of collateral or value to back our financing, that gives them such, that gives hidden roads such a massive head up on anybody else who's operating in the Digital prime brokerage space that it's, it's a very, very big deal. And so getting that print on the tape from a Ripple perspective makes enormous sense. It gives validation to the fact that XRP isn't just a wasting pile of crap that a lot of people say it is. I don't believe that that is true by the way. But that is said it puts validation to what they're building and what they're really trying to build is a multi hundred billion dollar banking franchise. And that's. And, and yes, it has value there and it basically says there's value. So that small haircut is just not that big of A deal. And so all the takes of people saying, well, it proves that it's not worth it. Yeah. It proves that in all likelihood that the professional investors don't see XRP as a slam dunk, that it's going to 10x. Obviously if it does, they make an enormous amount of money. But it shows that, that building a franchise on the back of XRP is being validated by some of the world's smartest investors. And by the way, when I say smart, I'm not talking about Sequoia or other aping in VCs, we're talking about operational business. Citadel securities is one of the largest users of prime services on the planet. Right. Because they're one of the, they are one of the big three biggest market makers on the planet. And so they are constantly borrowing and trading and securitizing and their funds are some of the biggest users of the borrow for their longer term positions on the planet. So these are people who understand the value of a financing business.
- [21:40]
A
So Dave, as, as you dig into this, I happen to get in trouble, but it sounds like you would much rather own Ripple Equity than xrp. The token.
- [21:50]
E
Oh come on.
- [21:50]
B
I've been saying that for, for, for weeks or months maybe.
- [21:54]
A
Isn't Ripple also looking to buy back a billion dollars worth of shares in Ripple?
- [22:01]
B
I'm not gonna. What I will say is this, I don't like where you don't know what you own and when you own xrp, there is no clear to me, it is not clear what value the token holders will get out of this ecosystem. If you own Ripple Company, you are, it is exceedingly clear.
- [22:22]
D
How do you own the Ripple company?
- [22:25]
B
You can't.
- [22:28]
A
They were trading at a $40 billion valuation before this privately on Carta and there's plenty of people, you know, it's pre ipo.
- [22:36]
B
You, you could, you can do it if you're, if you're as rich as you are, Gary. But you know, look, the reality is that if you ask me the point, it's about a valuation point. It's, it's for.
- [22:47]
D
Well, I think what I'm learning here though, Dave, like what I'm learning here, what you just said the audience should really pay attention to. You're saying a guy like me and maybe I need to start making more trips and being nice to people when they have failed business models. That's not really like me. I just, this business model is really problematic for. I don't know why they didn't raise 5 billion if it's such a Great deal.
- [23:11]
B
I'll tell you why they don't want to dilute it.
- [23:14]
D
Well, yeah, but, but the audience needs to understand that for xrp, there are large players buying XRP today for about a dollar or a dollar 20 in a 232 market. And they have a severe. And by the way, if I had that advantage, I would most certainly take it. If they want to sell me that, I will buy 25. I'd sell everything I got right now. Just buy XRP and then dump it. I don't know what the constraints on, on it is, but dude, I, I just.
- [23:46]
A
But those investors aren't getting liquid xrp.
- [23:49]
B
No, they're not.
- [23:50]
A
Presumably. So you're saying they should do that?
- [23:52]
B
I mean, you could hedge it, I.
- [23:53]
D
Suppose, but you can most certainly hedge this, dude. Like this would be so easy. Lock in 100% overnight. Anyway, it's just the audience needs to understand there's multiple markets here. It's not, you know, buying big volumes. I've seen discounts, I've not seen a discount like this. And then a bullish story.
- [24:13]
B
Well, the bullish story is important, so I'll tell another story.
- [24:18]
D
It should just come with a similar premium if the story.
- [24:21]
B
We should probably do a longer form. A longer form on this. But look, if you remember Phillips polygram back in the day, I'm probably. This shows how old I am. But I was trading in London in the 90s when, when Phillips owned Polygram Lock stock and barrel. And it was, they were both liquid publicly traded stock. And when you looked at Phillips's holdings, you were buying Phillips for negative dollars because you could have sold the polygram. Right. And so lots of people did that. And, and what happened was after a lot of people put that trade on, at least at Philip first, polygram tanked because so many people were hedging that, you know, that it, it, it, it screwed up the, whatever it, it just these sorts of merger arbitrages or things that you're talking about are more complicated because what could happen is ripple or XRP could moon causing your hedge to get crushed, but the ripple value doesn't go up. And so you're, you're hemorrhaging cash on that side so that, that kind of a trade is a problematic trade. But if you believe the story, it's a great long. And so it's, I'm not saying it will go down the way I just said, but I'm just saying that there's all sorts of things that can happen. I mean, and I think I saw Carlo, then Gorav, then Lou, But I don't know, you may have seen it a different order, Scott, but I know we got a lot of people up here and I've been talking a lot, so.
- [25:41]
A
Yeah, Carlo, I think was first go. Carlo.
- [25:43]
E
Yeah.
- [25:43]
G
Good morning, Scott. I'd be remiss if I didn't talk about stablecoins.
- [25:48]
F
Of course.
- [25:48]
G
And since we were talking about irrationality, can we talk about the deluge of negative commentary coming out of the banking sector yesterday?
- [25:56]
B
Could we go back to the deadline?
- [25:59]
G
I'm boarding a flight, so I just wanted to drop that hand grenade before I board.
- [26:02]
B
But everybody should read.
- [26:04]
D
Where are you headed, Carlos?
- [26:06]
G
I'm coming back, man. I was in Newport, California, selling the Gospel of stable coins and I'm heading back to Texas.
- [26:14]
D
Good.
- [26:14]
B
Yeah. The public service announcement is JW Varit post.
- [26:19]
G
Yes. I was going to ask if I could post it in the nest because it's that good.
- [26:22]
B
That'd be great. That is all right.
- [26:23]
G
That'll be my mic drop then.
- [26:25]
B
Good. It's a really good takedown of the absolute stupidity of the banking sector and what they're saying about stable coins. And understand that when the banking sector loses, that's a large part what. What Brad was basically talking about in his speech at SWELL yesterday. Because they believe they'll be one of the winners. And. And whether they will be or not is interesting. But. But that. That's really the key here. Anyway, Lou, I still see your hand up, Gaurav. I think I see your speaker unmuted. I think you were first.
- [26:55]
F
So.
- [26:58]
B
Are you there, Gaurav? Are you lifted?
- [27:01]
C
Yeah, I'm here. I. I just got caught by the Mooch, so. I'm sorry, I. I totally missed the conversation.
- [27:12]
A
Tell Mooch to call in. Get him on here.
- [27:14]
C
I actually told him. See, Mooch, Scott is inviting you to the space. You should join it. Yeah, he's yell through your phone.
- [27:24]
A
Come on, speakerphone. It'll be fun.
- [27:26]
C
Exactly like he's. He's with the ex prime minister right now, so get that guy on, too.
- [27:31]
A
What are we doing here?
- [27:32]
E
Come on.
- [27:34]
C
Yes, it'll be fun. But Dave, I heard your whole ripple thing and the one thing that I always wanted to say, you know, at some point of time in 2017, 18, we were the largest retail. Largest as in on the market.
- [27:47]
B
Whales.
- [27:49]
C
And so as much as I love the token, the reality is you're right. No matter how many businesses Ripple will own, no matter what the dynamics and the financials of those business are, there is Absolutely no clarity on how those businesses represent their value on the net value of the token. And so, definitely, owning Ripple Company, at least for the audience on this call, is a much better trade for everybody. And by the way, this is also an incredible idea for somebody to tokenize Ripple Equity for the first time. And I am here with the CEO of Kraken and the entire institutional team. I might as well suggest them to do that. It's a massive demand commodity as of now, and I'm calling it commodity as tokenized equity, not being straight security.
- [28:34]
B
Well, I mean, there's a lot in that regard. I will say that if you. If you know where the current US SEC is going, they are doing everything they can and very much want to eliminate the notion that being a security is a death sentence for crypto. But in order to do that, they need to get rid of the accredited investor rule. That's really the key. So it's really a non us thing until that rule goes away. And that's a totally different conversation. It is. It should be the key.
- [29:01]
C
Dave. Dave, we have. We have the mooch.
- [29:04]
A
We have him.
- [29:05]
B
Oh, awesome.
- [29:09]
A
Anthony, you there? He says we got faked out.
- [29:13]
H
Hey, guys, can you hear me?
- [29:14]
B
I just.
- [29:15]
H
I just want everybody to know that I take all my financial advice from the two Cardone brothers, okay? So whatever they. Whatever they say, I'm doing right? And, Mario, are you taking notes?
- [29:24]
D
You're doing the right thing, Anthony, all right?
- [29:27]
H
I just want to make sure we.
- [29:29]
A
Only do one brother here right now. I'm sorry.
- [29:31]
E
Care about.
- [29:31]
H
Oh, I see. I see him. I see them.
- [29:33]
F
They look.
- [29:33]
H
They look pretty similar without my bifocals. You know what I mean? But God bless. I gotta pass you back to G because we're doing an event here, but maybe next year we get you guys.
- [29:45]
E
To come here to the.
- [29:46]
H
The SALT event in London. It's been great fun.
- [29:48]
A
Dave, did you get your image?
- [29:49]
H
Mario, Mario, Mario, I miss you.
- [29:52]
D
Anthony throws absolute best events in the world. I will say that, sir.
- [29:56]
H
You please, please, please come next time. And, Mario, I think your invitation was lost in the mail, but I did send it to you.
- [30:05]
F
Okay?
- [30:09]
C
He's only as available as he is on the email was only as available as he is on this call.
- [30:15]
B
Yeah, exactly, exactly. So, anyway, you know, Gaurav, I think you and I agree on. On this. I mean, the key thing is, is. Is people need to understand that there's a long way to get from A to B where A is crypto native firm to B is becoming dominant in. In Financial securitization.
- [30:39]
C
And you know what?
- [30:40]
B
It is a massive business opportunity. Yeah.
- [30:43]
C
And also it's almost like impossible for me to fathom. How can, can this be the, the longest standing, most known misery of crypto where the business value is uncorrelative to the token value. Like everybody talks about it and every forum has this topic and it's almost a laughable topic about crypto amongst the crypto people and we still don't do nothing about it. And then leaders like Ripple, like come on Ripple. I mean at some point it was like number two, leaders like Ripple are not talking about it, are not doing anything about it. Right. At a $40 billion valuation, how can you not actually release a paper, at least a paper if not like an elaborated securities filing that the equity is backed by token. What's the correlation of value? Unless you actually want to capitalize on your ripple army and more emotional low hanging retail oriented tools.
- [31:51]
B
Wouldn't you if you, if you were Brad? I mean I, I think he's done a phenomenal job.
- [31:55]
C
I mean seriously, I mean like bringing me, no, bringing me in with my whole meditation and ultra ethical background and commitment which is like, which makes money secondary. Of course I would never do that. But you're right, probably everybody else should do that if they're, if they're not bounded to, to ethics from their soul.
- [32:17]
B
Well, I mean that's a. Phil, that's a great philosophical conversation. I mean. Well, I don't know, I guess I. 40 years on wall street, dude. I, I'm. I'm much so much more jaded. I know that. I know that being CEO and being doing what the way has approached this.
- [32:33]
C
Yeah. I think at this point, at this point you can't stop me from telling a very quick 30 second story. I spent again last three days at WA street with my bankers and the bankers I rejected and the bankers that want to work with me, like about 13 of them. And guess what? About half of the conversation was about philosophy, spirituality, ethics and how this business that we are doing, the DAT is about building an ethical, ethical liquidity layer through the power of ethics on blockchain for finance.
- [33:06]
E
So.
- [33:06]
C
Well, I'm not going to stop preaching about that ever Enough.
- [33:10]
B
Well, I'm actually writing a book talking about some of the unethical things that I've saw over, you know, those 30 some odd years on.
- [33:18]
C
You got a face for the same page.
- [33:20]
B
I'm just very practical.
- [33:23]
D
Yeah.
- [33:23]
B
Don't care. I opted out. Right. You know, for, for a reason. I mean among other reasons, but it is, it is a different conversation.
- [33:32]
C
But I'm your favorite, I'm your favorite cover page, picture, if not, then back page.
- [33:39]
B
Yeah, well, we'll talk. I. I'm going to DM you my WhatsApp anyway before, you know, when we're done with this, I have it up on my screen anyway. Lou, you've been very patient. You had your hand up and I see your speaker.
- [33:49]
F
No, no, it's been great listening to you guys, you know, play with each other. But I would say that the, you know, I think one of the things that you're missing about Ripple, and I think it's been alluded to is actually the value of the Ripple army. You can laugh at it if you want, right? You know, you can laugh at the Doge army, you can laugh at the Tesla army, but the fact is it's real. It's been there for a long time. I've experienced it viscerally. These aren't stupid people. These are a lot of people who've made a lot of money. They have a belief about the way that the world is going. And you know, I think that's going to continue to be a ton of value. And you can laugh at them if you want, but a lot of them have gotten really rich.
- [34:30]
B
I, I am not laughing. I mean, I, I don't like some of the delusions there, but I totally understand why and how brand building and where it's important. No, it's that, that's why I praise Brad for, for doing what he's doing. I mean, he's mon. He's one of the only people who I know who's actively monetized communities, you know, in a very specific, very concrete way. I mean, the closest analog, and I'm not sure they're too, too close analog to this, but the biggest analog is probably tether, right? In terms of, you know, arguably at one point they had to fake it till they made it because they got screwed by unscrupulous banks. And we know that, that they had to fill in balance sheet and they, they did it. One of the world's most successful, if not the most successful company.
- [35:15]
F
Because a lot of this I think is believing. It's not just Brad. It's not just Brad. A lot of people are getting, I mean, what, what is Justin Tron bringing, you know, and look at what he's built and the value that he's created for, for people who bought the Tron token.
- [35:33]
B
That's true.
- [35:35]
A
You're right.
- [35:35]
B
I mean, communities matter. Yeah, I Mean, there's no question. Yeah, exactly. Think that sales people do nothing other than take calls. It's like no relationships and communities matter and you have to be balanced about that. That's kind of important. But I think it's a good point, Luke.
- [35:51]
F
And I will say that's where I've always been an Ethereum bull. Because I think by a wide margin, Ethereum's got the best community and it's getting better. Their lead is growing, it's not shrinking.
- [36:03]
C
You mean the institutional community as you might want to call it, right?
- [36:07]
F
I mean the dev community. I mean they're obviously crushing it on the institutional community. I mean things could change tomorrow, obviously, but their lead there seems to be growing as well. But I mean in terms of the world's smartest devs, ethically aligned devs, I mean, and that's really the attraction of the Ethereum community, I think more than anything else is ethical.
- [36:35]
B
That's an interesting perspective. Thomas, what do you think? I see you join and have your hand.
- [36:39]
I
Yeah. So I would just have a question, Dave and maybe Gary. It seems like, you know, back in a prior life, back in the 1990s when I was at AT&T, we would be able to do deals with people because of the name brand and get equity on any kind of deal. People would throw it in just to have our name on their ledger. You have to think that at some level, and this is a hypothesis, I'd ask your comment on it. Does Citadel's participation in ripple accrete value that's intangible beyond the $40 billion?
- [37:15]
B
Yes. And in fact, let me tell you a story. God, this is your life story. So back in the early days of the, the last time there was a major M and a cycle in Fintech was in the early 2000s, started in the late 90s. And basically what you saw is a feeding frenzy where firms such as you know, start. It started with, with firms, all of them didn't matter. Goldman was probably the first to do it well, but all of them started, realized something very simple. They said if we use this technology, the technology will be worth more by the very fact of our use. So we want to have the chance to invest in it. Very simple. It's the point. It's called strategic investing. It became. It didn't exist really. They didn't do it. I know that my management stop. I tried to do it at Citi and I can tell that story too. But I'm not going to bore you guys, but that is a very big deal. So that's why when you literally have one of the three largest market makers in the world investing in a company that is going to be providing services to it, it's a strategic investment. That's why I said Citadel securities being the investor, not Citadel the venture side or Citade the investment side, it's actually very relevant and I think it's a very, very good signal, which is why I said, Gary, that's part of, part of the thesis that I was trying to get across to you. So thank you.
- [38:38]
C
The other issue, Dave, is Thomas, I don't think that thesis has ever changed. It just happens every hour, not just on Wall street, but also in the Valley, from early stage to later stage. And I don't think that's ever going to change. We just saw this stupid, like, not stupid. We just saw a random coin go from nothing to 500 million just because they had these incredible, you know, all these investors on the cap table. So it just keeps happening. Thomas?
- [39:06]
I
Yeah, I, I just, I'm just trying to rationalize what's happening here. The, the other issue from the ripple side is if they're using their XRP token to use as capital to expand their operations, whether it be M A activity or just core operations, this allows them not to touch that token stack, maintain the price at, you know, 225 and take that money in. So they, they're looking at this is on, on an accounting basis, this may look like dilution, but it's going to be net accretive with the Citadel stamp.
- [39:42]
A
Of approval and they don't write it. To your point, then they don't have to sell tokens if they have 500.
- [39:48]
I
Right, right, right.
- [39:51]
B
It is undeniable that signaling matters, which is Gaurav's point. It has always mattered and always will matter. But it's equally true that real utility matters too. So when Wall street firms value strategic acquisitions. They do. They were the first question that you'll ask, what's the utility of dope?
- [40:12]
A
Yeah, okay, go ahead. It's very loud. Go ahead.
- [40:16]
B
What was the question?
- [40:18]
A
It came in, it sounded like what.
- [40:20]
B
I was saying is the utility not of the token. I'm saying the utility of prime brokerage stack. That is, if you believe that prime brokerage, I. E. Financing, which is the core of Wall street, literally the beating heart is securitization and financing of all positions. If you believe that that's going to all move to a digital technology stack, then placing your bets on one of the leaders in. That makes sense. If you're if you're a firm like Citadel securities, especially if you think that your stamp of adoption is going to increase the likelihood of that, that's what this is about. All the other stuff is noise, Dave.
- [40:58]
I
If they made a five million dollar investment here, it would just be like buying a lottery ticket. They're just, you know, placing bets on the roulette table. But 500 million is a serious deployment. So, you know, look, you don't ignore smart money and there's something to this.
- [41:18]
B
That's, that's what I've been saying this whole space. So I mean, look, Ripple is still missing some pieces, you know, from building this whole thing out. I, I, I've said that before. I mean, they don't have, you know, in, you know, it's, it's just there are pieces missing but you know, for them to compete with Coinbase on the institutional side and surpass them with a bigger balance sheet. But that's clearly where they're going. And if it isn't, then maybe I'm, maybe I misread or, or you know, maybe I'm misreading what Brad and the team are doing. But it feels like that's what they're trying to do and, and their goal isn't to be bigger than Coinbase, although that's obviously a first step. Their goal is to go after J.P. morgan. You know that, that's, that's, I was.
- [41:58]
A
Gonna say it's a different business than Coinbase.
- [42:00]
F
Right?
- [42:00]
B
That's right. It's, their goal is to be, is to be a digital, you know, a digital solution for financing writ large, full stop.
- [42:08]
C
Also, let's not gone way beyond, forget the fact that like every other startup, no matter what the size is, and the size is of course empowered by the early days of crypto. They do, like every other startup, have to find their product market fit. They aimed something, they pivoted from that, they aimed Swift. It didn't work, of course. The technology wasn't ready. Banks didn't take it then. They probably now are aiming for the JP Morgan model and you know, let's give them the benefit of doubt like every other startup deserves a 10 year, 20 year chance. And again, depending on the treasury, which they have the biggest, they can do much better. They have more chances. So, you know, as long as there is clarity, I think, I think there's a chance for that. And with that I say bye. I do have to go to the stage now.
- [42:55]
B
Thanks Gaurav.
- [42:56]
A
Lou My favorite part of the whole Scaramucci cameo was that he clearly hasn't been here long enough to have been yelling hi to Mario.
- [43:09]
B
That is true. Anyway, Lou, you have your hand up.
- [43:12]
F
Oh, yeah, no, I was just gonna say I actually think Ripple is going to lean heavily into the stablecoin world. Although I think they're already over a.
- [43:20]
A
Billion and yeah, I think they just passed a billion. But interestingly, as many points out, I think 80 of it's on Ethereum. Ethereum, something like that. I'm not, I'm not even quipping. It's a fact. You were talking about Ethereum before, which is why I said it.
- [43:32]
B
Crap. But, but Ripple, the company doesn't give a crap, does it, Scott? No, because they care about is, is getting in and make. If you think about what they're trying to do, it's build a stat, it's build a business. And XRP is a tool for that business that they absolutely will constantly talk up because they need it to, because it helps their collateral. That doesn't mean that it, that they won't fake it till they make it either. I mean, it doesn't, it's not necessarily as negative as people think. I mean Ripple becoming a, a big player is good for xrp, the token at least for, for the foreseeable future until people. Unless someone says or proves that there's no relation. So I think you have to be sanguine about that. Anyway, I see Joe just jumped up. Do you have something specific or you just.
- [44:18]
E
No, no, I just jumped up to join. It's good to see everyone, hope everyone's doing well.
- [44:23]
B
I mean we, we started off talking about the market. I know you have pretty strong opinions there. Does anybody else have anything before we, we go back to that?
- [44:34]
A
Not me. We can go back.
- [44:36]
B
Yeah. So Joe, you've been, you've been going back and forth with, with a lot of the, you know, kind of poking bears, you know, for, for like two or three days. I mean, you know, what do you make of the fact that we're, we're stuck kind of at this very low end of a range for days? I mean, I know what I think, but I'm curious what you think.
- [44:56]
E
Yeah, I mean, I think everything is to be viewed in context and you came off very strong years where you had pretty much peak optimism coming into the election, coming into post election inauguration. I mean, a lot of folks forget that Bitcoin put in an all time high literally on inauguration day when it was clear that the regulatory climate would be much more favorable when that had been priced into the market. When you had a, you know, a very bullish atmosphere from just a general macro sense with the Trump administration coming in, and you spent basically the entire year consolidating. And I think that if, if I would have told you a year ago, just right now, we're going to be at roughly $100,000 on Bitcoin. We're going to be stabilizing there consistently for months, building support and consolidating, you would say that's fantastic. But the reason why I think most people are disappointed and you have to always check your sentiment and check your bias is because people bought into this myth of the four year cycle. People bought into this idea that you would have this explosive Q4. And because Bitcoin is explosive and we know that many of the altcoin complex rides the back of bitcoin and is sort of high beta to bitcoin. They loaded up on those names and not only do they load up on those names, they loaded up on call options and derivatives and they loaded up on bitcoin proxies, all these levered plays trying to outpace bitcoin's performance in what was supposed to be a very bullish year. And for me, like expectation, happiness is all about expectations. When they had these expectations at fever pitch for this bullish move to, you know, you had people to be in a year saying 400,000 or 300,000, you had that price to perfection. And we've spent a year consolidating alongside a very strong economy, which it is continue to remain robust at the aggregate level. And now people are confused. They're confused because they have to actually think and not buy into these myths that people have been tied to in the bitcoin space that, you know, we have three, four good years after having, and then we have a red year, you know, green dot, green dot, green dot, red dot, or whatever, you know, myth you want to believe in. And now you actually have to think. You have to think, what does it mean to have institutional adoption? What does it mean to have ETF access? What does it mean to have a rotating distribution from the OG Hodlers to more of a mainstream financial advisors allocating a small percentage of bitcoin in their portfolio? And what it means to me is you have capped upside and you have capped downside. And this is why I think you're seeing in the bitcoin market reduced volatility. You're seeing bitcoin tend to creep within ranges, top up certain levels and then sort of consolidate at that new range. And I think that's par for the course on the future of bitcoin. I think bitcoin's going to bore you to a million dollars. I do call I was. I do not blow to bitcoin's going to a million dollars in, you know, two years type narrative. I think bitcoin's going to trade a lot closer to the Nasdaq and how the Nasdaq trades over the coming years. And I think it's going to do fantastically well. Perhaps not as good as it had in previous years, but there's a reason for that. Because bitcoin has been de risked. And the people that bought in early, they were rewarded massively for having to deal with that risk when it's been de risked. Right. You should expect to be rewarded, but perhaps not as high of a level. So I view that as very positive. I think once you shake off this myth and PTSD that people suffer from in the LA that have really that are suffering from now, I think people are exiting bitcoin market because they think that they're going to be able to buy it back substantially lower. They're going to be severely disappointed and not say we can't go a little bit lower here. But I think you're basing. And I think next year is going to be great and I think the economy is going to get stronger going into next year. Just one final thing, just from a market space standpoint, you know, you've got through this sort of liquidity bottleneck over the last several days here for a variety of reasons we can get into mechanically. And where are you at? You're at the point where once they reopen the government, you're going to see billions of dollars start to be flown from the TGA that will be spent out. You're going right into a period early part of next year where the big beautiful bill spending is going to continue to bolster the economy. You're going to have a situation where the capex build starts really in earnest. I was looking at some massive numbers of build spend that's going to start in Q1 and Q2 of next year. And just the cherry on top, you have a new Fed chair that's going to come in. And we know that that Fed chair at the very minimum is going to be more hospitable to rate cuts than the current Fed chair. So all of that is to say I don't understand the bearish argument. I would love for people to explain it to me. It seems to be largely driven by PTSD and Myths could always count on.
- [49:51]
B
You for a great monologue, Joe.
- [49:52]
E
I mean, I'm sorry, I try to give it succinct.
- [49:55]
B
No, no, I failed.
- [49:57]
E
I failed miserably.
- [49:58]
B
I actually thought it was. That was a really good synopsis. The only place where I disagree with you is on its correlation to nasdaq. I think that, yes, that's sort of true, but at some point adoption will matter and what's happened, I think the rotation away from gold back to Bitcoin will also happen if you get any FOMO moving on. So momentum feeds momentum. I mean, Scott, one of my favorite things you say all the time is you always say that the best advertisement for bitcoin is number go up. And so it doesn't take a whole lot for, you know, the. If the rock starts moving downhill and right now people are trying to push the rock up the hill, when the rock starts moving downhill again, all bets are off. I think you'll, you'll find correlations will go to hell, etc. But you're right. Right now, it clearly is trading that way.
- [50:49]
E
Well, just, just to be clear, I don't view that as a negative. Like, I, I never understood this argument. People are saying, well, it's correlated to the nasdaq. I mean, Mike, your, your, your colleague on the show, he says this all the time. I think it's great. That's the correlation you want for the last 10 years. For some reason, people hate stocks, which, whatever, that's fine, you can hate stocks, but that's. You've made a boatload of money. If you've been in the NASDAQ 100 over the last 10 years, why is that a bad thing?
- [51:12]
B
I hear you. I hear you.
- [51:14]
E
I mean, and I'll just, I'll just remind people. Look at the sell off the other day, right when we had that real nasty sell off where bitcoin went down under 100k. What did gold do? Gold, which is much older than bitcoin, it sold off as well. And that's because when there is liquidity, stress, and an environment where you have to sell everything, Dave, you know, you don't get to be selective everything. The correlation goes to one on everything. But cash, it all goes down. And I don't know if you, that is a bad thing at all. I think that's just the nature of investing.
- [51:43]
B
Yep, I think that's absolutely right. So, yeah, I mean, I think that's a pretty good spot, Scott. Unless there's something else you want to say for us.
- [51:52]
A
No, I think it's Perfect. Perfect. Conclusion. Wrap it up. S P is down a bit today.
- [51:58]
B
And Gary, if you want to talk about some of the mechanics, just DM me. Happy to. Happy to have a chat. Okie doke.
- [52:08]
A
That's it. Thank you, everybody, for joining. Great show, as usual, and we will be back tomorrow. Well, I. I'm not available tomorrow. Dave, I don't know if you're available, but hopefully we'll be back tomorrow. 10:15am Eastern Standard Time for another crypto town. Dave will be here. It'll be a much better show. You should all show up. You won't have me. You won't be having me dumb up the conversation over here. All right, guys, that's all we got. See you tomorrow.
- [52:34]
B
Bye. Bye.
- [52:48]
F
It.