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- [00:00]
A
My view personally is that the four year cycle is dead and will prove itself dead in 2026. In general, institutional adoption and regulatory clarity and additional institutional infrastructure I think has reduced the size of drawdowns and added liquidity and buffers to the market.
- [00:19]
B
With Larry Fink stomping his feet that every asset, including equities and bonds are going to be tokenized, you would be hard pressed if you were Vanguard to see BlackRock saying these things and doing these things and building up the capacity to do these things and saying, sure, we're just going to stay the course and say that bitcoin and crypto are rat poison squared. As Munger said, that doesn't work because institutional investors, family offices, they all talk to each other. They're all different, but they all talk to each other.
- [00:57]
C
Hi everyone, welcome to Unchained, you know, hype resource for all things crypto. I'm your host Laura Shin. Before we get started, a quick reminder, nothing new here on Unchained is investment advice. The show is for informational and entertainment purposes only and my guest and I may hold assets discussed on the show. For more disclosures, visit Unchained Crypto.com looking to unlock your crypto's liquidity figure, offers crypto backed loans with an industry low 8.91% fixed rate. They're the only major provider with decentralized NPC custody and new liquidation protection. Take out a loan at FigureMarkets Co Unchained. I'm here with Ryan Rasmussen, Head of research at Bitwise and David Nage, Portfolio manager at arca. Welcome Ryan and David.
- [01:40]
B
Hey Laura.
- [01:41]
A
Hey, great to be here Laura.
- [01:43]
C
So you all, I was on vacation last week and actually not checking crypto, Twitter or crypto news very much. But it looks like I didn't miss a lot, at least when I look at the market activity. I think if you had asked most people in crypto a year ago, they wouldn't have predicted that the price of bitcoin would be lower than it was back then. So we're going to unpack what's going on in this market. We'll give a sneak preview into 2026 as well. So Ryan and David, we'll start with your general outlook right now. There had been a lot of talk earlier this year, even the year prior that the four year cycle was over. I actually was leading in that direction myself. But that thesis now looks like it may have been wrong. So I'm just curious, like what's your take on where we are in the cycle? Whether or not it's even appropriate to use that phrasing, you know, whether cycles exist anymore and just your general views on why it is that the markets have been so choppy. And Ryan, why don't we start with you?
- [02:48]
A
Yeah, that sounds great. A lot of investors that we speak to a bitwise have actually been asking about the four year cycle, which I find particularly interesting because most of these are institutional investors and that means that they're paying attention to what people are talking about in the market and what people are talking about on Twitter. But our view a bit wise, and my view personally is that the four year cycle is dead and will prove itself dead in 2026. I think there's a number of forces at work here in previous cycles that are not as impactful this time around, which would be things like the halving and interest rates were more of a factor before and less of a factor today. And in general, institutional adoption and regulatory clarity and additional institutional infrastructure I think has reduced the size of drawdowns and added liquidity and buffers to the market. So I think that we're not going to see those crazy all time high, you know, spikes that we've seen before, like the blow off tops. But I also think that means that the four year cycle of three great years in one bust year is dead and that 2026 will be an up year for crypto assets.
- [03:49]
C
And David, what about you?
- [03:51]
B
So mine is a little bit more of a, a take on looking at the history of what's happened over the last 15 odd years with Bitcoin and other digital assets. And so I recently wrote a blog post calling for Bitcoin having its Facebook moment. You can find that on my socials. And what I looked at relative to everything that's happened from a macro or micro perspective, the setup was there. And so let's talk about that. So we had a US shutdown of the government starting at the end of September, all the way for 41 some odd days. And what happened there was you had a buildup of the treasury general account. This is like the checking account for the treasury and the Fed. And basically this is where dollars come in from taxes, from tariffs, from revenue, and they usually go out to pay for contractors and for all the workers out there that are keeping the planes up in the air and landing safely, those types of things. And so the treasury general account, while the shutdown was happening, basically was taking in money, but not able to put out money into the market, into the banks. And so that treasury general account reached astronomical heights over A trillion dollars at one point in October. And this is not a healthy per se parameter. This is not something that you want to see. What happened from a banking perspective is that we started to see some levels of distress. You start to see the secure overnight funding rate, which used to be Libor. It's a rate where basically it's a determination of the liquidity and the kind of the ease, if you will, of liquidity between banks, lending big banks and regional banks that actually hit a rate where you would not want to see. It was over about 4.2, 4.25, where it normally sits around 3.8, 3.7. That's usually where they like it. And so it was very high. And so you started to see this imbalance between secured and unsecured lending, which was also inverted as well too. The rates and the yields there were inverted, which is not a healthy thing to see. And so you saw what happened after the shutdown ended, thankfully, is that there was a lot of forecast where there was about two weeks after the shutdown where, okay, the treasury general account was roughly around 1,950,000,000, give or take. And it's normally in the range of about 750 to $800 billion. So roughly $150 to $200 billion was supposed to roll off and go into the banks almost like a liquidity injection. This normally, and I looked at this and you can see it in the paper over three periods of time has happened over the last five or six years. This normally is very good for risk assets, including Bitcoin. But however, as you alluded to, Laura, you were on vacation and Bitcoin really wasn't doing very much. And so this really led me to start to take a look at why and we'll talk more about this. But in my opinion, Bitcoin, and you can see this from the numbers too, long term holders, you can see this also in some evidence out there. There is a little bit of a rotation. What you can start to see from long term holders that have been around for 10, 12, 13 years who have probably started to see the institutionalization of Bitcoin as an attack, something that they don't necessarily agree with. They have believed that Bitcoin was going to be a bank in your hands. And now they're starting to see Vanguard and they're starting to see Fidelity and all the other large tier one institutions embrace it, which is obviously something that many of us were hopeful for and something that we thought was going to happen. They might not necessarily agree with that, they might start to see that as centralization and censorship and something that they were really against initially. And so I think we're at this point right now, we're in this very, very difficult rotation where I equated it to Facebook. Where Initially when Facebook IPO'd, you had a situation where it was majority 40, 50% of the users were teenagers and early 20 year olds. They used it to get in touch with each other and set up meet and greets and hangouts and go into bars and everything like that. And then all of a sudden, about five or six years into the IPO of Facebook, you started to see the adults, the parents, the grandparents are coming in and starting to DM their kids. And it started to become a place where it wasn't very cool and it wasn't something that really attracted them anymore. So that's why they went to Snapchat and they went to TikTok and all the other different social media apparatuses out there. And so I think we're in that type of a situation right now where we're seeing this kind of painful rotation between those that had this more radical, revolutionary idea to those that are now coming in from the institutional side. There are starting to be much more long term holders that want to offer this to people in their 401ks. And so this is a very, very particular, interesting time in the evolution of Bitcoin digital assets where we're starting to see that rotation.
- [08:54]
C
That is, I find that so interesting. The one thing that I want to ask you about is, so I understand that money has network effects, but money is also different from a social network. So like the way you described, you know, people hanging out on Facebook and then wanting to hang out elsewhere. I don't know if that phrasing really applies to something like Bitcoin or any type of financial assets, but it could. I just wanted to hear you just kind of explain why you think that analogy works or like what might be different about it.
- [09:32]
B
Yeah, again, really, you know, from my days, in my early days when I started to take a look at Bitcoin and started to talk to bitcoiners and other people in the space, there is this idea of, as I said again, being a bank in your own wallet, in your hands, having control of that and what we've seen over the last year and a half or so, two years with ETFs, and obviously congratulations to Bitwise on the work that they been doing there. You've seen ETFs, you've seen, again As I said, bitcoin and other digital assets being offered potentially in 401ks. You've seen executive orders that are obviously trying to really broaden the horizons of adoption institutionally of bitcoin and other digital assets. And so again, the way that I've thought about this is that sure, money and social networks are not the same, but there was a reason why people, especially the OGs, if you will, really started to flock to bitcoin in the early parts of the days because they wanted a change from 2008 and 2009. They saw many things wrong with the financial markets at that time and they saw that this was an opportunity to right wrongs. Very similarly speaking. You started to see, as I said, the early adopters of Facebook, they wanted a place to network and to hang out and talk and communicate. And they started to see that big brands were starting to get Facebook accounts and starting to advertise them and starting to, you know, basically make this a place where it wasn't just about hanging out. It was all of a sudden, you know, seeing an ad for Louis Vuitton or for Porsche or for Walmart that really changed the whole apparatus and the whole experience. And so while, sure, Facebook has done phenomenally well, now Meta has done phenomenally well, especially if you look from a stock perspective after that kind of exodus happening six years after the ipo, that was a very painful rotation where you started to see the teens and the early kind of demographics switch out for this older, more mature demographic that we're seeing today. So there is similarities. It's not apples to apples, but it definitely you started to see this. There is a very big mind shift change that has happened.
- [11:44]
C
That's interesting. Yeah, I don't know. I think the theory has been that people sold because it reached a certain price though threshold, but you're basically saying that they sold due to ideology. And I would be interested for Ryan's reaction because Ryan kind of represents that transition like his company. That's what they do. So Ryan, what's your reaction to that?
- [12:05]
A
Yeah, I think it's a really great analogy for early adopters that became long term holders transitioning out of an asset or a network, and then new adopters who will eventually become long term holders transitioning into using that network or adopting bitcoin. So I think it's a really good analogy. I do wonder if the, the reason for those early adopters selling is more because bitcoin went to 100,000 or 125,000. They've held bitcoin for 10 plus years, their gains are astronomical. They've also lived through 60, 70% drawdowns multiple times. And so when they saw signs that those drawdowns might be happening again, we spoke at the beginning of this about the four year cycle. And if they really had fears of the four year cycle repeating itself, it made sense that that 100,000 psychological threshold was a great place to sell. I know what we're seeing at Bitwise when we work with a number of OG bitcoiners in Wales is that they're using things like covered call strategies to generate options income and to also exit long term positions at their desired price levels of 100 or above 100k. So I do think that we're, we have seen this transition happen with the launch of ETFs from early adopters and really the OGs and the retail adopters of Bitcoin into institutional adoption. And I do think that's a lot like what happens with IPOs. You have the early employees and the founders and the early investors who have been invested in these, you know, startup companies for a decade or more and have worked really, really hard and they've gritted their teeth through tough times and stuck with it. And so when a company IPOs, that's the liquidity event where they're going to take advantage of that and they're going to take profits. But at the same time, other investors come in, institutions come in and they buy those assets. And as mentioned, Facebook's done remarkably well since its ipo. There was a period where it chopped sideways. I think that's the period that we're going through with Bitcoin right now. But a lot of the institutions that we work with who are buying Bitcoin through ETFs that are buying crypto for options income overlays or running the basis trade are really here to stay in this market. And they find this market increasingly attractive because of the return profile or the volatility profile or the low correlation with other assets. And a lot of the investors that we speak to are excited that we have this pullback because they can finally allocate to Bitcoin now that it's trading below 100k and they have the ETFs and they're building positions, they're costing cost averaging down. And I think that these are long term oriented holders that are going to be here for the next decade, plus.
- [14:43]
C
Interest in Bitcoin and purchasing of Bitcoin. But obviously that hasn't quite panned out. And I was wondering why you thought that was. And what you thought might change that and either one of you can, can go.
- [14:56]
B
I think what we're seeing and as we're talking right now, we're obviously, if you look at a chart right now, you're seeing a nice little rebound here. Ethereum's up about 8.6%. Bitcoin's up about 4.4%. It is interesting. I just looked at my charts and I looked at the treasury general account, the tga and if you look at that chart over the last three or four days, the TGA has drained about 80 plus billion dollars, which is good. Which means that as I said again, liquidity is really starting to hit the banks and the financial system. If that's the reason why that's again, we deal with theoreticals. We try to obviously have the data, we try to have observational information in front of us. That could be one of reasons why we're seeing a nice little bounce right now. There's also, as I've seen, speculation that tomorrow there could be a Fed cut. There's also speculation that we could have a new Fed chair which would be very accommodative to easing, quantitative easing. And so, you know, I think those are some of the things that we're seeing today. I would love to hear obviously other opinions though.
- [16:06]
A
No, I think that's exactly right. I mean, if you look back at this other event that happened about a week ago or on December 1st, is that the Fed ended its two and a half year quantitative tightening program that really began as a reaction to the inflation and issues of COVID in June 20th or July 2022. And that program ended on December 1st and I think was the second largest single day liquidity injection since COVID And so that's a very big deal as well. And the price of Bitcoin is up nearly 10% since that happened on December 1st. So I think that combined with the TGA reopening, combined with hopes of an interest rate cut at tomorrow's meeting and hopes of more cuts in 2026 if we get a hawkish Fed chair and we see the things that, you know, the market's expecting when it comes to rate cuts, I think right now Polymarket's projecting a 95% of a rate cut tomorrow. So those liquidity elements are definitely playing a role in our opinion on investors outlooks for risk assets. And I think it's making its way through the market, you know, at the surface as well.
- [17:12]
C
Okay, so let's now talk a little bit more about things happening in the tradfi world because, you know, to David's point earlier about how we're at this moment where there's all this institutional adoption, there's been even bigger news. You know, I shouldn't say bigger, but just like the, you know, that those doors keep opening. So, you know, one of the bigger bits of news is about Vanguard finally opening its doors to crypto ETFs. As you're famously declaring that crypto was not worth investing in.
- [17:48]
There was also bank of America, Merrill lynch allowing its financial advisors to recommend four different Bitcoin ETFs.
- [17:56]
I was curious for why you thought it was that Vanguard finally had a change of heart, why we're seeing this move from bank of America and what you thought all of this would mean for crypto going forward.
- [18:07]
A
Yep, I'm happy to give this one a go. Look, it's like Lynn Alden says, but nothing stops this train. It was inevitable that Vanguard ultimately was going to allow their clients to, to invest in crypto because otherwise they risk losing their clients and they don't want to do that. We also saw bank of America and Merrill lynch talk about how their private wealth managers and financial advisors can start suggesting crypto, or allocating crypto and client accounts come January. Over the past three months, we've seen a number of other financial institutions and wirehouses start onboarding crypto ETF access. So I think this is a wave of institutional demand and it comes from the clients and the financial advisors asking about it. I mean, a bit wise, we talk to financial advisors at work at these firms every single day, and they've told us that they've been asking for access to these ETFs since they launched in January of 2024. Their clients have been asking them for access to it. They don't want to lose those clients if they go elsewhere. They don't want their clients to start investing on their own. And then it's outside of the wealth management plan they've created and the assets they can bill on, etc. But the reality is, is that these are huge institutions. They turn very, very, very slow. And one data point that we find interesting, a bitwise, perhaps you will too, is that on average, it takes eight meetings before an investor that we meet with ultimately makes an allocation to Bitcoin, which is incredible because those meetings typically happen once a quarter. So you can imagine that if those meetings started when the ETFs launched in January, the eighth meeting is happening right now. And that's just indicative of how long it Takes institutional investors in financial advisors to really become comfortable with an asset, complete their due diligence, go through the risk and investment committee processes and meetings and decisions, talk to their clients and then make allocations. So I think institutional adoption was inevitable. Vanguard was always going to change its stance and I think that's okay. I mean, Larry Fink years ago called bitcoin and index for money laundering and he was just on stage at a major conference this week talking about tokenization and Bitcoin as two of the biggest developments in markets over the next 10 to 20 years. So I think it's okay for people to change. I think it was inevitable. And of course we're really excited about these institutional doors opening for Bitcoin and for other crypto assets because institutional investors control tens of trillions of dollars of wealth. Most of that hasn't been able to access crypto for the past 15 years and it's just starting.
- [20:37]
B
Yeah, I was going to just say I've seen institutional kind of follow the, the, the, the lions into the den, if you will. BlackRock is 13.5 trillion. A, um, it is the largest asset manager in the world. And the CEO of BlackRock, as you just alluded to a week ago, just said he admitted that he was wrong at the dealbook Summit. And they have gone full tilt into this, especially with Larry Fink stomping his feet that every asset, including equities and bonds are going to be tokenized. You would be hard pressed if you were Vanguard to see BlackRock saying these things and doing these things and building up the capacity to do these things and saying, sure, we're just going to stay the course and say that bitcoin and crypto are rat poison squared. As Munger said, that doesn't work because institutional investors, family offices, they all talk to each other. They're all different, but they all talk to each other. They get together every week, every month at luncheons. They talk about what they're doing, they talk about what they're being pitched, they talk about the deals that they're looking at and when they, their representative from BlackRock or their representative from Fidelity or whoever may be, or kkr, you know, talks to them about deals that they're looking at, talks to them about what they're looking at. You know, it starts to have this cycle and it takes a long time, as you alluded to, but once it happens, it happens pretty fast. No one wants to be the last one on the bus. And so I think that's the experience that we're seeing right now is that blackrock really broke the the ceiling, if you will. Fidelity as I should definitely make a mentioning as Abigail Johnson was out there recently talking about Bitcoin and talking about all their work. They started this back in 2013, 14 or so, experimenting with bitcoin, experimenting with crypto. They were one of the first. But blackrock coming in at such velocity and such, the scope, I think really started to make all the institutional kind of delegators out there take a real notice of this and start to really prepare and start to get things going. Second point and then I'll be quiet. This can't happen without regulatory clarity. And this I think is incredibly important is that over the last nine months of this new administration, the ability to have genius passed. What we are seeing and hearing about clarity had a fantastic call thanks to the Digital chamber. Hearing Senator Gillibrand from New York talk about how they are looking to create real regulation that does not put digital assets in a box that was created 80 years ago necessarily. Speaking about, quote, unquote, like how we test. How do you actually create something that is not necessarily a security and not necessarily a commodity, but has a little bit of both of those and maybe a security at the end of the day or maybe a commodity at the end of the day, but it needs some time to kind of manifest and become what it is. Hearing that and hearing and seeing what the regulators and policymakers are doing this year, I think also has had a tremendous lift on the institutions out there that want to get involved with this. Everyone from Estate street to obviously anyone else out there.
- [24:03]
A
Schwab.
- [24:05]
B
These are all institutions that are waiting. And I think, you know, one of the things I've, I've, I saw a few months ago, Brian Moynihan, CEO of Bank of America, was basically all but saying we're waiting for this to be done, for regulation to be passed and written into law for us to come in. This is, you know, I think that's what we're seeing right now.
- [24:25]
C
Okay, so let's also now talk about some news that Ryan and Bitwise have today, which is that Bitwise has now turned its Bitwise 10 crypto index fund into an ETF. Ryan, tell us about this news and why it's significant.
- [24:42]
A
The Bitwise 10 crypto index. The Bitwise 10 crypto index fund transitioning into an ETF is something that is one of the main reasons why a lot of people that joined Bitwise did join Bitwise many, many years ago. This is our first and largest fund that we created. It's the top 10 crypto assets by market cap. Really, it's the S&P 500 of crypto. And the reason so many of us join Bitwise to champion this product is because a lot of investors allocate to many different asset classes through index funds. They don't want to pick and choose winners or losers. They don't have time to survey every corner of the market. And so if they want to invest in energy or in financials or in tech or otherwise, they buy an index fund. And so we're happy to bring the world's first and largest crypto index Fund as an ETF. Which means that alongside Bitcoin ETFs, alongside Ethereum ETFs, alongside Solana ETFs, investors now can just own 85% of the market with one click of a button. So we're really excited about this. We've been applying to convert this thing to an ETF for literally years. It's been trading as a GBTC like product with premiums and discounts, which isn't the best for investors. And it's, and it's costly. And now officially, as of today, it's listed on the New York Stock Exchange as the, like I said, the world's first and largest crypto index etf. And we're really excited about it.
- [26:03]
C
Very exciting. And one question. Do you find that investors tend to want an index type product or are they kind of more just like into Bitcoin or into like Ether or Solana or like how, you know, when, when these investors come into the space, like how do they tend to think about it? What, what do they want?
- [26:23]
A
Yeah, yeah, I think it's mixed. But most investors just want to have broad based exposure and they also want to be able to tell their clients that the clients have exposure. The last thing a financial advisor wants to do is talk to their client at the end of next year and say, look, I was right about crypto and you were right to ask me about crypto, but I bought the wrong asset. And so actually your profile, your portfolio is down, despite Ethereum being up and Bitcoin being down, or some other combination of those two. And so it takes the challenge of picking winners and losers and actively investing in the space out of the equation. And so a lot of investors do come into the space saying, I want to own digital Gold, I understand Bitcoin and I'm making that allocation and that's great. I think a lot of investors will slowly add satellite positions through index funds to that position. But for the most part, professional investors spend a relatively small amount of their time thinking about crypto. So for them to have an easy button to own 85% of the market through an index fund, I think they're going to do that. And that's the same for other asset classes like equities, like bonds, like alternative assets, like emerging market equities. So I don't think it'll be any different for crypto.
- [27:35]
C
Okay. Yeah. And I could see some of them wanting, you know, both the index fund plus like a bitcoin etf, you know, like they might have confidence in some of the assets, but then think, well, for the ones I don't know about, I would like, you know, broader exposure. So, all right, well, I think we.
- [27:52]
A
We see that with equities, just to, to cover that point in depth, they might own the NASDAQ and then add on a position in Nvidia or in Tesla or in another tech company. So it's not all that different to what they do in equities. And I think that's the power of a product like this is we're bringing crypto onto the same playing field as other asset classes. And that's just part of this journey into making crypto a more institutional and more approachable investment class, which will help grow the asset over time.
- [28:21]
C
And then one thing that I was just wondering about how this is structured is because in the top 10, you have sort of like, you know, assets that basically track the price of eth, like something like a lido, stake teeth or whatever. Like, does that exclude those, or are those included?
- [28:37]
A
Yeah, it's a great question. So the way that this works is that we survey the top 50 crypto assets by market cap, and then we run a bunch of screens around the index methodology against those assets, and it screens out things like wrapped tokens or liquid staking tokens. It also screams out, or, I'm sorry, screens out stable coins or meme coins or things like that. And so really, the 10th asset is probably the 25th largest by market cap because we're screening for certain risks and criteria. Now, that might sound like we're excluding something that you might want in the index or in the fund. But I would note that Luna at one point became the fourth largest crypto asset, but that was not allowed in this index or in this fund because we saw, in our index committee, saw certain security risks with the asset. And so I think that's also the power of buying an index fund that's managed by a crypto specialist firm like Bitwise is that we have 150 people each and every day surveying the crypto market and paying attention to it and looking out for risks like those that emerge with FTT or with the Luna token. And so it gives you some peace of mind where you can sleep at night knowing that you have a team of experts who are intimately close with the space, using a rules based methodology to ensure that you're protected against certain things that crypto has been known for in the past and that you're also not inadvertently exposed to a meme coin when you just bought the 10 largest or something like that.
- [30:02]
C
Okay, okay, super interesting. All right, so in a moment we're going to talk a little bit more about different trends and where they're going in crypto. But first we're going to take a quick word from the sponsors who make the show possible. Today's episode is sponsored by Figure, which is transforming financial services using blockchain. They're the largest non bank mortgage lender in in the US with over $19 billion unlocked on their lending platform. Now they're offering industry low crypto backed loans at 8.91% interest rates at 50% LTV for BTC, ETH and SOL. They differentiate themselves by offering decentralized MPC custody which protects your crypto ownership in a segregated wallet. They've also recently launched liquidation protection to protect you from liquidation during large price drops. Whether you're funding a major purchase, investing or even buying more bitcoin, figure makes it transparent. Visit FigureMarkets Co Unchained to take advantage of their crypto backed loans today. Back to my conversation with Ryan and David. So we briefly alluded earlier to tokenization and obviously we all know that is going to be a big trend that will take off, especially with the SEC chair Paul Atkins behind it. And it's funny to even be saying all this because this is what was being said 10 years ago when I started covering crypto and I think it was kind of part of one of the first big articles I wrote. So, decade and a half later, we're finally here. I'm curious though, so I can see how this would make tradfi markets more efficient. But I was wondering how you think it would benefit crypto, the crypto markets. And either one of you can go first.
- [31:47]
B
I think at the end of the day what tokenization is, is a vehicle to move assets faster than anything has been possible without having all the intermediaries, middle men and middle women in the middle. And so at the end of the day. The idea is that crypto doesn't just have to be crypto. Traditional finance doesn't just have to be traditional finance. I think what we're getting to at the end of the day is that it's going to be finance.
- [32:23]
It'S going to be technology. I don't think we're going to need to necessarily separate and parse out crypto versus traditional finance and traditional finance and crypto, I think you're going to see, and you're starting to see, especially with real world assets. And everything you're talking about with RWAS is a convergence where as I think I spoke, actually I think I tweeted to your colleague, to Hogan that There is roughly $240 trillion between equities and bonds that can potentially be affected by real world asset by tokenization. And Laura, as you alluded to, there are benefits to it, obviously. There's counterparty risk assessment, there's the ability to have everything on chain, have transparency. There's ability to have a world where we go from T + 5 where we were years ago, to T + 1 where we are today, to T + 0 or T + 30 seconds. This is all potential. With having the adaptation of the Rails that have been developed over the last six or seven years especially.
- [33:28]
I think this is really where we're going to have to start getting our minds through if we want to reach a billion plus users over the next few years, which is really where we should be thinking about as an industry, is how do we get to a billion users? We need to stop calling things specifically just defi. We need to start calling things finance. And we need to talk about the technology that we are adapting and building to address finance and how to make finance faster and better and more democratized. I think that is where we really need to start. That's how crypto and RWAs and tokenization really starts to flourish, is that we stop isolating it and really start kind of bringing it into an adaptation process. And I think that's what we'll see as successful for crypto going forward.
- [34:18]
A
Yeah, I could not agree more that we're going to just see a convergence of these two right now, kind of separate entities into one. And in the future we'll just call it finance and, and we'll be referring to things like tokenization and defi and stablecoins and stocks and bonds and hedge funds and all of those things combined. That's just the technological evolution of where we're headed. And what it's doing is bringing finance into the 21st century and really improving all those things that David mentioned. I mean, the fact that the chairman of the sec, which is the most important financial regulator in the world, was on Fox Business News talking about tokenization for like 15 minutes and talking about how nearly every asset in the world is going to be on chain in a few years and talking about how the prior SEC regime got it all wrong, just shows the massive transition that we've gone through over the past year. I think it shows where we're headed. And as Paul Atkins mentioned, tokenization just lowers the cost, reduces risk, increases transparency and modernizes financial markets. So I do think a decade or two decades from now, it'll just be referred to as finance. And we're on that journey of integrating both traditional markets and crypto markets into financial markets for the future.
- [35:36]
C
Yeah, and yeah, I guess, like once there's integration, then that will just lead to more adoption of crypto, which will help crypto markets generally. So here's something that's happening currently that I really wanted to touch on there. There's already been discussion of this on my channel, so we won't dwell too long. But Obviously everybody's seeing MSTR's MNAV is just a tad over 1. It's at 1.18 currently. There's a bunch of DATs that are already below a 1.0 MNAV. And I wondered, you know, what you thought would happen to those DATs, the ones that are trading below a 1.
- [36:16]
B
I'm not going to go too much into specifics there about the calculations of that. And I will talk more broadly about the vehicles that obviously have arisen with the DAD over the last eight or nine months. I do think what really needs to happen for them to be much more powerful and much more unique and much more of a value proposition is I really do think that they need to take more of a private equity type of an approach where if you have been able to raise a pipe 50 or 100 or $150 million, whatever it may be, or more, what are you doing to actually support the ecosystem around that specific token? Whether it's eth, whether it's Lana, whether it's Bitcoin, whether it's hyper liquid, whatever it may be, how are you actually encouraging the growth of that ecosystem? How are you looking for bolt ons, how are you looking to actually, again, look for customer acquisition? How are you getting into the hands of more users or potential users or partnerships? I think that's really where these things need to go now. They've raised in ordinance amount of money over the last, as I said again, six, seven, eight months. And I do think that they need to really recalculate and reformate how they are doing things. I don't think that it could just go and raise $150 million and buy the underlying token and call it a day. I don't think that's enough. I really do think that they need to create much more of a, as I said, private equity venture type of an approach where they're building accretion of value in the token and the underlying of the ecosystem to really create more, as I said, kind of downward pressure to build the upward price. It can't just be a line of last resort where I have $100 million and I could just buy the token ATM whenever I want. That really I don't think is necessarily doing very much right now.
- [38:14]
A
Yeah, I agree that there's going to be the companies that stand out by actually creating compelling operating businesses that build ecosystem investments around their core holdings and drive the growth and adoption of the broader ecosystem, whether it's Ethereum, Solana, Bitcoin, Hyperliquid, as David mentioned. I also think we're just going to see consolidation in the DAT space over the next 12 to 1224 months. This clearly got out over its skis. A lot of these, as you mentioned Laura, trading at or below M Nav. I think it won't be consolidation via M and A though I can imagine a world where a lot of these dats just unwind and they would do that because why would they sell their company to a larger DAT at a discount when they could just liquidate their balance sheet holdings at the market price of of Bitcoin? It's better for investors for them just to liquidate at the spot price. But I think what that means the larger DATs will ultimately create OTC deals to absorb that bitcoin. I don't think that digital asset treasury companies will be net sellers of crypto next year. I think we're going to see more purchases by public corporations of Bitcoin, Ethereum and Solana. And I think we're going to see one or two winners in each ecosystem emerge to the top and absorb the smaller ones through just buying, buying their crypto assets kind of in OTC deals at a slight discount on the market.
- [39:36]
C
Oh, okay. So basically it sounds like whatever fallout happens in the DAT space you don't feel will actually negatively impact the crypto markets.
- [39:45]
A
I think it absorbs its itself ultimately.
- [39:49]
B
David, what do you think absorption is the, the key word here? And again, you know, kind of harking back to the, the, the, the post I talked about at the beginning of the show, there are those that are selling, but then there is those that are absorbing that. Whereas when bitcoin hit to125, there really wasn't that necessarily sell pressure. But what we're seeing right now is that there's been selling, but there's been absorption. I love that word. That is the key word right now is that these markets, as Ryan knows, there's buyers and sellers. And so there are days when there is going to be more buyers and there's going to be days when there's more sellers, but there's still going to be people who are looking to buy. And as we know from any kind of traditional asset playbook, if you like something at 20 and you were buying it at 20 and now it's at 18, there's really, there's not many reasons why, you know, that you would change your playbook. And that's right out of Buffett and Munger right there.
- [40:46]
C
Okay, okay. So, yeah, we'll have to see because that space clearly is undergoing some changes right now, facing some challenges, but hopefully it won't impact the broader crypto markets too much.
- [41:01]
So the last piece of the adoption story that I wanted to talk about was stablecoins.
- [41:09]
We can all see that obviously because of genius and just simply the fact that even before genius stablecoins just became gigantic, that, you know, this is just going to keep growing bigger and bigger. I think people were surprised and a little upset about the news that Stripe is going to charge 1.5% on transactions for its stablecoin payments. And I wondered if you would just talk a little bit about, you know, how you thought the stablecoin, you know, competition will play out and how that will affect the adoption of crypto.
- [41:47]
B
I'm going to give a shout out to my colleague.
- [41:51]
Rain Steinberg, who obviously was the co founder of ARCA and also the co founder of WisdomTree for those that don't know which was one of the biggest ETF companies in the world. And I've learned a lot from him because at the earliest point in times, the growth of ETFs, all of a sudden you started talking about fee compression. And Ryan knows this too, you know, because it's classical etf, you know, playbook. You have an asset or you have an asset, a group of assets, you have something out there that you can charge X amount for. And then you have competition coming in and that fee compression starts to happen and it starts to become x minus 1, x minus 2, x minus 10. And so this is normal. What we see is that, yeah, sure, Stripe can do that. You know, they have, you know, a fairly large global reach right now and they can offer now this with their incorporation of Bridge. I would be hard pressed to think in the next year or two other operators out there, you know, full and fair disclosure. One of our companies in our venture portfolio was acquired by Modern treasury recently called Beam, and they acquired them specifically for similar purposes to offer stablecoin capacity on and off ramps. We see this happening in real time where there are more companies out there that have good balance sheets, that have capacity who are coming after this because this is where they see the growth. I think there was a annotation, Goldman might have said this, you know, a few, a few months back, where there is some forecasting out there, implied forecasting out there, that stable coins could reach 2 trillion volume over the next year or two. And so this is something that I think the majority of corporations understand, especially on the payment side. And I think as you start to see what I think you'll see and what we have seen evidently in 2025 is massive. I say massive with air quotes. It is a significant amount of M and A activity. And I think you're going to continue to see that. You saw obviously Stripe acquire Bridge, you've seen Ripple acquire certain ones. I think Rail was one of them. This is something that I think you'll continue to see for the next few quarters as you'll start to see acquisitions that have not already been done, where corporations large and small or mid size are going to continue to look to bring on stablecoin capacity to really compete in a global scale. So with that, over the course of the next year or two, you're going to see more capacity, more ability, more competition and you're going to see that fee start to compress significantly, in my opinion.
- [44:23]
C
Ryan?
- [44:24]
A
Yeah, I think it's like David said, it's a similar story we've seen with ETFs and just other technologies and products. Over the years. Stripe can charge 1/2% on stablecoin transactions because they're one of the largest payment companies in the world and they handle trillions of dollars of transactions every single year. So I'm not surprised that they are charging for it. I think another element to the story is that it's more than half the cost of what they're charging for credit card payments or other payments on their network. So we're still seeing the benefits of stablecoins play out now where those benefits accrue. Right now about 1 1/2% of each transaction on Stripe accrues to Stripe. But the cost savings on the other side of that transaction accrue to the small businesses, the large businesses and those using the stripe network. So I, I think we shouldn't, you know, step away from the fact that overall this is improving the system. Just as we've all who got into crypto said that stablecoins and crypto can, and I do think eventually fees will compress and will go lower. You see, as David mentioned, the same thing happen with ETFs. I mean, it was a race to the bottom when it came to the spot Bitcoin ETF fees. And that's why Bitcoin ETFs for the most part are less expensive than something like gold ETFs. And I do think that stablecoins being less expensive than credit card payments makes sense. I think that fee will compress. I also think that just every financial institution in fintech is either going to launch their own stablecoin or, or partner with the stablecoin issuer in the next 18 months. I think that's going to massively accelerate the adoption of stablecoins and accelerate that fee compression race because they'll be competing for business. They'll also find other ways to generate revenue. I mean, coinbase makes all stablecoin transactions free on with USDC when you use Coinbase, but they generate hundreds of millions in stablecoin revenue through their partnership with Circle. On the other side of us know interest on the reserve. So I think, you know, there's an area where it's kind of heads you in, tails you win. When it comes to stable coins, the end users win, the small businesses win, and the stablecoin issuers or platforms also win because it's net net a much better technology than our traditional payment systems.
- [46:33]
B
And if I could just say something else, one of the things I've been thinking through is as you may or may not have got, I like looking at the past 30 odd years of technological diffusion and it just points to me very clearly that you know, we talk about in crypto, we talk about product market fit, we talk about what is it being used for. We talk about that often. In my opinion, the stablecoin revolution that we're seeing right now and the adaptation, adoption of it is very similar to what you saw in the early 90s with email. There was A point in time, you know, for those that are too young to know, email was literally just me sending a text message to Ryan or to Laura. It was not much. It was like, hey, how are you doing? Hope all is well, blah, blah, blah. Then there was an adaptation mime, which allowed for the addition of metadata of files. And all of a sudden, now my email could be, hey, I just did this work for you. Here's my bill. Or, hey, we're looking at this deal. Take a look at the pitch deck, which we do time and time again every single day now. It became something that became commercialized. We started to be able to do business with it. And I think that's kind of the same track that we're seeing here with stablecoins, is that stablecoins are bringing crypto to the world. And then the world is going to say, okay, well, now can I send something on top of that? Can I send an attachment on top of that? And that's where I think really we start to see a linchpin and a catalyst is that in the next year or two, with more adaptation, more adoption of stablecoins around the world, and as Ryan alluded to, with more public companies trying to acquire stablecoin capacity, I think you're going to start to say, okay, now that I can send this asset instantaneously to Anyone, anywhere, anytime, 24, 7, 365, what else can I do with this stuff? And I think that's really where the magic is going to happen.
- [48:36]
C
Yeah. So let's circle back to David's piece, because we only talked about one portion of it. There was another part of it that was actually quite interesting to me.
- [48:47]
So as everybody knows, in the last few months, we saw Munch Munch. We saw this surge in zcash and in a bunch of privacy coins. And, you know, David kind of made this interesting point in his piece, which was he sort of, you know, talked about bitcoin being that countercultural asset that people were interested in, you know, part of the cypherpunk movement, and that now it's becoming institutionalized. And he sort of posited that zcash kind of was taking the place of that, you know, cypherpunk ethos, which is funny because there's a dat named cypherpunk, which I have said before on the show is the least cypherpunk thing I can think of, which I find hilarious. But anyway, the point is just, you know, I just wondered what you thought. This kind of upswing that we're seeing in the interest in privacy, because it's not only ccash, but as we know, you know, the Ethereum foundation suddenly has made privacy priority. And of course, as everybody has said for forever, if you're going to get institutions onboarded into this space, they need privacy. And most people generally would prefer to have privacy around their financial transactions. So I was wondering, do you think that there's a chance that Bitcoin is either too slow to adopt privacy or doesn't adopt it at all? That could cause it to kind of lose its mantle as the top crypto asset? And if so, which other asset do you feel is poised for that? David, it sort of seems like you think it's CCash, but now with the Ethereum foundation kind of prioritizing all this as well, and obviously Ether being an asset that just can do a lot more than kind of a simple payment asset like a Bitcoin or a zcash. I sort of wondered what you thought this new trend portended for the world order in crypto as we know it now.
- [50:42]
B
Right. I think this is coming from a few different places, gdpr, and you're starting to see much more of an advocacy for privacy online. And you're starting to see, especially in Europe, you're starting to see censorship of text messages, of social media, of all sorts of different things. And I think there's a counterclockwise for going against that. So I think there is ideological issues at bay. But there's also the other kind of piece of this that Chamath and others have brought up is the Quantum issue, the kind of the Q Day, if you will. And so there's conjecture out there that.
- [51:26]
Google's Willow project, the Willow chip, and some of the work done by Ionq and Rigetti and others out there on the Quantum side is really moving quite fast. And there is technicalities to this, where in 1994, I believe it was kind of prognosticated with.
- [51:49]
ECDSA and Shaw that there was going to be a point in time where Quantum was going to be able to kind of break and be able to break those. Those keys.
- [52:01]
And so that's also been all of a sudden a kind of a new issue that people have started to talk about a lot. And so it's interesting, I would not say that.
- [52:17]
Dating back, if you look at zcash specifically, zcash was founded or kind of brought to market about nine years ago. So this is not new, you know, zero knowledge proofs and rigging signatures and Monero uses and other different kind of capacities for security and privacy are not new. And so it's really quite interesting to see all of a sudden this new kind of movement towards looking into privacy. Looking at the concerns about Quantum. Again, I've done some research on this. I am not a Quantum kind of specialist or researcher per se. I've done enough to where I can be at least have a conversation and not sound completely stupid. But it does seem that, you know, the kind of, the capacities, if you forecast, if you look at the different forecasts and the technical capacities that Quantum could, you know, with their. With Qubit design and development, you know, there needs to be fidelity. There needs to be the ability for these things to be stable. There needs to be extreme cold temperatures with cryogenics. You know, it looks like, you know, somewhere in the range of 2030 to 2035, you know, there is some sort of a belief that that things could happen. But then I've also seen Adam back talk about the ability to adapt, you know, kind of adapt to this. And there's adaptations where bitcoin could start to really, you know, create some quantum resistance with that. So I really can't say. I don't think my. I think I put that into the paper because I wanted to throw it out there as theoretic and something that I've been observing. I can't say that I think that zcash isn't the answer, or dare I even say that bitcoin is going to fall to zcash. You know, there are those on crypto Twitter who are snapping their feet every hour on the hour, as good old KOLs as they are, who are doing that. I am not doing that, but there is some interesting components to that from, as I said, from an ideological perspective and from a physical and theoretical side of things and a science perspective where these things are kind of marrying each other and kind of creating this new float of interest in privacy. But, yeah, there's a lot to be on. There's a lot to be told right now. I think, you know, you will continue to see this conversation play out into 2026. I know that there's interest amongst people that, you know, privacy does need to be addressed, that these things do need to come to a head. But I really think from my perspective, the jury's still out.
- [54:50]
C
Ryan.
- [54:51]
A
Yeah, I mean, there's a lot to unpack there. I think that what I take away from this is that there's so much innovation and groundbreaking that's happening with crypto technology more broadly, whether it is privacy or whether it's stable coins or tokenization. Some of the things that we've spoken about today that I typically just believe all of this will matter more in the future than it does today. And what I love about the fact that privacy is becoming front and center in the discussion, as is stablecoins and tokenization. Other use cases, like prediction markets as well, are getting more and more popular. What I love is that crypto is no longer this one hit wonder with bitcoin. But there's numerous different ways in which crypto technology is disrupting financial markets, traditional markets, and other use cases and applications. I think privacy is extremely important, and you're seeing that reflected in the price of some of these privacy assets growing. But I also think other use cases are increasingly important. And that's, you know, to circle back on kind of making sure that you have exposure to the whole space as an investor is really, really important. And we don't know who the top crypto asset is going to be or what the biggest crypto company is going to be a decade or two decades from now. Just like in 1995, you had no idea who the Max 7 were going to be. Most of them weren't even around yet. And so I think I hear all of this. I see all the innovation being discussed in crypto circles. I see some of the brightest minds in the world focused on these challenges and these use cases. And I get excited about where we're headed. I get excited that we're still so early and that it's hard to imagine all the areas of the economy in the world that crypto technology will ultimately upend, transform and innovate on.
- [56:35]
C
All right, so we're coming up on time, so I definitely want to take a sneak Peek into 2026. And Ryan, you kind of alluded to this earlier. You said that you thought the four year cycle would be proven dead in 2026. So explain how you think that this coming year will play out. What can we expect to see in the crypto markets?
- [56:57]
A
When I think about 2026, the way that I, I see it being a positive year for bitcoin and for crypto assets. I think the liquidity environment is supportive for risk assets and crypto assets. I think we're more likely to see interest rate cuts than we are to see interest rate hikes. I think monetary supply globally is growing and that will drive risk assets higher. I also think there's still concern to that end around debasement of currencies and the debasement trade, which became really popular on Wall street last year and I think will become increasingly popular in the year to come. See central banks trying to diversify their reserves. We saw what happened with the price of gold this year. I think we'll see a similar move with bitcoin next year. And then we have the rise of stablecoins and tokenization. All of these things are kind of underpinned by the regulatory advancements we've seen with the Genius act, with the pro crypto sec. And so it's really hard for me to step back and look at 2026 and imagine a down year. Now, of course, there could be some big macro black swan event, geopolitical tensions. You never really know with Trump what he's going to do or say. And I think the midterms create some sort of uncertainty. But broadly Speaking, I believe 2026 will be an up year. I believe that tokenization and stable coins are going to continue to be front and center. You're going to continue to have Larry Fink pounding the table every chance he gets about tokenization. You continue to see the SEC be supportive of crypto. And if crypto wins the midterm elections and if we get the passage of the Clarity Act, I think that crypto is going to do remarkably well in 2026 and beyond.
- [58:34]
B
David, I would agree with the regulatory side first.
- [58:41]
The, the shutdown definitely affected the timeline for that. We were probably on, on target to potentially have that passed, you know, this year, right around now. Now we're looking towards Q1, maybe Q2 again. The call with Senator Gillibrand was enlightening to the fact that she said that this is really one of the areas where it is bipartisan, where they do work together on this, which is nice to hear because you don't necessarily get that color often. You usually think that they're killing each other, you know, in restaurants all along D.C. but no, they actually do seem to be trying to co op and work together on this, which is good, which is a big change. So I definitely think from a regulatory side, getting Clarity is definitely going to be an uplift. I think it's going to. It's going to take some time for it actually to be implemented. Let's also just be very fair about that. If it does get passed, it's not instantaneous where all of a sudden everything's done. There needs to be rulemaking, There needs to be actually a programming of that. And so I do think that that is a big one to be looking for. I completely agree with tokenization. As I said, as Ryan Said too, the biggest asset manager in the world is basically begging for tokenizing assets. I think that's going to be a very significant portion there with that. I would also be very curious to see how the infrastructure for tokenization works out. You need to have infrastructure behind tokenization to actually have that work well. So that's an area that I'm taking a look at for 2026 is the infrastructure behind tokenization. And lastly, I'd have to say AI has been on the hot button as a bubble, et cetera, et cetera. I still see that there is a significant confluence between AI and crypto. And I do see a world where, and I think Google is already expanding with this and a few others where AI agents are going to be embedded and powered with crypto wallets and especially stablecoins and they're going to be able to do significant processes and resources and they're going to be able to pay for those resources with stablecoins immediately. Friction, without friction. I do see a world that, that plays out and I think that's going to take more of a face in 2026. So those are some of the areas that I'm definitely taking a look at for 20 for the next year.
- [61:09]
C
And so you also think that the crypto markets will end higher at the end of the year 2026, like Ryan does.
- [61:18]
B
I've been around too long to actually prognosticate and to forecast those types of things.
- [61:25]
As I said before, and I will say again, these assets are supply and demand driven. We need to build the demand. The supply is there now for 2026. A calling for all of us in crypto, in the entire industry is we need to build the demand side. And I think we all need to look ourselves in the face every single day and say what are we doing to build the demand side? If we were able to solve that side of the equation, then as we know from classical economics, prices agree.
- [61:53]
C
And so I just me to end with this, I really want to know, so Ryan, if you were to put a number on it, where would you. Because you know, you talked about how, you know, all these RIAs, they, they take a while. It's been like eight meetings since, you know, the introduction of Bitcoin ETFs about Vanguard of bank of America, et cetera, et cetera. So I'm just so curious, like what price would you put on Bitcoin for the end of 2026?
- [62:23]
A
Yeah, I'll take a stab at this. Like, I think we're going to set new all time highs in 2026 for Bitcoin. I think we probably will set new highs for Ethereum in Solana as well. If the Clarity act passes for bitcoin. My target number for 2026 is somewhere between 125 and 150. Now, I wouldn't be surprised if we get the macro tailwinds that I spoke about and we get passage of the Clarity Act. And, you know, we continue to see institutional adoption, which we certainly believe that we will. I wouldn't be surprised to see Bitcoin trading north of 150 this time next year.
- [62:57]
C
All right. Well, we will leave on that note. That sounds really interesting. Thank you both so much for sharing your insights. I really enjoy chatting with you. Unchained is produced by Laura Shin, with help from Juan Aranovic, Margaret Curia, and Pam Majumdar. Thanks for listening.
- [63:14]
A
Sa.