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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. Joe, Tracy, Uh Bitcoin,

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Speaker 1: I think we could just leave it there. Let's just

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Speaker 1: bring on the guest. No, we actually could. Let's just

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Speaker 1: do it, Okay. Today we're going to be talking about bitcoin,

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Speaker 1: cryptocurrency having another big year. As Tracy says, no need

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Speaker 1: for intro, no need for banter here, let's just jump

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Speaker 1: right into it. I love that, all right. So we're

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Speaker 1: going to be speaking with a veteran of the industry

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Speaker 1: to the to the extent that such a thing can

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Speaker 1: even be described, uh these days. We're gonna be speaking

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Speaker 1: to Melton Demure's. She's the chief strategy officer at coin Shares,

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Speaker 1: very visible, very big follow on, someone great to follow

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Speaker 1: on Twitter, media, etcetera. Melton, thank you very much for

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Speaker 1: joining us. Hey, great to be here, Thanks for having me.

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Speaker 1: If you're a veteran, right, it's okay, it's it's heard

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Speaker 1: at this point, right. I mean what you said is correct.

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Speaker 1: You know, I've been in this industry for six years now. Um,

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Speaker 1: if six years makes one a veteran, you know, I

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Speaker 1: think it just speaks to how young this industry is. Yeah,

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Speaker 1: I mean I think I read this weekend that it

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Speaker 1: was just the twelve anniversary of the Bitcoin white paper.

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Speaker 1: So I guess that means literally half of the time

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Speaker 1: that the industry has been in existence, you've been involved

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Speaker 1: in it. And I mean and arguably, you know, in

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Speaker 1: one personally, I started interacting with bitcoin, like the way

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Speaker 1: you bought or you didn't buy bitcoin. You would go

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Speaker 1: to a website to bitcoin faucet, you know, by bitcoin

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Speaker 1: on Craigslist. You would send money to Japan to buy

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Speaker 1: bitcoin on on cox. So arguably, you know, the industry

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Speaker 1: didn't really exist really until or so. So I know

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Speaker 1: we skipped the intro and I think that's in odd

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Speaker 1: thoughts first, but it kind of it kind of speaks to, um,

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Speaker 1: I guess, the craziness of the year that bitcoin has

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Speaker 1: actually had. So I'm looking at the chart right now,

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Speaker 1: bitcoin is hovering around thirteen thousand, and the amazing thing

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Speaker 1: about bitcoin, I guess, is just how many times it

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Speaker 1: seems to have come back from the dead in some

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Speaker 1: way or the other. And I will admit, as a

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Speaker 1: journalist who has been covering the space for a long time,

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Speaker 1: I think at this point, I've written at least three

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Speaker 1: obituaries for bitcoin um in one way or another. I

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Speaker 1: think I did one in like two thousand twelve, and

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Speaker 1: maybe another one in in two thousand seventeen or two

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Speaker 1: thousand eighteen. Why has it come back this year? Look,

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Speaker 1: Bitcoin as as an asset right behaves UM in a

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Speaker 1: cyclical manner. There are shorter sort of cycles that occur,

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Speaker 1: and then there's a larger secular trend which has sort

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Speaker 1: of been up into the right because in each successive

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Speaker 1: high Bitcoin hits a higher high UM and the lows

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Speaker 1: are not quite as the prior quite as low as

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Speaker 1: the prior lows. So I think what you're seeing here

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Speaker 1: is Bitcoin operates typically you know we've seen so far,

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Speaker 1: isn't it roughly to your cycles? Although it seems like

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Speaker 1: that pace is now in increasing and as a result,

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Speaker 1: you know, there's sort of short term interim cyclical behavior,

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Speaker 1: but a larger term secular trend that obviously myself and

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Speaker 1: many other people in the industry building firms are are

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Speaker 1: looking for UM and tracking against. What what do you

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Speaker 1: do there? Yeah? So Quin shares a great question, Joe.

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Speaker 1: We are a financial services firm. We are best known

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Speaker 1: as an asset manager. We manage one point one billion

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Speaker 1: in assets in the form of publicly listed exchange traded products.

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Speaker 1: They're traded throughout Europe under the XPT Provider brand. Uh

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Speaker 1: So we've been in that business for about five years.

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Speaker 1: We're also in the trading business, venture capital business, and

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Speaker 1: a variety of other financial services products. That's what we do.

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Speaker 1: So one thing I'm curious about, given given the role

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Speaker 1: that you just described, I keep seeing bitcoin described as

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Speaker 1: a diversification strategy this year, especially for corporate treasurers. Is

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Speaker 1: that something that you're actually seeing in the marketplace at

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Speaker 1: the moment. Yeah, so, so we've actually done a lot

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Speaker 1: of research on bitcoin as a portfolio diversifier. I think

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Speaker 1: it's certainly true that in March, um, you know, investment

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Speaker 1: committees corporate treasures around the world looked at the makeup

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Speaker 1: of their portfolio and realized something probably needs to change.

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Speaker 1: Now that we're entering into November and coming close to

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Speaker 1: the end of the year, we're in a really interesting

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Speaker 1: sort of environment. Um. First, you know, I used to

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Speaker 1: work in corporate treasury before I got into bitcoin, so

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Speaker 1: part of me feels an affinity for corporate treasurers around

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Speaker 1: the world who are looking at the universe of investimbal assets.

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Speaker 1: And at the end of the day, you know, when

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Speaker 1: I was in corporate treasuring in I was at Exxonmobile,

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Speaker 1: and I recall at that point in time, our cost

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Speaker 1: of capital was effectively zero, meaning we could borrow at

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Speaker 1: very very low rates, and that environment I think continues

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Speaker 1: to persist for many corporates, particularly in the US, and

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Speaker 1: then we could deploy that capital um in terms of

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Speaker 1: you know, opportunities to to earn yield on that capital.

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Speaker 1: We could actually deploy that capital into the treasury market,

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Speaker 1: into the RPE market and earn a fairly healthy return

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Speaker 1: three to five percent with very minimal risk. That environment

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Speaker 1: doesn't exist anymore. For corporate treasures were in a zero

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Speaker 1: interest rate environment. Target inflation is two to two point

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Speaker 1: five percent, And so you know, for a treasure who's

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Speaker 1: looking at opportunity cost, the idea of losing two percent

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Speaker 1: per year to inflation while holding treasuries that yield effectively zero,

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Speaker 1: or holding ten years that maybe yield you know what

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Speaker 1: was it to to two point five percent, that's not

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Speaker 1: really an attractive proposition. So I think across the board,

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Speaker 1: treasures investors, people who have capital to allocate, or who

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Speaker 1: have cash that they're trying to deploy towards productive uses,

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Speaker 1: which at this point I think is is most investors

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Speaker 1: they're looking at the universe of options and they need

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Speaker 1: something different. Right, we've seen gold how to break out.

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Speaker 1: I think a lot of investors, particularly individual investors as

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Speaker 1: well as some institutional investors, have been allocating into gold

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Speaker 1: as a diversifier. And I think what's been interesting to observe.

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Speaker 1: You know, if you as you've mentioned, bitcoin has been

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Speaker 1: through numerous cycles. It's been through up, ups and downs.

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Speaker 1: I think historically, one of the core arguments we've always

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Speaker 1: heard when we speak to institutions, corporates, and investors about

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Speaker 1: bitcoin is concerns around its volatility, concerns around its cyclical nature,

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Speaker 1: concerns around on its lack of correlation or now it's

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Speaker 1: correlation to macro markets. And I think for the first time,

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Speaker 1: what's happened is bitcoin doesn't exist in a bubble. It

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Speaker 1: operates in a larger market, operates in a larger political

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Speaker 1: and social environment. For the first time, bitcoin actually is

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Speaker 1: less volatile than equities, and so I think in many ways,

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Speaker 1: a lot of the thinking around how to approach portfolio

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Speaker 1: construction has started to shift as investors and allocators look

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Speaker 1: at the reality of the situation. And so I would

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Speaker 1: say this narrative of bitcoin being a portfolio diversifier is

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Speaker 1: certainly something we're hearing more of, but I would just

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Speaker 1: caveat that by saying, you know, by no means is

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Speaker 1: this the prevalent mindset. I think as we look at

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Speaker 1: most firms and and most of our clients, it's really

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Speaker 1: only a small handful who have taken the leap into bitcoin.

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Speaker 1: I think for many though, bitcoin still feels in many

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Speaker 1: ways reputation sationally risky, and many firms, particularly asset managers,

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Speaker 1: are still waiting for validation from a blue chip firm

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Speaker 1: that will normalize sort of the entry into bitcoin. So,

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Speaker 1: by no means do I think there's a wall of

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Speaker 1: institutional money that's just going to start buying up bitcoin. So,

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Speaker 1: just on that note, a really practical question, but if

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Speaker 1: you were a corporate treasurer, how would you actually allocate

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Speaker 1: into bitcoin at the moment, what's the most efficient way

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Speaker 1: of doing it? Yeah, so I think other variety of

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Speaker 1: ways of doing it. The way it's been done to

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Speaker 1: date is uh, spot buying so UM. Fortunately, micro Strategy

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Speaker 1: and Square both wrote up a brief documents on how

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Speaker 1: they entered the bitcoin market. So what we've seen is

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Speaker 1: most treasures spot buying and then uh SO buying on

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Speaker 1: the open market using a sort of a time weighted

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Speaker 1: average price UM over a specific duration, and then custody

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Speaker 1: ing the bitcoin with a custode and that specializes in

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Speaker 1: a long term storage of bitcoin. However, UM in the

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Speaker 1: middle of this month, we're gonna be hosting a crypto

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Speaker 1: credit summit where we'll be focusing on the emergence of

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Speaker 1: a credit market around crypto assets, particularly UM in relation

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Speaker 1: to people utilizing bitcoin to earn yield um through lending

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Speaker 1: it out to people to trade, so they're a variety

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Speaker 1: of other ways. On the trading side, you know, we

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Speaker 1: look a lot at arbitrage opportunities between the futures forward

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Speaker 1: curve and stop markets and sort of playing that arbitrage,

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Speaker 1: I think is an interesting way to gain short term

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Speaker 1: exposure without having so much long term risk. We also

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Speaker 1: see people buying structured products like our xpt provider product.

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Speaker 1: In the US, the Gray Scale Bitcoin trust is popular.

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Speaker 1: Canada has its own bitcoin et F, so there are

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Speaker 1: number of structured products that are now emerging, and then

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Speaker 1: the last option is through a fund um And in

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Speaker 1: those sort of fund world we see variety of different strategies.

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Speaker 1: A lot of them are very much of venture strategy,

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Speaker 1: where they may have and our location to bitcoin and tokens.

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Speaker 1: Some are a quant driven strategy, whether actively trading around

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Speaker 1: bitcoins volatility, or maybe bitcoin and other highly liquid assets.

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Speaker 1: So they are a variety of different ways. But to date,

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Speaker 1: what we've seen on the corporate side at least is

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Speaker 1: primarily spot buying and then putting that bitcoin with a

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Speaker 1: custodian m So, so many questions, right, here's one that

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Speaker 1: so Tracy mentioned in the beginning as a journalist, she's

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Speaker 1: maybe written three obituaries. Thank you for making that point again, Joe,

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Speaker 1: thank you, But Tracy, you're probably gonna write like two

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Speaker 1: or three more before all's said and done, So do

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Speaker 1: you print those out? Well? So, this is the interesting thing,

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Speaker 1: all right, this is the interesting thing. I've written three

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Speaker 1: obituaries for bitcoin, but each obituary for bitcoin has been

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Speaker 1: about the death of a bitcoin for a particular purpose.

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Speaker 1: And this is what really interests me in crypto, because

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Speaker 1: when it started, it was all about you know, disintermediation,

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Speaker 1: all about not trusting the central bank, and then fast

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Speaker 1: forward to and now everyone's talking about intermediation and how

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Speaker 1: they want big asset managers to get into the space.

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Speaker 1: So I'm sure in a year or two I'll probably

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Speaker 1: be writing the obituary for that particular idea. But it's

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Speaker 1: always a different sort of facet of bitcoin comes up. Yeah,

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Speaker 1: And look, I think this evolution of the narrative is

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Speaker 1: a function of the world changing and Bitcoin's place in

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Speaker 1: the world changing. Right again, I think the hard part

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Speaker 1: here is Bitcoin doesn't exist in the isolated vacuum. Right

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Speaker 1: as the world changes, so does the market, So do

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Speaker 1: other asset classes, so does bitcoin, And so I think

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Speaker 1: the hard part it is and and the interesting part

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Speaker 1: for me, like, I think we're finally in a in

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Speaker 1: a market narrative where bitcoin actually starts to make sense.

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Speaker 1: We've been in a bowl market for the last eleven years, really,

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Speaker 1: since the last financial crisis. When the Bitcoin white Paper

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Speaker 1: was written and I was a little baby leaving college,

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Speaker 1: I thought I was going to be an investment banker.

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Speaker 1: That didn't happen, so I ended up working in the

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Speaker 1: energy industry, which maybe in a way, I turned out

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Speaker 1: to be a good choice because I ultimately ended up

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Speaker 1: in bitcoin. But look, this is the first time that

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Speaker 1: we're watching bitcoin in a down market. You know, we've

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Speaker 1: had two back to back quarters of economic contraction. I

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Speaker 1: think we can officially say we're now in our recession,

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Speaker 1: and I think bitcoin's behavior in our session is very

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Speaker 1: different than bitcoin's behavior in a booming macro mark good.

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Speaker 1: So all of these sort of narratives coming together constantly

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Speaker 1: are changing Bitcoin's form and fun function in the broader

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Speaker 1: economic system that we're we're all a part of. So

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Speaker 1: I think, um, you know this, this evolution of narrative

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Speaker 1: is going to continue until bitcoin reaches a point of maturity,

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Speaker 1: and that may take another three, five, seven, ten years.

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Speaker 1: Here's something, here's like a contradiction that I see that

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Speaker 1: I help me wrap my head around it with a bitcoin.

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Speaker 1: So it's like, there's this just this incredible industry, community, movement,

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Speaker 1: culture associated It's extremely impressive. On the other hand, and

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Speaker 1: in a way, you know, it's it's extraordinarily large in

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Speaker 1: a sense. According I'm looking um at one of the

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Speaker 1: measures right now that the total value of all outstanding bitcoin.

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Speaker 1: Sometimes it's called the market cap is two billion. That's

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Speaker 1: a lot. On the other hand, that's like a sort

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Speaker 1: of medium sized software I p O these days, or

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Speaker 1: maybe a little bit bigger than some like red hot

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Speaker 1: cloud company. Yeah, And so like is Bitcoin bigger small?

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Speaker 1: Because on the one hand, like it's extraordinary, on the

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Speaker 1: other hand, like it's like a regular like sort of

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Speaker 1: like middle of the stock Joe, I mean, Joe, you

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Speaker 1: answered the question. Bitcoin's teeny tiny apple has enough spare

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Speaker 1: cash on its balance sheet to buy the entire Bitcoin

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Speaker 1: market cap. Bitcoin's teeny tiny, right, And if we look

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Speaker 1: at the universe of assets and asset allocators, that coin

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Speaker 1: continues to be miniscule in relation to where it started.

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Speaker 1: Bitcoin's massive. Right, Everything is is relative. I mean I

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Speaker 1: remember Bitcoin trating at two fifty dollars and we were like,

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Speaker 1: oh my god, and we just broke a billion dollar

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Speaker 1: market cap, like this is huge. Um, So like everything's relative.

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Speaker 1: But again, I think this is part of the challenge.

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Speaker 1: It's sort of a chicken and egg problem. Until Bitcoin's

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Speaker 1: market cap gets larger and the market gets farmer, liquid

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Speaker 1: market gets deeper, you're not going to see people allocating

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Speaker 1: to bitcoin in size because the market cap is simply

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Speaker 1: too small, right, So this is actually this leads to

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Speaker 1: something that I wanted to ask, which is can bitcoin

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Speaker 1: b both a viable financial asset and one that's expected

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Speaker 1: to largely go up in value and a method of

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Speaker 1: payment at the same time. I think this is a

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Speaker 1: great question, Tracy, and I think here again, what's great

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Speaker 1: about bitcoin is, uh, so much of the way people

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Speaker 1: articulate bitcoin is really tied to their personal view and

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Speaker 1: their personal beliefs. And what's interesting is that one asset

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Speaker 1: can have so many different permutations, so many different characterizations

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Speaker 1: UM that that lend themselves to whoever is sort of

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Speaker 1: you know, doing the pontificating. In my view, I don't

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Speaker 1: need to use my bitcoin um to pay for coffee, right.

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Speaker 1: I think one of the criticisms of bitcoin has been like, oh,

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Speaker 1: you can't pay for coffee using bitcoin. Well, great, because

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Speaker 1: I don't want to say, spend my bitcoin on coffee.

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Speaker 1: It's really really not my intention holding bitcoin. There are

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Speaker 1: a lot of other cryptocurrencies UM and in particular even

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Speaker 1: US dollar assets that are blockchain based that will allow

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Speaker 1: me to buy my coffee. So when I think about

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Speaker 1: bitcoin for for me personally, and I think for many

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Speaker 1: allocators that we talked to. The view on bitcoin is

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Speaker 1: this is really more like a savings account, right, This

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Speaker 1: is really more like a savings technology. And the majority

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Speaker 1: of people who are holding bitcoin, who are using bitcoin,

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Speaker 1: at least in today's instantiation, are not using it for

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Speaker 1: transactional purposes necessarily, They're using it as a store value

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Speaker 1: and as a form of sound money and so Um again,

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Speaker 1: I do think that narrative has shifted over over time.

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Speaker 1: In the past, I certainly have used bitcoin to pay

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Speaker 1: for things. In the future, I may use bitcoin to

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Speaker 1: favor things. Sometimes it's actually cheaper and faster to use

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Speaker 1: bitcoin than it is to use my bank account, which

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Speaker 1: is really fascinating and very sad in a way that

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Speaker 1: in the your twenty you know, in this fintech boom,

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Speaker 1: it's it's still incredibly difficult to to send money. Um.

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Speaker 1: But look, I think, you know, beauties in the eye

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Speaker 1: of the beholder. In my view, most investors are not

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Speaker 1: buying bitcoin with the intention of spending it in the future.

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Speaker 1: It's really about having a savings technology. It's about having

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Speaker 1: the ability to sort of remove your assets from the

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Speaker 1: existing financial system. Um and Joe, I definitely recognize the

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Speaker 1: point you've made earlier that you know, in today's bitcoin environment,

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Speaker 1: everyone's becoming an intermediary. So in a way, you know,

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Speaker 1: it's slightly antithetical to the original stated goal of bitcoin,

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Speaker 1: which was to minimize the role of intermediaries in our

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Speaker 1: financial lives. What happened in up the end of March

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Speaker 1: with bitcoin, and because you know, obviously the all of

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Speaker 1: all of financial markets sort of collapse, but bitcoin, you know,

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Speaker 1: for all to talk about, bitcoin is a diversifier. I

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Speaker 1: think it had one of its biggest short term still

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Speaker 1: off either. Ever, do you feel like you have a

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Speaker 1: good handle on how the volatility that we saw in

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Speaker 1: market overall translated into sort of like liquidations and margin

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Speaker 1: calls from this asset asset that's very, uh, sort of

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Speaker 1: apart from traditional financial markets. Yeah. Look, I think what

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Speaker 1: happened at the end of March is symptomatic of how

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Speaker 1: people act in times of crisis. People panicked, right, and

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Speaker 1: in a time when everything's going down, you're panicking, you're

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Speaker 1: trying to sell everything that's not bolted down. And bitcoin, right,

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Speaker 1: just like every other asset, is highly salable, highly liquid.

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Speaker 1: So we saw a lot of sell off in in

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Speaker 1: bitcoin because people were trying to take risk off the table.

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Speaker 1: They were uncertain, you know, they were fearful of the future.

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Speaker 1: So we saw broad based sell off. I think what

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Speaker 1: happened in bitcoin that exacerbated the sell off, you know,

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Speaker 1: we saw it if you present and drop in a

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Speaker 1: twenty four hour period, was the result of the fact,

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Speaker 1: you know, in bitcoin. And one of the things that's

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Speaker 1: unique a round about the bitcoin market structurally is the

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Speaker 1: derivatives market um in many ways has outpaced the spot market,

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Speaker 1: and in many ways the forward curve as driving what's

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Speaker 1: happening in the spot market. So I call this the

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Speaker 1: tail wagging the dog in a way. So right now

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Speaker 1: bitcoin is in contango, right, but for a long time,

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Speaker 1: bitcoin futures were in backwardation, meaning bitcoin in December was

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Speaker 1: cheaper than holding bitcoin today. And so there are a

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Speaker 1: number of different firms in the bitcoin ecosystem that are

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Speaker 1: that that spread between the future expected price of bitcoin

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Speaker 1: in today's price of bitcoin was interesting that happened in

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Speaker 1: March in the midst of the sell off. I think

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Speaker 1: a lot of people had been positioned into bitcoin, going

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Speaker 1: into sort of this expected financial contraction. A lot of

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Speaker 1: people are like, Okay, this is Bitcoin's time to shine,

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Speaker 1: you know, it's it's an uncorrelated asset. Bitcoin is going

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Speaker 1: to do incredibly well, just like gold. And when that

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Speaker 1: didn't happen, what you saw was sort of a cascade

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Speaker 1: of liquidations that then further dragged down the price. And

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Speaker 1: so um, one of the benefits those a lot of

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Speaker 1: weekends got taken out of the market, a lot of

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Speaker 1: that cell pressure was removed. But I do think, you know, um,

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Speaker 1: a lot of people are expecting bitcoin to behave on

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Speaker 1: a very short term cycle, and the me to react

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Speaker 1: very quickly to money printing like inflation doesn't happen overnight.

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Speaker 1: So I think part of its people just understanding that

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Speaker 1: this market cycle, this market narrative will take much longer

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Speaker 1: than expected to play out because inflation hasn't even come

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Speaker 1: close to setting in yet. Do you think the inflation

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Speaker 1: hedge is still a big reason that people are buying

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Speaker 1: crypto even though we've had years and years and years

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Speaker 1: at this point of central banks undershooting their inflation. Inflation

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Speaker 1: is coming, Tracy, It's just a matter of time. It's

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Speaker 1: right around the corner, haven't you heard? But Joe and

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Speaker 1: Tracy like, look, this is the great thing I love

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Speaker 1: the high quote, which is, um, the purpose of economics

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Speaker 1: is teaching men how little they understand. Right, So right,

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Speaker 1: I've but shared the quote, but it's something like this,

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Speaker 1: which you know, I studied economics and math and you

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Speaker 1: know you you pontificate, but you know there's always the wrinkle. Look, um,

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Speaker 1: I hate to use this phrase, but like, we're unprecedented time.

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Speaker 1: I think nobody has a crystal ball and if they did,

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Speaker 1: you know, they certainly would be trading it instead of

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Speaker 1: talking about it on a podcast. But look, at the

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Speaker 1: end of the day, we haven't seen this before. And

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Speaker 1: to your point, right, we've we've printed a lot of money, um,

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Speaker 1: inflation hasn't really set in. I think it's it's more

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Speaker 1: likely that we'll have deflation um rather than inflation. So

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Speaker 1: I do you think the inflation narrative is important around bitcoin?

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Speaker 1: If we look at you know, the Paul Tutor Jones

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Speaker 1: of the world, if we look at the micro strategies

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Speaker 1: and squares of the world, if we look at this

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Speaker 1: developing narrative around bitcoin is an effective portfolio diversifier and

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Speaker 1: bitcoin is an effective hedge in the current market environment.

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Speaker 1: Much of that narrative is in fact centered around um

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Speaker 1: bitcoin's behavior in an inflationary period and the fact that

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Speaker 1: bitcoin is a deflationary asset by by nature, and there

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Speaker 1: are no asteroids we can mine for more bitcoin. I'm

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Speaker 1: like unlike gold because asteroid mining is the thing that

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Speaker 1: also comes up on regular basis. What about um solar

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Speaker 1: powered satellites that get extremely cheap energy that could happen, right, Yeah, totally.

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Speaker 1: And look, one of the great things that bitcoin is,

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Speaker 1: it's a money batteries. So places in the world where

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Speaker 1: there's cheap access to alternative energy that cannot be utilized

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Speaker 1: for industry and creation of economic value, those regions of

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Speaker 1: the world are now looking at bitcoin as an effective

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Speaker 1: monetary battery, right, a way of transforming stranded alternative energy

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Speaker 1: into monetary energy in the form of bitcoin. So, in

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Speaker 1: all seriousness, and I actually do think that's a pretty interesting,

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Speaker 1: pretty interesting avenue to be explored. In all seriousness. I

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Speaker 1: want to go back to something you said um earlier,

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Speaker 1: because I think it's probably the most sort of like provocative,

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Speaker 1: controversial thing in this whole conversation and the thing that

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Speaker 1: I'll piste a lot of people off. Potentially you said, uh,

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Speaker 1: as far as you can tell outside if you're there,

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Speaker 1: there really is not that much. The wall of institutional money,

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Speaker 1: the big title wave that everyone thinks it's coming any

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Speaker 1: day now or all these huge funds are going to

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Speaker 1: allocate like two percent and the bitcoin is going to

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Speaker 1: go to the moon. Um, you don't think it's really happened.

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Speaker 1: I don't think it's happening right now. I think it's

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Speaker 1: going to continue to be a slow trickle. Like at

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Speaker 1: the end of the day, you have to remember, there's

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Speaker 1: a process that someone goes through. Right now, the part

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Speaker 1: of the cycle we're in is people are okay entertaining

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Speaker 1: conversations about bitcoin, which wasn't the case even a year ago.

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Speaker 1: The world's largest banks are recognizing, like, hey, it's okay

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Speaker 1: to entertain a conversation about bitcoin. But you have to remember,

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Speaker 1: um that at the end of the day, right someone

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Speaker 1: being willing to learn and someone actually making decision to

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Speaker 1: do something, they're two very different things. And I think again,

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Speaker 1: you know, you look at the people who are allocating

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Speaker 1: capital by and large. You know, Warren Buffett didn't invest

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Speaker 1: in tech stocks until what like the late two thousands.

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Speaker 1: You know, people aren't paid to take a high level

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Speaker 1: of risk. That's not their function. Most people are in

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Speaker 1: the role of preserving capital rather than pursuing growth, particularly

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Speaker 1: intentionially high risk assets. So I think again, just the

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Speaker 1: incentive structure that's in place for institutional asset managers isn't necessarily,

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Speaker 1: you know, to be out on the frontier taking risk.

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Speaker 1: They're learning about it, they're educating their clients about it,

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Speaker 1: they're looking at different opportunities to provide access. But I

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Speaker 1: don't think anyone's racing out to buy bitcoin quite yet,

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Speaker 1: and I think it's going to continue to take time.

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Speaker 1: And the bitcoin market also is going to continue to evolve. Right.

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Speaker 1: It really has even possible until to buy bitcoin options

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Speaker 1: in in size right, and today the size the option market,

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Speaker 1: you know is multiple billions of dollars a day are

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Speaker 1: are traded. So the fact that the market is still

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Speaker 1: really mature, the fact that people are still early in

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Speaker 1: their learning process, the fact that there are only small

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Speaker 1: number of companies that can even cater to institutions, I

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Speaker 1: think all of these are just indicative of the fact

428
00:25:24,640 --> 00:25:28,000
Speaker 1: that it's still early um. And at the end of

429
00:25:28,000 --> 00:25:30,800
Speaker 1: the day, I think part of what's also changing is

430
00:25:30,840 --> 00:25:34,680
Speaker 1: the the p the clientele um of large asset managers

431
00:25:34,680 --> 00:25:37,320
Speaker 1: is starting to change, right. I think you see this

432
00:25:37,480 --> 00:25:41,360
Speaker 1: with um, you know, the acquisition of of e Trade, uh,

433
00:25:41,440 --> 00:25:44,800
Speaker 1: the acquisition of some of these fin techs and retail

434
00:25:44,840 --> 00:25:48,679
Speaker 1: oriented brokerage platforms like asset management is looking at avenues

435
00:25:48,760 --> 00:25:52,199
Speaker 1: for for growth in higher margin products and services, and

436
00:25:52,240 --> 00:25:56,480
Speaker 1: it could very well be that crypto provides that that avenue.

437
00:25:56,880 --> 00:25:59,800
Speaker 1: But I think the format takes will not look or

438
00:26:00,000 --> 00:26:04,840
Speaker 1: feel anything like Bitcoin in its sort of pure form um.

439
00:26:04,960 --> 00:26:07,320
Speaker 1: It'll sort of be, you know, a bitcoin depository your seat,

440
00:26:07,359 --> 00:26:09,679
Speaker 1: like you get an I owe you for for a

441
00:26:09,960 --> 00:26:14,120
Speaker 1: slice of bitcoin. So there's one other thing that has

442
00:26:14,320 --> 00:26:19,919
Speaker 1: outperformed even Bitcoin this year, and that is ethere um um.

443
00:26:20,000 --> 00:26:23,359
Speaker 1: And and this sort of gets to you even better

444
00:26:23,400 --> 00:26:26,280
Speaker 1: than Bitcoin. But this kind of also gets to a

445
00:26:26,359 --> 00:26:29,520
Speaker 1: criticism that you hear about cryptocurrency is quite a lot,

446
00:26:29,560 --> 00:26:33,639
Speaker 1: which is that even though bitcoin itself, um, the supply

447
00:26:33,720 --> 00:26:37,720
Speaker 1: Bitcoin is limited and it's deflationary, you have all these

448
00:26:37,760 --> 00:26:41,840
Speaker 1: competing coins, and you have competing cryptocurrencies that could basically

449
00:26:41,880 --> 00:26:45,240
Speaker 1: start at any time and then take off in one

450
00:26:45,280 --> 00:26:50,120
Speaker 1: way or another. Why do you think ethereum has outperformed

451
00:26:50,600 --> 00:26:54,439
Speaker 1: this year? Yeah? Um, I think ethereums out performance is

452
00:26:54,720 --> 00:26:59,320
Speaker 1: um very simple. Ethereum this year has had a breakout

453
00:26:59,359 --> 00:27:03,240
Speaker 1: year because of the rise of UM something called defy

454
00:27:03,520 --> 00:27:07,960
Speaker 1: or decentralized finance. Basically, it's UM using the sort of

455
00:27:08,080 --> 00:27:12,720
Speaker 1: smart contract programmable money feature of ethereum to create all

456
00:27:12,760 --> 00:27:18,240
Speaker 1: of these entirely blockchain based investment contracts and interest generating

457
00:27:18,240 --> 00:27:22,080
Speaker 1: opportunities UM. And the way this actually surfaces, and it's

458
00:27:22,119 --> 00:27:24,440
Speaker 1: interesting to look at if you look at the velocity

459
00:27:24,600 --> 00:27:28,320
Speaker 1: of ethereum right the velocity of ethereum is much higher

460
00:27:28,400 --> 00:27:31,720
Speaker 1: right now than the velocity of Bitcoin, meaning on average

461
00:27:31,920 --> 00:27:34,920
Speaker 1: um ether's total market cap, the amount of Ether out

462
00:27:34,920 --> 00:27:38,120
Speaker 1: on the market is traded and turned over on a

463
00:27:38,160 --> 00:27:41,159
Speaker 1: faster clip than than Bitcoin. And what this means is

464
00:27:41,200 --> 00:27:45,680
Speaker 1: people are actively out in the market using Ether much

465
00:27:45,800 --> 00:27:48,639
Speaker 1: much more. And I think there's also been a really

466
00:27:48,720 --> 00:27:52,520
Speaker 1: interesting consumptive demand for Ether where the way you interact

467
00:27:52,560 --> 00:27:55,840
Speaker 1: with a lot of these contracts is by utilizing ethereum

468
00:27:56,000 --> 00:27:58,200
Speaker 1: as the asset that you sort of post is collateral

469
00:27:58,520 --> 00:28:02,040
Speaker 1: to earn yield in these new tokens UM. And so

470
00:28:02,119 --> 00:28:04,960
Speaker 1: again I think it's really been a breakout your for

471
00:28:05,040 --> 00:28:08,560
Speaker 1: the functionality and sort of this emerging use case of

472
00:28:09,040 --> 00:28:12,800
Speaker 1: ethereum and and it's technology and the ecosystem of assets

473
00:28:12,800 --> 00:28:16,760
Speaker 1: built on top of ethereum. Bitcoin doesn't have that, right.

474
00:28:17,119 --> 00:28:21,719
Speaker 1: Bitcoin has Lightning, which is sort of a payments technology

475
00:28:21,760 --> 00:28:24,560
Speaker 1: that's built on top of bitcoin, but bitcoin doesn't have

476
00:28:24,640 --> 00:28:28,680
Speaker 1: this whole ecosystem of programmable financial assets built on top

477
00:28:28,760 --> 00:28:31,640
Speaker 1: of it. And so I think this has been really

478
00:28:31,680 --> 00:28:35,320
Speaker 1: interesting trying to observe. We're certainly watching it closely. Our

479
00:28:35,440 --> 00:28:38,240
Speaker 1: largest product is obvious their Bitcoin tracker, but our Ether

480
00:28:38,360 --> 00:28:40,920
Speaker 1: tracker now has over two d fifty million in a

481
00:28:41,040 --> 00:28:44,000
Speaker 1: u M and continues to grow. So I think the

482
00:28:44,080 --> 00:28:47,880
Speaker 1: interest in in ethereum growing has been really great for

483
00:28:47,920 --> 00:28:50,240
Speaker 1: the space. And look, at the end of the day,

484
00:28:50,320 --> 00:28:53,880
Speaker 1: you know, we're very excited about there being multiple assets

485
00:28:53,880 --> 00:28:56,479
Speaker 1: that people are going to allocate to. However, when it

486
00:28:56,520 --> 00:28:59,440
Speaker 1: comes to institutions, I think bitcoin is going to be

487
00:28:59,600 --> 00:29:03,320
Speaker 1: the stasset they get comfortable with, just because it has

488
00:29:03,760 --> 00:29:05,959
Speaker 1: had such a long history. I think a lot of

489
00:29:06,000 --> 00:29:10,960
Speaker 1: the data that exists around bitcoin and and uh, understanding

490
00:29:10,960 --> 00:29:13,640
Speaker 1: the bitcoin network and the security of the bitcoin network

491
00:29:13,800 --> 00:29:16,200
Speaker 1: is is much more robust. And then if we look

492
00:29:16,240 --> 00:29:20,400
Speaker 1: particularly at market infrastructure, bitcoin options volumes and are ten

493
00:29:20,480 --> 00:29:23,640
Speaker 1: times out of ethereum options volumes. So I think while

494
00:29:23,680 --> 00:29:27,160
Speaker 1: there's a lot of interest in ethereum from people who

495
00:29:27,160 --> 00:29:29,640
Speaker 1: are native to the space and who are deploying ether

496
00:29:29,760 --> 00:29:33,000
Speaker 1: in the space and sort of these consumptive new find

497
00:29:33,080 --> 00:29:37,560
Speaker 1: finance applications that create effectively liquidity sync for Ether, I

498
00:29:37,600 --> 00:29:40,840
Speaker 1: think Bitcoin continues sort of dominate the narrative when it

499
00:29:40,960 --> 00:29:45,720
Speaker 1: comes to the quote unquote institutional market, which I think

500
00:29:46,120 --> 00:29:48,400
Speaker 1: is the one that we track more closely UM in

501
00:29:48,440 --> 00:29:50,960
Speaker 1: our day to day at cooin shares. Is there ever

502
00:29:51,000 --> 00:29:54,239
Speaker 1: gonna be a UM a US Bitcoin e t F

503
00:29:54,400 --> 00:29:57,680
Speaker 1: or by the time that will exist, do you think

504
00:29:57,680 --> 00:30:02,959
Speaker 1: that bitcoin will be easily purchasable on enough different platforms

505
00:30:02,960 --> 00:30:06,000
Speaker 1: everywhere that it won't really be necessary. Yeah, this is

506
00:30:06,040 --> 00:30:08,680
Speaker 1: the question we ask ourselves as well, Joe, I think, Um,

507
00:30:08,720 --> 00:30:12,479
Speaker 1: at the end of the day, you know, US bitcoin ETF,

508
00:30:12,520 --> 00:30:16,080
Speaker 1: we haven't seen it yet. It does not look promising

509
00:30:16,160 --> 00:30:19,200
Speaker 1: right now, I think, Uh, you know, SEC chairman Jake

510
00:30:19,240 --> 00:30:23,120
Speaker 1: Clayton has repeatedly stated that, you know, it's very unlikely

511
00:30:23,200 --> 00:30:25,720
Speaker 1: under his tenure that we see such a product come

512
00:30:25,760 --> 00:30:28,120
Speaker 1: to market. But at the end of the day, you know,

513
00:30:28,360 --> 00:30:31,240
Speaker 1: E t s are a huge part of the ussset

514
00:30:31,280 --> 00:30:35,640
Speaker 1: management market and um, you well, we've observed, certainly from

515
00:30:35,640 --> 00:30:37,800
Speaker 1: having our product in the European market which n t

516
00:30:38,000 --> 00:30:41,920
Speaker 1: N it's fully clatteralized. With the underlying is people really

517
00:30:42,000 --> 00:30:45,840
Speaker 1: like having the ability to buy digital assets in their

518
00:30:45,920 --> 00:30:49,040
Speaker 1: retirement account, right, particularly if this is a secular bet.

519
00:30:49,360 --> 00:30:52,720
Speaker 1: The ability to point click and buy exposure to bitcoin

520
00:30:52,840 --> 00:30:56,320
Speaker 1: or ether or basket of assets in my tax advantaged

521
00:30:56,720 --> 00:31:00,040
Speaker 1: savings account right an investment account, that that's really a

522
00:31:00,040 --> 00:31:04,280
Speaker 1: active um today. Their number of firms like Kingdom Trust

523
00:31:04,320 --> 00:31:06,600
Speaker 1: which is a large custodian um, and a handful of

524
00:31:06,640 --> 00:31:09,240
Speaker 1: others for providing people with the ability to buy bitcoin

525
00:31:09,360 --> 00:31:11,200
Speaker 1: in their four oh one case and with their I

526
00:31:11,400 --> 00:31:14,840
Speaker 1: rash still very nascent. I do think a U S

527
00:31:14,880 --> 00:31:19,320
Speaker 1: Bitcoin ETF will be impactful. I do think though we're

528
00:31:19,320 --> 00:31:22,280
Speaker 1: seeing more and more avenues developing, and I'm not sure

529
00:31:22,320 --> 00:31:25,000
Speaker 1: you know how many folks will be left who want

530
00:31:25,000 --> 00:31:27,800
Speaker 1: to buy bitcoin but are unable to you know, come

531
00:31:27,840 --> 00:31:30,160
Speaker 1: to three years from now when the SEC gets to

532
00:31:30,240 --> 00:31:32,640
Speaker 1: point where it's ready to approve such a product. But

533
00:31:32,720 --> 00:31:37,000
Speaker 1: what we are seeing right is other jurisdictions are innovating.

534
00:31:37,080 --> 00:31:41,400
Speaker 1: Other jurisdictions are launching bitcoin ETFs and structured bitcoin products,

535
00:31:41,760 --> 00:31:43,240
Speaker 1: and at the end of the day, you know, it's

536
00:31:43,280 --> 00:31:47,840
Speaker 1: only a matter of time until we see one of

537
00:31:47,880 --> 00:31:52,280
Speaker 1: those asset managers perhaps successfully cross listing in in the US.

538
00:31:52,680 --> 00:31:58,120
Speaker 1: Wouldn't surprise me. We've certainly seen that unful before a

539
00:31:58,280 --> 00:32:01,120
Speaker 1: coin shares, and you know, it's it's been interesting to

540
00:32:01,120 --> 00:32:03,680
Speaker 1: see what the response been like from from regulators. But

541
00:32:03,760 --> 00:32:08,240
Speaker 1: at the end of the day, other jurisdictions Germany, Switzerland, Canada,

542
00:32:08,240 --> 00:32:12,520
Speaker 1: as I mentioned, even in Japan are providing consumers with

543
00:32:12,560 --> 00:32:16,040
Speaker 1: the ability to buy exposure to bitcoin in a trusted,

544
00:32:16,200 --> 00:32:19,600
Speaker 1: easy way through their existing brokerage account, and I think

545
00:32:19,640 --> 00:32:23,720
Speaker 1: that continues to be really important channel for the US investors,

546
00:32:23,800 --> 00:32:25,480
Speaker 1: and I think it's a real shame that it doesn't

547
00:32:25,480 --> 00:32:30,680
Speaker 1: exist any other things that you think are sort of

548
00:32:30,720 --> 00:32:34,080
Speaker 1: top of mine for you before we go. Look, I

549
00:32:34,120 --> 00:32:36,560
Speaker 1: think it's it's been a crazier it's going to continue

550
00:32:36,560 --> 00:32:39,160
Speaker 1: to be a crazier, Tracy. I look forward to reading

551
00:32:39,200 --> 00:32:44,400
Speaker 1: the next Bitcoin obitually I'll sing it, yeah, you should

552
00:32:44,400 --> 00:32:47,120
Speaker 1: get some some good quotes in there. But look, um,

553
00:32:47,160 --> 00:32:51,680
Speaker 1: it's it's been such an interesting six years, um, and

554
00:32:51,800 --> 00:32:54,440
Speaker 1: I'm sure that the next six years will be even

555
00:32:54,520 --> 00:32:58,360
Speaker 1: wilder than my wildest dreams. So I'm excited. Great, well,

556
00:32:58,360 --> 00:33:00,520
Speaker 1: we'll have you back in a uh six years. The

557
00:33:00,880 --> 00:33:03,800
Speaker 1: Melton thank you so much for joining us. Thanks to

558
00:33:04,000 --> 00:33:23,720
Speaker 1: thanks tasty, that great thanks. That's fun. You know, Tracy,

559
00:33:23,800 --> 00:33:27,120
Speaker 1: I thought you you made a really interesting observation talking

560
00:33:27,160 --> 00:33:33,440
Speaker 1: about how bitcoin obituaries over time aren't necessarily obituaries of

561
00:33:33,600 --> 00:33:37,720
Speaker 1: the currency itself, but all the different use cases that

562
00:33:37,800 --> 00:33:43,760
Speaker 1: we've heard, you know, payments cut out, visa, smart contracts, etcetera,

563
00:33:44,360 --> 00:33:46,960
Speaker 1: all of those sort of fade, and I think Meltip

564
00:33:47,000 --> 00:33:49,000
Speaker 1: sort of corroborted that, which is that there are sort

565
00:33:49,040 --> 00:33:52,160
Speaker 1: of like this like narrative is I don't know if

566
00:33:52,200 --> 00:33:55,640
Speaker 1: the word I'm looking for. It's like it's like, over time,

567
00:33:55,760 --> 00:33:59,480
Speaker 1: various narratives fail and then we're sort of like left

568
00:33:59,520 --> 00:34:02,520
Speaker 1: with like some core thing. In these days, everyone talks

569
00:34:02,520 --> 00:34:06,840
Speaker 1: about it as a savings technology. Yeah, you know, having

570
00:34:06,880 --> 00:34:09,600
Speaker 1: had that conversation, I think I have to I have

571
00:34:09,760 --> 00:34:15,880
Speaker 1: to confess something to eacho Oh, I think I'm actually

572
00:34:15,880 --> 00:34:20,040
Speaker 1: bullish on bitcoin. But you know what it's because yeah,

573
00:34:20,080 --> 00:34:23,160
Speaker 1: I know, breaking news, but I think I'm bullish on

574
00:34:23,160 --> 00:34:29,560
Speaker 1: bitcoin because I'm bullish on people's I guess cognitive dissonance

575
00:34:29,880 --> 00:34:34,360
Speaker 1: or the market's ability to generate narratives for this particular

576
00:34:34,400 --> 00:34:38,279
Speaker 1: asset place, because I realized, no matter what happens to bitcoin,

577
00:34:38,520 --> 00:34:40,960
Speaker 1: there are so many people who are committed to it

578
00:34:41,160 --> 00:34:43,400
Speaker 1: at this point, so many careers that are sort of

579
00:34:43,440 --> 00:34:45,400
Speaker 1: writing on it, and a lot of money that's writing

580
00:34:45,400 --> 00:34:49,399
Speaker 1: on it, that something else will always step into take

581
00:34:49,440 --> 00:34:53,200
Speaker 1: its place. You know, people will find a new bull

582
00:34:53,280 --> 00:34:55,560
Speaker 1: case for it or a new use case for it,

583
00:34:55,640 --> 00:34:58,799
Speaker 1: no matter what happens. So I guess I'm bullish on

584
00:34:58,880 --> 00:35:03,319
Speaker 1: people's create civity for justifying cryptocurrency, and therefore I am

585
00:35:03,320 --> 00:35:07,719
Speaker 1: bullish on cryptocurrency itself. This is really big. I think

586
00:35:07,760 --> 00:35:11,000
Speaker 1: we've gotta title this. This is the conversation that turned

587
00:35:11,040 --> 00:35:14,120
Speaker 1: Tracy bullish on bitcoin. But I actually think what you

588
00:35:14,160 --> 00:35:17,279
Speaker 1: say is like logical, Like at some point it's like

589
00:35:18,200 --> 00:35:20,960
Speaker 1: enough obituaries get written and then they don't really like

590
00:35:21,000 --> 00:35:24,040
Speaker 1: pan out, or like bitcoin survives or manages to find

591
00:35:24,040 --> 00:35:27,080
Speaker 1: a new narrative and picks up new people and picks

592
00:35:27,160 --> 00:35:31,640
Speaker 1: up new institutional avenues of money that it doesn't seem

593
00:35:31,680 --> 00:35:34,680
Speaker 1: like it's going anywhere, and then is melted pointed out,

594
00:35:34,760 --> 00:35:37,840
Speaker 1: is it's like still pretty small. So I think I

595
00:35:37,840 --> 00:35:39,480
Speaker 1: think you make a good point, and I think this

596
00:35:39,560 --> 00:35:42,040
Speaker 1: is a really historic moment for bitcoin that is happening

597
00:35:42,120 --> 00:35:46,280
Speaker 1: right now. It's the perfect the most modern financial asset,

598
00:35:46,600 --> 00:35:50,000
Speaker 1: I think, because everyone can just project their own sort

599
00:35:50,040 --> 00:35:53,520
Speaker 1: of dreams for an ideal economy and social system and

600
00:35:53,560 --> 00:35:57,680
Speaker 1: financial system onto bitcoin. So yeah, that's how thinking about

601
00:35:57,680 --> 00:36:00,440
Speaker 1: it now. This is pretty big. Well, well done to

602
00:36:00,480 --> 00:36:05,120
Speaker 1: our guest for convincing it that's too big. Um, shall

603
00:36:05,160 --> 00:36:08,759
Speaker 1: we leave it there? Let's leave it there. This has

604
00:36:08,800 --> 00:36:12,200
Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway.

605
00:36:12,280 --> 00:36:15,319
Speaker 1: You can follow me on Twitter at Tracy Alloway and

606
00:36:15,360 --> 00:36:18,839
Speaker 1: I'm Joe Wisn'tal. You can follow me on Twitter at

607
00:36:18,880 --> 00:36:21,400
Speaker 1: the Stalwart. And you should follow our guest on Twitter,

608
00:36:21,520 --> 00:36:25,880
Speaker 1: Melton de Mirrors. She's at melt Underscore dem follow our

609
00:36:25,920 --> 00:36:29,719
Speaker 1: producer Laura Carlson at Laura M. Carlson, followed the Bloomberg

610
00:36:29,760 --> 00:36:33,319
Speaker 1: head of podcast for Incesca Levi at Francesco Today and

611
00:36:33,440 --> 00:36:37,040
Speaker 1: check out all of our podcasts under the handle at podcasts.

612
00:36:37,120 --> 00:37:05,919
Speaker 1: Thanks for listening three years year