WEBVTT - The Episode That Turned Tracy Into A Bitcoin Bull 0:00:10.920 --> 0:00:14.760 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.800 --> 0:00:20.960 I'm Joe Wisenthal and I'm Tracy Halloway. Joe, Tracy, Uh Bitcoin, 0:00:23.239 --> 0:00:24.799 I think we could just leave it there. Let's just 0:00:24.800 --> 0:00:28.360 bring on the guest. No, we actually could. Let's just 0:00:28.400 --> 0:00:31.800 do it, Okay. Today we're going to be talking about bitcoin, 0:00:31.920 --> 0:00:36.160 cryptocurrency having another big year. As Tracy says, no need 0:00:36.200 --> 0:00:39.200 for intro, no need for banter here, let's just jump 0:00:39.280 --> 0:00:41.040 right into it. I love that, all right. So we're 0:00:41.080 --> 0:00:44.800 going to be speaking with a veteran of the industry 0:00:44.880 --> 0:00:47.599 to the to the extent that such a thing can 0:00:47.640 --> 0:00:51.440 even be described, uh these days. We're gonna be speaking 0:00:51.440 --> 0:00:55.800 to Melton Demure's. She's the chief strategy officer at coin Shares, 0:00:56.440 --> 0:01:00.400 very visible, very big follow on, someone great to follow 0:01:00.400 --> 0:01:03.280 on Twitter, media, etcetera. Melton, thank you very much for 0:01:03.360 --> 0:01:06.479 joining us. Hey, great to be here, Thanks for having me. 0:01:07.560 --> 0:01:10.240 If you're a veteran, right, it's okay, it's it's heard 0:01:10.280 --> 0:01:12.440 at this point, right. I mean what you said is correct. 0:01:12.560 --> 0:01:16.119 You know, I've been in this industry for six years now. Um, 0:01:16.640 --> 0:01:18.600 if six years makes one a veteran, you know, I 0:01:18.600 --> 0:01:21.840 think it just speaks to how young this industry is. Yeah, 0:01:21.840 --> 0:01:23.399 I mean I think I read this weekend that it 0:01:23.480 --> 0:01:27.040 was just the twelve anniversary of the Bitcoin white paper. 0:01:27.080 --> 0:01:30.120 So I guess that means literally half of the time 0:01:30.200 --> 0:01:33.080 that the industry has been in existence, you've been involved 0:01:33.080 --> 0:01:35.920 in it. And I mean and arguably, you know, in 0:01:36.880 --> 0:01:40.360 one personally, I started interacting with bitcoin, like the way 0:01:40.440 --> 0:01:43.200 you bought or you didn't buy bitcoin. You would go 0:01:43.280 --> 0:01:47.000 to a website to bitcoin faucet, you know, by bitcoin 0:01:47.080 --> 0:01:50.960 on Craigslist. You would send money to Japan to buy 0:01:51.040 --> 0:01:54.960 bitcoin on on cox. So arguably, you know, the industry 0:01:54.960 --> 0:02:00.160 didn't really exist really until or so. So I know 0:02:00.200 --> 0:02:02.000 we skipped the intro and I think that's in odd 0:02:02.000 --> 0:02:06.720 thoughts first, but it kind of it kind of speaks to, um, 0:02:06.760 --> 0:02:09.160 I guess, the craziness of the year that bitcoin has 0:02:09.200 --> 0:02:11.160 actually had. So I'm looking at the chart right now, 0:02:11.280 --> 0:02:15.639 bitcoin is hovering around thirteen thousand, and the amazing thing 0:02:15.720 --> 0:02:19.360 about bitcoin, I guess, is just how many times it 0:02:19.480 --> 0:02:22.320 seems to have come back from the dead in some 0:02:22.400 --> 0:02:25.280 way or the other. And I will admit, as a 0:02:25.320 --> 0:02:27.600 journalist who has been covering the space for a long time, 0:02:27.639 --> 0:02:30.560 I think at this point, I've written at least three 0:02:30.720 --> 0:02:34.639 obituaries for bitcoin um in one way or another. I 0:02:34.680 --> 0:02:37.640 think I did one in like two thousand twelve, and 0:02:37.800 --> 0:02:40.280 maybe another one in in two thousand seventeen or two 0:02:40.320 --> 0:02:44.720 thousand eighteen. Why has it come back this year? Look, 0:02:45.000 --> 0:02:49.200 Bitcoin as as an asset right behaves UM in a 0:02:49.280 --> 0:02:54.400 cyclical manner. There are shorter sort of cycles that occur, 0:02:54.680 --> 0:02:58.320 and then there's a larger secular trend which has sort 0:02:58.320 --> 0:03:01.520 of been up into the right because in each successive 0:03:02.120 --> 0:03:06.080 high Bitcoin hits a higher high UM and the lows 0:03:06.120 --> 0:03:08.200 are not quite as the prior quite as low as 0:03:08.240 --> 0:03:10.480 the prior lows. So I think what you're seeing here 0:03:10.560 --> 0:03:13.200 is Bitcoin operates typically you know we've seen so far, 0:03:13.320 --> 0:03:16.800 isn't it roughly to your cycles? Although it seems like 0:03:16.840 --> 0:03:20.200 that pace is now in increasing and as a result, 0:03:20.320 --> 0:03:23.840 you know, there's sort of short term interim cyclical behavior, 0:03:23.960 --> 0:03:27.560 but a larger term secular trend that obviously myself and 0:03:27.600 --> 0:03:30.919 many other people in the industry building firms are are 0:03:31.000 --> 0:03:35.160 looking for UM and tracking against. What what do you 0:03:35.200 --> 0:03:39.080 do there? Yeah? So Quin shares a great question, Joe. 0:03:39.560 --> 0:03:42.520 We are a financial services firm. We are best known 0:03:42.520 --> 0:03:45.200 as an asset manager. We manage one point one billion 0:03:45.240 --> 0:03:48.880 in assets in the form of publicly listed exchange traded products. 0:03:48.960 --> 0:03:53.560 They're traded throughout Europe under the XPT Provider brand. Uh 0:03:53.680 --> 0:03:56.160 So we've been in that business for about five years. 0:03:56.280 --> 0:03:59.320 We're also in the trading business, venture capital business, and 0:03:59.360 --> 0:04:03.960 a variety of other financial services products. That's what we do. 0:04:04.880 --> 0:04:09.360 So one thing I'm curious about, given given the role 0:04:09.440 --> 0:04:13.920 that you just described, I keep seeing bitcoin described as 0:04:13.960 --> 0:04:18.880 a diversification strategy this year, especially for corporate treasurers. Is 0:04:18.920 --> 0:04:21.960 that something that you're actually seeing in the marketplace at 0:04:21.960 --> 0:04:25.120 the moment. Yeah, so, so we've actually done a lot 0:04:25.160 --> 0:04:28.440 of research on bitcoin as a portfolio diversifier. I think 0:04:28.480 --> 0:04:32.680 it's certainly true that in March, um, you know, investment 0:04:32.680 --> 0:04:36.880 committees corporate treasures around the world looked at the makeup 0:04:36.920 --> 0:04:40.960 of their portfolio and realized something probably needs to change. 0:04:41.320 --> 0:04:44.479 Now that we're entering into November and coming close to 0:04:44.520 --> 0:04:47.240 the end of the year, we're in a really interesting 0:04:47.480 --> 0:04:50.080 sort of environment. Um. First, you know, I used to 0:04:50.080 --> 0:04:52.640 work in corporate treasury before I got into bitcoin, so 0:04:52.800 --> 0:04:56.400 part of me feels an affinity for corporate treasurers around 0:04:56.400 --> 0:04:59.800 the world who are looking at the universe of investimbal assets. 0:05:00.279 --> 0:05:02.560 And at the end of the day, you know, when 0:05:02.560 --> 0:05:05.760 I was in corporate treasuring in I was at Exxonmobile, 0:05:06.320 --> 0:05:09.240 and I recall at that point in time, our cost 0:05:09.320 --> 0:05:13.040 of capital was effectively zero, meaning we could borrow at 0:05:13.200 --> 0:05:16.240 very very low rates, and that environment I think continues 0:05:16.279 --> 0:05:20.120 to persist for many corporates, particularly in the US, and 0:05:20.160 --> 0:05:22.960 then we could deploy that capital um in terms of 0:05:23.000 --> 0:05:25.800 you know, opportunities to to earn yield on that capital. 0:05:26.160 --> 0:05:29.400 We could actually deploy that capital into the treasury market, 0:05:29.440 --> 0:05:32.799 into the RPE market and earn a fairly healthy return 0:05:32.880 --> 0:05:36.760 three to five percent with very minimal risk. That environment 0:05:36.800 --> 0:05:40.200 doesn't exist anymore. For corporate treasures were in a zero 0:05:40.279 --> 0:05:43.800 interest rate environment. Target inflation is two to two point 0:05:43.839 --> 0:05:47.520 five percent, And so you know, for a treasure who's 0:05:47.560 --> 0:05:51.520 looking at opportunity cost, the idea of losing two percent 0:05:51.520 --> 0:05:56.359 per year to inflation while holding treasuries that yield effectively zero, 0:05:56.640 --> 0:05:59.000 or holding ten years that maybe yield you know what 0:05:59.160 --> 0:06:02.440 was it to to two point five percent, that's not 0:06:02.480 --> 0:06:06.000 really an attractive proposition. So I think across the board, 0:06:06.480 --> 0:06:11.080 treasures investors, people who have capital to allocate, or who 0:06:11.080 --> 0:06:14.640 have cash that they're trying to deploy towards productive uses, 0:06:15.120 --> 0:06:17.600 which at this point I think is is most investors 0:06:18.440 --> 0:06:21.640 they're looking at the universe of options and they need 0:06:21.760 --> 0:06:25.320 something different. Right, we've seen gold how to break out. 0:06:25.480 --> 0:06:30.280 I think a lot of investors, particularly individual investors as 0:06:30.279 --> 0:06:34.040 well as some institutional investors, have been allocating into gold 0:06:34.160 --> 0:06:37.960 as a diversifier. And I think what's been interesting to observe. 0:06:38.040 --> 0:06:40.599 You know, if you as you've mentioned, bitcoin has been 0:06:40.640 --> 0:06:43.760 through numerous cycles. It's been through up, ups and downs. 0:06:44.080 --> 0:06:47.719 I think historically, one of the core arguments we've always 0:06:47.800 --> 0:06:52.960 heard when we speak to institutions, corporates, and investors about 0:06:53.000 --> 0:06:59.040 bitcoin is concerns around its volatility, concerns around its cyclical nature, 0:06:59.160 --> 0:07:02.599 concerns around on its lack of correlation or now it's 0:07:02.680 --> 0:07:07.040 correlation to macro markets. And I think for the first time, 0:07:07.080 --> 0:07:10.360 what's happened is bitcoin doesn't exist in a bubble. It 0:07:10.440 --> 0:07:14.200 operates in a larger market, operates in a larger political 0:07:14.200 --> 0:07:18.480 and social environment. For the first time, bitcoin actually is 0:07:18.600 --> 0:07:22.679 less volatile than equities, and so I think in many ways, 0:07:22.840 --> 0:07:26.680 a lot of the thinking around how to approach portfolio 0:07:26.720 --> 0:07:31.400 construction has started to shift as investors and allocators look 0:07:31.440 --> 0:07:34.760 at the reality of the situation. And so I would 0:07:34.760 --> 0:07:39.280 say this narrative of bitcoin being a portfolio diversifier is 0:07:39.280 --> 0:07:42.560 certainly something we're hearing more of, but I would just 0:07:42.760 --> 0:07:45.560 caveat that by saying, you know, by no means is 0:07:45.600 --> 0:07:48.680 this the prevalent mindset. I think as we look at 0:07:48.760 --> 0:07:51.680 most firms and and most of our clients, it's really 0:07:51.720 --> 0:07:55.200 only a small handful who have taken the leap into bitcoin. 0:07:55.840 --> 0:07:58.800 I think for many though, bitcoin still feels in many 0:07:58.840 --> 0:08:04.920 ways reputation sationally risky, and many firms, particularly asset managers, 0:08:05.000 --> 0:08:08.760 are still waiting for validation from a blue chip firm 0:08:08.800 --> 0:08:12.280 that will normalize sort of the entry into bitcoin. So, 0:08:12.320 --> 0:08:14.320 by no means do I think there's a wall of 0:08:14.360 --> 0:08:19.040 institutional money that's just going to start buying up bitcoin. So, 0:08:19.440 --> 0:08:22.000 just on that note, a really practical question, but if 0:08:22.040 --> 0:08:26.240 you were a corporate treasurer, how would you actually allocate 0:08:26.320 --> 0:08:29.520 into bitcoin at the moment, what's the most efficient way 0:08:29.520 --> 0:08:33.199 of doing it? Yeah, so I think other variety of 0:08:33.240 --> 0:08:35.000 ways of doing it. The way it's been done to 0:08:35.080 --> 0:08:40.080 date is uh, spot buying so UM. Fortunately, micro Strategy 0:08:40.280 --> 0:08:43.960 and Square both wrote up a brief documents on how 0:08:44.000 --> 0:08:46.599 they entered the bitcoin market. So what we've seen is 0:08:46.640 --> 0:08:49.599 most treasures spot buying and then uh SO buying on 0:08:49.640 --> 0:08:52.880 the open market using a sort of a time weighted 0:08:52.920 --> 0:08:57.520 average price UM over a specific duration, and then custody 0:08:57.600 --> 0:09:01.480 ing the bitcoin with a custode and that specializes in 0:09:01.679 --> 0:09:05.840 a long term storage of bitcoin. However, UM in the 0:09:05.840 --> 0:09:08.040 middle of this month, we're gonna be hosting a crypto 0:09:08.080 --> 0:09:10.960 credit summit where we'll be focusing on the emergence of 0:09:11.080 --> 0:09:15.280 a credit market around crypto assets, particularly UM in relation 0:09:15.320 --> 0:09:19.240 to people utilizing bitcoin to earn yield um through lending 0:09:19.280 --> 0:09:21.640 it out to people to trade, so they're a variety 0:09:21.640 --> 0:09:23.960 of other ways. On the trading side, you know, we 0:09:24.040 --> 0:09:27.760 look a lot at arbitrage opportunities between the futures forward 0:09:27.800 --> 0:09:30.920 curve and stop markets and sort of playing that arbitrage, 0:09:30.960 --> 0:09:33.080 I think is an interesting way to gain short term 0:09:33.080 --> 0:09:36.680 exposure without having so much long term risk. We also 0:09:36.720 --> 0:09:40.800 see people buying structured products like our xpt provider product. 0:09:40.880 --> 0:09:43.560 In the US, the Gray Scale Bitcoin trust is popular. 0:09:44.040 --> 0:09:47.040 Canada has its own bitcoin et F, so there are 0:09:47.160 --> 0:09:49.600 number of structured products that are now emerging, and then 0:09:49.679 --> 0:09:52.920 the last option is through a fund um And in 0:09:53.000 --> 0:09:56.520 those sort of fund world we see variety of different strategies. 0:09:56.640 --> 0:09:58.920 A lot of them are very much of venture strategy, 0:09:58.960 --> 0:10:01.560 where they may have and our location to bitcoin and tokens. 0:10:02.040 --> 0:10:06.040 Some are a quant driven strategy, whether actively trading around 0:10:06.120 --> 0:10:10.240 bitcoins volatility, or maybe bitcoin and other highly liquid assets. 0:10:10.240 --> 0:10:12.640 So they are a variety of different ways. But to date, 0:10:12.679 --> 0:10:15.080 what we've seen on the corporate side at least is 0:10:15.120 --> 0:10:17.880 primarily spot buying and then putting that bitcoin with a 0:10:17.920 --> 0:10:40.000 custodian m So, so many questions, right, here's one that 0:10:40.559 --> 0:10:43.400 so Tracy mentioned in the beginning as a journalist, she's 0:10:43.440 --> 0:10:48.240 maybe written three obituaries. Thank you for making that point again, Joe, 0:10:48.480 --> 0:10:52.880 thank you, But Tracy, you're probably gonna write like two 0:10:52.960 --> 0:10:55.800 or three more before all's said and done, So do 0:10:55.840 --> 0:10:59.200 you print those out? Well? So, this is the interesting thing, 0:10:59.360 --> 0:11:02.000 all right, this is the interesting thing. I've written three 0:11:02.080 --> 0:11:06.480 obituaries for bitcoin, but each obituary for bitcoin has been 0:11:06.920 --> 0:11:11.440 about the death of a bitcoin for a particular purpose. 0:11:11.520 --> 0:11:14.720 And this is what really interests me in crypto, because 0:11:14.720 --> 0:11:18.600 when it started, it was all about you know, disintermediation, 0:11:19.160 --> 0:11:22.000 all about not trusting the central bank, and then fast 0:11:22.040 --> 0:11:25.439 forward to and now everyone's talking about intermediation and how 0:11:25.480 --> 0:11:27.920 they want big asset managers to get into the space. 0:11:28.160 --> 0:11:30.400 So I'm sure in a year or two I'll probably 0:11:30.559 --> 0:11:33.679 be writing the obituary for that particular idea. But it's 0:11:33.720 --> 0:11:39.360 always a different sort of facet of bitcoin comes up. Yeah, 0:11:39.440 --> 0:11:42.800 And look, I think this evolution of the narrative is 0:11:42.840 --> 0:11:46.480 a function of the world changing and Bitcoin's place in 0:11:46.520 --> 0:11:49.080 the world changing. Right again, I think the hard part 0:11:49.120 --> 0:11:52.200 here is Bitcoin doesn't exist in the isolated vacuum. Right 0:11:52.360 --> 0:11:56.200 as the world changes, so does the market, So do 0:11:56.400 --> 0:11:59.400 other asset classes, so does bitcoin, And so I think 0:11:59.400 --> 0:12:01.640 the hard part it is and and the interesting part 0:12:01.679 --> 0:12:04.800 for me, like, I think we're finally in a in 0:12:04.880 --> 0:12:07.679 a market narrative where bitcoin actually starts to make sense. 0:12:08.480 --> 0:12:11.480 We've been in a bowl market for the last eleven years, really, 0:12:11.480 --> 0:12:14.240 since the last financial crisis. When the Bitcoin white Paper 0:12:14.320 --> 0:12:18.040 was written and I was a little baby leaving college, 0:12:18.320 --> 0:12:20.120 I thought I was going to be an investment banker. 0:12:20.480 --> 0:12:23.160 That didn't happen, so I ended up working in the 0:12:23.240 --> 0:12:25.840 energy industry, which maybe in a way, I turned out 0:12:25.840 --> 0:12:28.200 to be a good choice because I ultimately ended up 0:12:28.200 --> 0:12:30.880 in bitcoin. But look, this is the first time that 0:12:30.960 --> 0:12:35.199 we're watching bitcoin in a down market. You know, we've 0:12:35.240 --> 0:12:37.840 had two back to back quarters of economic contraction. I 0:12:37.840 --> 0:12:40.199 think we can officially say we're now in our recession, 0:12:40.679 --> 0:12:43.679 and I think bitcoin's behavior in our session is very 0:12:43.679 --> 0:12:47.880 different than bitcoin's behavior in a booming macro mark good. 0:12:48.240 --> 0:12:51.720 So all of these sort of narratives coming together constantly 0:12:51.720 --> 0:12:55.959 are changing Bitcoin's form and fun function in the broader 0:12:56.000 --> 0:12:58.400 economic system that we're we're all a part of. So 0:12:58.480 --> 0:13:01.880 I think, um, you know this, this evolution of narrative 0:13:02.240 --> 0:13:06.280 is going to continue until bitcoin reaches a point of maturity, 0:13:06.480 --> 0:13:10.840 and that may take another three, five, seven, ten years. 0:13:13.000 --> 0:13:16.000 Here's something, here's like a contradiction that I see that 0:13:16.120 --> 0:13:18.160 I help me wrap my head around it with a bitcoin. 0:13:18.320 --> 0:13:25.199 So it's like, there's this just this incredible industry, community, movement, 0:13:25.679 --> 0:13:30.520 culture associated It's extremely impressive. On the other hand, and 0:13:30.520 --> 0:13:32.520 in a way, you know, it's it's extraordinarily large in 0:13:32.559 --> 0:13:35.720 a sense. According I'm looking um at one of the 0:13:36.080 --> 0:13:39.600 measures right now that the total value of all outstanding bitcoin. 0:13:40.120 --> 0:13:44.040 Sometimes it's called the market cap is two billion. That's 0:13:44.080 --> 0:13:47.160 a lot. On the other hand, that's like a sort 0:13:47.200 --> 0:13:50.560 of medium sized software I p O these days, or 0:13:50.559 --> 0:13:52.560 maybe a little bit bigger than some like red hot 0:13:52.600 --> 0:13:56.480 cloud company. Yeah, And so like is Bitcoin bigger small? 0:13:56.520 --> 0:13:58.800 Because on the one hand, like it's extraordinary, on the 0:13:58.800 --> 0:14:01.640 other hand, like it's like a regular like sort of 0:14:01.679 --> 0:14:04.960 like middle of the stock Joe, I mean, Joe, you 0:14:04.960 --> 0:14:09.120 answered the question. Bitcoin's teeny tiny apple has enough spare 0:14:09.160 --> 0:14:12.400 cash on its balance sheet to buy the entire Bitcoin 0:14:12.440 --> 0:14:16.079 market cap. Bitcoin's teeny tiny, right, And if we look 0:14:16.080 --> 0:14:19.640 at the universe of assets and asset allocators, that coin 0:14:19.720 --> 0:14:24.360 continues to be miniscule in relation to where it started. 0:14:24.400 --> 0:14:28.520 Bitcoin's massive. Right, Everything is is relative. I mean I 0:14:28.560 --> 0:14:31.280 remember Bitcoin trating at two fifty dollars and we were like, 0:14:31.280 --> 0:14:33.560 oh my god, and we just broke a billion dollar 0:14:33.680 --> 0:14:38.040 market cap, like this is huge. Um, So like everything's relative. 0:14:38.480 --> 0:14:40.320 But again, I think this is part of the challenge. 0:14:40.320 --> 0:14:42.920 It's sort of a chicken and egg problem. Until Bitcoin's 0:14:42.920 --> 0:14:46.040 market cap gets larger and the market gets farmer, liquid 0:14:46.120 --> 0:14:49.120 market gets deeper, you're not going to see people allocating 0:14:49.160 --> 0:14:51.480 to bitcoin in size because the market cap is simply 0:14:51.560 --> 0:14:56.240 too small, right, So this is actually this leads to 0:14:56.520 --> 0:14:59.360 something that I wanted to ask, which is can bitcoin 0:14:59.520 --> 0:15:04.560 b both a viable financial asset and one that's expected 0:15:04.600 --> 0:15:08.600 to largely go up in value and a method of 0:15:08.600 --> 0:15:12.440 payment at the same time. I think this is a 0:15:12.480 --> 0:15:15.520 great question, Tracy, and I think here again, what's great 0:15:15.520 --> 0:15:18.960 about bitcoin is, uh, so much of the way people 0:15:19.080 --> 0:15:23.040 articulate bitcoin is really tied to their personal view and 0:15:23.080 --> 0:15:26.200 their personal beliefs. And what's interesting is that one asset 0:15:26.280 --> 0:15:30.520 can have so many different permutations, so many different characterizations 0:15:30.720 --> 0:15:33.160 UM that that lend themselves to whoever is sort of 0:15:33.160 --> 0:15:36.680 you know, doing the pontificating. In my view, I don't 0:15:36.680 --> 0:15:40.320 need to use my bitcoin um to pay for coffee, right. 0:15:40.360 --> 0:15:42.720 I think one of the criticisms of bitcoin has been like, oh, 0:15:42.800 --> 0:15:45.560 you can't pay for coffee using bitcoin. Well, great, because 0:15:45.640 --> 0:15:48.240 I don't want to say, spend my bitcoin on coffee. 0:15:48.600 --> 0:15:52.080 It's really really not my intention holding bitcoin. There are 0:15:52.120 --> 0:15:55.280 a lot of other cryptocurrencies UM and in particular even 0:15:55.480 --> 0:15:58.640 US dollar assets that are blockchain based that will allow 0:15:58.680 --> 0:16:01.800 me to buy my coffee. So when I think about 0:16:01.800 --> 0:16:04.920 bitcoin for for me personally, and I think for many 0:16:04.960 --> 0:16:07.840 allocators that we talked to. The view on bitcoin is 0:16:07.920 --> 0:16:11.520 this is really more like a savings account, right, This 0:16:11.600 --> 0:16:15.120 is really more like a savings technology. And the majority 0:16:15.160 --> 0:16:18.600 of people who are holding bitcoin, who are using bitcoin, 0:16:18.800 --> 0:16:22.760 at least in today's instantiation, are not using it for 0:16:22.920 --> 0:16:26.640 transactional purposes necessarily, They're using it as a store value 0:16:26.640 --> 0:16:30.280 and as a form of sound money and so Um again, 0:16:30.320 --> 0:16:33.440 I do think that narrative has shifted over over time. 0:16:33.920 --> 0:16:36.400 In the past, I certainly have used bitcoin to pay 0:16:36.440 --> 0:16:39.640 for things. In the future, I may use bitcoin to 0:16:39.760 --> 0:16:43.000 favor things. Sometimes it's actually cheaper and faster to use 0:16:43.040 --> 0:16:45.880 bitcoin than it is to use my bank account, which 0:16:45.960 --> 0:16:49.880 is really fascinating and very sad in a way that 0:16:50.040 --> 0:16:52.840 in the your twenty you know, in this fintech boom, 0:16:52.880 --> 0:16:56.400 it's it's still incredibly difficult to to send money. Um. 0:16:56.440 --> 0:16:58.480 But look, I think, you know, beauties in the eye 0:16:58.480 --> 0:17:01.840 of the beholder. In my view, most investors are not 0:17:01.920 --> 0:17:04.920 buying bitcoin with the intention of spending it in the future. 0:17:05.440 --> 0:17:09.800 It's really about having a savings technology. It's about having 0:17:09.800 --> 0:17:12.480 the ability to sort of remove your assets from the 0:17:12.480 --> 0:17:16.720 existing financial system. Um and Joe, I definitely recognize the 0:17:16.760 --> 0:17:20.320 point you've made earlier that you know, in today's bitcoin environment, 0:17:20.720 --> 0:17:23.879 everyone's becoming an intermediary. So in a way, you know, 0:17:23.920 --> 0:17:27.320 it's slightly antithetical to the original stated goal of bitcoin, 0:17:27.680 --> 0:17:30.119 which was to minimize the role of intermediaries in our 0:17:30.160 --> 0:17:35.400 financial lives. What happened in up the end of March 0:17:35.440 --> 0:17:37.879 with bitcoin, and because you know, obviously the all of 0:17:38.880 --> 0:17:42.600 all of financial markets sort of collapse, but bitcoin, you know, 0:17:42.680 --> 0:17:45.280 for all to talk about, bitcoin is a diversifier. I 0:17:45.320 --> 0:17:47.200 think it had one of its biggest short term still 0:17:47.280 --> 0:17:50.080 off either. Ever, do you feel like you have a 0:17:50.119 --> 0:17:53.919 good handle on how the volatility that we saw in 0:17:54.280 --> 0:17:59.679 market overall translated into sort of like liquidations and margin 0:17:59.760 --> 0:18:02.919 calls from this asset asset that's very, uh, sort of 0:18:02.960 --> 0:18:06.040 apart from traditional financial markets. Yeah. Look, I think what 0:18:06.160 --> 0:18:09.160 happened at the end of March is symptomatic of how 0:18:09.200 --> 0:18:12.840 people act in times of crisis. People panicked, right, and 0:18:12.920 --> 0:18:15.520 in a time when everything's going down, you're panicking, you're 0:18:15.560 --> 0:18:19.680 trying to sell everything that's not bolted down. And bitcoin, right, 0:18:19.800 --> 0:18:23.640 just like every other asset, is highly salable, highly liquid. 0:18:24.119 --> 0:18:26.199 So we saw a lot of sell off in in 0:18:26.240 --> 0:18:28.879 bitcoin because people were trying to take risk off the table. 0:18:29.000 --> 0:18:32.200 They were uncertain, you know, they were fearful of the future. 0:18:32.600 --> 0:18:34.800 So we saw broad based sell off. I think what 0:18:35.320 --> 0:18:37.800 happened in bitcoin that exacerbated the sell off, you know, 0:18:37.880 --> 0:18:39.280 we saw it if you present and drop in a 0:18:39.280 --> 0:18:42.080 twenty four hour period, was the result of the fact, 0:18:42.160 --> 0:18:44.240 you know, in bitcoin. And one of the things that's 0:18:44.320 --> 0:18:47.919 unique a round about the bitcoin market structurally is the 0:18:47.960 --> 0:18:51.800 derivatives market um in many ways has outpaced the spot market, 0:18:52.520 --> 0:18:55.280 and in many ways the forward curve as driving what's 0:18:55.280 --> 0:18:57.399 happening in the spot market. So I call this the 0:18:57.480 --> 0:19:00.639 tail wagging the dog in a way. So right now 0:19:00.680 --> 0:19:03.560 bitcoin is in contango, right, but for a long time, 0:19:03.640 --> 0:19:07.960 bitcoin futures were in backwardation, meaning bitcoin in December was 0:19:08.040 --> 0:19:11.159 cheaper than holding bitcoin today. And so there are a 0:19:11.200 --> 0:19:13.640 number of different firms in the bitcoin ecosystem that are 0:19:14.040 --> 0:19:17.480 that that spread between the future expected price of bitcoin 0:19:17.520 --> 0:19:20.560 in today's price of bitcoin was interesting that happened in 0:19:20.600 --> 0:19:22.720 March in the midst of the sell off. I think 0:19:22.720 --> 0:19:25.800 a lot of people had been positioned into bitcoin, going 0:19:25.960 --> 0:19:29.720 into sort of this expected financial contraction. A lot of 0:19:29.720 --> 0:19:32.040 people are like, Okay, this is Bitcoin's time to shine, 0:19:32.520 --> 0:19:36.359 you know, it's it's an uncorrelated asset. Bitcoin is going 0:19:36.400 --> 0:19:39.400 to do incredibly well, just like gold. And when that 0:19:39.440 --> 0:19:42.199 didn't happen, what you saw was sort of a cascade 0:19:42.200 --> 0:19:46.200 of liquidations that then further dragged down the price. And 0:19:46.320 --> 0:19:49.159 so um, one of the benefits those a lot of 0:19:49.200 --> 0:19:51.280 weekends got taken out of the market, a lot of 0:19:51.280 --> 0:19:54.880 that cell pressure was removed. But I do think, you know, um, 0:19:54.920 --> 0:19:57.960 a lot of people are expecting bitcoin to behave on 0:19:57.960 --> 0:20:00.600 a very short term cycle, and the me to react 0:20:00.680 --> 0:20:05.000 very quickly to money printing like inflation doesn't happen overnight. 0:20:05.280 --> 0:20:07.840 So I think part of its people just understanding that 0:20:08.080 --> 0:20:10.880 this market cycle, this market narrative will take much longer 0:20:10.920 --> 0:20:13.720 than expected to play out because inflation hasn't even come 0:20:13.720 --> 0:20:17.040 close to setting in yet. Do you think the inflation 0:20:17.119 --> 0:20:20.320 hedge is still a big reason that people are buying 0:20:20.480 --> 0:20:22.880 crypto even though we've had years and years and years 0:20:23.520 --> 0:20:26.879 at this point of central banks undershooting their inflation. Inflation 0:20:26.960 --> 0:20:30.600 is coming, Tracy, It's just a matter of time. It's 0:20:30.680 --> 0:20:33.439 right around the corner, haven't you heard? But Joe and 0:20:33.480 --> 0:20:36.480 Tracy like, look, this is the great thing I love 0:20:36.520 --> 0:20:40.040 the high quote, which is, um, the purpose of economics 0:20:40.200 --> 0:20:45.840 is teaching men how little they understand. Right, So right, 0:20:45.960 --> 0:20:48.240 I've but shared the quote, but it's something like this, 0:20:48.359 --> 0:20:51.359 which you know, I studied economics and math and you 0:20:51.400 --> 0:20:58.080 know you you pontificate, but you know there's always the wrinkle. Look, um, 0:20:58.200 --> 0:21:01.040 I hate to use this phrase, but like, we're unprecedented time. 0:21:01.080 --> 0:21:03.440 I think nobody has a crystal ball and if they did, 0:21:03.720 --> 0:21:06.359 you know, they certainly would be trading it instead of 0:21:06.440 --> 0:21:09.439 talking about it on a podcast. But look, at the 0:21:09.520 --> 0:21:11.800 end of the day, we haven't seen this before. And 0:21:11.880 --> 0:21:16.040 to your point, right, we've we've printed a lot of money, um, 0:21:16.080 --> 0:21:19.120 inflation hasn't really set in. I think it's it's more 0:21:19.200 --> 0:21:23.960 likely that we'll have deflation um rather than inflation. So 0:21:24.920 --> 0:21:28.680 I do you think the inflation narrative is important around bitcoin? 0:21:28.720 --> 0:21:31.000 If we look at you know, the Paul Tutor Jones 0:21:31.119 --> 0:21:33.560 of the world, if we look at the micro strategies 0:21:33.600 --> 0:21:36.160 and squares of the world, if we look at this 0:21:36.280 --> 0:21:41.679 developing narrative around bitcoin is an effective portfolio diversifier and 0:21:41.760 --> 0:21:44.919 bitcoin is an effective hedge in the current market environment. 0:21:45.480 --> 0:21:49.440 Much of that narrative is in fact centered around um 0:21:49.920 --> 0:21:54.480 bitcoin's behavior in an inflationary period and the fact that 0:21:54.560 --> 0:21:58.479 bitcoin is a deflationary asset by by nature, and there 0:21:58.520 --> 0:22:02.120 are no asteroids we can mine for more bitcoin. I'm 0:22:02.200 --> 0:22:05.199 like unlike gold because asteroid mining is the thing that 0:22:05.359 --> 0:22:09.760 also comes up on regular basis. What about um solar 0:22:09.840 --> 0:22:14.480 powered satellites that get extremely cheap energy that could happen, right, Yeah, totally. 0:22:14.560 --> 0:22:16.919 And look, one of the great things that bitcoin is, 0:22:16.960 --> 0:22:19.440 it's a money batteries. So places in the world where 0:22:19.440 --> 0:22:24.080 there's cheap access to alternative energy that cannot be utilized 0:22:24.240 --> 0:22:27.919 for industry and creation of economic value, those regions of 0:22:27.960 --> 0:22:30.400 the world are now looking at bitcoin as an effective 0:22:30.400 --> 0:22:35.359 monetary battery, right, a way of transforming stranded alternative energy 0:22:35.640 --> 0:22:56.240 into monetary energy in the form of bitcoin. So, in 0:22:56.280 --> 0:22:59.280 all seriousness, and I actually do think that's a pretty interesting, 0:23:00.480 --> 0:23:03.080 pretty interesting avenue to be explored. In all seriousness. I 0:23:03.080 --> 0:23:06.200 want to go back to something you said um earlier, 0:23:06.320 --> 0:23:09.080 because I think it's probably the most sort of like provocative, 0:23:09.320 --> 0:23:13.639 controversial thing in this whole conversation and the thing that 0:23:13.680 --> 0:23:16.720 I'll piste a lot of people off. Potentially you said, uh, 0:23:16.880 --> 0:23:18.840 as far as you can tell outside if you're there, 0:23:18.840 --> 0:23:23.080 there really is not that much. The wall of institutional money, 0:23:23.119 --> 0:23:25.400 the big title wave that everyone thinks it's coming any 0:23:25.480 --> 0:23:27.800 day now or all these huge funds are going to 0:23:27.920 --> 0:23:30.600 allocate like two percent and the bitcoin is going to 0:23:30.680 --> 0:23:33.560 go to the moon. Um, you don't think it's really happened. 0:23:34.119 --> 0:23:36.400 I don't think it's happening right now. I think it's 0:23:36.440 --> 0:23:40.120 going to continue to be a slow trickle. Like at 0:23:40.119 --> 0:23:42.280 the end of the day, you have to remember, there's 0:23:42.280 --> 0:23:45.240 a process that someone goes through. Right now, the part 0:23:45.320 --> 0:23:49.119 of the cycle we're in is people are okay entertaining 0:23:49.160 --> 0:23:52.520 conversations about bitcoin, which wasn't the case even a year ago. 0:23:52.960 --> 0:23:56.440