1 00:00:13,840 --> 00:00:16,880 Speaker 1: Welcome to What Goes Up, a weekly markets podcast. UM 2 00:00:16,960 --> 00:00:21,040 Speaker 1: Veldona Hi across Acid reporter with Bloomberg, and I'm Mike Reagan, 3 00:00:21,200 --> 00:00:24,000 Speaker 1: a senior editor at Bloomberg, and this week on the show, 4 00:00:24,120 --> 00:00:27,520 Speaker 1: cryptocurrencies have had an awful year. The major coins have 5 00:00:27,680 --> 00:00:30,960 Speaker 1: all had in value or worse as the Federal Reserve 6 00:00:31,160 --> 00:00:34,440 Speaker 1: hikes interest rates and froth leaves the most speculative corners 7 00:00:34,440 --> 00:00:37,159 Speaker 1: of the market. At the same time, retail investors have 8 00:00:37,200 --> 00:00:39,640 Speaker 1: bailed and there are no signs that they're making a comeback. 9 00:00:40,200 --> 00:00:42,400 Speaker 1: We'll get into it with a pro who trades crypto 10 00:00:42,400 --> 00:00:45,600 Speaker 1: on a daily basis. But first, Mike, I wanted to 11 00:00:45,640 --> 00:00:49,000 Speaker 1: ask you a question. I'm wondering if you have ever 12 00:00:49,120 --> 00:00:53,480 Speaker 1: been in a book club? As Pavis used to say, data, 13 00:00:53,640 --> 00:00:55,680 Speaker 1: if I wanted to read, I'd go to school. No, 14 00:00:55,920 --> 00:00:59,279 Speaker 1: no book clubs for me. Now. I I have never 15 00:00:59,320 --> 00:01:01,880 Speaker 1: been in a book club. I feel like it's a 16 00:01:01,880 --> 00:01:04,080 Speaker 1: lot of high pressure to actually read the book. You know. 17 00:01:04,200 --> 00:01:07,200 Speaker 1: If there was like a cliffs Cliff Notes club, I 18 00:01:07,240 --> 00:01:09,720 Speaker 1: would join maybe, But um, how about you? Have you 19 00:01:09,720 --> 00:01:11,679 Speaker 1: ever been in a book club? Of course, I'm in 20 00:01:11,760 --> 00:01:15,520 Speaker 1: multiple book clubs right now, multiple book clubs how many 21 00:01:15,520 --> 00:01:18,200 Speaker 1: book clubs can one woman join? I'm in like two 22 00:01:18,280 --> 00:01:20,920 Speaker 1: or three. I want to say they're small sometimes like 23 00:01:21,000 --> 00:01:23,520 Speaker 1: sometimes it's just me and one other person. Part of 24 00:01:23,560 --> 00:01:25,840 Speaker 1: my reason for never joining is a book club is 25 00:01:25,880 --> 00:01:29,000 Speaker 1: I've never been invited to join a book club. So 26 00:01:29,120 --> 00:01:31,760 Speaker 1: I'm not even gonna ask you if you'll invite me 27 00:01:31,800 --> 00:01:34,559 Speaker 1: to one of your multiple book clubs considering Yeah, I'm 28 00:01:34,600 --> 00:01:37,080 Speaker 1: not inviting and there's no way, there's absolutely no way. 29 00:01:37,160 --> 00:01:39,960 Speaker 1: There's no room for me in any of your multiple 30 00:01:40,000 --> 00:01:42,600 Speaker 1: book clubs. Consider it. I can't even get into your 31 00:01:42,600 --> 00:01:47,200 Speaker 1: professional network on LinkedIn. I assume I'll never get into 32 00:01:47,240 --> 00:01:50,480 Speaker 1: a La book Yeah no, no Lincoln invitation for your 33 00:01:50,480 --> 00:01:52,720 Speaker 1: notebook club for you. And actually I have a story 34 00:01:52,760 --> 00:01:54,680 Speaker 1: for you. I met with some students the other day 35 00:01:54,720 --> 00:01:57,320 Speaker 1: at the journalism school I went to, and I was 36 00:01:57,360 --> 00:01:59,800 Speaker 1: talking to them about Bloomberg and what it's like working there. 37 00:02:00,080 --> 00:02:03,040 Speaker 1: And afterwards, a bunch of them adam me on LinkedIn, 38 00:02:03,120 --> 00:02:05,520 Speaker 1: and last night I logged in and I accepted all 39 00:02:05,560 --> 00:02:09,640 Speaker 1: of them. So students get in mere students, not actual 40 00:02:10,080 --> 00:02:12,399 Speaker 1: and maybe they'll join my book club too. Yeah that's 41 00:02:12,400 --> 00:02:15,280 Speaker 1: not even that's like LinkedIn fraud. They're not even part 42 00:02:15,280 --> 00:02:19,000 Speaker 1: of your professional network. They are just students. Anyway. Well, 43 00:02:19,000 --> 00:02:21,600 Speaker 1: I've I've got news for you and that next week, 44 00:02:21,639 --> 00:02:24,760 Speaker 1: returning the podcast into our own little book club, So 45 00:02:25,000 --> 00:02:28,359 Speaker 1: you better make some room for your multiple book clubs 46 00:02:28,400 --> 00:02:32,440 Speaker 1: to read. Uh. The Paul Volker Memoirs A great time 47 00:02:32,440 --> 00:02:35,680 Speaker 1: to talk about Paul Vulcar Uh with the inflation flight 48 00:02:35,800 --> 00:02:39,320 Speaker 1: going on, the former Federal Reserve chair. Our own colleague 49 00:02:39,360 --> 00:02:43,040 Speaker 1: Christine Harper, one of my buddies at Bloomberg, actually helped 50 00:02:43,080 --> 00:02:45,040 Speaker 1: him write the memoirs, so we're gonna have her on 51 00:02:45,600 --> 00:02:49,520 Speaker 1: to discuss his fight against inflation in the eighties and 52 00:02:49,520 --> 00:02:52,360 Speaker 1: how it relates to today. So like it or not, 53 00:02:52,480 --> 00:02:55,040 Speaker 1: we're in our own little book club here, Bildono. That's 54 00:02:55,080 --> 00:02:57,920 Speaker 1: actually a very very good tease and a good segue 55 00:02:58,000 --> 00:02:59,919 Speaker 1: for the guests that we have on this week. We 56 00:03:00,080 --> 00:03:04,200 Speaker 1: have Michael Safi. He's the managing partner at Dexterity Capital, 57 00:03:04,240 --> 00:03:07,480 Speaker 1: which is a crypto proprietary trading firm. He's joining us 58 00:03:07,480 --> 00:03:10,120 Speaker 1: this week. Michael, thanks so much for coming on the show. 59 00:03:10,760 --> 00:03:13,040 Speaker 1: Thanks for having me. Great to see you both. So, Michael, 60 00:03:13,040 --> 00:03:16,160 Speaker 1: maybe you can just start with telling us about Dexterity 61 00:03:16,240 --> 00:03:21,480 Speaker 1: and what it means to be running a proprietary trading firm. Sure, Well, 62 00:03:21,480 --> 00:03:24,799 Speaker 1: the short version of Dexterity Capital is where a proprietary 63 00:03:24,800 --> 00:03:28,720 Speaker 1: trading firm. We specialize in high frequency trading of market 64 00:03:28,760 --> 00:03:33,320 Speaker 1: neutral algorithmic strategies for cryptocurrency assets. So there's about a 65 00:03:33,320 --> 00:03:36,280 Speaker 1: team of seventeen of us and together we trade a 66 00:03:36,360 --> 00:03:40,040 Speaker 1: few billion dollars worth of crypto per day. Ue we 67 00:03:40,120 --> 00:03:42,840 Speaker 1: treated over one point two trillion, which made us one 68 00:03:42,840 --> 00:03:45,320 Speaker 1: of the biggest traders of cryptocurrency in the world. So 69 00:03:45,360 --> 00:03:47,400 Speaker 1: that's the very brief version of what we're doing out there. 70 00:03:47,800 --> 00:03:51,200 Speaker 1: Market neutral. An interesting time to be market neutral. Michael considered, 71 00:03:51,200 --> 00:03:53,680 Speaker 1: I feel like we've been so range bound in crypto 72 00:03:54,080 --> 00:03:56,360 Speaker 1: at least the last I don't know, six months or so. 73 00:03:57,680 --> 00:04:01,000 Speaker 1: How do you explain this, uh, this tight range around 74 00:04:01,000 --> 00:04:04,120 Speaker 1: twenty thousand in bitcoin and sort of every other coin 75 00:04:04,560 --> 00:04:06,840 Speaker 1: major coin at least kind of falling in place and 76 00:04:06,880 --> 00:04:11,240 Speaker 1: being ranged bound? What what what explains that in your opinion? Well, 77 00:04:11,240 --> 00:04:13,280 Speaker 1: I mean there's a few factors, as we all know, 78 00:04:13,400 --> 00:04:16,560 Speaker 1: with the FED raising rates, money is tightened up, and 79 00:04:16,600 --> 00:04:19,159 Speaker 1: with the kind of big controversies we've had in crypto 80 00:04:19,279 --> 00:04:23,120 Speaker 1: around the terror crash and around the Celsius collapse, retail 81 00:04:23,160 --> 00:04:25,720 Speaker 1: has kind of fled the market. So what's happened in 82 00:04:25,800 --> 00:04:28,320 Speaker 1: recent months is we're seeing a lot more institutional flow 83 00:04:28,600 --> 00:04:31,159 Speaker 1: than we did over the course of the past five years. Now, 84 00:04:31,240 --> 00:04:34,200 Speaker 1: institutional players are smart, So when we might have been 85 00:04:34,200 --> 00:04:37,160 Speaker 1: playing checkers two years ago, we're playing chess now. And 86 00:04:37,160 --> 00:04:39,560 Speaker 1: when you're playing chess, things tighten up, and these guys 87 00:04:39,600 --> 00:04:41,880 Speaker 1: are keeping kind of things in the same range while 88 00:04:41,920 --> 00:04:44,440 Speaker 1: we kind of do price discovery but still try to 89 00:04:44,480 --> 00:04:47,000 Speaker 1: make a good profit. Maybe you can just talk a 90 00:04:47,040 --> 00:04:49,800 Speaker 1: little bit more about the crypto winter, and you just 91 00:04:49,880 --> 00:04:52,320 Speaker 1: mentioned the FED et cetera and some of the other 92 00:04:52,520 --> 00:04:55,520 Speaker 1: factors that have been behind the draw down that we've 93 00:04:55,520 --> 00:04:58,520 Speaker 1: seen this year. And another thing that's been happening in 94 00:04:58,560 --> 00:05:02,640 Speaker 1: crypto is that the major cryptocurrencies at least have been 95 00:05:02,640 --> 00:05:05,240 Speaker 1: trading in the same way that US stocks have, in 96 00:05:05,279 --> 00:05:08,440 Speaker 1: particular tech stocks. So can you talk about that and 97 00:05:08,760 --> 00:05:12,600 Speaker 1: what some of the factors are behind the draw down? Yeah, 98 00:05:12,600 --> 00:05:15,800 Speaker 1: and I think you know, with institutions coming in, they're 99 00:05:15,839 --> 00:05:18,359 Speaker 1: playing by the rules they've always played by. So you know, 100 00:05:18,360 --> 00:05:21,760 Speaker 1: we're crypto native Dexterity never traded equities is always traded crypto, 101 00:05:21,839 --> 00:05:23,800 Speaker 1: and that's kind of what we were raised on, so 102 00:05:23,880 --> 00:05:25,719 Speaker 1: to speak, over the course of our five year history. 103 00:05:26,160 --> 00:05:28,400 Speaker 1: But as institutions have come in, they're bringing in the 104 00:05:28,440 --> 00:05:32,200 Speaker 1: strategies they adopt in mainstream markets and equities markets in 105 00:05:32,240 --> 00:05:35,040 Speaker 1: f X, so I think part of what we're seeing 106 00:05:35,240 --> 00:05:38,760 Speaker 1: is that as equities Bitcoin drops and they kind of 107 00:05:38,920 --> 00:05:41,160 Speaker 1: stick together. And it's because the same strategies are being 108 00:05:41,240 --> 00:05:44,799 Speaker 1: enacted by a big players in the institutional world across 109 00:05:44,880 --> 00:05:48,479 Speaker 1: both asset classes. I'm kind of fascinated with the idea 110 00:05:48,640 --> 00:05:52,240 Speaker 1: of high frequency trading in crypto, Michael, because you know, 111 00:05:52,680 --> 00:05:56,080 Speaker 1: you know, I'm an older gentleman, so shall we say, 112 00:05:56,080 --> 00:05:58,159 Speaker 1: you know, I remember the old flash boys days in 113 00:05:58,200 --> 00:06:01,000 Speaker 1: the backlash and sort of a lot of the focus 114 00:06:01,040 --> 00:06:07,080 Speaker 1: of HFT in equities and traditional futures markets, uh, was 115 00:06:07,240 --> 00:06:09,960 Speaker 1: on that idea of latency. You know, if you could 116 00:06:10,320 --> 00:06:13,760 Speaker 1: co locate your machine right next to the matching engine 117 00:06:14,120 --> 00:06:16,800 Speaker 1: at the exchange, you could be the first in and 118 00:06:16,839 --> 00:06:20,479 Speaker 1: first out of every trade. I don't get the impression 119 00:06:20,520 --> 00:06:24,880 Speaker 1: that that's at all factor and crypto at all. Correct 120 00:06:24,880 --> 00:06:27,039 Speaker 1: me if I'm wrong. Maybe it is, but you know, 121 00:06:27,080 --> 00:06:30,760 Speaker 1: I'm curious what sort of the traditional HFT strategies. What 122 00:06:30,880 --> 00:06:34,240 Speaker 1: the kind of compare and contrast is between crypto h 123 00:06:34,320 --> 00:06:38,120 Speaker 1: f T and that old school low latency you know, 124 00:06:38,600 --> 00:06:42,400 Speaker 1: venue arbitrage type of h f T that was so 125 00:06:42,480 --> 00:06:45,960 Speaker 1: famous in the flashboy days. Yeah, it was still kind 126 00:06:45,960 --> 00:06:48,080 Speaker 1: of funny talking about crypto n h f T because 127 00:06:48,279 --> 00:06:52,719 Speaker 1: the real flashboys HFT you're talking nanoseconds to microseconds latency, 128 00:06:52,800 --> 00:06:55,640 Speaker 1: and in crypto you don't really get there, you know, 129 00:06:55,720 --> 00:06:58,680 Speaker 1: the differences co location is the exception. Most of the 130 00:06:58,720 --> 00:07:01,480 Speaker 1: major exchanges in the world are all in a WS 131 00:07:01,480 --> 00:07:03,080 Speaker 1: so it's not like I can go buy a machine 132 00:07:03,160 --> 00:07:04,760 Speaker 1: and put it right next to theirs and try to 133 00:07:04,760 --> 00:07:06,760 Speaker 1: minimize the length of my cable down to one meter 134 00:07:06,880 --> 00:07:10,679 Speaker 1: instead of two to be faster. So it's fundamentally different. 135 00:07:10,760 --> 00:07:13,080 Speaker 1: And there's two types of latency to think about. There's 136 00:07:13,120 --> 00:07:16,520 Speaker 1: internal and external. So external is that a w S 137 00:07:16,600 --> 00:07:18,400 Speaker 1: layer I want to submit in order, I've got to 138 00:07:18,440 --> 00:07:20,360 Speaker 1: send it through a bunch of machines across the world 139 00:07:20,360 --> 00:07:23,360 Speaker 1: and try to hit the receiving exchanges exchange as fast 140 00:07:23,360 --> 00:07:26,480 Speaker 1: as I can. Um that's something these days that's on 141 00:07:26,480 --> 00:07:29,440 Speaker 1: the order of milliseconds, And that's true whether you're Citadel 142 00:07:29,520 --> 00:07:32,320 Speaker 1: or whether you're Dexterity. And it's an interesting problem still 143 00:07:32,320 --> 00:07:35,720 Speaker 1: as solved when you talk about all these institutions entering 144 00:07:36,280 --> 00:07:40,640 Speaker 1: into the market, is how much of their strategies are 145 00:07:40,720 --> 00:07:43,120 Speaker 1: are sort of HFT based as well? Is it is it? 146 00:07:43,240 --> 00:07:45,560 Speaker 1: You know, are we really in a speed battle at 147 00:07:45,560 --> 00:07:49,119 Speaker 1: this point among the big traders of the crypto industry? 148 00:07:50,320 --> 00:07:53,200 Speaker 1: Not yet, but we're getting there and we can see 149 00:07:53,240 --> 00:07:56,840 Speaker 1: it now, and part of it is exchanges themselves maturing. 150 00:07:57,040 --> 00:07:59,880 Speaker 1: So we talked about latency, but it's also once I 151 00:08:00,040 --> 00:08:01,880 Speaker 1: sent a trade to an exchange, how are they going 152 00:08:01,920 --> 00:08:04,679 Speaker 1: to process it? And it's getting there first actually gonna 153 00:08:04,680 --> 00:08:08,440 Speaker 1: matter now in traditional markets definitely, but with crypto exchanges 154 00:08:08,600 --> 00:08:10,880 Speaker 1: there's this thing called jitter or is that this kind 155 00:08:10,920 --> 00:08:14,720 Speaker 1: of moment as orders arrive, how fast do they process them? 156 00:08:14,720 --> 00:08:16,520 Speaker 1: Do they queue them up properly? Do they do them 157 00:08:16,560 --> 00:08:19,920 Speaker 1: first come, first serve? And in the past they really didn't, 158 00:08:20,240 --> 00:08:22,120 Speaker 1: so whether I was a hundred milliseconds or a hundred 159 00:08:22,160 --> 00:08:24,000 Speaker 1: and ten million sseconds to get my message out didn't 160 00:08:24,040 --> 00:08:26,920 Speaker 1: matter much. They're improving, though, and this is going to 161 00:08:27,040 --> 00:08:29,640 Speaker 1: enable guys like the Citadels and the Jumps to the 162 00:08:29,680 --> 00:08:33,480 Speaker 1: world to get better. And it also means internal latency matters. 163 00:08:33,480 --> 00:08:36,120 Speaker 1: Because you talk about being in the traditional close to 164 00:08:36,360 --> 00:08:38,960 Speaker 1: the machine, that's not all that matters. It also matters 165 00:08:38,960 --> 00:08:41,760 Speaker 1: how fast you process information you receive from an exchange 166 00:08:41,760 --> 00:08:43,800 Speaker 1: and how fast you make a decision to send a 167 00:08:43,840 --> 00:08:46,520 Speaker 1: message back out. And while we didn't think about that 168 00:08:46,559 --> 00:08:48,760 Speaker 1: too much in the past because it just didn't matter 169 00:08:48,920 --> 00:08:50,560 Speaker 1: with the big guys in, we have to think about 170 00:08:50,600 --> 00:08:52,320 Speaker 1: that now we have to think about arctic to trade 171 00:08:52,360 --> 00:08:56,280 Speaker 1: or internal latency. So we're at the beginnings of this 172 00:08:56,520 --> 00:08:59,440 Speaker 1: kind of arms race to be faster, to be smarter, 173 00:09:00,160 --> 00:09:02,960 Speaker 1: to really win. Yeah, And is there a risk that 174 00:09:03,080 --> 00:09:06,680 Speaker 1: as more and more sophisticated players like this uh sort 175 00:09:06,720 --> 00:09:09,400 Speaker 1: of dominate the volume in crypto? Is there any worry, 176 00:09:09,400 --> 00:09:12,200 Speaker 1: any concerned that you might scare scare away the retail 177 00:09:12,400 --> 00:09:15,840 Speaker 1: investors and traders And you know, do you really need 178 00:09:15,920 --> 00:09:19,240 Speaker 1: them in the market to sort of optimize your your strategies, 179 00:09:19,320 --> 00:09:20,640 Speaker 1: you know what I mean, Like, do you need that 180 00:09:21,160 --> 00:09:25,520 Speaker 1: unsophisticated mom and pop trader to to kind of give 181 00:09:25,559 --> 00:09:29,640 Speaker 1: you the best opportunities? Yeah? I think you know, the 182 00:09:29,760 --> 00:09:32,920 Speaker 1: key about retail treaders is they're not price sensitive the 183 00:09:32,920 --> 00:09:36,640 Speaker 1: way institutions are. So institutions will care about a single 184 00:09:36,679 --> 00:09:39,200 Speaker 1: bit a hundred of a hundred will care about that, right, 185 00:09:39,600 --> 00:09:42,439 Speaker 1: but an institution, but a retail treader, they're not bothered 186 00:09:42,480 --> 00:09:44,959 Speaker 1: if they pay one penny or two pennies on top 187 00:09:45,000 --> 00:09:48,079 Speaker 1: of ten dollars to get a trade done. Um, So 188 00:09:48,720 --> 00:09:51,120 Speaker 1: when retail goes, it ends up being just a most 189 00:09:51,200 --> 00:09:55,240 Speaker 1: institutional players scrapping over a tiny little sliver. So having 190 00:09:55,280 --> 00:09:57,920 Speaker 1: retail of the market it's not great right now. But 191 00:09:58,360 --> 00:10:00,920 Speaker 1: because crypto is so unique, because there's new products that 192 00:10:00,960 --> 00:10:04,439 Speaker 1: people don't fully understand, because there's models that haven't been 193 00:10:04,440 --> 00:10:08,200 Speaker 1: developed for decades, like indratify, there's lots of opportunity to 194 00:10:08,280 --> 00:10:12,760 Speaker 1: kind of find alpha. Michael, can you talk a little 195 00:10:12,760 --> 00:10:15,920 Speaker 1: bit more about the involvement of the retail investor because 196 00:10:16,040 --> 00:10:20,640 Speaker 1: obviously we had them involved in when prices were going 197 00:10:20,720 --> 00:10:25,000 Speaker 1: up and everything was great, and so this year really 198 00:10:25,280 --> 00:10:28,920 Speaker 1: we've had the retail investor retreating. I'm wondering if you 199 00:10:28,960 --> 00:10:33,880 Speaker 1: think the retail investor will be staging a comeback or 200 00:10:34,040 --> 00:10:36,600 Speaker 1: if we need the retail investor to really be coming 201 00:10:36,640 --> 00:10:40,839 Speaker 1: back for prices to start to recover. I think we 202 00:10:40,880 --> 00:10:42,840 Speaker 1: do need retail to come back. And the truth is 203 00:10:43,640 --> 00:10:46,160 Speaker 1: crypto is not just supposed to be another speculative asset. 204 00:10:46,200 --> 00:10:48,800 Speaker 1: It's supposed to have cases, it's supposed to change the 205 00:10:48,800 --> 00:10:52,959 Speaker 1: way finance works, and that ultimately relies on retail. Now, 206 00:10:53,000 --> 00:10:55,480 Speaker 1: cryptos had this long journey of trying to find products fit. 207 00:10:56,000 --> 00:10:58,160 Speaker 1: Really what does it matter to the everyday person to 208 00:10:58,160 --> 00:11:01,959 Speaker 1: be using or smart contract or any of these things, 209 00:11:02,400 --> 00:11:04,960 Speaker 1: and were still not there yet. So you know what 210 00:11:05,080 --> 00:11:07,640 Speaker 1: really excited sparked the last bull run? I mean there 211 00:11:07,640 --> 00:11:09,360 Speaker 1: were a number of factors, but a key factor was 212 00:11:09,400 --> 00:11:12,040 Speaker 1: there was lots of cool new projects with unique applications 213 00:11:12,040 --> 00:11:14,440 Speaker 1: that people wanted to try, many of them financial and 214 00:11:14,440 --> 00:11:19,000 Speaker 1: many of them gaming, some things, other things. But without 215 00:11:19,040 --> 00:11:23,360 Speaker 1: that excitement, it's just speculation. So without retail that's excited 216 00:11:23,400 --> 00:11:26,800 Speaker 1: about product fit, it's not gonna be much fun. And 217 00:11:26,840 --> 00:11:29,360 Speaker 1: what is it that would sort of help bring them 218 00:11:29,360 --> 00:11:32,040 Speaker 1: back in? What would it be that we need to 219 00:11:32,080 --> 00:11:35,440 Speaker 1: see maybe some development or something that you can imagine 220 00:11:35,480 --> 00:11:39,000 Speaker 1: that would help them come back into the market. Right, 221 00:11:40,240 --> 00:11:44,560 Speaker 1: FOMO is very important. I think I think I'll point 222 00:11:44,559 --> 00:11:47,040 Speaker 1: to two major categories. You know, One is n f 223 00:11:47,080 --> 00:11:49,959 Speaker 1: T S, which I'm a skeptic of everything. I was 224 00:11:49,960 --> 00:11:52,560 Speaker 1: a skeptic a bit point from day one. UM, and 225 00:11:52,600 --> 00:11:54,280 Speaker 1: so n f T is always kind of seemed fine 226 00:11:54,320 --> 00:11:56,640 Speaker 1: to me. But there is some attraction there. Maybe it's 227 00:11:56,640 --> 00:11:58,600 Speaker 1: because I'm from the last generation, but I don't like 228 00:11:58,640 --> 00:12:01,439 Speaker 1: collecting things I can touch. It turns out a lot 229 00:12:01,440 --> 00:12:04,200 Speaker 1: of younger people do, UM, so they might be value 230 00:12:04,200 --> 00:12:06,160 Speaker 1: and n f T s there, especially if they're tied 231 00:12:06,200 --> 00:12:08,880 Speaker 1: to access. You can get into this club, you have 232 00:12:09,000 --> 00:12:12,640 Speaker 1: these rights. That's an interesting thing. UM. And the same 233 00:12:12,640 --> 00:12:15,920 Speaker 1: with gaming. You know, we've seen loot boxes in traditional gaming, 234 00:12:16,040 --> 00:12:19,400 Speaker 1: you know, buying player cards for FIFA or you know 235 00:12:19,600 --> 00:12:22,800 Speaker 1: v bucks for Fortnite. Bringing that onto the blockchain has 236 00:12:22,880 --> 00:12:25,120 Speaker 1: interesting applications, but it has to be done right, and 237 00:12:25,120 --> 00:12:27,320 Speaker 1: it has to be away consumers can use. This is 238 00:12:27,320 --> 00:12:30,560 Speaker 1: the key problem with crypto. It's a pain to use, 239 00:12:31,360 --> 00:12:34,160 Speaker 1: and no one's really cracked that UI problem yet. I 240 00:12:34,200 --> 00:12:36,480 Speaker 1: think once that's solved it gets much easier to be 241 00:12:36,480 --> 00:12:39,439 Speaker 1: excited about it and retail come back. Well, let's talk 242 00:12:39,480 --> 00:12:43,360 Speaker 1: about that UI issue, because I'm interested. You know, how 243 00:12:43,440 --> 00:12:50,680 Speaker 1: you approach um this fragmented all over the world crypto industry. 244 00:12:50,720 --> 00:12:52,600 Speaker 1: I mean, I don't even know what the latest count is. 245 00:12:52,679 --> 00:12:56,240 Speaker 1: What is it like ten fifteen thousand different coins going around? 246 00:12:56,440 --> 00:12:58,880 Speaker 1: You know? So does a firm like your yours you 247 00:12:58,960 --> 00:13:03,000 Speaker 1: just focus on the the majors or are you dabbling 248 00:13:03,000 --> 00:13:05,280 Speaker 1: out into the defy world? You know? How do you 249 00:13:05,600 --> 00:13:09,440 Speaker 1: decide what the trade? Yeah, you know, our bread and 250 00:13:09,480 --> 00:13:12,240 Speaker 1: butter as a high frequency trading firm is high volume. 251 00:13:12,880 --> 00:13:16,200 Speaker 1: So obviously the highest volumes are immediately going to be BTCNA. 252 00:13:16,880 --> 00:13:19,760 Speaker 1: Now what's the flavor of the week is a question 253 00:13:19,800 --> 00:13:22,600 Speaker 1: were always asking because coin x, y Z might be 254 00:13:22,679 --> 00:13:24,960 Speaker 1: having all kinds of volume for reasons that we don't 255 00:13:24,960 --> 00:13:27,240 Speaker 1: really care about. Were in hf T shop, But it's 256 00:13:27,320 --> 00:13:29,640 Speaker 1: very much data and data out. I've seen volume spike 257 00:13:29,720 --> 00:13:31,839 Speaker 1: over there, I see numbers of my back tests that 258 00:13:31,880 --> 00:13:33,920 Speaker 1: are promising. I'm going to go trade that. I don't 259 00:13:33,920 --> 00:13:36,400 Speaker 1: really care what it is. So that's really what we 260 00:13:36,480 --> 00:13:39,280 Speaker 1: succeed at. We look for high volume spikes and activity 261 00:13:39,360 --> 00:13:42,319 Speaker 1: and go trade there as fast as we can. Um 262 00:13:42,400 --> 00:13:45,439 Speaker 1: That being said, sometimes their opportunities and defy. Sometimes it's 263 00:13:45,480 --> 00:13:47,840 Speaker 1: interesting signals coming from that part of the world, but 264 00:13:47,920 --> 00:13:51,440 Speaker 1: it's not dexterities kind of center of excellence. Can you 265 00:13:51,520 --> 00:13:54,319 Speaker 1: talk a little bit more about what specifically you guys do, 266 00:13:54,440 --> 00:13:56,520 Speaker 1: because you and I have talked in the past about 267 00:13:56,520 --> 00:14:00,280 Speaker 1: market neutral strategies, which we mentioned earlier in the show. 268 00:14:00,520 --> 00:14:03,200 Speaker 1: So layout for us, what is that, what you guys 269 00:14:03,240 --> 00:14:06,880 Speaker 1: are doing, what you're utilizing, what what a market neutral 270 00:14:06,880 --> 00:14:10,240 Speaker 1: strategy really is, And then also tell us how you 271 00:14:10,240 --> 00:14:12,280 Speaker 1: guys are holding up this year and how market neutral 272 00:14:12,280 --> 00:14:14,959 Speaker 1: strategies are holding up this year. Yeah, and you have 273 00:14:15,040 --> 00:14:17,160 Speaker 1: a high like kind of finance. One on one level 274 00:14:17,200 --> 00:14:20,120 Speaker 1: of market neutral strategy is one where you're indifferent to 275 00:14:20,200 --> 00:14:23,640 Speaker 1: the price direction of the assets you're trading. So Dexterity 276 00:14:23,680 --> 00:14:26,000 Speaker 1: doesn't care put Point goes up or down in terms 277 00:14:26,040 --> 00:14:28,800 Speaker 1: of its piano. What we care about is volatility and 278 00:14:28,880 --> 00:14:32,080 Speaker 1: activity and pricing inefficiencies. That's what we really look for, 279 00:14:32,560 --> 00:14:35,120 Speaker 1: and that's what makes us market neutral. And it's kind 280 00:14:35,120 --> 00:14:37,360 Speaker 1: of a few flavored strategies that work like this. You've 281 00:14:37,400 --> 00:14:39,480 Speaker 1: heard of the basis trade, maybe maybe you've heard of 282 00:14:39,480 --> 00:14:43,160 Speaker 1: statistical arbitrage strategies or market making strategies. These are all 283 00:14:43,160 --> 00:14:46,360 Speaker 1: strategies that generate alpha, but at the same time, the 284 00:14:46,400 --> 00:14:48,480 Speaker 1: price of the underlying doesn't really matter to you whether 285 00:14:48,480 --> 00:14:51,160 Speaker 1: it goes up or down, And the good thing about 286 00:14:51,160 --> 00:14:53,880 Speaker 1: market neutral is that whether it's rain or shine, you're 287 00:14:53,880 --> 00:14:56,520 Speaker 1: doing okay. You're printing money and things are going the 288 00:14:56,560 --> 00:15:00,240 Speaker 1: right way. You have a very high sharp strategy. Um. 289 00:15:00,280 --> 00:15:02,640 Speaker 1: The downside is when there's a bull run like there 290 00:15:02,680 --> 00:15:05,640 Speaker 1: wasn't up till at the beginning of this year, Um, 291 00:15:05,760 --> 00:15:08,400 Speaker 1: you're not getting those outsize asymmetric gains of somebody who 292 00:15:08,480 --> 00:15:12,240 Speaker 1: just goes leopard long. The good news is when Celsius 293 00:15:12,240 --> 00:15:14,960 Speaker 1: falls down and so does bitcoins price, you don't get 294 00:15:15,040 --> 00:15:18,080 Speaker 1: hurt either. So that's our goal is to kind of 295 00:15:18,760 --> 00:15:22,640 Speaker 1: be be ready for any market. Can you maybe give 296 00:15:22,720 --> 00:15:25,640 Speaker 1: us an example of a strategy or a trade you 297 00:15:25,960 --> 00:15:29,960 Speaker 1: have utilized recently and talk a little bit more specifically 298 00:15:29,960 --> 00:15:33,400 Speaker 1: about what returns actually look like. If somebody is running 299 00:15:33,440 --> 00:15:36,240 Speaker 1: a good market neutral strategy this year, what do those 300 00:15:36,400 --> 00:15:39,960 Speaker 1: returns look like? Because obviously within crypto everything else has 301 00:15:40,000 --> 00:15:42,200 Speaker 1: been just suffering so much. I think you know. The 302 00:15:42,240 --> 00:15:44,680 Speaker 1: example I used for a typical stat our strategy is 303 00:15:44,720 --> 00:15:48,840 Speaker 1: one inequities. Let's say you buy some uh Coca Cola stock, 304 00:15:49,400 --> 00:15:51,720 Speaker 1: and you see your Coca Cola stock pops ten percent, 305 00:15:51,760 --> 00:15:54,200 Speaker 1: but PEPSI doesn't. Now they're not the same thing coke 306 00:15:54,240 --> 00:15:56,360 Speaker 1: and pepsi. But whatever is good for coke is probably 307 00:15:56,360 --> 00:15:58,720 Speaker 1: good for pepsi. So maybe you sell all your coke, 308 00:15:58,960 --> 00:16:00,960 Speaker 1: you spend that the proceeds it's to buy some pepsi, 309 00:16:01,080 --> 00:16:03,440 Speaker 1: and you wait and if things go right, it also 310 00:16:03,480 --> 00:16:05,720 Speaker 1: goes up ten. And now you've kind of made this 311 00:16:05,760 --> 00:16:08,800 Speaker 1: stat art strategy where you've traded two things that aren't fungible, 312 00:16:09,200 --> 00:16:10,600 Speaker 1: but it was a good signal that you're going to 313 00:16:10,680 --> 00:16:14,640 Speaker 1: make money. It's a bit more sophisticated in that simple example. 314 00:16:14,640 --> 00:16:16,920 Speaker 1: In the real world, and in crypto, you have a 315 00:16:16,920 --> 00:16:20,120 Speaker 1: lot of different products that are margin in different assets. 316 00:16:20,240 --> 00:16:22,880 Speaker 1: So the price of bitcoin in us D tether is 317 00:16:22,880 --> 00:16:24,440 Speaker 1: going to be different than the price of bitcoin in 318 00:16:24,520 --> 00:16:27,360 Speaker 1: us D. They're not fungible, they're not the same product, 319 00:16:27,440 --> 00:16:31,400 Speaker 1: but they're highly correlated, so there might be opportunities there. Um. 320 00:16:31,400 --> 00:16:33,400 Speaker 1: So that's a very simple example of stat art strategy 321 00:16:33,440 --> 00:16:36,400 Speaker 1: that makes sense um in terms of returns. One of 322 00:16:36,400 --> 00:16:37,840 Speaker 1: the problems of being a prop shop is a very 323 00:16:37,880 --> 00:16:41,200 Speaker 1: defensive of what our returns are. UM. But I can 324 00:16:41,240 --> 00:16:44,880 Speaker 1: tell you that if you're doing north, you're probably doing 325 00:16:44,880 --> 00:16:47,640 Speaker 1: it right. But you can get better than that. Wow, 326 00:16:48,000 --> 00:16:58,240 Speaker 1: North I'll take that in this market for sure. That's yeah, Mike. 327 00:16:58,280 --> 00:17:02,680 Speaker 1: I'm curious how you see uh, the market structure in 328 00:17:02,760 --> 00:17:07,439 Speaker 1: crypto evolving. You know, it strikes me as it's probably 329 00:17:07,480 --> 00:17:09,439 Speaker 1: a tough time to be in exchange. You're tougher than 330 00:17:09,480 --> 00:17:12,440 Speaker 1: it was. Volumes are low, prices are low. As you said, 331 00:17:12,440 --> 00:17:17,719 Speaker 1: you're you're losing that retail uh interest. Um are we 332 00:17:17,800 --> 00:17:19,600 Speaker 1: do for sort of a replay of what we saw 333 00:17:19,600 --> 00:17:21,320 Speaker 1: in the equities market where there was a lot of 334 00:17:21,320 --> 00:17:26,000 Speaker 1: consolidation of exchanges and a lot of sort of efforts 335 00:17:26,040 --> 00:17:30,240 Speaker 1: to uh figure out ways to bring in more revenue 336 00:17:30,359 --> 00:17:34,040 Speaker 1: for exchanges, either by selling data or you know, selling 337 00:17:34,080 --> 00:17:37,160 Speaker 1: co location services that sort of thing. Obviously, as you said, 338 00:17:37,359 --> 00:17:39,919 Speaker 1: you can't really co locate in the cloud. But you know, 339 00:17:40,080 --> 00:17:41,879 Speaker 1: walk us through how you see the sort of the 340 00:17:41,920 --> 00:17:45,320 Speaker 1: market structure and the big players evolving from here. Given 341 00:17:45,359 --> 00:17:48,359 Speaker 1: this this sort of lackluster year we've had had in 342 00:17:48,400 --> 00:17:51,359 Speaker 1: crypto um or the boom times over, you know, is 343 00:17:51,400 --> 00:17:54,640 Speaker 1: it is it's sort of a time for belt tightening 344 00:17:54,640 --> 00:17:58,000 Speaker 1: among the major players, and we could see you know, 345 00:17:58,480 --> 00:18:01,560 Speaker 1: a different crypto market structure at the other end of this. 346 00:18:03,320 --> 00:18:05,679 Speaker 1: You know, I think there's two major camps amongst the 347 00:18:05,680 --> 00:18:08,879 Speaker 1: crypto exchanges right now. And keep in mind crypto emerged 348 00:18:08,880 --> 00:18:10,879 Speaker 1: from a type of rebellion. There was a lack of 349 00:18:10,920 --> 00:18:14,760 Speaker 1: trust and institutions people want to have. Didn't trust banks. 350 00:18:14,760 --> 00:18:17,399 Speaker 1: They want to control their own assets, and so a 351 00:18:17,440 --> 00:18:19,840 Speaker 1: lot of the guys who founded the big exchanges have 352 00:18:20,080 --> 00:18:25,159 Speaker 1: that kind of mavericky kind of ideology. Um And you know, 353 00:18:25,200 --> 00:18:27,560 Speaker 1: for Dexterity, the reason we started in crypto was because 354 00:18:27,560 --> 00:18:30,119 Speaker 1: the barriers to entry much lower. I didn't have to 355 00:18:30,119 --> 00:18:32,479 Speaker 1: pay a million dollars a month in data from twelve 356 00:18:32,480 --> 00:18:34,800 Speaker 1: exchanges to get it going. I didn't have to pay 357 00:18:34,800 --> 00:18:36,960 Speaker 1: for co location. I didn't have to buy a microwave tower, 358 00:18:37,520 --> 00:18:40,960 Speaker 1: right And I think some founders of cryptic changes love that. 359 00:18:40,960 --> 00:18:42,920 Speaker 1: That's what they want to see as a level playing field. 360 00:18:42,920 --> 00:18:44,439 Speaker 1: But you can't buy your way in. You have to 361 00:18:44,480 --> 00:18:48,119 Speaker 1: be smarter. And there's other exchanges that are saying the 362 00:18:48,160 --> 00:18:52,040 Speaker 1: TRAFFI market descry five model makes sense, and that's exactly 363 00:18:52,040 --> 00:18:55,200 Speaker 1: where we should go. So I think some exchanges dogmatically 364 00:18:55,200 --> 00:18:56,800 Speaker 1: will say, no, we don't want to sell data, No 365 00:18:56,920 --> 00:18:58,680 Speaker 1: we don't want to sell cola. That's not the world. 366 00:18:58,800 --> 00:19:01,119 Speaker 1: We want the future to be and there are others 367 00:19:01,520 --> 00:19:03,560 Speaker 1: that will say, yeah, this makes perfect sense, and I 368 00:19:03,600 --> 00:19:05,359 Speaker 1: want to kind of limit all the small guys and 369 00:19:05,400 --> 00:19:07,800 Speaker 1: have five major counterparties. Who are you know, the brand 370 00:19:07,880 --> 00:19:11,080 Speaker 1: name h F T s and institutional traders in the world. Um, 371 00:19:11,080 --> 00:19:13,720 Speaker 1: and that's what life should look like. It's hard to 372 00:19:13,760 --> 00:19:16,240 Speaker 1: say who's gonna win. The pessimist Simmy says attracted by guys, 373 00:19:17,000 --> 00:19:20,000 Speaker 1: But as someone who came as an outsider into crypto 374 00:19:20,080 --> 00:19:22,440 Speaker 1: and into finance, I really hope it's the guys who 375 00:19:22,440 --> 00:19:24,399 Speaker 1: are more altruistic and want to see a different financial 376 00:19:24,440 --> 00:19:27,280 Speaker 1: world going forward. Can you talk a bit more about 377 00:19:27,280 --> 00:19:29,919 Speaker 1: the state of play for exchanges right now, because if 378 00:19:29,960 --> 00:19:34,280 Speaker 1: we have people trading less, if if volumes are much lower, 379 00:19:34,320 --> 00:19:37,520 Speaker 1: what does that mean, what does it mean for exchanges 380 00:19:37,560 --> 00:19:40,119 Speaker 1: and can they still continue to make money in this 381 00:19:40,240 --> 00:19:43,080 Speaker 1: environment a fewer people are trading? You know? I think 382 00:19:43,080 --> 00:19:45,040 Speaker 1: what the interesting thing about criptual exchanges is you know 383 00:19:45,119 --> 00:19:47,320 Speaker 1: exactly how much money they're making because their fees are 384 00:19:47,320 --> 00:19:49,760 Speaker 1: public and their volumes are public, and it's not a 385 00:19:49,760 --> 00:19:52,479 Speaker 1: black box. Um. They are the exchange and broker combined. 386 00:19:52,680 --> 00:19:54,840 Speaker 1: So at a minimum, you know what their basic exchange 387 00:19:54,840 --> 00:19:56,280 Speaker 1: fees are and then they have lots of other things 388 00:19:56,320 --> 00:19:58,080 Speaker 1: going on the side, O, t C, d C, what 389 00:19:58,160 --> 00:20:01,240 Speaker 1: have you. Um, the kind of big leading exchanges, they're 390 00:20:01,280 --> 00:20:04,280 Speaker 1: still doing great. I'm not really worried about them. It's 391 00:20:04,320 --> 00:20:05,960 Speaker 1: as you go into those two two and tier three 392 00:20:05,960 --> 00:20:09,040 Speaker 1: exchanges you have to wonder what's going to happen. UM. Now, 393 00:20:09,080 --> 00:20:12,760 Speaker 1: for them, exit kind of can make sense, but only 394 00:20:12,960 --> 00:20:14,879 Speaker 1: if it's the right kind of exit. Now for a 395 00:20:14,880 --> 00:20:18,680 Speaker 1: big exchange, you know, flow comes organically. It's very easy 396 00:20:18,720 --> 00:20:21,360 Speaker 1: for me to trade from Exchange A. Could drop Exchange 397 00:20:21,359 --> 00:20:23,760 Speaker 1: A and start trading on Exchange B. So there's no 398 00:20:23,800 --> 00:20:26,200 Speaker 1: point in buying exchange being necessarily unless they have a 399 00:20:26,280 --> 00:20:29,480 Speaker 1: unique geographical positioning where they've got a user base that 400 00:20:29,520 --> 00:20:32,160 Speaker 1: the big exchanges don't have. So I do expect big 401 00:20:32,160 --> 00:20:35,840 Speaker 1: exchange just to purchase small exchanges that have geographic strength. 402 00:20:36,560 --> 00:20:38,960 Speaker 1: And also exchanges have licenses, and you see an ft 403 00:20:39,119 --> 00:20:41,200 Speaker 1: X and coin base both do this. Coin Base for 404 00:20:41,240 --> 00:20:43,159 Speaker 1: example buying fair x, so they could get that Future's 405 00:20:43,200 --> 00:20:46,240 Speaker 1: license in the US. UM. That's where I see consolidation 406 00:20:46,280 --> 00:20:49,160 Speaker 1: making sense. UM. And in terms of revenue, yeah, they're 407 00:20:49,400 --> 00:20:53,520 Speaker 1: gonna have to get creative, and doesn't mean buying data maybe, um, 408 00:20:53,560 --> 00:20:55,960 Speaker 1: but today, looking at their exchange fees, I think the 409 00:20:56,000 --> 00:20:59,120 Speaker 1: big guys are fine. You know, Michael, It's funny when 410 00:20:59,160 --> 00:21:02,000 Speaker 1: Viltata booked you for this podcast a few weeks ago, 411 00:21:02,040 --> 00:21:05,480 Speaker 1: I think the last thing I ever imagined we'd discuss 412 00:21:05,600 --> 00:21:09,719 Speaker 1: would be Kim Kardashian. But uh, here we are, you know, 413 00:21:10,000 --> 00:21:13,400 Speaker 1: uh SEC dropping a bombshell this week, finding uh Kim 414 00:21:13,480 --> 00:21:18,439 Speaker 1: Kardashian for her uh being a crypto influencer on social 415 00:21:18,440 --> 00:21:22,840 Speaker 1: media without disclosing she was being paid. But I look 416 00:21:22,880 --> 00:21:25,560 Speaker 1: at that action and I really have to scratch my 417 00:21:25,640 --> 00:21:28,679 Speaker 1: head because here, you know, Gary Geintsler of the SEC 418 00:21:28,920 --> 00:21:32,399 Speaker 1: is coming out and basically saying there's these tens of 419 00:21:32,480 --> 00:21:38,000 Speaker 1: thousands of tokens we consider securities. Um. And if you 420 00:21:38,080 --> 00:21:41,160 Speaker 1: read between the lines, the unspoken part is, well, we're 421 00:21:41,160 --> 00:21:43,960 Speaker 1: gonna let all these on you know, unregistered securities be, 422 00:21:44,080 --> 00:21:46,679 Speaker 1: but we're gonna go after the Kim Kardashians of the 423 00:21:46,720 --> 00:21:50,879 Speaker 1: world for shilling them on social media, which, you know, 424 00:21:51,480 --> 00:21:54,280 Speaker 1: it makes me wonder about, you know, is there a 425 00:21:54,320 --> 00:21:59,320 Speaker 1: message from the regulation standpoint of something like that that, look, 426 00:21:59,359 --> 00:22:01,800 Speaker 1: these things are here to stay, whether or not they 427 00:22:01,960 --> 00:22:05,399 Speaker 1: are registered securities. Were not um that the sort of 428 00:22:05,400 --> 00:22:08,560 Speaker 1: horses out of the barn and and the regulators are 429 00:22:08,640 --> 00:22:13,360 Speaker 1: trying now to just uh deal with the market as 430 00:22:13,400 --> 00:22:16,240 Speaker 1: it is rather than blow it up or you know, 431 00:22:17,960 --> 00:22:20,240 Speaker 1: make it start from scratch. But for a guy like you, 432 00:22:20,280 --> 00:22:23,040 Speaker 1: I wonder how much does it matter regulation? I mean, 433 00:22:23,119 --> 00:22:25,919 Speaker 1: is it is it a major risk to you? Or 434 00:22:26,000 --> 00:22:27,520 Speaker 1: is it the type of thing like you know, you'll 435 00:22:27,560 --> 00:22:29,600 Speaker 1: you'll keep dancing while the music is playing and if 436 00:22:29,600 --> 00:22:32,320 Speaker 1: they you know, if the crackdown comes, you'll you'll you'll 437 00:22:32,320 --> 00:22:34,399 Speaker 1: figure out a second career choice. You know, how how 438 00:22:34,440 --> 00:22:37,920 Speaker 1: are you thinking about it all? You know what I mean? Yeah? 439 00:22:37,920 --> 00:22:39,880 Speaker 1: And I think you know I'm an explawyer, actually believe 440 00:22:39,880 --> 00:22:41,520 Speaker 1: it or not. But don't worry. I'm much better now. 441 00:22:42,000 --> 00:22:45,200 Speaker 1: And the way, you know, the way regulators have to 442 00:22:45,240 --> 00:22:47,959 Speaker 1: work with crypto, it's so hard. I do not envy them, 443 00:22:48,000 --> 00:22:51,240 Speaker 1: because you've got this borderless asset that's taken off while 444 00:22:51,280 --> 00:22:53,680 Speaker 1: the world was on fire, there were so many things 445 00:22:53,680 --> 00:22:56,120 Speaker 1: happening in the world, and you've had COVID and wars 446 00:22:56,240 --> 00:22:58,359 Speaker 1: and how do you actually worry about regulating crypto of 447 00:22:58,400 --> 00:23:01,040 Speaker 1: all things? And it's stuck up on and it gut big. 448 00:23:01,640 --> 00:23:03,439 Speaker 1: So now they've got this borderless thing and how they 449 00:23:03,440 --> 00:23:05,880 Speaker 1: control it. So you're right. The opinions and the actual 450 00:23:05,960 --> 00:23:07,760 Speaker 1: letners we've seen and they're kind of they're kind of 451 00:23:07,800 --> 00:23:10,400 Speaker 1: hard to read because they don't dictate general rules. They 452 00:23:10,440 --> 00:23:13,600 Speaker 1: indicate them. But I do feel this kind of a 453 00:23:13,600 --> 00:23:17,080 Speaker 1: a difficulty, and how do you make rules for something 454 00:23:17,080 --> 00:23:19,840 Speaker 1: that's so borderless and that's just going to jurisdiction hop 455 00:23:19,880 --> 00:23:23,200 Speaker 1: as need be. Um? Now, do I worry about that? 456 00:23:23,240 --> 00:23:25,240 Speaker 1: A lot? Of course I do, because we need to 457 00:23:25,280 --> 00:23:28,080 Speaker 1: trade these things. The good news is the big exchanges 458 00:23:28,119 --> 00:23:30,440 Speaker 1: out there are also very worried about this, and they're 459 00:23:30,440 --> 00:23:33,200 Speaker 1: getting proactive. Um. Even if you're ask me three years ago, 460 00:23:33,240 --> 00:23:35,440 Speaker 1: it was wild West and I won't mention any names 461 00:23:35,480 --> 00:23:37,960 Speaker 1: by name, but you know them. They were definitely taking 462 00:23:38,000 --> 00:23:41,080 Speaker 1: some chances with the regulators and now they're trying to 463 00:23:41,119 --> 00:23:43,440 Speaker 1: rectify their ways and get into a position where they're 464 00:23:43,480 --> 00:23:46,840 Speaker 1: offering is compliant with the relevant jurisdictions they participate in. 465 00:23:47,600 --> 00:23:49,480 Speaker 1: And so you know, my hope is that we're going 466 00:23:49,520 --> 00:23:52,119 Speaker 1: to get there in time and the regulators won't really 467 00:23:52,200 --> 00:23:54,240 Speaker 1: knock anybody out, and I think that's what they're doing. 468 00:23:54,680 --> 00:23:57,399 Speaker 1: People are cooperative with regulators now, and they're trying to 469 00:23:57,440 --> 00:24:00,480 Speaker 1: find a framework that works because everyone knows this isn't 470 00:24:00,480 --> 00:24:03,560 Speaker 1: going away anymore. Cryptos here to stay. Whether it's a 471 00:24:03,640 --> 00:24:07,560 Speaker 1: chillion dollar asset clus or not, it's pretty darn sticky. Um. 472 00:24:07,600 --> 00:24:10,280 Speaker 1: So that's my expectation is they're going to have to 473 00:24:10,320 --> 00:24:13,640 Speaker 1: kind of struggle to give kind of really clear opinions, 474 00:24:13,680 --> 00:24:16,480 Speaker 1: but they'll get there eventually working with the relevant parties. 475 00:24:16,880 --> 00:24:20,399 Speaker 1: But what does regulation actually look like? Because I've been 476 00:24:20,400 --> 00:24:22,560 Speaker 1: covering crypto for the last four and a half years, 477 00:24:22,600 --> 00:24:25,280 Speaker 1: I feel like at least once a week somebody tells 478 00:24:25,320 --> 00:24:29,080 Speaker 1: me that regulation is coming, regulators are going to crack down, 479 00:24:29,119 --> 00:24:31,040 Speaker 1: and that actually it's going to be good for the 480 00:24:31,080 --> 00:24:35,040 Speaker 1: crypto space. But I feel like a very squashy subject. 481 00:24:35,200 --> 00:24:40,360 Speaker 1: So what does regulating the crypto markets actually look like? Yeah? 482 00:24:40,400 --> 00:24:42,240 Speaker 1: And I think I think the problem is that in regulation, 483 00:24:42,280 --> 00:24:45,680 Speaker 1: you have existing frameworks for trap FI and the traditional 484 00:24:45,680 --> 00:24:48,080 Speaker 1: thing you want to do is just apply that to crypto, 485 00:24:48,280 --> 00:24:49,919 Speaker 1: and it's clear it doesn't work. And we saw this 486 00:24:49,960 --> 00:24:52,280 Speaker 1: in the early Internet days when you talked about regulating 487 00:24:52,280 --> 00:24:54,320 Speaker 1: media and you just couldn't do it the same way 488 00:24:54,359 --> 00:24:57,639 Speaker 1: because Internet was borderless, So it's not clear to me 489 00:24:57,720 --> 00:24:59,239 Speaker 1: what the end state is and I don't know if 490 00:24:59,240 --> 00:25:02,320 Speaker 1: it means luciening of certain restrictions in the traditional world 491 00:25:02,680 --> 00:25:04,879 Speaker 1: or tightening in crypto. I think it really could go 492 00:25:04,960 --> 00:25:07,960 Speaker 1: either way. Um, but it's really hard to say. It 493 00:25:08,280 --> 00:25:09,720 Speaker 1: was a problem I count solve. I would go do 494 00:25:09,800 --> 00:25:11,320 Speaker 1: it and hopefully make a lot of money doing it, 495 00:25:11,840 --> 00:25:15,760 Speaker 1: but it's a hard one. How did uh? Was the 496 00:25:15,760 --> 00:25:20,040 Speaker 1: the ethery emerge a good trading opportunity for you guys? 497 00:25:21,720 --> 00:25:23,960 Speaker 1: You know, being high fregnacy trader is what we worry 498 00:25:23,960 --> 00:25:26,720 Speaker 1: about is edge cases, and the merge is an edge 499 00:25:26,760 --> 00:25:30,400 Speaker 1: case in that what's going to happen is trading activity 500 00:25:30,480 --> 00:25:32,320 Speaker 1: going to go through the roo roof or exchange is 501 00:25:32,320 --> 00:25:35,119 Speaker 1: going to explode, you know what could go wrong? And 502 00:25:35,160 --> 00:25:37,960 Speaker 1: we didn't know, and we're conservatives, so we played it safe. 503 00:25:38,440 --> 00:25:42,000 Speaker 1: Now we lost our machines like hawks, um, and we 504 00:25:42,160 --> 00:25:44,760 Speaker 1: just kind of navigated it in a very safe way. 505 00:25:45,200 --> 00:25:47,240 Speaker 1: That being said, there were definitely others who were making 506 00:25:47,320 --> 00:25:49,440 Speaker 1: use of this moment to kind of find ways to 507 00:25:49,480 --> 00:25:52,119 Speaker 1: generate alpha, and I think that the big trade everyone 508 00:25:52,200 --> 00:25:54,240 Speaker 1: was doing, and it appeared in the funding rates on 509 00:25:54,280 --> 00:25:57,960 Speaker 1: perpetual softs of either was simply buying spot either going 510 00:25:58,040 --> 00:26:01,520 Speaker 1: short on the perpetual and then acting that fork because 511 00:26:01,520 --> 00:26:03,960 Speaker 1: when the merge went through, if you were holding any eat, 512 00:26:04,080 --> 00:26:06,960 Speaker 1: you also got e W a proof of workings. So 513 00:26:06,960 --> 00:26:09,240 Speaker 1: now you have two coins, the second one kind of free, 514 00:26:09,560 --> 00:26:11,200 Speaker 1: and then you go dump that as soon as you can. 515 00:26:11,520 --> 00:26:13,320 Speaker 1: And there was a race among exchanges to see you 516 00:26:13,359 --> 00:26:15,880 Speaker 1: could list at first and open up deposits and withdraws 517 00:26:15,920 --> 00:26:17,600 Speaker 1: because they wanted to get the fees off of all 518 00:26:17,600 --> 00:26:20,439 Speaker 1: that dumping. And that's exactly what we saw. We didn't partake, 519 00:26:20,520 --> 00:26:21,720 Speaker 1: but it was you know, it's a fund trade to 520 00:26:21,800 --> 00:26:24,159 Speaker 1: run if that's your kind of thing. Yeah, So I 521 00:26:24,200 --> 00:26:28,280 Speaker 1: get the impression you are mainly trying to profit off 522 00:26:28,320 --> 00:26:33,040 Speaker 1: of price appreciation or depreciation going longer short, not getting 523 00:26:33,080 --> 00:26:36,800 Speaker 1: involved in the yield farming. Uh, you know the terra 524 00:26:36,960 --> 00:26:39,679 Speaker 1: dollar and and Celsius is of the world. Is that 525 00:26:40,280 --> 00:26:42,920 Speaker 1: is that a safe assumption? And and how do you 526 00:26:42,920 --> 00:26:45,080 Speaker 1: you know, how do how does yield farming and that 527 00:26:45,119 --> 00:26:49,080 Speaker 1: whole end of the industry fit into your your strategies 528 00:26:49,240 --> 00:26:52,280 Speaker 1: if it does at all? Yeah, you know, it's not 529 00:26:52,320 --> 00:26:55,160 Speaker 1: something we do much of. Um, and there's there's kind 530 00:26:55,160 --> 00:26:57,320 Speaker 1: of a reason. Now now they can be very profitable 531 00:26:57,320 --> 00:26:59,240 Speaker 1: on a lot of people that are very successful doing it. 532 00:26:59,600 --> 00:27:02,040 Speaker 1: But the thing about and this come almost almost comes 533 00:27:02,040 --> 00:27:04,520 Speaker 1: down to dogma about dexterity, is that we're just a 534 00:27:04,520 --> 00:27:08,479 Speaker 1: bunch of nerds and we really like hard problems, and 535 00:27:08,520 --> 00:27:10,639 Speaker 1: so h f T is a super hard problem. You 536 00:27:10,680 --> 00:27:12,560 Speaker 1: bang your head against the wall for three months until 537 00:27:12,600 --> 00:27:14,680 Speaker 1: you have the Eureka moment and you're rushed with dopamine. 538 00:27:14,680 --> 00:27:16,119 Speaker 1: And that's what I'm looking for, and that's what my 539 00:27:16,160 --> 00:27:19,479 Speaker 1: team is looking for. Your farming school um, but it 540 00:27:19,520 --> 00:27:22,720 Speaker 1: doesn't have the same kind of characteristics of that difficult 541 00:27:22,720 --> 00:27:25,560 Speaker 1: problem solving, at least for us, So it's not something 542 00:27:25,600 --> 00:27:27,560 Speaker 1: we do. I think one thing in defense that would 543 00:27:27,560 --> 00:27:30,000 Speaker 1: be interesting to do that we don't do is MTV 544 00:27:30,280 --> 00:27:33,400 Speaker 1: or minor extraction value, which has to do with optimizing 545 00:27:33,440 --> 00:27:36,160 Speaker 1: your trades on chain, in particular on the ethereum chain, 546 00:27:36,560 --> 00:27:38,600 Speaker 1: to kind of make alpha based on the fact you 547 00:27:38,600 --> 00:27:41,880 Speaker 1: can see what's coming, because if someone summits an order 548 00:27:41,880 --> 00:27:44,240 Speaker 1: on chain, you've got a good fifteen seconds to react 549 00:27:44,280 --> 00:27:46,800 Speaker 1: to it before it actually gets action, and you can 550 00:27:46,800 --> 00:27:48,800 Speaker 1: try to run kind of front run it in a 551 00:27:48,920 --> 00:27:51,200 Speaker 1: very legal and compliant way because it's all public, it's 552 00:27:51,240 --> 00:27:55,159 Speaker 1: not proprietary information. So MTV is cool. Lots of interesting 553 00:27:55,160 --> 00:27:57,479 Speaker 1: problems there. It's like planning poker with your cards up 554 00:27:57,480 --> 00:28:00,399 Speaker 1: and still trying to win um. But we don't do 555 00:28:00,400 --> 00:28:02,359 Speaker 1: that now. Sadly, we just don't have the badly and 556 00:28:02,440 --> 00:28:05,520 Speaker 1: Michael just to to go back to markets again. I'm 557 00:28:05,520 --> 00:28:08,600 Speaker 1: wondering how you guys think about the crypto winter and 558 00:28:08,760 --> 00:28:12,639 Speaker 1: how long that might actually last, because I read a 559 00:28:12,640 --> 00:28:16,640 Speaker 1: lot of notes about what's going on in crypto markets. 560 00:28:16,960 --> 00:28:19,719 Speaker 1: One of the themes that people have been focusing on 561 00:28:19,760 --> 00:28:23,120 Speaker 1: recently is that long term holders really have just been 562 00:28:23,119 --> 00:28:27,159 Speaker 1: sitting on their holdings and their coins really aren't moving 563 00:28:27,200 --> 00:28:30,640 Speaker 1: all that much, and so the thought there is that 564 00:28:30,720 --> 00:28:34,000 Speaker 1: maybe they're just waiting, waiting out and waiting for things 565 00:28:34,040 --> 00:28:36,760 Speaker 1: to get a little bit worse before they actually start 566 00:28:36,800 --> 00:28:38,960 Speaker 1: to get better. So how are you thinking about the 567 00:28:38,960 --> 00:28:43,720 Speaker 1: crypto winter winter and how long it might potentially drag out? 568 00:28:43,760 --> 00:28:46,760 Speaker 1: For Yeah, one of the benefits of being marketing trill 569 00:28:46,840 --> 00:28:48,400 Speaker 1: is I don't have to worry about that a lot. 570 00:28:48,800 --> 00:28:51,320 Speaker 1: Whether it's six months or two years or even longer, 571 00:28:51,680 --> 00:28:53,920 Speaker 1: we're still going to be okay. But I do think 572 00:28:53,920 --> 00:28:55,960 Speaker 1: about it because it's a lot more fun when there's 573 00:28:56,000 --> 00:28:58,040 Speaker 1: a lot of activity, when people are excited about it 574 00:28:58,280 --> 00:29:02,480 Speaker 1: and we're discovering what crypto is actually for in the world. Um. So, 575 00:29:02,600 --> 00:29:05,640 Speaker 1: you know, it's something that I wish I could tell 576 00:29:05,640 --> 00:29:07,400 Speaker 1: you how long it's going to beat last. I don't know, 577 00:29:08,120 --> 00:29:10,480 Speaker 1: but I think a lot of holdlers have said, I've 578 00:29:10,480 --> 00:29:12,960 Speaker 1: seen this before. This has been happening for ten years. 579 00:29:13,080 --> 00:29:16,520 Speaker 1: We've been through cycles, and each dip is bigger than 580 00:29:16,560 --> 00:29:19,720 Speaker 1: the prior, and each wave forward is bigger than the prior. 581 00:29:20,520 --> 00:29:22,160 Speaker 1: And I know a lot of people who are betting 582 00:29:22,200 --> 00:29:25,560 Speaker 1: on that. Um, there's some things this is the last 583 00:29:25,560 --> 00:29:28,160 Speaker 1: one because we've got to a point where the maturity 584 00:29:28,200 --> 00:29:31,360 Speaker 1: of the market is so great and the institutional participation 585 00:29:31,480 --> 00:29:34,720 Speaker 1: has ramped up that after the next bull run there 586 00:29:34,800 --> 00:29:36,600 Speaker 1: might not be another one as it kind of falls 587 00:29:36,640 --> 00:29:40,160 Speaker 1: in line with traditional finance. But it remains to be seen, 588 00:29:41,080 --> 00:29:43,280 Speaker 1: you know, Michael, It's it's fascinating. You know, we talked 589 00:29:43,320 --> 00:29:46,440 Speaker 1: about sort of this range bound market in the major 590 00:29:46,520 --> 00:29:50,840 Speaker 1: cryptos traditional effects markets, though I've been anything but range 591 00:29:50,840 --> 00:29:52,680 Speaker 1: bound this year. You know, we've got this unre letting 592 00:29:52,760 --> 00:29:57,520 Speaker 1: dollar strength, uh week pound. I'm sorry to bring that up. 593 00:29:57,560 --> 00:29:59,600 Speaker 1: I know that's probably sore subject for a guy guy 594 00:29:59,680 --> 00:30:03,960 Speaker 1: based in London, uh hero, I mean, does that influence 595 00:30:04,600 --> 00:30:09,840 Speaker 1: this this false totally in the tradfi traditional uh FX market, 596 00:30:10,760 --> 00:30:12,960 Speaker 1: you know, is there an opportunity there for you? You You know, 597 00:30:12,960 --> 00:30:16,400 Speaker 1: are you trading stable coins against one one another that 598 00:30:16,440 --> 00:30:19,680 Speaker 1: type of thing. Yeah, and it's it's an interesting thing 599 00:30:19,800 --> 00:30:23,560 Speaker 1: because crypto can be margin in anything. So there's certainly 600 00:30:23,600 --> 00:30:25,920 Speaker 1: pairs that our margin in GDP and the pairs margin 601 00:30:25,960 --> 00:30:28,640 Speaker 1: in dollars and margin and stable coins. So they're definitely 602 00:30:28,680 --> 00:30:32,080 Speaker 1: our opportunities there. It was moving so fast and so furious, 603 00:30:32,560 --> 00:30:34,960 Speaker 1: and it's really an area that hasn't been explored in 604 00:30:35,000 --> 00:30:38,240 Speaker 1: the past because FX was relatively stable for the major 605 00:30:38,280 --> 00:30:40,600 Speaker 1: pairs for a long time. Um, So they're definitely were 606 00:30:40,640 --> 00:30:44,400 Speaker 1: opportunities there. Um. But as you said, I'm a Londoner. 607 00:30:44,640 --> 00:30:48,040 Speaker 1: I want things to get back to normal. So my 608 00:30:48,160 --> 00:31:06,560 Speaker 1: hope is things stabilized and we'll just trade group and Michael, 609 00:31:06,600 --> 00:31:10,040 Speaker 1: I think early in the show you mentioned the basis trade, 610 00:31:10,040 --> 00:31:13,280 Speaker 1: which was a really popular trade with institutions a couple 611 00:31:13,320 --> 00:31:16,320 Speaker 1: of years ago. So I'm just taking this opportunity while 612 00:31:16,360 --> 00:31:18,920 Speaker 1: I have you here too, very selfishly ask you what 613 00:31:18,960 --> 00:31:21,160 Speaker 1: are some of the quirky things that are happening in 614 00:31:21,240 --> 00:31:23,840 Speaker 1: crypto markets right now? Maybe something that's going on a 615 00:31:23,920 --> 00:31:26,760 Speaker 1: trade or something that we should all be paying attention to. 616 00:31:27,240 --> 00:31:28,920 Speaker 1: If I could, if I could butt in, you know, 617 00:31:30,160 --> 00:31:32,600 Speaker 1: the non nerds among us might not know exactly what 618 00:31:32,600 --> 00:31:35,080 Speaker 1: the basis trade is. I of course know exactly what 619 00:31:35,120 --> 00:31:37,360 Speaker 1: it is, but maybe some of our listeners maybe start 620 00:31:37,400 --> 00:31:41,400 Speaker 1: off explaining what that is. Michael, Sure, when you've got 621 00:31:41,640 --> 00:31:44,840 Speaker 1: a future product and the underlying spot product, so let's see, 622 00:31:44,880 --> 00:31:48,000 Speaker 1: you've got a BTC spot and you've got a BTC future, 623 00:31:48,440 --> 00:31:51,520 Speaker 1: they'll converge upon the delivery date of that future. So 624 00:31:51,600 --> 00:31:53,720 Speaker 1: by going short on one and long on the other 625 00:31:53,800 --> 00:31:55,960 Speaker 1: based on where the prices are, you know the price 626 00:31:56,040 --> 00:31:58,240 Speaker 1: is going to converge. So you've locked in your profit 627 00:31:58,440 --> 00:32:00,360 Speaker 1: the day you actually make the trade, but then you 628 00:32:00,440 --> 00:32:02,479 Speaker 1: have to wait for the convert it to happen. Whenever 629 00:32:02,520 --> 00:32:05,520 Speaker 1: that future contract is going to settle, you close all 630 00:32:05,520 --> 00:32:07,480 Speaker 1: your positions and you've made your money and you're happy. 631 00:32:07,880 --> 00:32:09,400 Speaker 1: So that's what the basis trade is. And if you 632 00:32:09,440 --> 00:32:12,640 Speaker 1: look back in Q one, crypto basis trades were just 633 00:32:12,720 --> 00:32:14,640 Speaker 1: all the rage because the numbers were well out of whack. 634 00:32:15,080 --> 00:32:18,200 Speaker 1: Things were so frothy, and the futures price of crypto, 635 00:32:18,240 --> 00:32:19,920 Speaker 1: I mean, it's it's difficult to make sense of it. 636 00:32:20,120 --> 00:32:22,080 Speaker 1: You know, the fruitures price of a barrel of oil 637 00:32:22,320 --> 00:32:24,360 Speaker 1: makes sense because it costs money to keep oil in 638 00:32:24,400 --> 00:32:26,600 Speaker 1: someplace for a quarter before you deliver it. There's a 639 00:32:26,680 --> 00:32:29,680 Speaker 1: cost to carry Crypto there's no cost to carry. So 640 00:32:29,720 --> 00:32:31,680 Speaker 1: the futures price is always kind of an interesting thing 641 00:32:31,680 --> 00:32:34,680 Speaker 1: to look at. What does that yield curve look like? UM, 642 00:32:34,680 --> 00:32:37,840 Speaker 1: So that trade was kind of big then, but really 643 00:32:38,400 --> 00:32:41,520 Speaker 1: in mid kind of settled down. There's still people running it, 644 00:32:41,520 --> 00:32:43,640 Speaker 1: but it's not the biggest yields out there these days. 645 00:32:43,720 --> 00:32:45,920 Speaker 1: But to get to Veldana's point, is there anything sort 646 00:32:45,920 --> 00:32:50,440 Speaker 1: of new and exciting that to replace that? You know, 647 00:32:50,480 --> 00:32:53,960 Speaker 1: there's some opportunities I'll talk about that we're not doing. UM. 648 00:32:54,000 --> 00:32:56,960 Speaker 1: But one of the side effects of the crypto kind 649 00:32:56,960 --> 00:32:59,640 Speaker 1: of downturn is that there were lots of twos that 650 00:32:59,680 --> 00:33:03,680 Speaker 1: were ing on treasuries that are kind of in distress UM. 651 00:33:03,720 --> 00:33:05,880 Speaker 1: And it's almost like a distress asset market where if 652 00:33:05,920 --> 00:33:08,400 Speaker 1: you can persuade enough voters in a dow. And just 653 00:33:08,480 --> 00:33:11,640 Speaker 1: to back up, a dow as a decentralized autonomous organization, 654 00:33:12,040 --> 00:33:15,440 Speaker 1: if you own sub cooin, you can vote on propositions 655 00:33:15,480 --> 00:33:17,880 Speaker 1: that dictate how the data hates. So a lot of 656 00:33:17,920 --> 00:33:20,520 Speaker 1: these dows are distressed, and the prices of these dolls 657 00:33:20,840 --> 00:33:25,080 Speaker 1: are beneath the treasury value. And so the game then is, hey, 658 00:33:25,160 --> 00:33:27,480 Speaker 1: can I convince the rest of the dow to liquidate 659 00:33:27,520 --> 00:33:30,200 Speaker 1: the treasury and then pay it out? And if I 660 00:33:30,280 --> 00:33:32,800 Speaker 1: do that, the liquidation value is going to be greater 661 00:33:32,920 --> 00:33:35,400 Speaker 1: than the price I'm paying of the token. And that's 662 00:33:35,400 --> 00:33:38,200 Speaker 1: because crypto prices are sometimes a ration, and sometimes they 663 00:33:38,240 --> 00:33:41,000 Speaker 1: don't trust the people running the dough. So that's an 664 00:33:41,000 --> 00:33:42,960 Speaker 1: interesting trade We've seen happen a few times over the 665 00:33:43,000 --> 00:33:45,720 Speaker 1: course of the past few months. So one of the 666 00:33:45,800 --> 00:33:50,120 Speaker 1: things that I've been writing about recently are the different 667 00:33:50,160 --> 00:33:53,240 Speaker 1: narratives that are in the crypto space. So, for example, 668 00:33:53,560 --> 00:33:56,440 Speaker 1: one of the narratives is that bitcoin is an inflation hedge. 669 00:33:56,640 --> 00:33:59,880 Speaker 1: Another is that it's a store of value, ETCeteras. Who 670 00:34:00,120 --> 00:34:03,120 Speaker 1: hear you hear about these narratives quite a bit, But 671 00:34:03,280 --> 00:34:07,360 Speaker 1: really the narratives have quieted down this year as prices 672 00:34:07,400 --> 00:34:09,759 Speaker 1: have been crashing, So what is what do you think 673 00:34:09,840 --> 00:34:13,160 Speaker 1: is the narrative right now? If I go on Twitter, 674 00:34:13,360 --> 00:34:16,000 Speaker 1: for example, I see a lot of tweets that say 675 00:34:16,040 --> 00:34:18,960 Speaker 1: one bitcoin equals one bitcoin, which is which has just 676 00:34:19,040 --> 00:34:22,399 Speaker 1: become this sort of crypto meme. So is that one 677 00:34:22,400 --> 00:34:24,360 Speaker 1: of the narratives? What are what are the things that 678 00:34:24,400 --> 00:34:27,839 Speaker 1: are people talking about are latching onto while we're having 679 00:34:27,840 --> 00:34:31,040 Speaker 1: this very bad year for prices, you know, it's hard. 680 00:34:31,080 --> 00:34:32,480 Speaker 1: I think a lot of us are waiting for a 681 00:34:32,520 --> 00:34:36,200 Speaker 1: good narrative because narratives are what drive bull markets, and 682 00:34:36,239 --> 00:34:39,200 Speaker 1: I can't say there's a great narrative right now. I 683 00:34:39,239 --> 00:34:41,919 Speaker 1: think one thing to consider those that with institutions coming 684 00:34:41,960 --> 00:34:45,440 Speaker 1: in in size, with h f T players coming in, UM, 685 00:34:45,600 --> 00:34:48,480 Speaker 1: they're learning a lot about what this beast crypto is 686 00:34:48,520 --> 00:34:52,120 Speaker 1: and how it's fundamentally different and how this technology, whether 687 00:34:52,120 --> 00:34:54,960 Speaker 1: it's in crypto or in other kind of places even 688 00:34:55,000 --> 00:34:59,399 Speaker 1: traify it's probably the future UM and so for them 689 00:34:59,480 --> 00:35:02,840 Speaker 1: they are kind of learning how do we how do 690 00:35:02,920 --> 00:35:05,480 Speaker 1: we like tackle this? And so if you're an hf 691 00:35:05,560 --> 00:35:09,080 Speaker 1: T shop from trad fi, you have great latencies. You 692 00:35:09,160 --> 00:35:10,759 Speaker 1: know how to work a fixed connection, which is the 693 00:35:10,760 --> 00:35:14,280 Speaker 1: standard connection among exchanges can trad five. Crypto is weird. 694 00:35:14,480 --> 00:35:17,280 Speaker 1: You have really unique connections to every exchange and everyone 695 00:35:17,400 --> 00:35:20,799 Speaker 1: is different, and you win by finding nuances in the 696 00:35:20,880 --> 00:35:24,239 Speaker 1: integrations the A p I s with each exchange. So 697 00:35:24,280 --> 00:35:27,000 Speaker 1: that's something. Dexterity is really good at UM. You know, 698 00:35:27,040 --> 00:35:28,400 Speaker 1: we're not going to have the same ticket ray to 699 00:35:28,480 --> 00:35:30,239 Speaker 1: hit it up. They're going to beat us there. But 700 00:35:30,280 --> 00:35:33,080 Speaker 1: in terms of connectivity, we spent five years building it 701 00:35:33,120 --> 00:35:35,480 Speaker 1: and figuring it out. So I think, you know, I 702 00:35:35,480 --> 00:35:37,480 Speaker 1: can't say a narrative is going to drive bitcoin. I 703 00:35:37,520 --> 00:35:40,239 Speaker 1: think in amongst institutions, there is a narrative of how 704 00:35:40,239 --> 00:35:43,520 Speaker 1: do they figure out this new asset class and how 705 00:35:43,520 --> 00:35:46,120 Speaker 1: do they solve problems that they haven't solved before. Mike, 706 00:35:46,160 --> 00:35:49,319 Speaker 1: typically we use crypto examples and the craziest things we 707 00:35:49,360 --> 00:35:52,000 Speaker 1: saw in markets. So happy we were able to devote 708 00:35:52,000 --> 00:35:55,080 Speaker 1: this entire episode to talking about some of the things 709 00:35:55,160 --> 00:35:57,719 Speaker 1: that are going on on there. And Michael, I hope 710 00:35:57,840 --> 00:36:01,120 Speaker 1: you came prepared with something. I'll let you go first 711 00:36:01,160 --> 00:36:04,120 Speaker 1: with whatever it is that was the craziest thing that 712 00:36:04,160 --> 00:36:08,000 Speaker 1: you saw in markets this week? Okay, brilliant. Uh, Well, 713 00:36:08,040 --> 00:36:10,480 Speaker 1: as you know, I only read and only watch Bloomberg 714 00:36:10,920 --> 00:36:13,640 Speaker 1: every mole and then something of course because I'm a 715 00:36:13,640 --> 00:36:17,200 Speaker 1: good citizen. Um. But now and again something just cross 716 00:36:17,239 --> 00:36:19,200 Speaker 1: my desk from the publication. And this one had to 717 00:36:19,200 --> 00:36:22,600 Speaker 1: do with Chippotle, which was doing a proof of steak 718 00:36:23,360 --> 00:36:28,280 Speaker 1: the meat position, and so they were running a promotion 719 00:36:28,280 --> 00:36:31,279 Speaker 1: and they were saying, we'll give you off because that's 720 00:36:31,280 --> 00:36:33,319 Speaker 1: how much you power, you say, by not using proof 721 00:36:33,320 --> 00:36:35,600 Speaker 1: of work and instead using proof of steak, we'll give 722 00:36:35,600 --> 00:36:38,319 Speaker 1: you that off a steak bowl. Um, if you use 723 00:36:39,160 --> 00:36:41,839 Speaker 1: tool I think it's called flexa to pay with your ease. 724 00:36:42,640 --> 00:36:44,319 Speaker 1: And so this journalists have gone to try to do 725 00:36:44,360 --> 00:36:48,600 Speaker 1: that and guess to Chipotle and they've got no idea. 726 00:36:48,880 --> 00:36:50,960 Speaker 1: And he says, well, here's the tweet. Look at my 727 00:36:51,000 --> 00:36:53,239 Speaker 1: tweet and they're like, okay, well there's a QR cod 728 00:36:53,239 --> 00:36:54,960 Speaker 1: when you're out, let's scan that. And then an error 729 00:36:55,000 --> 00:36:58,319 Speaker 1: shows up in the terminal and they're like, you know what, man, 730 00:36:58,440 --> 00:37:01,239 Speaker 1: just just take it and leave. You don't to pay, 731 00:37:02,680 --> 00:37:04,399 Speaker 1: And so it was it was a dred percent off. 732 00:37:04,440 --> 00:37:07,160 Speaker 1: So he did really well. But it highlights the really 733 00:37:07,200 --> 00:37:10,040 Speaker 1: the problem with crypto. It's it's not there yet in 734 00:37:10,160 --> 00:37:12,719 Speaker 1: terms of being super usable by the everyday person. And 735 00:37:12,719 --> 00:37:14,840 Speaker 1: that's where we gotta get. That's pretty good proof of 736 00:37:14,880 --> 00:37:19,279 Speaker 1: proof of steak. That Chinese place, Chinese takeout has to 737 00:37:19,280 --> 00:37:25,640 Speaker 1: have proof of walk then, but it's called the sweat point. 738 00:37:25,760 --> 00:37:30,120 Speaker 1: You can use that. Well, that's a good one, Michael, Yeah, 739 00:37:30,160 --> 00:37:33,440 Speaker 1: you can't prepared. I like that. Okay. For my craziest thing, 740 00:37:33,560 --> 00:37:35,960 Speaker 1: it's actually not at all markets related, but I'm giving 741 00:37:36,000 --> 00:37:40,919 Speaker 1: myself a pass because I'm hosting the show. So there's 742 00:37:40,920 --> 00:37:43,680 Speaker 1: a farmer in upstate New York near Buffalo, and he 743 00:37:43,760 --> 00:37:46,439 Speaker 1: had set out to grow the heaviest pumpkin in all 744 00:37:46,480 --> 00:37:49,600 Speaker 1: of New York State, and he actually ended up with 745 00:37:49,880 --> 00:37:54,440 Speaker 1: a national championship winning pumpkin. His giant pumpkin clocked in 746 00:37:54,520 --> 00:37:58,680 Speaker 1: at two thousand, five hundred fifty four pounds, which is 747 00:37:59,440 --> 00:38:03,360 Speaker 1: above the previous record of two thousand five eight pounds. 748 00:38:03,440 --> 00:38:06,200 Speaker 1: And what the farmers had to do to keep it growing, 749 00:38:06,400 --> 00:38:08,239 Speaker 1: which is so interesting to me, is they gave it 750 00:38:08,280 --> 00:38:12,640 Speaker 1: fertilizer and help and warm castings whatever that was, and 751 00:38:12,920 --> 00:38:17,480 Speaker 1: chicken refuse, which sounds disgusting, in tons of water. And 752 00:38:18,520 --> 00:38:21,320 Speaker 1: there was a really great quote in the article for 753 00:38:21,520 --> 00:38:24,719 Speaker 1: about this pumpkin. I think it was maybe in the 754 00:38:24,760 --> 00:38:28,040 Speaker 1: Guardian or something, but it said the farmers said all 755 00:38:28,040 --> 00:38:30,560 Speaker 1: the animals and cutters seemed to love this pumpkin more 756 00:38:30,600 --> 00:38:33,359 Speaker 1: than anything in the world. They all want to eat 757 00:38:33,400 --> 00:38:35,920 Speaker 1: on it. And I have some cats and try to 758 00:38:36,080 --> 00:38:37,800 Speaker 1: come and try to scratch it. They think it's a 759 00:38:37,840 --> 00:38:40,360 Speaker 1: big couch. So this was my favorite story that I 760 00:38:40,400 --> 00:38:42,680 Speaker 1: saw this week, and I just wanted to use the 761 00:38:42,680 --> 00:38:48,320 Speaker 1: opportunity to talk about it. That's hilarious. Two thousand, two 762 00:38:48,320 --> 00:38:52,319 Speaker 1: thousand plus pounds of a well, it makes me think 763 00:38:52,360 --> 00:38:56,160 Speaker 1: of I went to UH College in in the state 764 00:38:56,160 --> 00:38:58,239 Speaker 1: of Delaware. I went to the finest university in the 765 00:38:58,239 --> 00:39:00,440 Speaker 1: state of Delaware. I will I will tell you and 766 00:39:00,560 --> 00:39:04,440 Speaker 1: UH in Delaware what they do after Halloween every year, 767 00:39:04,440 --> 00:39:07,480 Speaker 1: as they have something called pumpkin chunkin, which is where 768 00:39:07,480 --> 00:39:10,800 Speaker 1: you build a catapult and you load on your pumpkins 769 00:39:10,800 --> 00:39:13,799 Speaker 1: and the goal is to see who can chuck their 770 00:39:13,840 --> 00:39:16,680 Speaker 1: pumpkin the furthest from the catapult. So I feel like 771 00:39:16,719 --> 00:39:18,399 Speaker 1: if you could do that with this pump you could 772 00:39:18,400 --> 00:39:21,040 Speaker 1: like take out the Russian Army with this thing, if 773 00:39:21,480 --> 00:39:26,000 Speaker 1: if you had a alright, pretty good stiff competition this week, 774 00:39:26,040 --> 00:39:28,640 Speaker 1: I think I don't know I might have to. I 775 00:39:28,719 --> 00:39:30,200 Speaker 1: might have to give it to proof ofstake. I think 776 00:39:30,239 --> 00:39:33,480 Speaker 1: that's my favorite of the week. I'll concede defeat well, 777 00:39:33,560 --> 00:39:37,080 Speaker 1: rare rare time when I'm actually defeated, Rarey rare, Michael, 778 00:39:37,320 --> 00:39:40,880 Speaker 1: I'll concede defeat. But I'll give you mine. Uh. Mine 779 00:39:40,960 --> 00:39:44,560 Speaker 1: is themed appropriately for you too. They're both British related, 780 00:39:45,320 --> 00:39:48,000 Speaker 1: both have a little London connection, and one includes a 781 00:39:48,080 --> 00:39:51,040 Speaker 1: very nerdy book for you old on us. So two 782 00:39:51,080 --> 00:39:55,360 Speaker 1: things going up for auction. One is uh, David Bowie's 783 00:39:55,400 --> 00:40:01,239 Speaker 1: Space Shoot Space Suit Um from the nineteen video for 784 00:40:01,400 --> 00:40:06,360 Speaker 1: Ashes to Ashes is up for auction from prop Store 785 00:40:06,440 --> 00:40:09,280 Speaker 1: Auctions later in the year. This is a story courtesy 786 00:40:09,320 --> 00:40:12,080 Speaker 1: of the Daily Mail, so that's one item going up 787 00:40:12,120 --> 00:40:15,919 Speaker 1: for auction. The other item is a Jane Austin book, 788 00:40:16,200 --> 00:40:20,680 Speaker 1: uh unique first edition of Emma. Now that and the 789 00:40:20,760 --> 00:40:24,319 Speaker 1: story's courtesy of the Telegraph. So one item is yet 790 00:40:24,360 --> 00:40:25,880 Speaker 1: to go up for auctions. So we only have the 791 00:40:25,960 --> 00:40:28,600 Speaker 1: estimated price for that. But we do know that the 792 00:40:28,719 --> 00:40:31,719 Speaker 1: Jane Austen book did sell, by the way, but by 793 00:40:31,760 --> 00:40:35,440 Speaker 1: an American who insisted that at stay in England, so 794 00:40:35,480 --> 00:40:39,759 Speaker 1: it's going to a museum. Uh. Very nice gesture there 795 00:40:39,800 --> 00:40:43,080 Speaker 1: from some rich American, But Michael, I regret to inform 796 00:40:43,160 --> 00:40:46,000 Speaker 1: you you're now contestant on a game show. We call 797 00:40:46,120 --> 00:40:50,320 Speaker 1: the prices precise, and so I need you to guess, 798 00:40:50,360 --> 00:40:54,240 Speaker 1: not the prices right. We're playing the price is precise, 799 00:40:54,520 --> 00:40:57,680 Speaker 1: not the prices right. Yes, yes, any lawyers out there 800 00:40:57,680 --> 00:41:00,000 Speaker 1: for Bob Barker who are listening, this is completely different. 801 00:41:01,280 --> 00:41:04,480 Speaker 1: So I need you to guess which one is a 802 00:41:04,560 --> 00:41:07,840 Speaker 1: higher value and and give me give me a pound 803 00:41:07,880 --> 00:41:12,080 Speaker 1: figure for that value. Will Donna as tradition, you start, 804 00:41:12,280 --> 00:41:15,560 Speaker 1: is it David Bowie's space suit from the video for 805 00:41:15,640 --> 00:41:19,320 Speaker 1: Ashes to Ashes in Night? Or is it that first 806 00:41:19,600 --> 00:41:24,080 Speaker 1: unique first edition of Emma by Jane Austen, I will 807 00:41:24,120 --> 00:41:28,960 Speaker 1: say includes a handwritten from the author message inside it's 808 00:41:28,960 --> 00:41:33,040 Speaker 1: it's definitely the space suit. I'm going with seventy five 809 00:41:33,120 --> 00:41:39,399 Speaker 1: thousand pounds seventy British pounds. Michael. Uh, Let's see how 810 00:41:39,400 --> 00:41:43,320 Speaker 1: your valuation skills are. What do you think which ones higher? 811 00:41:43,680 --> 00:41:47,680 Speaker 1: And what's your your dollar, your pound figure on on it? 812 00:41:48,719 --> 00:41:50,440 Speaker 1: Now you can find out why remarking neutral, it's like 813 00:41:50,440 --> 00:41:54,080 Speaker 1: can never gisces of things. But we'll give it a 814 00:41:54,120 --> 00:41:56,880 Speaker 1: shot and Honestly, they'll donna. You just betrayed your book clubs. 815 00:41:56,880 --> 00:42:01,680 Speaker 1: So I'm really ashamed of you. Anyway, I invite you 816 00:42:01,800 --> 00:42:04,839 Speaker 1: from from my book clubs. You're you're not invited. You're 817 00:42:04,840 --> 00:42:08,719 Speaker 1: no longer invited from to my book clubs. Well, you're 818 00:42:08,719 --> 00:42:11,120 Speaker 1: not invited to my Bowie David Bowie club. No, I'm kidding, 819 00:42:11,200 --> 00:42:14,920 Speaker 1: you're invited. You're invited. I'll clock at at a hundred 820 00:42:14,920 --> 00:42:16,799 Speaker 1: and thirty three thousand pounds because that's what I would 821 00:42:16,840 --> 00:42:19,719 Speaker 1: pay for it. Okay, it's a tough one to referee 822 00:42:19,760 --> 00:42:25,800 Speaker 1: because the Jane Austen book wins three seventy five thousand pounds. 823 00:42:25,800 --> 00:42:29,000 Speaker 1: For the Jane Austin book. Bowie Space suit has not 824 00:42:29,080 --> 00:42:30,800 Speaker 1: yet gone off for auction, so it could go higher, 825 00:42:30,840 --> 00:42:34,560 Speaker 1: but they only expected to fetch eighty one thousand pounds. 826 00:42:35,400 --> 00:42:37,880 Speaker 1: I think the bottom line is you both lose and 827 00:42:37,960 --> 00:42:39,799 Speaker 1: I win. I don't know that's the only that's all 828 00:42:39,840 --> 00:42:41,759 Speaker 1: your fair resolution I can come up with. I'm sorry, 829 00:42:41,800 --> 00:42:44,399 Speaker 1: I thought you were letting Michael win this week. Well 830 00:42:44,440 --> 00:42:47,439 Speaker 1: he he wins the craziest thing, Uh word, I win. 831 00:42:47,719 --> 00:42:50,960 Speaker 1: I win the prices prices per sype because as we know, 832 00:42:51,000 --> 00:42:53,080 Speaker 1: I have to win something. I have to stroke my 833 00:42:53,120 --> 00:42:56,279 Speaker 1: eagle egoes somehow, somehow in this I'll let you do 834 00:42:56,320 --> 00:42:58,920 Speaker 1: the introduction, and he did very well. They'll down a congratulations. 835 00:42:59,440 --> 00:43:01,600 Speaker 1: I think that's about all the time we have thought. 836 00:43:02,280 --> 00:43:05,520 Speaker 1: Join us for our book club next week. Uh, Michael 837 00:43:05,520 --> 00:43:08,200 Speaker 1: suff I greate to catch up with you and hear 838 00:43:08,760 --> 00:43:12,800 Speaker 1: all about h f T trading and crypto. Fascinating stuff. Michael, 839 00:43:12,800 --> 00:43:14,520 Speaker 1: thanks so much for joining us. We were so happy 840 00:43:14,719 --> 00:43:16,680 Speaker 1: to have you on the show. All right, thanks a lot, 841 00:43:16,719 --> 00:43:26,319 Speaker 1: great to speak of you both. That's it for the 842 00:43:26,360 --> 00:43:29,960 Speaker 1: show this week. Don't forget to tune into Bloomberg Crypto, 843 00:43:30,080 --> 00:43:33,360 Speaker 1: a daily Bloomberg I Heeart podcast. You can find it 844 00:43:33,400 --> 00:43:37,239 Speaker 1: on the terminal or wherever you download your podcasts. What 845 00:43:37,360 --> 00:43:39,759 Speaker 1: Goes Up. We'll be back next week. We love it 846 00:43:39,760 --> 00:43:41,640 Speaker 1: if you took the time to rate and review the 847 00:43:41,719 --> 00:43:44,359 Speaker 1: show on Apple podcast so more listeners can find us. 848 00:43:44,680 --> 00:43:47,200 Speaker 1: And you can find us on Twitter, follow Mike Reagan 849 00:43:47,280 --> 00:43:51,279 Speaker 1: at at reag Anonymous, I'm at at Bildonna Hirach and 850 00:43:51,360 --> 00:43:55,319 Speaker 1: you can also follow Bloomberg podcast at at Podcasts. What 851 00:43:55,440 --> 00:43:58,440 Speaker 1: Goes Up is produced by Stacy Wong. Thanks so much 852 00:43:58,480 --> 00:44:00,960 Speaker 1: for listening and we'll see you next week. An