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Speaker 1: We're going to now bring in Galaxy Digital CEO Mike Novgrats.

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Speaker 1: We're going to get started talking about the markets though

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Speaker 1: here because you see the slide downward and yields. Mike,

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Speaker 1: and do you believe in the pivot that the market

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Speaker 1: believes in next year?

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Speaker 2: I do? I do.

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Speaker 3: I think the economy is slowing. I think the economy

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Speaker 3: will slow a lot. In the first quarter. The Fed

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Speaker 3: will be cutting rates. You know who knows exactly when,

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Speaker 3: but in the first quarter beginning a second quarter. And

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Speaker 3: what's important is when you have a shift, right, when

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Speaker 3: you go from the tightening mindset to the cutting mindset.

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Speaker 2: You don't know whether they're.

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Speaker 3: Going to cut fifty, are they going to cut twenty five,

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Speaker 3: twenty five? Are they going to go one hundred?

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Speaker 2: Iferent? Things look bad.

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Speaker 3: Right, if inflation settles at two percent, real rates are

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Speaker 3: too high, and so the uncertainty around the bullishness of

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Speaker 3: the Fed, right, the dubbishness of the Fed are the

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Speaker 3: bullishness for markets will create the animal spirits the same

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Speaker 3: way the varishness did, and so the yield curve will

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Speaker 3: go to positively slope. Right, it's still negative slope. Two

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Speaker 3: thirties is I think minus twenty that'll go to plus sixty,

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Speaker 3: plus eighty plus one hundred, and so some of these

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Speaker 3: trade trends are just starting right. The dollar, which had

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Speaker 3: been the dominant currency for a long time, all of

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Speaker 3: a sudden, we will sell off and you're seeing that,

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Speaker 3: and so it feels like it could be the beginning

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Speaker 3: of a big trend shift.

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Speaker 1: Animal spirits. It's a funny thing to hear you talk

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Speaker 1: about again. There was a sense that once the Fed

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Speaker 1: got off its quantitative easing cycle, once it start at

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Speaker 1: hiking rates again, that animal spirits were of yesterday, you

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Speaker 1: think they're going to come back really well.

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Speaker 3: Listen, you know, when you're putting liquidity into the system,

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Speaker 3: leverage gets easier to get and people get excited. And

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Speaker 3: so I do think, you know, I was there talking

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Speaker 3: about animal spirits in the currency market or animal spirits

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Speaker 3: in the in the fixed income market, equities will be

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Speaker 3: more challenging.

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Speaker 2: I think there's two stories to it, right.

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Speaker 3: If the economy slows, what that does to earnings versus.

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Speaker 2: You know, lowering rates and allowing money to flow.

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Speaker 3: And so I'm less less convicted on the equity call,

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Speaker 3: but more convicted on rates and currency well.

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Speaker 1: Let's talk more about rates and currency. I'm going to

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Speaker 1: make you put on your macro hat before we get

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Speaker 1: to bitcoin in the next block. What are you trading

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Speaker 1: in terms of currencies and along the yield curve at

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Speaker 1: this point?

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Speaker 3: Listen, I you know, had gone from a long dollar

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Speaker 3: bias to a short dollar bias, and so being long

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Speaker 3: the euros, being long off Sea dollar, still on some

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Speaker 3: Brazilian currency. I do have as short in the Chinese currency.

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Speaker 3: I think their problems are much more structural than they've

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Speaker 3: addressed so far.

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Speaker 2: But broadly a net you know, short dollar.

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Speaker 3: Position and an interest rates long two years, long five

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Speaker 3: years and long two years, verse thirty years.

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Speaker 2: And so the.

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Speaker 3: Idea that the FED will cut rates and then start

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Speaker 3: a cutting cycle as the we slows and inflation you know,

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Speaker 3: triggers down to two percent.

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Speaker 1: But even in an animal spirits environment, what would you

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Speaker 1: not buy? Do you think that things can get too frouthy?

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Speaker 3: Again, listen, already you have you know, almost five rate

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Speaker 3: cuts priced into the to the fixed income market, and

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Speaker 3: so you know, markets move quick. As you said, this

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Speaker 3: is one of the biggest weeks in fixed income, our

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Speaker 3: biggest months in fixed income rallying and so nothing's going

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Speaker 3: to go in a straight line, right. Things are going

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Speaker 3: to go up and then retrace and go up and retrace.

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Speaker 2: I don't see anything flashing, you know, you know, triple

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Speaker 2: red right now.

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Speaker 3: We've got to be nervous, right, these trends are just starting.

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Speaker 3: One of the mistakes a lot of investors make is

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Speaker 3: the trend starts, you get your first move and you're like, oh,

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Speaker 3: that was a great profit. I got to get out,

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Speaker 3: and then it just keeps going and going. And so listen,

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Speaker 3: gold looks great. If gold, you know, closes above this

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Speaker 3: two thousand mark for a few days or weeks, you

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Speaker 3: could see gold much higher in the future.

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Speaker 2: Silver feels like.

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Speaker 3: It's being squeezed and could go much hi and bitcoin

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Speaker 3: right those, gold, silver, bitcoin really all should do well

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Speaker 3: if the FED is finished hiking rates and starting.

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Speaker 1: To cut What about the Magnificent seven You started to

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Speaker 1: talk about kind of the lack of conviction and your

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Speaker 1: equity call relative to the.

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Speaker 2: Macro kind of movers here.

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Speaker 1: So, given how much the Magnificent seven has driven up

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Speaker 1: the market, do you have conviction there?

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Speaker 2: You know, again, I don't think Navidia and Microsoft.

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Speaker 3: Do you want to think of those as the two

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Speaker 3: stocks that the best encompass AI are finished. Those things

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Speaker 3: great bull markets are great bubbles and manias, and we're

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Speaker 3: going to have a mania in AI usually and with

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Speaker 3: something much more spectacular than what we see.

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Speaker 2: And so just my trader's.

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Speaker 3: Bias is that those stocks no higher and probably dragging

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Speaker 3: Magnificent seven up.

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Speaker 2: Listen, things are very expensive, and so.

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Speaker 3: For me it's easier not to have big positions there

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Speaker 3: and to be, you know, a small trader and a

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Speaker 3: big watcher because I see so much opportunity elsewhere.

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Speaker 1: Okay, opportunity. You're a big bitcoin trader, but do you

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Speaker 1: think that there is more opportunity in AI? Do you

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Speaker 1: ever wake up some days and say, maybe Galaxy should

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Speaker 1: be an AI company?

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Speaker 3: You know, if I was smart enough to really understand

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Speaker 3: how the AI worked, listen it. You know, you sometimes

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Speaker 3: pick your bed a few years in advance, and then

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Speaker 3: you're you're you're stuck in the bed. There is some

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Speaker 3: convergence of AI and crypto at one point, and so

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Speaker 3: we follow it pretty closely. The AI think is difficult

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Speaker 3: in that the economies of scale you need to be

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Speaker 3: a player in it are so large that you're going

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Speaker 3: to have a couple giant winners, and I don't think

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Speaker 3: a lot of second places, And you know, you can

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Speaker 3: just see the amount of capital needed to raise em

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Speaker 3: for the new company, and so I don't think it was.

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Speaker 2: Easy for a lot of people to pivot a AI

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Speaker 2: using AI. You know, figuring out.

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Speaker 3: How AI impacts our industry all really important, But to

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Speaker 3: build an AI company I think.

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Speaker 2: Probably beyond my skill set.

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Speaker 1: Mike. If you think about what happened with the settlement

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Speaker 1: over at Finance, a more than four billion dollar settlement

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Speaker 1: and the admissions of guilt in some really skating allegations,

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Speaker 1: including aiding of money laundering and even working with sanctioned

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Speaker 1: nations in certain cases, how do you think about what

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Speaker 1: exchanges you're working with with those kinds of financial and

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Speaker 1: regulatory risks tied to them.

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Speaker 3: We listen, we have a pretty thorough process of looking

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Speaker 3: at who we deal with, and we're also reasonable. Right

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Speaker 3: if you went through the list of trade five banks

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Speaker 3: who have been sanctioned or fined by the different regulators

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Speaker 3: in the last twenty four months, so not going back

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Speaker 3: twenty years, twenty four months, it's a shocking list, right,

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Speaker 3: And so you're not looking for zero mistakes, Otherwise there'd

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Speaker 3: be no.

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Speaker 2: One to deal with. We're looking for people but take

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Speaker 2: their job responsibly.

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Speaker 3: I think the Binance settlement was great for their company

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Speaker 3: and great for the industry.

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Speaker 2: I rich wish Richard Well, I think they're.

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Speaker 3: De risked in lots of ways. Right, people were worried

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Speaker 3: about dealing with Byans. There's a lot less to worry

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Speaker 3: about now.

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Speaker 1: Right when it comes to Binance, Do you trade with them,

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Speaker 1: do you keep the same amount of exposure to them,

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Speaker 1: or do you begin to diversify.

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Speaker 3: More at this point, Well, we've always been diversified. We

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Speaker 3: don't talk exactly who we trade with what we trade

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Speaker 3: with most people, but I would just say, you know,

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Speaker 3: all else equal, you should feel more comfortable dealing with

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Speaker 3: Binance now that they've settled. Right, there was all this

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Speaker 3: worry that they were going to get shut down or

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Speaker 3: they were stealing people's money, and it came down to

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Speaker 3: they had some pretty serious violations of KYC protocol and

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Speaker 3: they've worked to correct them and they're paid their fine

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Speaker 3: and they're moving on, and so I think it's a

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Speaker 3: net positive for their company.

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Speaker 2: I think it's a net positive for our industry.

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Speaker 1: You have legal questions still around the industry. You have

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Speaker 1: Doquon about to face trial. You had the FTX trial

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Speaker 1: and but Sam maigmanfreed still facing other charges to face

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Speaker 1: trial for you had the buyinance settlement. How do you

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Speaker 1: have faith that the bad behaviors have not been washed

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Speaker 1: out of the industry or have been washed out of indus.

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Speaker 3: The twenty twenty two crash, the amount of bad actors

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Speaker 3: that got swept out of the industry was pretty significant,

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Speaker 3: and so I would say my intuition is that most

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Speaker 3: of the bad actors are off the stage right.

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Speaker 2: Markets are pretty efficient and regulators.

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Speaker 3: Are pretty efficient, and they've gone after three arrows Alie

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Speaker 3: Michinski at Celsius. You know plenty of other There'll be

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Speaker 3: a few more, I'm sure, because there always are.

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Speaker 2: But the industry got delevered.

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Speaker 3: The industry, I think, chased out many bad actors, and

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Speaker 3: so it feels like a much cleaner slate that we're

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Speaker 3: playing with.

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Speaker 1: You know, the bitcoin, for its own part, has rallied

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Speaker 1: to just above thirty eight thousand, and it's been flirting

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Speaker 1: with that price right now. Where do you think it

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Speaker 1: ends the year.

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Speaker 2: Or next year? Rather at this pace? You know, listen

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Speaker 2: there's a bunch of good things happening for bitcoin.

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Speaker 3: Right. We are going to get an ETF right now,

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Speaker 3: there's a lot of anticipation.

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Speaker 2: Some of that's built into the price.

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Speaker 3: When you actually get the ETF announcement, there's probably still

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Speaker 3: two months before it starts trading, and then once it

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Speaker 3: starts trading, we'll see if black Rock and ourselves with

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Speaker 3: Investco and ARC and all these other institutions Fidelity have

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Speaker 3: their salesforces out convincing people to adopt bitcoin, the price

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Speaker 3: is going to be significantly higher, especially at a time

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Speaker 3: when the FED is probably cutting rates. And so could

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Speaker 3: we go to old highs by this time next year?

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Speaker 2: Of course we could, And can we go higher? We'll see.

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Speaker 3: You know, you have to remember prices are set on

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Speaker 3: the margin, and there's not that many sellers of bitcoin. Right.

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Speaker 3: We're going to of the having next year, which means

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Speaker 3: that the daily supply or inflation rate gets cut in half,

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Speaker 3: and so you really are setting up for a wonderful story.

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Speaker 3: We're also going to an election year, and that uncertainty

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Speaker 3: should help bitcoin in the fact that the US and

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Speaker 3: Europe and Japan still can't come close to fiscally being

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Speaker 3: responsible is why people got invested in Bitquin in the

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Speaker 3: first place.

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Speaker 1: I'm glad you bought up politics because when you think

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Speaker 1: about who you support, how doescripto pay a play a

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Speaker 1: role at all? And who are you supporting in for

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Speaker 1: what reasons? Frankly Man, at this point, it's been becoming.

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Speaker 3: I'm kind of I'm kind of in anything but crazy

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Speaker 3: or really old party.

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Speaker 2: Uh. And so I really.

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Speaker 3: Really believe we need to move away from the baby

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Speaker 3: boomer generation having run our country into the ground. And

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Speaker 3: so I pledged that I would not vote for any

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Speaker 3: went over seventy five years old or even seventy two

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Speaker 3: years old.

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Speaker 2: You know, listen from Chris Christy to.

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Speaker 3: Nicki Haley to Neil Phillips, all of them might take

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Speaker 3: over the two most likely candidates that we're going to get.

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Speaker 3: And so I'd be bipartisan in my thought to get

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Speaker 3: us to move on generationally and to get us to

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Speaker 3: move away from crazy.

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Speaker 1: Well, what did you think about Jamie Diamond this morning

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Speaker 1: over at the Dealbolek conference and said that even if

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Speaker 1: you're a very liberal Democrat, I urge you to help

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Speaker 1: Nicki Haley too. How much are you getting those kinds

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Speaker 1: of calls from your friends.

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Speaker 3: I literally got a text from a dear friend of

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Speaker 3: mine this morning asking me if I would sit down

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Speaker 3: and meet with her and would you help, And I

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Speaker 3: would certainly sit down and meet with Nicky Haley. I

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Speaker 3: met Neil Phillips in the office a few last week

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Speaker 3: and had never met him before and didn't really know

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Speaker 3: his story. It's an amazing story, and he's an amazingly.

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Speaker 2: Rational and guy.

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Speaker 3: I don't think he's got the name recognition NICKI does

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Speaker 3: at this point, but he's the only you know, non

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Speaker 3: biten Canada on the Democratic side. I'm certainly going to

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Speaker 3: spend more time with him. I don't think it's really

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Speaker 3: democratic Republican at this point. For our country, it's we

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Speaker 3: need to move beyond where we are. And you know,

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Speaker 3: the thought of a Trump presidency is so divisive, and

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Speaker 3: you know, for Republicans, Biden feels that way, and I

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Speaker 3: might disagree with them, but he feels that way, and

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Speaker 3: so to me, best for the country is that we

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Speaker 3: move on and get someone different. The odds of that

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Speaker 3: happening are still pretty small, but hey, I think the

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Speaker 3: you know, the payoff if it happens is pretty good.

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Speaker 2: For the country.

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Speaker 1: Speaking of odds, it's worth asking you what would you do,

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Speaker 1: or would you support or would you urge a Mark

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Speaker 1: Cuban presidency given all the speculation around his next moves

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Speaker 1: after the Mavericks.

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Speaker 2: I love Mark Cuban. He's a kind man, he's a

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Speaker 2: smart man. I've spent some time with him. I've podcasted

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Speaker 2: with him.

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Speaker 3: He throws his hat in the ring, and I will

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Speaker 3: certainly have have dinner with him.

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Speaker 1: So when you think about next year, what do you

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Speaker 1: think is going to be the defining factor for the

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Speaker 1: elections at the end of the day, when you and

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Speaker 1: your peers are putting money towards candidates, what exactly is

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Speaker 1: it that you're looking for.

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Speaker 3: Hey, I don't think my peers money or my money

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Speaker 3: is going to make too much of a difference. You know,

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Speaker 3: the world has shifted so much in how these elections

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Speaker 3: happen with social media. Trump doesn't even other than his

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Speaker 3: legal defense. You know, he gets publicity just because he's Trump.

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Speaker 3: And so I do think, you know, we'll see that

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Speaker 3: something feels to me it's got a break. I'm not

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Speaker 3: sure what it is yet. You know, people wake up

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Speaker 3: one day and say no, I mean again. The most

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Speaker 3: likely outcome is we go to the polls and it's

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Speaker 3: Trump versus Biden, and you know, you go to bed,

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Speaker 3: you know, praying, and you're not going to know who wins.

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Speaker 2: Until you wake up.

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Speaker 1: Before I let you go, we're gonna go back to

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Speaker 1: bitcoin for a second. The market is watching. The market

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Speaker 1: is watching closely. You've been looking at the ATF space

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Speaker 1: when you talk to investors these early conversations you're having

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Speaker 1: how much interest do you expect into an ETF upon arrival,

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Speaker 1: and how soon do you expect the SEC to approve

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Speaker 1: that process?

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Speaker 3: Listen, you know, the timing is a little bit of art,

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Speaker 3: not science. It does feel like it should happen soon.

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Speaker 3: You know what has soon means by the end of

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Speaker 3: this year, the first month of next year. After it

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Speaker 3: gets approved, there's probably six to eight weeks before the

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Speaker 3: mechanisms are up and you can actually put money in.

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Speaker 2: And then I think a lot of money will come in.

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Speaker 3: I think up to ten billion dollars the first year

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Speaker 3: should flow into the.

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Speaker 2: ETF space, if not more.

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Speaker 3: And that's a lot for a market is small a

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Speaker 3: bitcoin again, prices are set on the margin, and so

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Speaker 3: that's all new money. And so I do think we'll

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Speaker 3: see a pretty successful shift of psychology. Right when the

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Speaker 3: government and institutions are allowed. Government says you're allowed to

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Speaker 3: buy bitcoin, Institutions say, hey, this is great. It then

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Speaker 3: allows institutions to look at what else is out there,

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Speaker 3: and so I think it'll be a seminal event.

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Speaker 1: Well, we'll look forward to seeing what happens next. That

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Speaker 1: is Galaxy Digital CEO Mike Novgratsy, thank you for your

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Speaker 1: time today.