Speaker 1: Bloomberg Audio Studios, podcasts, radio news. All right, well, let's
Speaker 1: take a look right now at how crypto prices are doing.
Speaker 1: I want to bring in a very special guest right now.
Speaker 1: I do want to welcome our Bloomberg TV and radio
Speaker 1: audiences who are joining us now. Is our convest CEO
Speaker 1: and CIO, Kathy. Would Kathy good to have you on
Speaker 1: the program this afternoon. I want to start right with
Speaker 1: bitcoin and what you see as the outlook for bitcoins price.
Speaker 1: In recent weeks, you've come out and said one point
Speaker 1: five million dollars per bitcoin by the year twenty thirty.
Speaker 1: Since then, though we've seen quite a few outflows, we've
Speaker 1: seen a lot of volatility. Shanali just went through that.
Speaker 1: Is that still your view one point five million by
Speaker 1: twenty thirty, Yes.
Speaker 2: It is our view. I think right now we're in
Speaker 2: a risk off period generally, and if you've been watching bitcoin,
Speaker 2: it's almost been a leader in terms of the risk
Speaker 2: on risk off. So I think that's what we're seeing.
Speaker 2: If we look at our on chain analytics, what we
Speaker 2: see is I'm sorry as to get this off. If
Speaker 2: you look at our on chain analytics, which you will see,
Speaker 2: is that we are in the middle of a little
Speaker 2: bit more than halfway through a four year cycle. We
Speaker 2: think we're still in a bull market and we believe
Speaker 2: that the deregulation that we're seeing here in the United
Speaker 2: States is going to be very important to institutions moving
Speaker 2: into this new asset class. As to the allocators have
Speaker 2: to have a point of view on this new asset class,
Speaker 2: and we think by putting it in portfolios, risk adjusted
Speaker 2: returns for the entire portfolio will go up.
Speaker 3: One question I have to the point you're making here
Speaker 3: on where the risk appetite stands around bitcoin versus other
Speaker 3: asset classes. There has been a serious dip in markets, Kathy.
Speaker 3: If you had to choose where you would buy the
Speaker 3: dip the most, would it be in bitcoin, Tesla or Nvidia?
Speaker 2: Oh my goodness. Well, we post our trades every day
Speaker 2: and you'll see that we've been buying Tesla and names
Speaker 2: that mimic Bitcoin and other crypto assets like Coinbase, like
Speaker 2: robin Hood, taking advantage of this risk off period.
Speaker 3: So what does this mean in terms of where you
Speaker 3: see things going.
Speaker 4: Do you see more of a selloff.
Speaker 3: Before things get better in these risk assets bitcoin or otherwise?
Speaker 4: How do you know that we're not at the lows.
Speaker 2: So one of the things we think is going on
Speaker 2: right now is and Treasury Secretary Besson today said he
Speaker 2: does not believe that we're going into a recession. We
Speaker 2: think we've been in a rolling recession and that we
Speaker 2: are actually going to see some negative quarters here, and
Speaker 2: that's because the velocity of money is collapsing as people,
Speaker 2: the labor force is worried that and we're talking about federal, state,
Speaker 2: and local quasi government categories like education and healthcare. There's
Speaker 2: a lot of fear around job security right now. So
Speaker 2: we see the saving rate going up, we see the
Speaker 2: velocity of money coming down, and we do think we'll
Speaker 2: see one or two negative quarters. What we believe that
Speaker 2: will do is set this administration up and the fed
Speaker 2: up with more degrees of freedom for tax cuts and
Speaker 2: perhaps lower interest rates or at least ending quantitative tightening.
Speaker 1: What do you see as the rate path for this year?
Speaker 1: The Federal Reserve kicking off, it's two day policy meeting today,
Speaker 1: We're going to hear from j Powell tomorrow. How many
Speaker 1: rate cuts do you see happening this year?
Speaker 2: Kathy, Well, we tend not to be very short term
Speaker 2: in our focus. But if we're right and inflation is
Speaker 2: going to surprise on the low side of expectations, we
Speaker 2: wouldn't be surprised to see two or three cuts. Now,
Speaker 2: if you look at an indicator called true inflation, it's
Speaker 2: probably the broadest measure of inflation out there. It is
Speaker 2: saying inflation is down to one point six y five percent,
Speaker 2: well below where the FED is pinning it at roughly
Speaker 2: the CPI's two point eight percent. And we believe that
Speaker 2: the combination of actually food prices have started coming down,
Speaker 2: even egg prices have started to collapse. As a matter
Speaker 2: of fact, gasoline prices are coming down. We're seeing some
Speaker 2: rent prices coming down. So we think inflation's going to
Speaker 2: surprise on the low side of expectations for those reasons,
Speaker 2: and because innovation is inherently deflationary, and our five innovation
Speaker 2: platforms are all driving different kinds of deflation. Good deflation,
Speaker 2: which you'll call it unit growth, but deflation nonetheless. So
Speaker 2: we think the FED is going to have many more
Speaker 2: degrees of freedom in the second half of this year.
Speaker 2: Then most people think we could see more than the
Speaker 2: number I just suggested, two to three cuts.
Speaker 1: Hey, Kathy and I have spoken quite a bit over
Speaker 1: the last few months. You were optimistic about the Trump administration,
Speaker 1: specifically with regard to disruptive technology and your thesis, but
Speaker 1: also with cryptocurrency. You just spoke about the easy regulatory
Speaker 1: environment around crypto. I'm curious that what you think about
Speaker 1: President Trump's relationship with crypto. The Wall Street Journal reported
Speaker 1: that the Trump family has held deal talks with finance
Speaker 1: following that guilty exchange plea. And then also you have
Speaker 1: the President getting into meme coins, you have World Liberty Financial.
Speaker 1: Are you at all concerned that the Trump family is
Speaker 1: too close to crypto?
Speaker 2: Well, I think the Trump family is very supportive of crypto,
Speaker 2: which is great. It's completely different from the environment we
Speaker 2: had been In our view on mean coins, we are
Speaker 2: not as focused on them. We would not be putting
Speaker 2: them into our various private funds because and I think
Speaker 2: that you know, the combination of AI and blockchain technology
Speaker 2: is creating millions millions of these mean coins. We think
Speaker 2: most of them are not going to be worth very much.
Speaker 2: We think there are just going to be a few
Speaker 2: crypto assets that will gain most of the spoils in
Speaker 2: the entire ecosystem.
Speaker 3: Kathy even some of the people who believe most firmly
Speaker 3: in the crypto story here, they are still worried about
Speaker 3: those mean coins and a lot of retail investors being
Speaker 3: stuck holding the bag.
Speaker 4: And another thing that's happening at the same time is you.
Speaker 3: Have a lot of exchanges looking to loosen their listing standards.
Speaker 4: Do you worry that this could go too far.
Speaker 3: That too many coins that are going to hurt retail
Speaker 3: ambassadors ultimately will be listed on too many exchanges.
Speaker 2: Well, I think that the SEC did a very important
Speaker 2: thing in declaring these meme coins not securities. What they
Speaker 2: essentially were saying is we are not going to regulate them,
Speaker 2: and it's buyer beware. And so if I have one
Speaker 2: message for those listening who are buying mean coins, buyer beware,
Speaker 2: and I think the message is loud and clear from
Speaker 2: the regulators. What we think will happen is there will
Speaker 2: be some heresome declines in the prices of some of
Speaker 2: these meme assets, and you know, there's nothing like losing
Speaker 2: money for people to learn, and they'll learn that the
Speaker 2: SEC and regulators are not taking responsibility for these mean coins.
Speaker 1: Buyer beware of what specifically, because you did say that
Speaker 1: you believe that there are only certain crypto assets that
Speaker 1: will gain the most spoils. What do buyers need to.
Speaker 2: Be aware of that the millions of meme coins will
Speaker 2: probably end up worthless. So, uh, when we're talking about
Speaker 2: the big three, we're talking about Bitcoin, Ethereum, Solana. The
Speaker 2: use cases for those are multiplying, and we think they're
Speaker 2: going to become very important in years ahead. Meme coins not.
Speaker 1: So what about Trump's meme coin? Is that one of
Speaker 1: the ones that you think will become worthless? Kathy?
Speaker 2: You know it's interesting. Uh, the meme coins will be
Speaker 2: collector's items, so digital collector's items, and so of course
Speaker 2: some will withstand, uh, you know, will withstand the judgment
Speaker 2: of time, and that may be one of them. That
Speaker 2: our working assumption is that when you're talking about millions
Speaker 2: of meme coins, you know that that's just a step
Speaker 2: too far and that most of them are not going
Speaker 2: to be worth very much.
Speaker 3: Kathy, I want to switch gears here a little bit
Speaker 3: and talk about something that I know you've been focusing
Speaker 3: on a lot, tokenization. Now.
Speaker 4: One question I have.
Speaker 3: About this is do you think the investment community, particularly
Speaker 3: the venture community, is underestimating how catastrophic this could be.
Speaker 4: To their business model.
Speaker 3: If you have companies that can raise money through tokens
Speaker 3: rather than through traditional venture capital and go public this
Speaker 3: way or list this way rather than through the traditional
Speaker 3: listing process, is that a sea change coming for the
Speaker 3: way that this has typically been done.
Speaker 2: I actually think it's very complicated. But you know, in
Speaker 2: terms of our own venture fund, and we did start
Speaker 2: an Interval fund, which is a forty act fund, I
Speaker 2: mean we could see tokenizing that, putting it on chain
Speaker 2: and enabling many, many more people to get involved with
Speaker 2: the private world. And I think other venture capital firms
Speaker 2: could do much of the same thing. I do agree
Speaker 2: there's going to be a lot more competition, a lot
Speaker 2: more ways to fund new companies, So that is true
Speaker 2: as well. So I'd say this new world's going to
Speaker 2: be complicated. You know, when we hear Larry Fink of
Speaker 2: Blackrock saying he wants to tokenize everything, you know, it's
Speaker 2: big because it takes it takes a lot to move
Speaker 2: the needle at Blackrock. So we're watching the token innovation
Speaker 2: movement very closely for own purposes as well.
Speaker 3: A little earlier, you said that when you look at
Speaker 3: these dips, you've been trying to take advantage of them,
Speaker 3: particularly in part through Coinbase and Robinhood.
Speaker 4: I have a question about robin Hood in particular. Do
Speaker 4: you think it looks more and.
Speaker 3: More like coinbase in the future and to the extent
Speaker 3: that you're buying more of it? Is it on the
Speaker 3: thesis of expanded stock trading among retail investors, for election betting,
Speaker 3: or expanded crypto trading.
Speaker 4: What of those three things is your favorite thesis?
Speaker 2: Well, our main thesis for both is we're looking for
Speaker 2: the winners in the digital wallet space. Most of us
Speaker 2: are not going to have many wallets. You can think
Speaker 2: about this in the same way you think about credit cards.
Speaker 2: Most of us don't have very many credit cards. So
Speaker 2: we're looking for those winners. And you know, Robinhood and
Speaker 2: Coinbase are coming at this from different angles, of course,
Speaker 2: Coinbase from the crypto first angle and robin Hood from
Speaker 2: more the equity end of the spectrum. Both of them
Speaker 2: have to Robinhood has nailed the either interface. I think
Speaker 2: Coinbase is putting a lot of effort into getting that
Speaker 2: right as well. So we're looking at them as two
Speaker 2: of the bigger winners.
Speaker 1: Hey, Kathy, revenut trouble. I'm a letter team. I'm going
Speaker 1: to let our team work on that. In the meantime,
Speaker 1: I do want to ask you a big picture question
Speaker 1: about crypto, because I think for a lot of people
Speaker 1: they look at these tokens as stores of value, as
Speaker 1: bets that they'll go up in the future and they'll
Speaker 1: be worth more and their portfolio will grow as a result.
Speaker 1: When do you see use cases for crypto, maybe specifically bitcoin,
Speaker 1: actually affecting us in the real world. You spoke about
Speaker 1: tokenization just now, but when will we see crypto being
Speaker 1: used as something else apart from just a store of value.
Speaker 2: Well, I think what is happening with a stable coin movement,
Speaker 2: which again that we're going to see deregulation and legislation
Speaker 2: this year, we think, which will open the doors to
Speaker 2: stable coins. So USDC that circles USDT, that's tethers, that's
Speaker 2: the on ramp into defied decentralized financial services. So you're
Speaker 2: already seeing lending and saving and yield harnessing taking place
Speaker 2: on these ecosystems which are supported by Ethereum and Solana,
Speaker 2: and of course you're seeing rapped bitcoin on ethereum as well.
Speaker 2: So Bitcoin's trying to get into the game. But in
Speaker 2: terms of real utility, if you go to emerging markets,
Speaker 2: and I know this is not this market, but you
Speaker 2: go to emerging markets where their currencies destroy purchasing power
Speaker 2: and wealth with massive devaluations. So it's really their policy
Speaker 2: leaders they are using bitcoin in particular, but also stable coins,
Speaker 2: which is effectively the dollar as backstops to their purchasing
Speaker 2: power and wealth because they've been through too many of
Speaker 2: these devaluations. So I think the real utility if you're
Speaker 2: looking at stable coins and bitcoin today is in the
Speaker 2: emerging markets really protecting consumers purchasing power and.
Speaker 3: Well, Kathy, you have the great challenge of investing in
Speaker 3: innovative solutions at a time where the market is nervous
Speaker 3: and discounting the idea of putting more money to work
Speaker 3: in innovation at the moment, and to the extent that
Speaker 3: you could choose one single biggest conviction bet that you
Speaker 3: would make right now, what is it and why?
Speaker 2: Well, we've been we have been known for our Tesla
Speaker 2: call and our Bitcoin call, and those still stand as
Speaker 2: two of our biggest calls. For sure, I would add
Speaker 2: in the AI age platform as a service companies like
Speaker 2: Pallenteer which are really enabling large enterprises to move into
Speaker 2: this AI age and enjoy the efficiencies, the cost effectiveness
Speaker 2: and to create products and services. Those I think are
Speaker 2: going to be very big as well.
Speaker 3: Absolutely fascinating ARC and best Kathy, would we thank you
Speaker 3: so much for joining us today looking ahead of the
Speaker 3: curve a little bit and some thoughts on how to
Speaker 3: get into the ability to buy this dip.
Speaker 4: Thank you so much for your time.