WEBVTT - Learning to Love Crypto Volatility 0:00:12.600 --> 0:00:16.040 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:16.280 --> 0:00:18.880 My name is Mike Reagan. I'm a senior editor at Bloomberg, 0:00:19.120 --> 0:00:22.360 and I'm Baldonna Higher Across Asset reported Bloomberg, and this 0:00:22.440 --> 0:00:25.520 week on the show, well, cryptocurrencies have been under pressure 0:00:25.560 --> 0:00:28.120 this year as the Federal Reserve and other central banks 0:00:28.160 --> 0:00:32.080 get ready to withdraw stimulus, and as tensions escalate between 0:00:32.200 --> 0:00:35.400 Russia and Ukraine. And in fact, the situation has gotten 0:00:35.520 --> 0:00:38.680 much more serious since we recorded this episode on Wednesday, 0:00:38.720 --> 0:00:42.199 with Russia launching a massive invasion of Ukraine. What do 0:00:42.280 --> 0:00:45.440 all these developments mean for digital assets? We'll get into 0:00:45.479 --> 0:00:48.000 it with the chief strategy officer at a big digital 0:00:48.040 --> 0:00:53.080 asset investment firm. I want to welcome Melton the Mirrors. 0:00:53.080 --> 0:00:56.120 She's the chief strategy officer at coin Shares. Melton, thank 0:00:56.120 --> 0:00:58.720 you so much for joining us. I am so delighted 0:00:58.760 --> 0:01:01.920 to be here, Ldonna. We've and flirting online and offline 0:01:01.960 --> 0:01:06.200 for years now, years years, and I've always appreciated part 0:01:06.200 --> 0:01:09.120 of your coverage of the cryptos days to be here, 0:01:10.000 --> 0:01:12.960 need to no one flirts with me, either online or offline, 0:01:13.959 --> 0:01:17.680 maybe for a reason, but uh well, well, so let's 0:01:17.920 --> 0:01:20.600 get into it a little bit and tell our listeners 0:01:20.760 --> 0:01:23.199 about coin shares. I mean, I think you're probably most 0:01:23.240 --> 0:01:28.080 well known for exchange traded products tracking bitcoin and ether, 0:01:28.319 --> 0:01:30.560 but a lot more going on with the company. So 0:01:30.600 --> 0:01:31.840 what do you give a sort of a you know, 0:01:32.000 --> 0:01:34.760 quick rundown of what's going on at coin shares and 0:01:35.040 --> 0:01:37.600 sort of how you got into the space personally, into 0:01:37.600 --> 0:01:40.080 the crypto space. I'd love to, and maybe I'll actually 0:01:40.160 --> 0:01:43.040 start with my journey into crypto first, because it's really 0:01:43.040 --> 0:01:45.560 relevant to who we are coin shares and why we 0:01:45.600 --> 0:01:47.880 do what we do. So before I got into crypto 0:01:48.000 --> 0:01:49.920 is actually in the oil and gas industry, and I 0:01:49.960 --> 0:01:52.400 started on the trading side, then moved into the M 0:01:52.480 --> 0:01:55.640 and A side, and then into corporate treasury at Exnomobile. 0:01:55.760 --> 0:01:58.160 At a time, if you recall, many many years ago, 0:01:58.160 --> 0:02:00.280 an ex don Moobil was in fact the largest company 0:02:00.280 --> 0:02:03.040 in the world by market capitalization of four billion dollars, 0:02:03.240 --> 0:02:05.960 which today it feels very paltry when we have companies 0:02:06.160 --> 0:02:09.440 with market caps and several trillion dollars, but at that time, 0:02:09.560 --> 0:02:11.720 this was less than a decade ago. You know that 0:02:11.720 --> 0:02:13.760 that was a pretty big deal. As I went to 0:02:13.919 --> 0:02:16.320 graduate school, I was at I was like, I don't 0:02:16.360 --> 0:02:18.359 know about oil and gas. The world was changing a lot, 0:02:18.400 --> 0:02:20.680 everything was going digital. I've never heard of venture capital 0:02:20.760 --> 0:02:23.280 or startups. Winter God School and I t went down 0:02:23.320 --> 0:02:25.600 you know, the startup BC rabbit Hole, and had been 0:02:25.600 --> 0:02:29.120 personally interested and engaged with bitcoin, but started interacting with 0:02:29.160 --> 0:02:31.360 a lot of bitcoin startups. Um, if you recall, it 0:02:31.360 --> 0:02:34.959 wasn't really until when coin base received its first round 0:02:34.960 --> 0:02:37.519 of funding went through by Combinator that people were even 0:02:37.680 --> 0:02:40.079 investing in in bitcoin companies. At the time, it was 0:02:40.160 --> 0:02:44.160 really just bitcoin. None of these other cryptocurrencies existed. Web 0:02:44.200 --> 0:02:47.160 three didn't exist, Defied didn't exist. And then as I 0:02:47.160 --> 0:02:49.960 was leaving grad school, I met Barry Silver who starting 0:02:49.960 --> 0:02:53.359 Digital Currency Group, and when I met the coin Shares team. Um, really, 0:02:53.360 --> 0:02:55.400 what we bonded over is all of us come from 0:02:55.440 --> 0:02:59.240 the commodity space. So my business partners they had launched 0:02:59.240 --> 0:03:02.320 and ran a commodities hedge fund. And again, if we 0:03:02.360 --> 0:03:04.840 look at the narrative cycle around commodities, if you recall 0:03:05.040 --> 0:03:08.919 twenty years ago, commodities really weren't an investible asset class. 0:03:08.960 --> 0:03:11.560 A lot of commodities trading was done physically by firms 0:03:11.560 --> 0:03:14.320 who operated in the commodity space and the energy space 0:03:14.360 --> 0:03:17.520 who had a need to hedge, right, but um it 0:03:17.600 --> 0:03:20.480 really wasn't a space with a lot of financial instruments 0:03:20.560 --> 0:03:23.920 or really active electronic market. And so what they saw 0:03:23.960 --> 0:03:26.160 that I think was so interesting and really the genesis 0:03:26.200 --> 0:03:30.480 of point shares was trading and market infrastructure, building market infrastructure. 0:03:30.880 --> 0:03:33.240 And what they saw that I think was so compelling, 0:03:33.280 --> 0:03:35.240 and I think so many other people who were earlier 0:03:35.240 --> 0:03:39.080 Crucco also saw from commodity space was this nasive market. 0:03:39.560 --> 0:03:42.080 It was already inherently digital, right, there was nothing physical 0:03:42.120 --> 0:03:45.240 that needed to be dematerialized, but the market infrastructure on 0:03:45.280 --> 0:03:48.040 bitcoin didn't needs this at all. So most of what 0:03:48.120 --> 0:03:49.920 I did for the first five years in the industry 0:03:50.040 --> 0:03:52.880 is invest in market microstructure on and off rams and 0:03:52.920 --> 0:03:56.720 a lot of the basic elements of this market. And 0:03:56.760 --> 0:04:00.840 what's been really fascinating is over really until twenty the 0:04:00.840 --> 0:04:04.120 crypto market operated largely outside of the traditional system, so 0:04:04.160 --> 0:04:07.720 outside of existing brokers, outside of existing exchanges, um, it 0:04:07.720 --> 0:04:10.520 didn't really even have its own access to banking system, 0:04:10.560 --> 0:04:13.640 which is why we saw the proliferation of the stable coins, right. 0:04:13.680 --> 0:04:16.560 We needed a way to settle dollars on the same 0:04:16.720 --> 0:04:19.799 sort of rules that that crypto settled with. Our journey 0:04:19.839 --> 0:04:22.920 at point Shares really started with trading, thinking about market structure. 0:04:23.520 --> 0:04:26.240 We then got into the exchange trader products space. Most 0:04:26.240 --> 0:04:29.840 people know our legacy product line, XPT Provider, which was 0:04:30.120 --> 0:04:32.960 the first crypto et P in the world, started with bitcoin. 0:04:33.320 --> 0:04:36.120 Now we have ethereum Um and a bunch of others. 0:04:36.480 --> 0:04:38.599 The two biggest elements of our business today are asset 0:04:38.600 --> 0:04:42.960 management with three platforms, XPT Provider, Coinchers, Physical which is 0:04:43.080 --> 0:04:46.920 fully collateralized and uh sort of cold storage coins. And 0:04:46.960 --> 0:04:50.839 then we have a e t F that tracks crypto equities, 0:04:50.880 --> 0:04:52.760 which are also an exciting part of the market. Now 0:04:52.839 --> 0:04:55.720 it's no longer just the digital assets themselves, also equities. 0:04:55.880 --> 0:04:58.560 We're also publicly listed, so that's been a fun process 0:04:58.600 --> 0:05:00.440 and we can definitely talk about that what eas side 0:05:00.480 --> 0:05:03.520 of the crypto space. And then obviously it was underpinning 0:05:03.520 --> 0:05:05.680 all of that. We operate all of that infrastructure, We 0:05:05.720 --> 0:05:08.279 build all that infrastructure. That's what makes the products possible. 0:05:08.600 --> 0:05:09.960 And then what I get to do. I have the 0:05:10.000 --> 0:05:12.360 best job in the company. I think, I get to 0:05:12.400 --> 0:05:14.640 think about what the future looks like, so I invest 0:05:14.680 --> 0:05:17.040 in our behalf and focus on investing M and A 0:05:17.160 --> 0:05:20.120 and growth. And so it's been really interesting over the 0:05:20.160 --> 0:05:23.320 last few years, in particular to think about how asset management, 0:05:23.400 --> 0:05:27.320 how investments, how market microstructure fundamentally changing, and what the 0:05:27.360 --> 0:05:30.680 implications are for how we build and distribute financial products, 0:05:30.680 --> 0:05:35.240 particularly on chain financial products and non custodial financial products, 0:05:35.279 --> 0:05:37.400 which is a thing you know, you would never have 0:05:37.520 --> 0:05:41.000 conceptualized even as little as five years ago, but now 0:05:41.040 --> 0:05:43.680 it's very much becoming a reality with hundreds of billions 0:05:43.720 --> 0:05:47.000 of dollars locked in these protocols that are managing money 0:05:47.040 --> 0:05:51.800 programmatically for individuals and institutions alike. That's really the genesis 0:05:51.800 --> 0:05:54.560 of coin shares. You know, we're a publicly listed company. 0:05:54.720 --> 0:05:57.640 Um we just reported our full year results for last year, 0:05:58.000 --> 0:06:00.200 so people can go and check that out. We've atty 0:06:00.200 --> 0:06:02.599 big research team that publishes all sorts of great insight 0:06:02.800 --> 0:06:06.320 on markets, whether that's the exchangere to product market, whether 0:06:06.360 --> 0:06:09.120 that's the equities market, whether that's crypto market structure and 0:06:09.160 --> 0:06:11.400 new assets in the crypto space. But it's been a 0:06:11.520 --> 0:06:13.720 it's been a fun journey over the last four years 0:06:13.800 --> 0:06:17.120 building that business and really thinking about constantly how we're 0:06:17.120 --> 0:06:20.440 going to disrupt ourselves. Right. I'm glad actually that you 0:06:20.480 --> 0:06:23.960 mentioned that you guys just reported earnings because I wanted 0:06:23.960 --> 0:06:26.440 to ask you about that and what type of growth 0:06:26.480 --> 0:06:29.400 you're seeing or what you're seeing ahead for you guys. Yes, 0:06:29.480 --> 0:06:32.960 so so for us, obviously, exchange for your products continue 0:06:33.040 --> 0:06:36.800 to grow. Um. What's been really interesting is we see 0:06:36.800 --> 0:06:39.800 a lot more entrance into the ETP space, into the 0:06:39.800 --> 0:06:42.559 structure product space. I think one of the really cool 0:06:42.600 --> 0:06:44.800 things happened over the last two years. It used to 0:06:44.880 --> 0:06:47.920 be the only way people could really access crypto investing 0:06:47.960 --> 0:06:50.640 in the early days was through exchanges, right, and I 0:06:50.680 --> 0:06:54.320 recall my early days. You know, you'd send envelopes of cash, 0:06:54.600 --> 0:06:56.640 or you would try to wire money to bank in 0:06:56.720 --> 0:06:59.120 China or Japan and you'd hope that that would work 0:06:59.160 --> 0:07:01.960 out for you, or you'd use local bitcoins. Um. I 0:07:01.960 --> 0:07:04.000 remember when Circle came on this theme and I was 0:07:04.040 --> 0:07:06.960 in Boston, Circle as the Boston company. Leave ability to 0:07:07.120 --> 0:07:09.880 a c h or wire money into a platform by 0:07:09.920 --> 0:07:13.120 crypto was such a huge relief. But if we think 0:07:13.120 --> 0:07:15.360 about what's happened over the last two years, crypto is 0:07:15.360 --> 0:07:19.760 now accessible directly through dozens of both traditional fin tax 0:07:19.840 --> 0:07:22.880 as well as crypto native fin techs. We have coin based, Gemini, 0:07:23.040 --> 0:07:25.320 cracked in a lot of others, but we also have 0:07:25.520 --> 0:07:28.120 Square and robin Hood and so By and others to 0:07:28.360 --> 0:07:30.520 make it really, really easy for people to manage their 0:07:30.560 --> 0:07:34.240 crypto in the same way they're managing their equities exposure. Right, So, 0:07:34.280 --> 0:07:36.680 I think that's been a really amazing development and has 0:07:36.680 --> 0:07:40.320 certainly made consumer on ramp much simpler. An area I'm 0:07:40.320 --> 0:07:43.560 really excited about is putting crypto in iras and tax 0:07:43.600 --> 0:07:46.560 advantaged accounts. I think that's a huge opportunity for this 0:07:46.680 --> 0:07:49.680 growth asset. We're investors in a company called Choice that 0:07:49.760 --> 0:07:52.720 does that, but Alto i RA does that and others 0:07:52.760 --> 0:07:55.040 do that as well, and I think for us, the 0:07:55.040 --> 0:07:57.600 biggest area of growth is really continue think about how 0:07:57.600 --> 0:07:59.680 we can use our market infrastructure and all of the 0:07:59.680 --> 0:08:02.240 technic l you we feel the coin shares to reach 0:08:02.280 --> 0:08:16.480 our consumers in different ways, our clients in different ways. Maltim, 0:08:16.480 --> 0:08:18.800 I wanted to ask you about sort of the institutional 0:08:18.800 --> 0:08:21.280 investor end of things. You know, correct me if I 0:08:21.400 --> 0:08:23.800 if you disagree with this, but I kind of, you know, 0:08:23.960 --> 0:08:26.080 I get the sense that for a lot of sort 0:08:26.080 --> 0:08:29.080 of individual retail investors. As you pointed out, there's so 0:08:29.120 --> 0:08:33.559 many easy ways to to get yourself exposure to crypto. 0:08:33.600 --> 0:08:36.840 But I feel like the institutions are really such a 0:08:36.880 --> 0:08:39.400 big well of money there that potentially could come into 0:08:39.440 --> 0:08:42.920 the space. And my guess is they more likely uh 0:08:43.360 --> 0:08:46.280 be interested in a in an exchange traded product, um, 0:08:46.360 --> 0:08:50.199 something they're more comfortable with, and say storing crypto themselves 0:08:50.480 --> 0:08:53.800 or going through you know, direct exposure through a coin base. 0:08:54.240 --> 0:08:57.959 Where are institutions in your opinion as far as where 0:08:57.960 --> 0:09:00.640 on the curve are they as far as getting into crypto. 0:09:00.679 --> 0:09:02.840 It's it seems to me like we're just at the 0:09:02.840 --> 0:09:05.720 early days of them scratching the surface. What are the 0:09:05.720 --> 0:09:08.880 type of conversations institutions have about crypto as far as 0:09:08.880 --> 0:09:12.400 how much exposure they really want to get? Yeah, that's 0:09:12.440 --> 0:09:15.280 been the topic in the crypto industry for quite some time. 0:09:15.720 --> 0:09:18.880 So let's just start by talking about how institutions typically 0:09:18.920 --> 0:09:22.800 allocate the new asset classes. For most it starts with research, right, 0:09:22.840 --> 0:09:25.680 and it starts with actually an internal decision process around 0:09:25.760 --> 0:09:28.320 whether or not they want to engage with a specific 0:09:28.400 --> 0:09:31.720 asset class. Now for a bitcoin in particular, for the 0:09:31.760 --> 0:09:33.839 longest time. You know, when I first went out to 0:09:33.880 --> 0:09:36.200 the street and tried to raise money for a bitcoin business, 0:09:36.320 --> 0:09:41.480 people told me I was crazy. Does this DNI? Everyone 0:09:41.520 --> 0:09:43.559 wanted to do blockchain, but we weren't really clear with 0:09:43.640 --> 0:09:46.240 that that meant. But everyone was doing blockchain. And what 0:09:46.360 --> 0:09:50.040 was really interesting about what happened in particularly when individuals 0:09:50.080 --> 0:09:53.160 like Bill Miller, Um and you know, Stan Drucor Miller 0:09:53.200 --> 0:09:55.360 came out and said, I'm Paul to your Jones, right, 0:09:55.400 --> 0:09:57.920 came out and said I'm allocating a bitcoin. I have 0:09:57.960 --> 0:10:01.280 long term conviction in mis sasset. It made it acceptable 0:10:01.800 --> 0:10:06.520 institutions for chief investment officers, for investment committees, for risk 0:10:06.559 --> 0:10:09.080 review committees to start looking at the asset. Right. They've 0:10:09.080 --> 0:10:10.720 been doing a little bit of research, and I'll say 0:10:11.000 --> 0:10:13.680 there's some firms that were really you know, forward looking 0:10:13.720 --> 0:10:17.600 and started doing research as early. But it was really 0:10:17.640 --> 0:10:20.680 in when people started saying, Okay, this is an asset class, 0:10:21.200 --> 0:10:23.400 maybe we're willing to consider it, We're willing to talk 0:10:23.440 --> 0:10:25.920 about it Um And what I think is happening now 0:10:26.160 --> 0:10:29.559 is institutions definitely want to add crypto exposure. I mean, 0:10:29.559 --> 0:10:32.520 all you have to do is look at the margins 0:10:32.559 --> 0:10:35.079 in this business, thanks for in the business of making money. 0:10:35.160 --> 0:10:38.000 Financial firms are in the business of making money. There's 0:10:38.040 --> 0:10:41.760 an industry that is printing billions of dollars of revenues. 0:10:42.160 --> 0:10:44.040 Right they're going to get in that game. That's that's 0:10:44.080 --> 0:10:46.640 there it for them right now. The challenge is how 0:10:46.679 --> 0:10:49.520 do they mesh the way they're customed to interacting with 0:10:49.600 --> 0:10:53.000 assets with this new thing, a digitally native asset that 0:10:53.080 --> 0:10:56.160 settles with finality on a public network. Right, That's that's 0:10:56.160 --> 0:10:59.160 a little bit different. So the cme um cash settled 0:10:59.160 --> 0:11:02.720 futures product has been really popular with institutions because it 0:11:02.760 --> 0:11:06.520 fits within their existing infrastructure, doesn't require many new processes internally. 0:11:06.960 --> 0:11:08.840 The only risk they're really taking their right with the 0:11:08.840 --> 0:11:11.719 c music counterparty with this cash settled contract is the 0:11:11.760 --> 0:11:15.000 asset risk. And that's really what's been the biggest thing 0:11:15.040 --> 0:11:17.920 for us that coin shares is thinking about articulating those 0:11:17.920 --> 0:11:20.920 different risks and then qualifying, quantifying those different risks, and 0:11:20.960 --> 0:11:24.080 finding rappers and constructions, because the only risk they really 0:11:24.080 --> 0:11:26.439 want to have right is asset level risk. They don't 0:11:26.480 --> 0:11:28.040 want to have market risk, they don't want to have 0:11:28.080 --> 0:11:30.679 counterparty risk. They want to try to minimize that. They 0:11:30.720 --> 0:11:33.240 certainly don't want to have some contract risk, which is 0:11:33.280 --> 0:11:35.840 something you face these defied products. So I think a 0:11:35.840 --> 0:11:38.400 lot of institutions through the sort of risk review phase, 0:11:38.440 --> 0:11:40.640 and now the question is do we build buyer partner 0:11:40.960 --> 0:11:44.160 start to offer these capabilities. So we've partnered, for example, 0:11:44.200 --> 0:11:46.440 with invest Go on the TF side, and that's been 0:11:46.480 --> 0:11:50.160 a great partnership. Asset manager massive asset manager who really 0:11:50.200 --> 0:11:52.280 wants to get into the crypto space, partnering with the 0:11:52.280 --> 0:11:55.199 crypto native firm like US gives them an accelerated way 0:11:55.240 --> 0:11:57.200 to do that, and we've seen a lot of partnerships 0:11:57.200 --> 0:12:00.679 of that type. We're also seeing folks buying. We've seen 0:12:00.720 --> 0:12:03.640 a number of financial institutions acquiring companies in the crypto 0:12:03.720 --> 0:12:06.840 space or evaluating the opportunity to acquire, although evaluations are 0:12:06.880 --> 0:12:10.560 pretty high these days. And then um some are building, right, 0:12:10.600 --> 0:12:12.559 But the issue with building is it takes a lot 0:12:12.559 --> 0:12:15.200 of time. It's really difficult to find talent, and at 0:12:15.200 --> 0:12:17.760 the end of the day, not certain that the culture 0:12:17.920 --> 0:12:21.640 at institutions is necessarily built around keeping pace with an 0:12:21.640 --> 0:12:24.760 industry that's so dynamic and constantly evolving. But I think 0:12:24.840 --> 0:12:27.520 right now that's really where most institutions are at they 0:12:27.559 --> 0:12:31.000 have internal approval, the board is on board shareholders, you know, 0:12:31.760 --> 0:12:34.480 I find it compelling. We've certainly seen when companies around 0:12:34.480 --> 0:12:37.520 their announced shouldn't do something crypto, right, we see a 0:12:37.520 --> 0:12:40.559 share price pop. So it's certainly value creative. I think 0:12:40.600 --> 0:12:42.800 now the question is how do they actually deliver on 0:12:42.880 --> 0:12:45.720 that in a meaningful way, um, and what does that 0:12:45.760 --> 0:12:48.199 timeline look like the next two to three years, it's 0:12:48.200 --> 0:12:50.360 going to be table stakes for every asset manager, every 0:12:50.360 --> 0:12:53.920 financial institution to offer crypto related services. I don't think 0:12:53.960 --> 0:12:55.960 many of those will be on chain. I think they'll 0:12:55.960 --> 0:12:58.679 find ways to wrap those assets, to make them custodial 0:12:58.760 --> 0:13:01.160 and to minimize some of the that they perceive with 0:13:01.240 --> 0:13:03.920 engaging with crypto assets in a more way that has 0:13:03.960 --> 0:13:07.080 the price action we've seen over the last few months, 0:13:07.240 --> 0:13:10.560 UM sort of slowed that momentum at all. Uh, you know, 0:13:10.640 --> 0:13:13.439 thrown some cold water on it. Absolutely not what I 0:13:13.440 --> 0:13:15.840 think has been interesting. The argument we used to get, 0:13:15.920 --> 0:13:17.560 or the pushback we used to get when we speak 0:13:17.600 --> 0:13:21.679 to the institutions that allocating to bitcoin was around bitcoin's volatility, 0:13:21.840 --> 0:13:25.439 and as we've seen in the last two years, volatility 0:13:25.520 --> 0:13:27.760 is no longer limited to Bitcoin. I think we've seen 0:13:27.840 --> 0:13:30.600 volatility all across the f f AT landscape and all 0:13:30.640 --> 0:13:34.040 across the part polar landscape. So I think um as 0:13:34.080 --> 0:13:36.280 a sort of a mindset shift has happened over the 0:13:36.360 --> 0:13:39.319 last two years, where everything else has gotten much more volatile. 0:13:39.760 --> 0:13:43.560 I think institutions are much more comfortable with Bitcoin's inherent volatility, 0:13:43.760 --> 0:13:47.000 and in some ways that volatility actually can be an 0:13:47.040 --> 0:13:50.080 an asset, particularly on the fixed side, or or the 0:13:50.120 --> 0:13:52.600 trading side, or the prime brokerage side right, which are 0:13:52.640 --> 0:13:56.400 big profit centers for many financial institutions. You know volatilities 0:13:56.400 --> 0:13:59.000 when you make money. Vola vol is good for traders. 0:13:59.320 --> 0:14:02.760 So I think that that volatility has gone from criticism 0:14:02.840 --> 0:14:05.440 to now being sort of did reality and potentially an 0:14:05.440 --> 0:14:09.000 opportunity for firms. So the big news obviously this week 0:14:09.080 --> 0:14:11.960 is Russia Ukraine tensions, and I wanted to ask you 0:14:12.000 --> 0:14:17.360 what happens to bitcoin prices as things sort of escalate 0:14:17.520 --> 0:14:20.160 in the coming days, because the thought used to be 0:14:20.280 --> 0:14:21.840 at least a couple of years ago, I remember hearing 0:14:21.840 --> 0:14:25.480 a lot about for example, Venezuela like bitcoin, and whenever 0:14:25.520 --> 0:14:29.880 something was happening in an unstable country, people could potentially 0:14:29.920 --> 0:14:32.800 use bitcoin or start to use bitcoin a bit more so, 0:14:33.160 --> 0:14:35.640 how should we be thinking about what happens to bitcoin's 0:14:35.720 --> 0:14:40.000 price as these Russia Ukraine tensions as collect Yeah, Vil Donna, 0:14:40.040 --> 0:14:43.200 I think that's that's a huge question. Um. If I 0:14:43.240 --> 0:14:45.840 had a crystal ball, right, I would be trading this. 0:14:46.320 --> 0:14:49.320 I sadly don't have a crystal ball. What I think 0:14:49.400 --> 0:14:51.680 is interesting is you alluded to. I think one of 0:14:51.720 --> 0:14:55.000 the narratives around bitcoin historically has been bitcoin is an 0:14:55.040 --> 0:14:58.640 antidote to chaos and government incompetence, right, And I think 0:14:58.680 --> 0:15:01.960 in many ways historically gold was also viewed that way, right, 0:15:02.000 --> 0:15:04.360 And we're seeing right now gold is having a little moment, 0:15:04.400 --> 0:15:07.000 it's rallying. I think one of the big questions around 0:15:07.040 --> 0:15:10.440 bitcoin in particular in this environment is we don't know 0:15:10.480 --> 0:15:12.720 what's going to happen. Right. A matter of weeks is 0:15:12.720 --> 0:15:15.440 not really going to reveal what correlations might exist between 0:15:15.480 --> 0:15:19.360 bitcoin and other sort of macro trends, political trends, cultural trends, etcetera. 0:15:19.800 --> 0:15:22.480 I think it's a bit too early to say. Um. 0:15:22.560 --> 0:15:25.360 I think certainly bitcoin in an inflationary environment has been 0:15:25.400 --> 0:15:27.840 something we've been waiting for for a long time. Um, 0:15:27.920 --> 0:15:30.280 and we are going to look at the data like 0:15:30.320 --> 0:15:33.080 we do with coin Shares research team. We're gonna continue 0:15:33.120 --> 0:15:36.440 looking at correlations, decrrelations and where things shake out. But 0:15:36.480 --> 0:15:40.120 again I'm hesitant to make any sort of definitive conclusions. 0:15:40.200 --> 0:15:43.120 I think it gets things we don't have. Unfortunately, in 0:15:43.120 --> 0:15:45.640 the sasset class is a long time series of data 0:15:45.720 --> 0:15:48.600 to look at to allow us to make inferences. Things 0:15:48.600 --> 0:15:51.280 have changed so much fundamentally that it's very difficult to pinpoint, 0:15:51.320 --> 0:15:53.640 like what's happening in markets. I think everyone is a 0:15:53.680 --> 0:15:56.640 little bit perplexed and confused to be candid, and if 0:15:56.640 --> 0:15:58.360 you look at the way things are trading in markets 0:15:58.400 --> 0:16:01.520 like it, it's wild. So um, I don't have a 0:16:01.560 --> 0:16:03.520 clear answer to that. I think for us, we're going 0:16:03.560 --> 0:16:05.840 to continue watching, We're going to continue looking at the data. 0:16:06.080 --> 0:16:08.360 Is always they I love to bring receipts of CBS, 0:16:08.400 --> 0:16:11.400 susy baby. They are a long um so, so we 0:16:11.440 --> 0:16:12.920 want to get some more data. We want to look 0:16:12.920 --> 0:16:15.760 at this over a longer time scale. But certainly we're 0:16:15.800 --> 0:16:18.560 optimistic around this idea that people will continue to look 0:16:18.600 --> 0:16:23.400 at bitcoin as a portfolio diversisfire, an effective portfolio diversisfire 0:16:23.480 --> 0:16:26.760 in an environment of increased chaos and uncertainty, you know. 0:16:26.920 --> 0:16:29.720 To me, I think the one thing that skeptics of 0:16:29.840 --> 0:16:33.200 crypto sort of sees on is that the narrative bowl 0:16:33.240 --> 0:16:35.800 case for crypto tends to be kind of a moving target. 0:16:35.880 --> 0:16:38.880 You know, Um, as you say, you know, government chaos 0:16:38.960 --> 0:16:42.200 and and sort of geopolitical chaos. Was was one selling 0:16:42.240 --> 0:16:46.880 point obviously, monetary inflation being sort of one of the 0:16:46.920 --> 0:16:51.320 evergreen bowl cases for crypto. Is it just natural then 0:16:51.360 --> 0:16:54.680 to expect a correction like this when central banks start 0:16:54.800 --> 0:16:57.920 moving in the other direction and tightening policies? I mean, 0:16:58.000 --> 0:17:00.360 is that the main cattles you think? For what we've 0:17:00.360 --> 0:17:04.160 seen this drop in in crypto prices over the last 0:17:04.200 --> 0:17:06.600 few months. Um, is it as simple as that? Or 0:17:06.640 --> 0:17:08.920 is there more going on? Do you think? I think 0:17:08.960 --> 0:17:10.760 there's more going on. So if we look at how 0:17:10.840 --> 0:17:14.200 much bitcoin has dropped, Bitcoin is down around from its 0:17:14.280 --> 0:17:17.040 last high in November around set nine thousand, So it's 0:17:17.040 --> 0:17:19.280 down for you five percent. If we look at tech equities, 0:17:19.320 --> 0:17:21.680 tech equities are down and round thirty two in some 0:17:21.720 --> 0:17:25.120 cases like right, So we've seen drawdowns in in that 0:17:25.160 --> 0:17:28.639 asset class, which is technically considers a growth assets, we're 0:17:28.680 --> 0:17:32.840 using more traditional value stocks like pre um, core equities 0:17:32.960 --> 0:17:36.359 rallying a bit right UM. But I think across the 0:17:36.520 --> 0:17:40.840 board there is growing awareness and I think it's not 0:17:40.880 --> 0:17:43.760 the Ukraine Russia conflict that's highlighted this, but it's what's 0:17:43.760 --> 0:17:46.640 been happening in Canada with the Drucker protests and um 0:17:46.680 --> 0:17:50.400 the Canadian government cutting off financial access to more involved 0:17:50.400 --> 0:17:53.280 in in these protests. People in the in the West, 0:17:53.400 --> 0:17:56.639 right historically, and the majority of capital markets activities still 0:17:56.680 --> 0:17:58.639 by and large in the United States and in the 0:17:58.680 --> 0:18:02.000 Western hemisphere. If we look at what's happened in the West, 0:18:02.080 --> 0:18:04.679 people in the West have never really conceptualized situation like 0:18:04.760 --> 0:18:07.160 Venezuela or Greece or Turkey like it. Just I think 0:18:07.160 --> 0:18:09.639 as we watch what's unfolded over the last few weeks 0:18:09.640 --> 0:18:12.680 and months with new regulation being proposed around surveilling bank 0:18:12.720 --> 0:18:15.119 accounts with balances over six and some of the new 0:18:15.200 --> 0:18:18.440 rules and be increased oversight in the lack of financial 0:18:18.440 --> 0:18:21.199 privacy that's coming down the pike, I think people just 0:18:21.359 --> 0:18:25.359 globally are becoming more aware of the fact that moving 0:18:25.359 --> 0:18:28.879 into the digital age and our lives being so driven 0:18:28.920 --> 0:18:31.359 by technology. On a day to day basis, every facet 0:18:31.359 --> 0:18:34.600 of our lives also has some profound implications for our self, 0:18:34.640 --> 0:18:37.359 sovereignty and the level of freedom we enjoy. And so 0:18:37.440 --> 0:18:40.280 I actually think for many people it is catalyzed and 0:18:40.320 --> 0:18:45.240 renewed interest in how bitcoin other cryptocurrencies could potentially be 0:18:45.320 --> 0:18:47.879 part of their lives in the future. And you know 0:18:47.920 --> 0:18:50.680 what I always say is taking a small percentage of 0:18:50.720 --> 0:18:55.160 your portfoliolocating it to bitcoin. It's a form of insurance. Right. 0:18:55.560 --> 0:18:59.760 If we're wrong and everything else works out, great, you're covered. 0:19:00.080 --> 0:19:02.560 But if we're right, the fact that this is still 0:19:02.560 --> 0:19:07.000 such an asymmetrical risk reward asset makes it worthwhile making 0:19:07.000 --> 0:19:09.560 that small allocation. That's how I view it, and when 0:19:09.560 --> 0:19:11.919 I think to people that sort of how articulate it. 0:19:12.119 --> 0:19:15.119 And again, there are risks. I certainly don't think you 0:19:15.160 --> 0:19:17.959 know that there aren't risks here, and certainly it's important 0:19:18.000 --> 0:19:20.879 to convey those that I think around the world just 0:19:21.280 --> 0:19:25.560 people are becoming more aware of the potential impact technology, 0:19:25.600 --> 0:19:29.399 in particularly financial surveillance technology will have on their lives, 0:19:29.640 --> 0:19:31.679 and they're starting to think more critically about it. I mean, 0:19:31.720 --> 0:19:33.840 we've been locked in our houses for the last two years. 0:19:33.960 --> 0:19:36.960 Investing has become a form of entertainment. And I think 0:19:37.000 --> 0:19:40.280 generally people are looking around them and they're asking what 0:19:40.320 --> 0:19:43.200 do we do from from here? Especially for my generation, 0:19:43.359 --> 0:19:47.000 like we got screwed by the financial crisis. That's from college, 0:19:47.280 --> 0:19:49.840 no jobs set back, you know, four or five years. 0:19:50.119 --> 0:19:52.639 You're in your thirties, So so what are you gonna do? 0:19:53.280 --> 0:19:56.280 It's really, I think, good, an interesting shift that's happening. 0:19:56.320 --> 0:19:58.880 It is a generational shift, and I do think, um, 0:19:58.880 --> 0:20:01.240 what's interesting. There's amunt of amount of capital in the 0:20:01.240 --> 0:20:04.000 crypto space. You know, we talked about institutions for a 0:20:04.000 --> 0:20:06.800 long time, and we thought about institutions, we thought about things. 0:20:07.160 --> 0:20:09.160 Now when we think about institutions, we actually think about 0:20:09.160 --> 0:20:12.600 crypto native institutions with a tremendous amount of capital, a 0:20:12.680 --> 0:20:15.479 huge amount of capital. And so it's no longer just 0:20:15.560 --> 0:20:18.040 the traditional players. There is a new world. There's a 0:20:18.040 --> 0:20:20.400 new set of power players and they're spending a lot 0:20:20.440 --> 0:20:23.760 of money. They're moving fast, very aggressive in this land, 0:20:23.800 --> 0:20:27.359 grab for not just mind share, for attention and for 0:20:27.400 --> 0:20:29.960 share of wallet. And that shift is happening very rapidly. 0:20:31.160 --> 0:20:35.160