Speaker 1: Hello, and welcome to What Goes Up a weekly markets podcast.
Speaker 1: My name is Mike Reagan. I'm a senior editor at
Speaker 1: Bloomberg and I'm Aldana Higher Across Acid reporter at Bloomberg.
Speaker 1: And this week on the show, well, we didn't see
Speaker 1: this coming, but turned out to be the year when
Speaker 1: the crazy things we normally talked about at the end
Speaker 1: of the podcast turned into the things we talked about
Speaker 1: during the serious part of the show too, with crypto
Speaker 1: executives being called before Congress, tokens that started out as
Speaker 1: jokes skyrocketing to tens of billions of dollars in value,
Speaker 1: n f t s of board apes selling for millions
Speaker 1: of dollars, coin based, going public, you name it. It
Speaker 1: was hard to avoid the crypto headlines this year and
Speaker 1: wonder what it all means going forward. We're gonna talk
Speaker 1: to the woman leading Bloomberg's coverage of it all about
Speaker 1: what a wild year was and what's a lookout for
Speaker 1: in two And speaking of crazy and wild things, are
Speaker 1: operators are standing by to take your crazy things. So
Speaker 1: if anybody saw something that they wanted to flag or
Speaker 1: wanted to let us know about, you can call us
Speaker 1: on the crazy things hotline. That's six four six three
Speaker 1: two four three four zero. Leave us a voicemail. Maybe
Speaker 1: we'll play it on the show. And as always, you
Speaker 1: can always tweet at us as well. But first I
Speaker 1: want to bring in Stacy Marie Ishmael. She's the managing
Speaker 1: editor for Crypto at Bloomberg. Welcome to the show. Hi,
Speaker 1: thanks so much for having me. Stacy also my neighbor
Speaker 1: in the office. Although I'm getting kicked out of that
Speaker 1: row about kicked out. They're moving me closer to the
Speaker 1: men's room, which for a guy my agees is a
Speaker 1: good it's an upgrade, So I'll take let's Stacy, I
Speaker 1: just want you to tell the listeners a little bit
Speaker 1: about yourself. I mean, how does such a nice, smart,
Speaker 1: level headed woman, what career path takes her into this
Speaker 1: crazy world of crypto that you found yourself in. Give
Speaker 1: us sort of your your your resume in a nutshell here. Sure. So,
Speaker 1: I'm a person who has bounced between technology and media
Speaker 1: for a long long time, and my very first job
Speaker 1: in journalism as a kind of a baby reporter, was
Speaker 1: covering structured finance credit to false swaps and derivatives from
Speaker 1: two thousands sticks to two thousand nine, which you know,
Speaker 1: it was an interesting time for a baby reporter. While yeah,
Speaker 1: it was, you know, it's what you do. Um you
Speaker 1: sort of get you get thrown into the deep end.
Speaker 1: You start writing these stories about market in disease of
Speaker 1: credit to false swaps that seven people read, and then
Speaker 1: for lots of different subprime and housing related reasons six
Speaker 1: months later that everybody in the whole country in the
Speaker 1: world are reading. So, you know, I come at finance
Speaker 1: from this perspective of what goes up must go down,
Speaker 1: But sometimes it goes sideways, and you don't always understand
Speaker 1: what the structural transmission mechanisms might be. Something that looks
Speaker 1: totally un correlated actually turns out to be a hundred
Speaker 1: percent correlated with something else. And that's a perspective that
Speaker 1: I found really helpful in in crypto, where you have
Speaker 1: to both take it I suppose seriously but not literally
Speaker 1: when when you're thinking about these things. And I also
Speaker 1: have you know, a technology background of workers technology companies.
Speaker 1: I have more kind of technical skills. I know, I
Speaker 1: know enough programming and codes be dangerous, which has also
Speaker 1: come in really handy from the perspective of evaluating on
Speaker 1: understanding some of the white papers in crypto about like
Speaker 1: why you should trust this OME token, or just on
Speaker 1: understanding how disruptive some of the conversations that we're having
Speaker 1: about the underpinnings of blockchain can be for the rest
Speaker 1: of the sector. So just to start out really broadly speaking,
Speaker 1: I know you wrote an article for Bloomberg recently. It's
Speaker 1: titled Wall Street Finally Learned it Can't ignore Crypto and
Speaker 1: n f T S. So I was hoping we could
Speaker 1: start out with you just sort of talking about the
Speaker 1: year in crypto. It seems like the big theme was
Speaker 1: street acceptance. We heard that over and udging or otherwise,
Speaker 1: right exactly, So maybe can you later lay that out
Speaker 1: for us and what some of those factors were and
Speaker 1: why that is important for the crypto community. Three three
Speaker 1: good questions at once. Okay, So I'll start with what
Speaker 1: what happened? Right, which is if you think back to
Speaker 1: you know, millions of years ago in January one, when
Speaker 1: so much of the conversation about crypto was tied up
Speaker 1: in scams, fraud and ransomware, right, if you were if
Speaker 1: you were talking about bitcoin, you were talking about how
Speaker 1: somebody lost all of this and you know, I think
Speaker 1: that that really had set been the tone and set
Speaker 1: the tone for all but the truest of believers for
Speaker 1: quite a long time. I think there are a lot
Speaker 1: of media companies, Bloomberg included, that had much more sophisticated
Speaker 1: coverage of crypto than just it's all scams all the time.
Speaker 1: But you know, if you were to ask a person
Speaker 1: on the street, odds are that if they had heard
Speaker 1: about it, they either thought it was totally sketchy or
Speaker 1: they also were like Team by Gold, you know, high,
Speaker 1: high guns and in basement kind of kind of stereotype.
Speaker 1: And then a few things happened all at once, right,
Speaker 1: which is that you had the beginnings of fairly significant
Speaker 1: price appreciation because coin base went public and coin based
Speaker 1: being this major major exchange and hopefully helped well, I
Speaker 1: think the people who were backing it, who helped hope
Speaker 1: that it would help institutionalize the idea of this is
Speaker 1: something that you can take seriously. Look it's it's serious
Speaker 1: enough for this to be part of the public markets.
Speaker 1: And that was in kind of March April, those conversations
Speaker 1: were happening, and you you started to see that first
Speaker 1: run up in prices. I would also say that right
Speaker 1: around that time, when some of the buzz around meme
Speaker 1: stocks was kind of hitting its peak, there was a
Speaker 1: lot of overlap between people who were spending a lot
Speaker 1: of time on Reddit forums talking about its etcetera. With
Speaker 1: people who are spending a lot of time in Discord
Speaker 1: talking about different crypto tokens. And I have what I
Speaker 1: sometimes call my unified unified theory of crypto, which is
Speaker 1: that it's roughly the same groups of folks who are
Speaker 1: interested in sports, betting, poker, video games, n f t S,
Speaker 1: Wall Street Bets, Discord, Reddit, Twitch, and YouTube. And not
Speaker 1: everybody is part of every single one of those communities,
Speaker 1: but chances are that if you belong to any one
Speaker 1: of them, you are adjacent to people who belong to
Speaker 1: the others. And I think there was a lot of
Speaker 1: interesting overlap and conversation between some of the folks who
Speaker 1: were like die hard on meme stocks and you know,
Speaker 1: trading those in robin hood with people who were like, hey,
Speaker 1: have you heard about the theory um maybe you should,
Speaker 1: maybe you should add that to your portfolio. And this
Speaker 1: is kind of what I mean about when you you
Speaker 1: have to say crypto seriously but not always literally, which
Speaker 1: is like you you wouldn't look back and say, Okay,
Speaker 1: Wall Street now has to take crypto seriously because of
Speaker 1: Wall Street bets. But you could also say one of
Speaker 1: the reasons that Wall Street is taking crypto seriously is
Speaker 1: because another thing that was driving material performance and markets
Speaker 1: from the equities perspective, there were similar trends driving material
Speaker 1: performance in crypto, you know, a totally different asset class.
Speaker 1: And then, of course, I think one of the biggest
Speaker 1: things that happened, and they happened within not too far
Speaker 1: apart from each other, is al Salvador was like we're
Speaker 1: all in on bitcoin, and China was like bitcoing completely legal,
Speaker 1: and you had these totally different approaches to the asset
Speaker 1: class that had you know, some interesting ripple effects, right,
Speaker 1: which is one folks were like, well, if this is
Speaker 1: serious enough for an entire country to ban it, and
Speaker 1: it's also seriously enough for an entire country to go
Speaker 1: all in on on bitcoin, perhaps we should pay more attention. Right. So,
Speaker 1: whether you were pro or con the fact that this
Speaker 1: asset class had is into sovereign attention as it were,
Speaker 1: was I think another marker for folks that Okay, they
Speaker 1: can't just be like la la la, I don't know
Speaker 1: what's going on here. They really need to engage with
Speaker 1: it in a serious way. So if your portfolio included
Speaker 1: emerging market exposure of any kind, or your portfolio included TESLA,
Speaker 1: or it included micro strategy, you know you were suddenly
Speaker 1: having to be way more up to speed on Bitcoin
Speaker 1: than you were maybe comfortable with or even aware of. Right,
Speaker 1: so all of all of this is happening in a
Speaker 1: very short amount of time. You know, we we kind
Speaker 1: of go from like, ah, this is all bad and
Speaker 1: ran somewhere to like WHOA, I need to I need
Speaker 1: to understand this better. And then you have this incredible
Speaker 1: run up in prices. Well, you know, at the time
Speaker 1: of recording, like crypto is obviously nowhere near the old
Speaker 1: time highs that we hit in November. You know, we're
Speaker 1: about thirties down from the peak depending on the day,
Speaker 1: but we are still so far above you know, the
Speaker 1: when you could buy a bitcoin for like eight hundred
Speaker 1: dollars that it's almost a different universe. And I think
Speaker 1: that when you when you consider as Mike question in
Speaker 1: the intro, you have n f T selling for millions
Speaker 1: of dollars, you have single tokens experiencing three thousand percent
Speaker 1: appreciation in a given window. You have bitcoin trading above
Speaker 1: sixty dollars. If you are a serious person in financial markets,
Speaker 1: there is too much money on the table, whatever your
Speaker 1: personal opinion of the asset class might be, to ignore that. Yeah, absolutely,
Speaker 1: I love your unifying theory there, you know, I pictured
Speaker 1: is like a big ven diagram with all these little bubbles,
Speaker 1: but all of them sort of dip into the crypto space. Uh,
Speaker 1: to some I know personally, I know a lot of
Speaker 1: I have some friends who were online poker players who
Speaker 1: you know, when there was a crackdown on that all
Speaker 1: of a sudden, the only way you could really bet
Speaker 1: on online poker was was with crypto, you know. So
Speaker 1: it's it's interesting the different sort of you avenues that
Speaker 1: you can get sucked into it. Um. But Stacy, I
Speaker 1: wanted to talk sort of from the journalistic perspective because
Speaker 1: along with the growth of crypto, there's been this whole
Speaker 1: new growth of media companies covering crypto, and you know,
Speaker 1: whatever that happens there, You know, these publications have some
Speaker 1: sort of vested interest in the space, and to me,
Speaker 1: there's a risk of sort of coverage that that borders
Speaker 1: on cheerleading, you know, and I don't want to use
Speaker 1: cheerleading in a derogatory term, Bildona. I'm the father of
Speaker 1: two cheerleaders. I actually I could be pressed into service.
Speaker 1: Is like a backspot in a stunt group if needed.
Speaker 1: So I I all all the respect it is for
Speaker 1: if we if you ever want to do a stunt
Speaker 1: at work, let you know, you know all the respect
Speaker 1: in the world for cheerleading. Um. But you know from
Speaker 1: that notion of and I think I know the answer.
Speaker 1: I think Plato knows the answer. But to listeners out
Speaker 1: there who are used to reading a different type of
Speaker 1: coverage of crypto, how how do you approach Bloomberg's coverage?
Speaker 1: And how how my it be different than say and
Speaker 1: I'm la going to name any names, but a website
Speaker 1: that obviously has has direct skin in the game of
Speaker 1: the crypto world more so than we would. Yeah, I
Speaker 1: mean this is this is the perpetual question of trade magazines,
Speaker 1: right in the sense of and you know, for a
Speaker 1: place where if you're direct owner is incentivized because they
Speaker 1: participate in the crypto ecosystem to have all prices go
Speaker 1: up that can present interesting editorial challenges and compromises. But
Speaker 1: it's I think, as a as a universe of media,
Speaker 1: it's not something we're totally unfamiliar with. What I would
Speaker 1: say that I'm trying to bring to Bloomberg is, in
Speaker 1: terms of crypto coverage, is a phrase that I use
Speaker 1: a lot, which is rigorous skepticism, And that is to say,
Speaker 1: I'm not actually interested in being cynical or nihilistic about
Speaker 1: the asset class. I'm not interested in starting from a
Speaker 1: place of well, all of this is, you know, potentially fraudulent,
Speaker 1: Like I don't think that's journalistically useful, and I also
Speaker 1: think it's untrue, right, Like is there an above average
Speaker 1: number of sketchiness happening at all times? Yeah? Sure, but
Speaker 1: it's it's not that's not the entirety of the universe. Similarly,
Speaker 1: I'm not like a starry eyed believer, who will, you know,
Speaker 1: take for granted any claim that a aggressively well funded
Speaker 1: crypto ceo makes about this is the pathway to wealth redistribution. Like, sure, how,
Speaker 1: give me, give me evidence, give me examples, you know, like,
Speaker 1: show me materially what this means in practice. Um, And
Speaker 1: I think that's that's where I would like all of
Speaker 1: our coverage to live right that we are appropriately curious
Speaker 1: and we're appropriately questioning, but we are sufficiently open minded
Speaker 1: that we don't miss interesting stories. So, speaking of some
Speaker 1: of the conversations we've been having internally, know we're we've
Speaker 1: been working on a lot of stories that are you know,
Speaker 1: looking at the year and review for crypto and for
Speaker 1: bitcoin and for all these other offshoots, and so I'm wondering,
Speaker 1: you know, I've been asking a lot of people like
Speaker 1: what will it take to continue to see the market mature?
Speaker 1: And I'm wondering how you're thinking about that. I think
Speaker 1: any markets in which you have individual tokens or groups
Speaker 1: of tokens that can go up or down by two
Speaker 1: percent in one day is not mature yet. And I
Speaker 1: think that when you're in a situation in which individual
Speaker 1: CEOs tweeting about their puppies can cause entirely new classes
Speaker 1: of things to spring into existence, I would also say
Speaker 1: it's not you know, fully baked from from that kind
Speaker 1: of perspective, and so I look at a couple of
Speaker 1: different things. If you think about, you know, some traditional markers,
Speaker 1: like what's the depth of the liquidity, right, what's the
Speaker 1: what's the sort of proportion of pure momentum driven speculation
Speaker 1: to fundamental analysis and investment. Like how many people are huddling,
Speaker 1: as it were, not merely because they think that if
Speaker 1: they outlast everybody else there will be gains for them,
Speaker 1: but because they're making a more fundamental bet on something else.
Speaker 1: I look at the frankly, the quality of the executive
Speaker 1: bench of a lot of these crypto companies, Like, you know,
Speaker 1: what is what is the experience of the folks involved,
Speaker 1: What are their backgrounds? How do they spend a lot
Speaker 1: of time on Twitter raging against the machine or are
Speaker 1: they doing work? You know, it's it's things that you
Speaker 1: tend to from a more traditional perspective. You see a
Speaker 1: lot of activity happening in crypto that makes you think
Speaker 1: that there is a degree of un seriousness which can
Speaker 1: be funny but is also troubling. Um I'll give an example.
Speaker 1: You know, just this year, we have seen a tremendous
Speaker 1: number of outages and downtime across you know, even some
Speaker 1: of the biggest players in the space. And it'll be
Speaker 1: while you can't log in for x amount of time,
Speaker 1: or you can't withdraw or you can't liquidate this particular position,
Speaker 1: or you've been locked out of your accounts for X
Speaker 1: number of days. And if you are a person who's
Speaker 1: used to sort of technology, and perhaps some of our
Speaker 1: listeners might remember when if you use Twitter, you would
Speaker 1: see the fail whale, like every five minutes, it's like,
Speaker 1: oh Twitter is down again, and it's like that that
Speaker 1: can be funny for a while, but then you start
Speaker 1: to have people who are like, hang on a minute,
Speaker 1: this is my primary bank account, or I have positions
Speaker 1: that at risk of being liquidated here because the market
Speaker 1: is moving against me and I can't log into my
Speaker 1: account to adjust an adapt accordingly, you start to move
Speaker 1: into one actually needing customer service, like actually needing to
Speaker 1: be able to service and meet the needs of your
Speaker 1: customers who might be facing some kind of difficulty and
Speaker 1: to way better reliability and uptime. Right, It's like you
Speaker 1: get past the point of trillions of dollars where joking
Speaker 1: around on your social platforms while people are locked out
Speaker 1: of their accounts goes from like funny, ha ha, we're
Speaker 1: all in this together to just unprofessional and inappropriate. You know, Stacey,
Speaker 1: I want to sort of unpack something you said earlier
Speaker 1: on there in that answer, and um, it really it's
Speaker 1: to an interesting quote I saw recently, and I wish
Speaker 1: I had written down who who tweeted it or said it,
Speaker 1: but it was it was basically the notion that defied
Speaker 1: the centralized finance is a solution in search of a problem.
Speaker 1: And you know, people kind of been saying that about
Speaker 1: crypto all all along. But I do think you know,
Speaker 1: it's it's ah, you know something that is a criticism
Speaker 1: of DeFi. That's that's worth talking about, you know, you know,
Speaker 1: the real believers and DeFi will tell you, well, it's
Speaker 1: you know, it's opens the doors to the unbanked and
Speaker 1: to the populations that have been sort of neglected by
Speaker 1: traditional financial services. Is there validity to that? I mean,
Speaker 1: is that sort of just the nice bow you put
Speaker 1: on top of a real gambler's market to make it
Speaker 1: look like, you know, it's a virtue signal? It a
Speaker 1: little bit, But how do you think of that, you know,
Speaker 1: the whole world of the centralized finance and you know
Speaker 1: the ability to to solve real world problems that people
Speaker 1: might be having with the traditional financial system. Sure, if
Speaker 1: I put my curious and also skeptical hat on for
Speaker 1: a second. I think back to a couple of things.
Speaker 1: I think back to when people were like why do
Speaker 1: we need email? Fox machines are great and then or
Speaker 1: or like this internet thing will never take off, or
Speaker 1: video chatting never gonna need that we were in person constantly, right,
Speaker 1: Like there's always a moment when you are standing at
Speaker 1: a technological fork in the road where whatever you are
Speaker 1: doing right now seems still fine, adequate, appropriate, well suited
Speaker 1: to whatever. The problem is that anything that isn't that
Speaker 1: seems ridiculous, right, And I think there are certain there
Speaker 1: is a risk in in some of the discussion of
Speaker 1: Defy that is that idea of what we have now
Speaker 1: is fine, Like what you're talking about is overly complicated
Speaker 1: and doesn't make any sense and it's never gonna work, right,
Speaker 1: And now we say this while recording on zoom in
Speaker 1: in in full video for something organized by email that
Speaker 1: we will publish through the Internet. So I think there's
Speaker 1: some of that, But I also think that there are
Speaker 1: insufficiently compelling arguments for some of the valuations and some
Speaker 1: of the claims that we see in Defy right, Because
Speaker 1: I think it's like you could argue that the the
Speaker 1: mare fact of being able to offer twelve a p
Speaker 1: y in a lowish interest rates environment is like useful
Speaker 1: for people who are looking for yield. Right, That's that's
Speaker 1: certainly a problem that's being solved through some applications of Defy.
Speaker 1: You could argue that the idea of smart contract is
Speaker 1: kind of genius actually, that you know, you have this
Speaker 1: notion of within an agreed set of parameters and variables,
Speaker 1: you can automate things right now that are otherwise very manual.
Speaker 1: Any lawyers listening to this like hatesmart contracts because it's
Speaker 1: so potentially ultimating them out of jobs. But you know,
Speaker 1: there's like lots of interesting stuff out there, But there isn't,
Speaker 1: you know, to use a phrase from our colleague Olga Crief,
Speaker 1: there isn't a killer app for defy yet other than like,
Speaker 1: here's like yield farming with super attractive interest rates, or
Speaker 1: here's a handful of particularly technical or you know, niche
Speaker 1: uses that some people find really helpful, but for the
Speaker 1: vast majority, their eyes glaze over when you try to
Speaker 1: explain to them how it works. I'm glad you brought
Speaker 1: up the fax machine. I'm so old all Donna. When
Speaker 1: I was a baby reporter, the newspaper had a fax machine,
Speaker 1: but like the police department didn't, and the funeral homes didn't,
Speaker 1: So you know, I'd have to to the police station
Speaker 1: take notes on all the police reports. You know, the
Speaker 1: funeral home would call and and read me in about
Speaker 1: thirty seconds, the super long o bit that that I'd
Speaker 1: have to take down, and you know, so uh to me,
Speaker 1: the facts machine was revolutionary when when those places starting
Speaker 1: to get I can see where Paul Krugman was coming
Speaker 1: from when he said, you know, the internet is is
Speaker 1: just going to be as influential as the facts machine.
Speaker 1: I've got it to be pretty influential. I'm imagining baby
Speaker 1: Mike Reagan reporter. I'll bring by the fax machine here,
Speaker 1: browner hair, you know, otherwise not the same Stacy. I
Speaker 1: also wanted to ask you, speaking of all things defy,
Speaker 1: there's also this trend of regular, you know, old school
Speaker 1: traditional financial products, things like e t f s maybe
Speaker 1: also moving into the DeFi space, or some version of
Speaker 1: it moving into the DeFi space. I'm wondering if you're
Speaker 1: surprised by sort of that whole world recreating itself in
Speaker 1: the crypto world not at all. Um, you know, sort
Speaker 1: me say this because as we said, we're basically deskmates
Speaker 1: where I'm like everything old is new and crypto, which
Speaker 1: is you know, the idea that in whatever you have
Speaker 1: a starry eyed industry that's like, we're going to change
Speaker 1: the world, but first we're going to rebuild everything we've
Speaker 1: left behind. We're gonna make them better, but we're going
Speaker 1: to start from recreating this infrastructure. It happens all the
Speaker 1: time because inventing things that are genuinely new and have
Speaker 1: never existed before is you know, super hard actually, um,
Speaker 1: And what I what I also think is that there
Speaker 1: are parts of crypto, there are parts of defy that
Speaker 1: let you do certain things more efficiently potentially or you know,
Speaker 1: with less friction, even if the underlyings are very similar. Right.
Speaker 1: So you know, we've we've kind of looked at different
Speaker 1: things around what would it mean if remittances didn't take
Speaker 1: days on average but instead took hours and you could
Speaker 1: initiate them from WhatsApp Right, You're still doing the same thing.
Speaker 1: You're moving money across borders, but the cost of moving
Speaker 1: that money and the convenience of moving that money is
Speaker 1: like transformational in in its distinctiveness. And so I don't
Speaker 1: think that the that recreating old things in a in
Speaker 1: a with a new code of paint is necessarily a
Speaker 1: bad thing. And it's often helpful to help skeptics migrate
Speaker 1: along with you because somebody's like, oh, I understand E
Speaker 1: T S, or I understand tokenization, or understand fractional shares,
Speaker 1: and so I have now a useful mental model to
Speaker 1: approach something that I couldn't make head or tail of before.
Speaker 1: As they said, I wanted to get into the n
Speaker 1: f T market a little bit. You know, it's fascinating
Speaker 1: me because NFC has really started out as sort of this,
Speaker 1: you know, it seemed to come from the artistic community
Speaker 1: more than anything else, and kind of the the outsider community.
Speaker 1: And there's obviously, you know, uh, sort of an appeal
Speaker 1: and and uh a natural nous, a sort of I
Speaker 1: don't know if it's it's something to feel good about.
Speaker 1: I feel like, but then, you know, every day I
Speaker 1: come in now and there's some corporation or some celebrity
Speaker 1: in my inbox talking about a new corporate sponsored n
Speaker 1: f T or some celebrity getting involved in it. It
Speaker 1: seems to me to kind of cancel out that sort
Speaker 1: of grassroots artist end of it. You know, is there
Speaker 1: attention there? Do you think? And you know, I know
Speaker 1: it's impossible to say which way it goes, but does
Speaker 1: the sort of corporate you know, intrusion on the n
Speaker 1: f T market kind of kind of ruin you know,
Speaker 1: the fun on the arts side of it. This is
Speaker 1: the absolute punk rocker in you. It's like down down
Speaker 1: with the man him, absolutely, and so I mean it.
Speaker 1: I'll say a couple of things about that. One is,
Speaker 1: when people think about n f T s right now,
Speaker 1: they often will have a visual in mind, because you know,
Speaker 1: the thing's selling for dollars seventy million dollars. Are visual
Speaker 1: representations that are akin to or in some cases are art, right,
Speaker 1: So I don't necessarily consider an ape smoking a cigarette
Speaker 1: high art, but it is it is highly visual. And
Speaker 1: then there are some pretty cool and interesting experiments you know,
Speaker 1: from like folks like everybody, from people to banks see
Speaker 1: that are much more in that like fine art with
Speaker 1: a digital perspective, um kind of persuasion. But but the
Speaker 1: visual is not what defines the n f T right,
Speaker 1: What defines the idea of the of an n f
Speaker 1: T is this idea of uniqueness and that you can
Speaker 1: only have one, not because the thing itself is not replicable,
Speaker 1: but because there is a one to one ownership claim.
Speaker 1: And so I do think that right now, art is
Speaker 1: where n f t s have like captured the popular imagination,
Speaker 1: and there is some fun outsider energy just as much
Speaker 1: as there is you know, massive corporations like a MC
Speaker 1: and Marvel and others being like, ha ha, we can
Speaker 1: make more money on this. Here's a spider Man n
Speaker 1: f T for you. But I also think n f
Speaker 1: T s are like massively under imagined in their ultimate
Speaker 1: potential right because it's like you could represent anything with
Speaker 1: an n f T. It's it's it's a container for ownership.
Speaker 1: And I think when you know, it could be drawings,
Speaker 1: it could be music. I um, I was reading a
Speaker 1: story that an unreleased Whitney Houston track was just sold
Speaker 1: as an n f T. Right, It's like it is
Speaker 1: a container that represents authenticity. And I am looking forward
Speaker 1: to folks putting more interesting things in those containers over time.
Speaker 1: And I'm also looking for there to be kind of
Speaker 1: a shakeout. I mean, you know, my you and me
Speaker 1: are probably old enough to remember when like A O
Speaker 1: L was a thing. There you go and in addition
Speaker 1: to all of the unused cd s with an hour
Speaker 1: of A L access that so many of us connected
Speaker 1: over the years, brands would like claim their A O
Speaker 1: L identity right and they were like, we have to
Speaker 1: set up shop on a O L. And then it
Speaker 1: was like, well, we have to have our own dot
Speaker 1: com presence, and it's like we have to have our
Speaker 1: own Facebook page, we have to have our own Twitter handle.
Speaker 1: There's always a digital brand rush to make sure that
Speaker 1: one they have some control over their intellectual property on
Speaker 1: whatever the hot new thing is, and to that if
Speaker 1: there's any money to be made or any audience engagement
Speaker 1: to be generated, that they don't miss out on it.
Speaker 1: And then there's a shakeout right where the brands who
Speaker 1: understand how to like interact on that platform survive and
Speaker 1: the ones who don't don't. So I I it's a
Speaker 1: great point about sort of the potential of of what
Speaker 1: an n f T can be. I always bring up
Speaker 1: the notion of the z racing, you know, based digital
Speaker 1: thoroughbred horses that can race each other and can breed
Speaker 1: and you know, sort of recreating the whole horse racing
Speaker 1: industry in n f T. Whenever I talk about it
Speaker 1: to like, I won't say it used the word degenerate,
Speaker 1: but a gambling enthusiast friend of mine there. You know,
Speaker 1: they may roll their eyes at the notion of n
Speaker 1: f T S, but then you mentioned that and then explained, right,
Speaker 1: but horse racing Okay, now this is this changes everything. Yeah.
Speaker 1: I want to give a shout out to my in
Speaker 1: laws who just last year got rid of their A
Speaker 1: O L dial up internet. Wow. I know, I know
Speaker 1: they've been paying all these years. I think it was
Speaker 1: like a monthly fee. So and there are the listeners
Speaker 1: of the podcast, So shout out to the in laws. Hello,
Speaker 1: shout out. But just to wrap everything up, obviously a
Speaker 1: big through line here is that there were all these
Speaker 1: new people who entered the market for whatever reason, as
Speaker 1: you laid out at the start out of the show,
Speaker 1: and I know we are constantly thinking about, just as
Speaker 1: we are with the stock market, thinking about whether or
Speaker 1: not these new investors are going to stick around. I
Speaker 1: know for a while the idea was that as economies
Speaker 1: everywhere start to reopen, that people will become less interested.
Speaker 1: There won't be as much stimulus, etcetera, etcetera. So do
Speaker 1: you think that this huge new wave of investors is
Speaker 1: here to stay. I think every generation looks for a
Speaker 1: place to put their money. And I also think that
Speaker 1: it's never been true that investing is a solitary act,
Speaker 1: because I've certainly read a lot of coverage that is like, oh,
Speaker 1: you know, they're just saying that it's about community, but
Speaker 1: it's actually just about money. Like yeah, but you know,
Speaker 1: fund managers in the mad Men era, we're all trying
Speaker 1: to impress their smoking buddies with like whatever, whatever their
Speaker 1: picks were. That there's always been an element of social
Speaker 1: approval to portfolio management, even when new approval is the
Speaker 1: rejection of the status clue, right, you want to be
Speaker 1: the contrarian, you want to be the bear in a
Speaker 1: bowl market. And so I think when people underestimate the
Speaker 1: social and community elements of crypto, they miss a very
Speaker 1: large part of the story because unlike you know, the
Speaker 1: previous times when your social universe will like your fellow
Speaker 1: men at the country club, because let's be clear, there
Speaker 1: are mostly no woman there. Now it's the five thousand
Speaker 1: people in the discord with you, right, and they can
Speaker 1: be all over the world, and they're going to come
Speaker 1: at things from different places, and that is you know,
Speaker 1: discord is it's a big chat for him. It's like slack,
Speaker 1: it's like a well, a messenger, but it's a place
Speaker 1: where people are communicating, and it's it's built into how
Speaker 1: we live our lives. And I don't think that communication
Speaker 1: is going to go away. And I don't think the
Speaker 1: expectation of I'm going to ask perfect strangers what gotchi?
Speaker 1: They're gonna buy U? I don't think that's going away either.
Speaker 1: And so even if we see a major shakeout, I mean,
Speaker 1: like we are down again from the high um, all
Speaker 1: of this money still needs places to go and folks.
Speaker 1: So yeah, sure some folks will reallocate them. They be
Speaker 1: like I can't handle this volatility and buy some bonds.
Speaker 1: But I don't think it's going to disappear just because
Speaker 1: some people have moved on to the next thing. Like
Speaker 1: there are signs, you know, even with what I said
Speaker 1: about the relative immaturity of the asset class, there are
Speaker 1: absolutely signs of institutionalization. Right, you mentioned e t s. Right,
Speaker 1: there are so many more ways to get exposure to
Speaker 1: something that is still offering really impressive returns and yields
Speaker 1: compared with you know, lots of other things out there.
Speaker 1: All it's basically before we get to our crazy things
Speaker 1: of the year, not just the week. I think we've
Speaker 1: got to do over the year this time, just briefly.
Speaker 1: What so, where do you see the whole plot line
Speaker 1: going for crypto? And you know, both the regulatory front
Speaker 1: and just the the space itself, you know what, I know,
Speaker 1: it's impossible. It's such a fast moving space to try
Speaker 1: to predict what I feel like if I could answer
Speaker 1: that question, i'd be I'd be a hedge fund. Fair enough,
Speaker 1: fair enough, you know, the journalist. But I do think
Speaker 1: the biggest open question in crypto is what a regulator
Speaker 1: is going to do. You know, I don't think it's
Speaker 1: going to be an all or nothing. It's all all
Speaker 1: in in the in Salvador way or all against in
Speaker 1: the China way. I think there's and I actually think
Speaker 1: that is much harder in some ways, because it means
Speaker 1: if you're interested in this space, you have to become
Speaker 1: an expert on the regulatory regimes of like fifty different
Speaker 1: governments and you know, an equal number of central banks,
Speaker 1: but the amounts of uncertainty over whether just in state
Speaker 1: by state in the US, for example, you are allowed
Speaker 1: to like access meta mask or some other kind of
Speaker 1: wallets is considerable, and that is certainly weighing on consumer
Speaker 1: access because institutional investors will always find ways around um
Speaker 1: whatever regulations are. And then I would say the second
Speaker 1: thing is we'll probably start to see some price normalization
Speaker 1: across various types of asset classes. And I don't think
Speaker 1: the price normalization necessarily means we're going to decline in
Speaker 1: another for I think there's going to be more of
Speaker 1: a reliable median for certain types of things. You know,
Speaker 1: like the the NFC market right now is such a barbell.
Speaker 1: It's like hundreds of millions of dollars or two. It's
Speaker 1: like and there's there's you know, significant concentration on the
Speaker 1: two end, and a handful of examples on the hundreds
Speaker 1: of millions of dollars, and and that's not super sustainable
Speaker 1: or attractive or interesting, right Like it's it's hard to
Speaker 1: become a mass market product if you either offer very
Speaker 1: little or you offer a ton, but only if you
Speaker 1: have significance capital too to guess into that space. And
Speaker 1: so I think we'll probably start to see a little
Speaker 1: bit more of a shake out there, just so things
Speaker 1: kind of settled to a place that make more intuitive
Speaker 1: sense to folks. Tiden up your straight jackets. It's time
Speaker 1: for the craziest things we saw in markets this week.
Speaker 1: Stand clear of the craziest things we saw this year.
Speaker 1: What's the craziest crypto or other story in markets he
Speaker 1: saw this year? Well, I've been thinking a lot about
Speaker 1: this because obviously I covered a lot of them, and
Speaker 1: it was really hard to make up my mind. But
Speaker 1: something that I read recently is sticking out, and Stacy
Speaker 1: a little bit already was alluding to this. So Stacy
Speaker 1: earlier had said at the start of the year it
Speaker 1: was all scams all the time, and so and so
Speaker 1: lost their crypto keys, etcetera, etcetera. And there actually is
Speaker 1: this amazing story from the New Yorker called half a
Speaker 1: billion in bitcoin lost in the dump. So my second
Speaker 1: shout out today that one goes out to the New Yorker.
Speaker 1: It's an amazing story of this person who claims to
Speaker 1: be the fifth person to have been mining bitcoin like
Speaker 1: way way long ago, and he unfortunately lost his hard
Speaker 1: drive that has all the information on it. So he's
Speaker 1: trying so hard to literally dig it out from a
Speaker 1: dump in England. Is that the guy he's like in Wales? Yeah? Right,
Speaker 1: I remember reading about that. Yeah. And he's trying to
Speaker 1: the UK, trying to pay off the operator to let
Speaker 1: him in with the metal. I mean, is finding it though,
Speaker 1: But it's something like a few hund million dollars worth
Speaker 1: five it's I think it's five hundred million dollars right, yeah, So,
Speaker 1: but it's amazing he has all these blueprints for how
Speaker 1: he's going to dig it up little by little and
Speaker 1: have it go through metal detectors and all these people
Speaker 1: who are going to be working on it. Who's going
Speaker 1: to get a cut and you just you you feel
Speaker 1: his pain. But at the same time, I love the
Speaker 1: idea of it being about, you know, him actually just
Speaker 1: losing a little computer a piece, so, but an actual
Speaker 1: physical thing that he lost. If I were him, my
Speaker 1: first line of questioning would be, like, did any employees
Speaker 1: of the dump retire early? I I want to know
Speaker 1: who they It's a really good point. That's that's who
Speaker 1: I That would my investigation would start there. But Stacy,
Speaker 1: how about you? I don't suppose you saw anything crazy?
Speaker 1: And crypto markets show every everything is super chill all
Speaker 1: the time. Um, in October, if there were a bunch
Speaker 1: of headlines about the fact that, like, whoa, this crypto punk,
Speaker 1: which is a collection of n f T has just
Speaker 1: sold for five hundred million dollars. What's happening? Mind is
Speaker 1: blown And then we're like, wait a minute, the person
Speaker 1: who sold and bought the crypto punk is of the
Speaker 1: same it was. You know, it was wastrating, right, and
Speaker 1: like the person was doing it for the lulls whatever.
Speaker 1: But it was enabled by a kind of a smart contract,
Speaker 1: a flash loan, right, which is the idea that you
Speaker 1: could just in the space of seconds, like the time
Speaker 1: it takes to perform that transaction on the blockchain, put
Speaker 1: something up for sale, borrow a bunch of money to
Speaker 1: buy it back, and then repay that money in the
Speaker 1: process of selling it back to yourself. Like this just
Speaker 1: with computer code was fascinating to me because I thought, okay, one,
Speaker 1: here's the world for which regulates is a completely unprepared
Speaker 1: and it's just sort of another example of you know,
Speaker 1: there will be some folks who always have alpha because
Speaker 1: they understand different ways to end run the system, right
Speaker 1: and you know, you could argue that wash trading is
Speaker 1: kind of victim lest crime. The I R S might
Speaker 1: have perspectives on that, the mere fact that the cost
Speaker 1: of that transaction was minimal to this person because like
Speaker 1: flash loans are generally on collateralized, like you don't have
Speaker 1: to put up a bunch of money to borrow it.
Speaker 1: Like what what are the if you think expansively about
Speaker 1: what that might mean for more interesting transactions. It was
Speaker 1: a little bit mind blowing that. Yeah, and it goes
Speaker 1: back to your point of everything old is new again.
Speaker 1: I think I was supposed to write a story about
Speaker 1: that night. Prodecy we do about it? Then that you
Speaker 1: were busy is another year, the new opportunity for more
Speaker 1: balls to drop. So we're recording this a couple of
Speaker 1: weeks early here, right in the middle of December, and
Speaker 1: mine was just the really just a couple of nights ago, Stacy,
Speaker 1: when we're sitting there and you all of a sudden said,
Speaker 1: the price of bitcoin is up about eight million percent
Speaker 1: or something. I forget the exact number, but some data
Speaker 1: era happened I guess somewhere between coin base and coin
Speaker 1: market cap, where prices just went bananas. You know, I
Speaker 1: don't even know what the top tick of bitcoin was
Speaker 1: and that that error, but it was. It was something
Speaker 1: in the hundreds of millions, I think, maybe even in
Speaker 1: the billions, and even shiba you know. I think at
Speaker 1: one point it was worth twenty nine thousand dollars uh
Speaker 1: per shiba, you know, which is worth way below it
Speaker 1: a fraction of a penny. But it does, you know,
Speaker 1: it goes back to that notion of where how the
Speaker 1: industry needs to mature and and where it's going. I mean,
Speaker 1: to me, what was amazing is people just left it off.
Speaker 1: You know, people were doing screenshots of their accounts with
Speaker 1: billions of trillionaire a trillionaire and a hundred billion dollars
Speaker 1: in my coin basis. I mean, in a way, it
Speaker 1: makes me think, well, the users kind of have matured
Speaker 1: enough to know an error when they see it. So
Speaker 1: maybe maybe that's part of it, is the user base.
Speaker 1: Now it's not just sort of the plumbing of the
Speaker 1: market and everything, but the users themselves kind of know
Speaker 1: when they say it, you know what I mean. I
Speaker 1: think I think the reason that that was okay was
Speaker 1: that everything went up. That's true, I mean, because you know,
Speaker 1: imagine let's say everything had massively gone down and that
Speaker 1: had triggered like liquidations for instance, or you know, or
Speaker 1: like blew through someone's stop orders. We might have been
Speaker 1: having a very different conversation yesterday. Then that would not
Speaker 1: be as funny, would not have been as a funny joke. Well,
Speaker 1: I think instinctively, you know, that's kind of what you
Speaker 1: worry about. You could you could see theoretically, you know,
Speaker 1: something happening to cause a massive you know, dropping bitcoin
Speaker 1: to see a massive million, ten million percent rally would seem,
Speaker 1: you know, on its face, less pausible. I guess I know.
Speaker 1: With that said, I don't know. I it's hard gonna
Speaker 1: be hard to top the crazy things of words. I
Speaker 1: hopefully I'm chexing it. We have. We've got plenty of
Speaker 1: more crazy stories to write next year. What do you
Speaker 1: think filled out of Yeah, for sure, no way that
Speaker 1: it's not going to be crazy again. Stacyvil that is
Speaker 1: most excited about bitcoin and crypto being seven because that
Speaker 1: means she gets to work on the weekends, like she
Speaker 1: she does not have to like figure out something like
Speaker 1: absolutely not. My eyes go wide every time somebody brings
Speaker 1: it up. There they go. They did just go eyes.
Speaker 1: I think the laser beams shot out of her eyes
Speaker 1: on that one too. Anyway, I think that's all the
Speaker 1: time we have it. Stacy. Is so great to have
Speaker 1: you on the show, and we're definitely gonna bring you
Speaker 1: back a few times to make sense of all this
Speaker 1: because it's here to stay like it or not, it's
Speaker 1: here today exactly. Thank you Stacy a pleasure What Goes Up.
Speaker 1: We'll be back next week. Until then, you can find
Speaker 1: us on the Bloomberg Terminal website and app or wherever
Speaker 1: you get your podcasts. We'd love it if you took
Speaker 1: the time to rate and review the show on Apple
Speaker 1: Podcasts so more listeners can find us. And you can
Speaker 1: find us on Twitter, follow me at Reaganonymous. Will Dotta
Speaker 1: Hirich is that Will Dota Hirich. You can also follow
Speaker 1: Bloomberg Podcasts at podcast and Thank you to Charlie Pellett
Speaker 1: of Bloomberg Radio. What Goes Up is produced by Laura Carlson.
Speaker 1: The head of Bloomberg Podcast is Francesco Levy. Thanks for listening,
Speaker 1: See you next time. Four