AI is winning the capital war: can crypto catch up?

Transcript

tokenized stocks, stable coins, like these are the things that actually matter in this space. And so the more that we can like get capital mark onchain capital markets to actually be relevant to like real products and real things in the world, that's when we're going to start to see the gains in the crypto space and we're going to start to make crypto the black hole of capital like it used to be. Good morning. Trump is in China making deals while crypto is in Congress getting clarity. Hello and welcome to the Milk Road Show, the daily crypto show that can't wait for crypto to be the big story again, but not because of bad news. Today is Thursday, May 14th, 2026, and today's episode is brought to you by Cape, the privacy first mobile carrier. Feros, the layer 1 built for reali, and Nexo, earn interest, borrow, and trade crypto. And

without further ado, welcome to the Milk Pro research meeting. Kyle, Martin, how are you guys? Martin, how are you feeling? >> Hello, guys. Good morning. Yeah, I'm feeling good. A lot of stuff happening. So, I hope you're going to talk about some of the cool stuff and see what's going on. >> A lot to cover today. Kyle, how are you feeling about the Clarity Act being in Congress and finally getting marked up today. >> It's about time. Uh, and this better go through or I'm going to be absolutely pissed. Let's just let's actually start on this real quick because we have a little bit of progress here on the Clarity Act. Um, we have somewhat of an agreement between the two sides. First of all, it's crazy to me that we have spent months now, I guess, allowing the banks to basically say, "Hey, we're just

simply not going to allow stable coin issuers to give yield and pass yield through to consumers, uh, because it might hurt our business." Like, why don't we pay taxes to politicians so that they can protect us and like do good for us? And we are literally just watching live them allow the lobbyists of the banks to not do that. I it's mind-blowing to me that this is how the world works, but I guess I'm the only one that cares about that other than maybe Brian Armstrong, it seems. Now, anyway, we have somewhat of an agreement where it looks like they are going to be allowed to pass some yield through, but it has to be related to activity that's happening on the platform. So, think of it similar to like a rewards program like you get when you use Visa, you know, and you you tap your credit card

and you get 3% back or whatever. It's like that kind of idea. previous to this or what actually what happens currently is like I can just put my dollars uh on Coinbase and they just give me my yield. I don't have to do anything. Now you're probably have to take an action or it's going to be based on your activity or like I don't know how they're going to do it. It's still a gray area, but at least Coinbase feels anyway that they'll be able to have a path forward to pass through at least some of the yield to consumers. So hopefully it ends up being a good thing and hopefully this just gets passed because at this point I think this industry just just needs it.

Uh it's a it's pretty tough to get any momentum I think in crypto without it. In fact, for a long time my trading view, I have like a list of of uh of all the assets that I care about and I I categorize them. So it's like crypto, I've got like 20 and then it's like stocks and mainly AI stocks. I've got a bunch and then it's like macro stuff and whatever. And I look at it every day and generally I'm pretty depressed looking at my trading view because it's always red. Um but I decided earlier this week, why don't I just move the stocks up to the top of my trading view? And now every day I wake up and I see green. So, it's actually a great hack. If you just want to have a little happier life, a little more optimistic life, just move

crypto down. That's my new hack. I don't know if you guys have decided to do that, but it really helps. >> Martin, uh, you you pointed out that a lot of markets are fighting for investors capital right now. Do you think if we do get the Clarity Act through that crypto is going to start winning some of this capital fight and we'll see some green candles back in the crypto section of the portfolio? >> Well, good question. I think even if it passes it won't materialize anytime soon. So like you know because right now I don't want to say nobody's touching it but if there is no clarity people are not you know doing things or building things and once there's a clear regulation then people will start to implement it. So I think the the effects of that are going to be longterm. So

it's not necessarily like you know short-term thing. Yes. like obviously like stuff things like Coinbase might you know have some pump because obviously Coinbase would significantly benefit from that but outside of the big companies and you know the biggest beneficiaries are obviously stable coins and the ones that have the most stable coins and the liquidity but like talking about more broadly about crypto and DeFi in general it can help as well but I don't think that all of a sudden we are going see a huge spike and you know like billions of stable coins supply in in in a short time like stable coins keep growing but I don't think that it's

going to change drastically in the next 3 to 6 months I think it will be like slow uh continuous adoption and then at some point it will start to accelerate but not in in in in the short term. >> Well I want to talk a little bit more about stable coins. >> Yeah, go ahead. Yeah. Well, I I actually want to go on that too, which is I could see a couple things really ignite from this. I don't know necessarily like the prices of like I don't know DeFi assets or like these onchain assets or even L1's is going to make a huge difference here, but I could see some acceleration in two things. Tokenized stocks and stable coins. I do think we'll accelerate once we get this live. Um because there is some clarity around that for the most part. So, I don't know. I think that we might see some

growth from that and like you said, they're already growing both of them. Like tokenized stocks have gone from I think it's about 250 million last year at this time to 1.45 billion today. So that's actually growing I mean crazy fast to be honest. It's like what a 56x. Um and I think that that will accelerate. So it'll continue along that pace but even grow faster if we get Clarity Act. So we're already seeing some pretty good growth. Um I think that's going to actually continue to pick up as a result. I don't know if that if the investment thesis picks up just yet though uh because a lot of the things that are happening are are kind of unrelated to where the investable assets are. So like you know Tempo is seeing a lot of great growth. Okay cool

well I can't invest in Tempo. Uh like there's just a lot of things that like are happening but it's not really acrewing a lot of value to the assets in the space just yet which is the problem. And so, you know, as you kind of alluded to with this question, John, there's a black hole of capital that is getting sucked into AI infrastructure right now because, you know, there's a lot of money going in there and there are there are benefits coming from that. There are revenues and earnings that are being generated from that within chips and memory, etc. Um, and you're not really having that in the crypto space today because we don't have a lot of value capture yet. Uh, we have too much block space, for example. And so I don't know, it's going to be tough for capital to not continue to get sucked into the AI

infrastructure buildout because I know that there's $1.1 trillion worth of capital going into the AI infrastructure buildout next year. How the heck does any industry compete with that? That's pretty damn tough, right? And there's probably going to be even more than 1.1 trillion the following year in 2027. Uh and so it's it's very difficult for I think capital to make its way. Now, what I do think needs to happen for crypto to take advantage of this is it's interesting. There's a lot of people in crypto that are like, I don't want to go invest in AI. I don't want to go and look in the stock market. Like, I I'm a crypto person. I want to keep my money in crypto. And the thing that I've been saying for a long time is the only way that crypto actually becomes relevant is if we go become the capital markets for

the things that matter in the world, which right now is AI. And so what we need is to become the capital markets infrastructure for the the AI infrastructure buildout and for the AI agentic economy and we are like working towards that but very very small like USDA we talked about a couple weeks ago on this show that's a great example of crypto like moving its way into things that matter in the world right like more DeFi products that are related to like ETH or derivatives of ETH it just does nothing for the world but a stable coin, DeFi product like USDA that like provides funding and financing for GPUs, which is what all the world wants right

now. That's a great way to bring crypto into like relevancy. And so like the more we can do those things, the better. And I think that's what's really going to set up crypto for success. That's why I think tokenized stocks, stable coins, like these are the things that actually matter in this space. And so the more that we can like get capital mark onchain capital markets to actually be relevant to like real products and real things in the world, that's when we're going to start to see the gains in the crypto space and we're going to start to make crypto the black hole of capital like it used to be. Um but I don't know when that's going to happen. We're we're pretty slow to make that happen.

>> Yeah. >> I want to say two things. >> Oh, go ahead. >> Like I agree with Kyle. I'm bullish on these products that are superior that couldn't exist before and now that's what blockchains unlocks. That's huge. But does it necessarily mean that it's a good investment? No. And that's the problem. So like you're bullish on USDA. So am I. But then you look at their valuations and it just doesn't make sense. If I if I can, you know, buy some companies that are much cheaper, much less risk with, you know, maybe I would also argue with higher growth potential in the next 12 months. Why should I invest in in these crypto tokens in the first place?

>> Well, the the problem is is that there's a lot there's capital on chain and then there's just not enough good assets to put that in. So the moment we have one good idea, the capital all rushes in there and it gets overbought and then you're like, "Okay, I guess I'll wait for capital to go somewhere else now." Whereas like at least in the like the stock market, you have a ton of ideas. Uh it's like you can you can you know there's just more opportunities there. But >> if you're not seeing this, you're trading blind right now. There are real moves happening behind the scenes that most people don't see until it's way too late. Inside Milkroad Pro, you can track exactly what our analysts are buying, selling, and what's on their watch lists before it moves. You can try it out for just a dollar for seven days. The link

is in the description. >> Actually, I wanted to ask a question about this to kind of get your guys thoughts here. One of the things in this bill is this compromise on stable coin yield. The banks are still fighting this, so it's not even clear this is going to go through, but as part of this, it seems like Coinbase is going to lose one of their their big sources of revenue. Um, today it was announced that Coinbase is expanding their support for Hyperlquid and that Hyperlid is going to be, I believe, suns setting their USDH uh, stablecoin to use USDC instead. It seems like a partnership Coinbase is initiating to sort of bring in some additional revenue because they're going to be losing some of that that revenue um, from from the stable coins. Uh, talk to me about how how this looks and what

this means and and how big this partnership is going to be. So, first they're not going to lose the revenue from yield because that that's the agreement they're coming to in this Clarity Act. It looks like they're going to be allowed to do this still. So, I think they're going to be fine there. At least that's what it appears. This is very interesting. It's kind of funny. They basically acquired USDH, Hyperlquid Stablecoin, and replace it with USDC, which is Circle Stable Coin, not Coinbase's stable coin. So, honestly, this is kind of a little bit weird. They're like buying a company to replace it with a company that they don't even I mean I guess they own some small percent of circle but I guess they do make revenues from Circle. So I think any revenues that come from USDC on their platform they make whatever 50% or 100%

Mark maybe you know the details. Um so like it's a very very smart move. I think anytime they can find big treasuries and get it on Coinbase like that's that's the whole point of their business. So it's just weird that they honestly Coinbase needs to buy circle. like how how are they making acquisitions to put him into USDC and they don't even own USDC? It's very odd to me. So, I don't know. But I I do think it is a smart idea. What do you think Martin? >> Yeah, I think the announcement was that Coinbase is going to be exclusive Treasury deployer or something like that. So, you know, this is this might be a way to to go around that legal stuff. But yeah, it's interesting. And I know that last week or two weeks ago, Lighter, which is, you know, the biggest competitor of Hyperlid, which is also

perpetuals exchange on on Ethereum, they partner with Circle doing pretty much the same thing, but just, you know, skipping the the Coinbase. So, I I don't I don't really know. It It feels quite weird because what's the point of Circle and Coinbase making like different deals? And also circle is now pushing their own um blockchain arc. They will have as well as they will have token as well. So it's like are they going to try push like users to their own compete against >> you know blockchain instead of Coinbase base? It's it's like what are these guys doing? It it I I sort of feel like there's internal fight about like Circle

and Coinbase and what is going on and what's their future strategies and because right now it feels like they are both trying to do the same thing. But >> yeah, >> we shouldn't forget the economics that right now from all USDC that's in circulation 50% goes to uh Coinbase 50% from all the circulation that >> Yeah. revenues and 100% of the yield goes to Coinbase from the balances that are just on Coinbase. So, you know, I think Coinbase has like 18 billion USDC on their platform. So, 100% of those revenues are coming to Coinbase and then

the rest 50% goes to Coinbase and 50% goes to Circle. And then when circle partners with with lighter or some other like new bank and other integrators with distribution they also have to give them some yield as incentives because otherwise why would they do it right? So that's sort of that's why I have been bearish on circle like forever because I think that they don't have distribution and it's pretty costly to get you know that distribution. So, the economics are not really in favor of Circle.

>> I think the companies are just going to merge. >> Like, why would they not? You know what I mean? Like, Circle needs the diversification that Coinbase has and Coinbase needs the liquidity uh that Circle has. Put them together and you've got a fantastic company. >> Do you know why? Actually, I know that there were some, you know, talks before the like maybe year or two years ago >> before they IPOed. Yeah, they almost did. And do you know what was the reason that it didn't go through? >> I don't know. >> Because right now it seems like, you know, Coinbase is investing a lot of money into base and building this distribution there and building their own wallets and stuff. And I feel like Circle is doing the very same thing with

their own blockchain. And it's just like if they are really going to, you know, merge at some point like this is just a wasting of money. And yeah, I think it will happen eventually. I think it was in in my prediction for maybe this year um that the merge will happen because it just makes sense. >> Well, it has to make sense to a lot of people to get that over the finish line. Uh Kyle, I want to ask you, I think you've had, you know, you mentioned Chip is on your watch list. Another one you've had on your watch list for a while is hype. Um and I'm curious what you're watching for to take a position there and and why you haven't so far.

>> Yeah, for me, oh man, I just looked. Hype is up 6% today. So, that's cool. Uh so, thanks for asking that. there just hasn't been growth in hype uh for the last little while. And so I'm kind of like, is it going to keep growing? What's kind of next for them? I'm not really sure. Um I know they're obviously trying to go after like prediction markets. Um and so we'll have to see how that does, but at the moment it feels like they've sort of saturated who their their user base is and they haven't been able to expand yet beyond that. That's not to say they can't. I I think and hope that they can for sure. um but they need to basically reach outside of the crypto dgen world and that seems to be pretty challenging for a lot of

companies in this uh or protocols in the space. So the question is can hyperlquid do that and if they can that's their next sort of phase of success. If they can't then I think they do what most crypto companies have done which is like they get the spotlight for a year um everyone in crypto uses them and then they just fizzle out like has happened to many many many protocols before us. So, can they cross that chasm? And I just I don't know yet. Um, and so that's kind of what I'm waiting on to be completely honest. >> Yeah, I think the other reason >> cross chasm. >> Yeah, the other reason is I'm putting more capital into AI. Uh, because there's just a lot more momentum there.

There's a lot more opportunities there. Um, I like I'm still allocated to cryptos. It's not like I don't like hyperlquid. It's just I'm already allocated to things like Bitcoin and to Ethereum into Sky and it's like how much more do I really want to put into a space that isn't moving for the last however many years. Um to me it doesn't make any sense and so I'd rather put my capital into uh into the black hole that we talked about at the beginning of the episode. Uh which right now is AI. It doesn't mean I don't like crypto. Doesn't mean I don't support crypto. Doesn't mean I'm not still excited about crypto. Of course I am. There's just better places to put your capital right now. Um, the only way I would buy these things is if I like sold some Bitcoin or sold some ETH or something like that,

which I just I don't really want to do that right now. >> Well, that brings me to Martin, and I'm sure Martin, you have thoughts on what Kyle just said, but you also did, I think, this week, sell some Tesla, some Coinbase, and some Bitcoin to raise some cash um, ostensibly for other investments. I'd love to hear your thoughts on on those choices and and that repositioning you did in your portfolio. I did so because I was overexposed to crypto and crypto is not doing well and you know markets are at all-time highs stocks I mean but crypto is still lagging so I sort of wanted to lower my exposure to crypto and to diversify a little bit and I was short on cash and I want to have at least 10% in cash all time so yeah that was the move and if I just make comment

hyperlquid it's pumping today because of that announcement And there is right now 5 billion USDC on hyperlquid which means you know if you can earn 3.7% on that balance it's something like 170 million. Let's say that hyperlquid will be able to keep 80% of that. So it brings additional revenue like 130 million or something around that to hyperlquid. So that's why hype is I think pumping today and it makes sense. It will also help them to diversify their business. So it's not just you know related to trading volumes but now it's also um related to how much USDC uh balance you have on your platform. So yeah I think

they are doing the right decisions and right moves and to Kyle's point that he doesn't own hype. I still do because you know when you are a portfolio manager in stocks you always want to sort of beat S&P 500 because that's your that's your benchmark right and sometimes you just need to be allocated in some assets because if you are not and you are not going to outperform you'll be fired pretty much and I feel like for crypto you besides Bitcoin you need to have two assets and that's that's sky and ads hype because they are both attracting not that existing capital in crypto but I'm able to go to

some friends from banks or you know traditional funds and pitch them hyperlquid or Skype because it's just a great investment opportunity but there are not many protocols like that so I feel like if you are in crypto you should have exposure to both of them because both of both both of them are pretty easy to sell to anyone who is you know thinking from like first principles and like their business is growing and it's doing quite well. Yes, Kyle said that it's the growth slowed down. I agree. But I think it will reacelerate again and I think they will be they will do fine.

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Plus, SIM swap protection that puts you in control of your number, so no one, not even Cape, can hijack it. Use code milkroad at milkroad.com/cape for 33% off your first 6 months. >> I wanted to ask about something else here. Uh, Go ahead, Kyle. >> Yeah, I was just going to say, you know what's crazy is, so for those that are listening, we have five analysts in Milk Road Pro, all competing uh with their portfolios. Martin is number one and Martin is predominantly a crypto portfolio and the second and third place are predominantly AI portfolios and so we've been sitting here talking about how AI is the black hole and it's dominating. How the hell are you in the lead versus these guys? I don't understand it Martin. So either Martin has hacked the system or like I just

don't I just it doesn't make I'm even looking and like they're up like a 100% on multiple of their assets and and you're not and somehow you're still beating them. So risk management I assume and and just proper positioning. But it's interesting. >> Yeah, exactly. Yeah. >> I was going to ask you about this because Martin also bought Uber this week and I think that's a pretty controversial choice. And I was actually going to ask Kyle, what's your thoughts on that that that decision? >> Yeah. Well, I mean, look, I think um I've talked about this a lot on the on the AI show. If you guys are are also watching that, I think robo taxis in general are going to be the sort of like next big use case of AI um as we bring AI into into the physical world um and

into real devices. And so I think um I think it's a massive massive massive market. My bet on that is Tesla, but it doesn't mean that Tesla's going to be the only one to do this. So I'm sure Uber is also a good bet on that because they're kind of partnering with every other car company that's that's competing with Tesla. So, I I I think owning both is smart, which I'm just looking at Martin's portfolio right now, and he owns both Tesla and Uber. Uh, but that's that's not a crypto conversation, so we'll we'll revert to something else now. >> All right. Yeah, we'll we'll go back to crypto. But yes, anybody who's listening, if you want to see what all of our analysts are doing in their portfolios, their moves, their positions, their sizing, all of that, $1 Milk Road Pro, um, that that offer is

available at any time. So, make sure you take advantage of that. Uh, Martin, I want to get your thoughts on this. This is something you've been watching for a while. Galaxy Digital is a company that sits kind of at this intersection of crypto, digital assets, and AI. They're up for an additional 1.8 gawatts of power approval on January or not January, excuse me, June 1st, I believe. Um, are you anticipating that they will get this this power approved for them? And how big of a deal is this for Galaxy's business overall? >> Hold on. This is just a speculation, okay? This is not confirmed fact because if it is then Galaxy would be you know double uh today's price. Um by the way Galaxy is my biggest position and >> and best performing. That's actually why

it's your biggest position and your best performing asset in your portfolio. Maybe I'll I'll shoe my bags here a little because what happens is that there is air which is electricity council in Texas and Galaxy operates their data center in Texas and they have a meeting um June 1st and there is a bunch of sort of cues that are waiting applications that are waiting for approval and Galaxy has already got approved 1.6 six gigawatt which is big. I don't want to talk about all that. Um but the point is that someone find out that Galaxy might get additional 1.8 uh gawatt energy approved by June 1st.

If that happens like we are gonna see d high double digits growth on that announcement because >> is Galaxy still undervalued versus its AI revenues or like AI potential revenues because crypto has sort of like suppressed the stock and held it down. Is that still the case in your opinion? >> Yes. I think people still see Galaxy just as crypto. >> That's that's the issue with the company. But it's changing actually Q2. >> Even without these approvals, if crypto goes up, Galaxy should shoot up and have an incredible moment in their stock. But now you're saying there's kind of two potential because like Clarity Act happens. Galaxy is one of the other ones that's going to do really well along

with Coinbase as you said because you know Galaxy is the only one of the only other like public companies that is like basically onboarding a lot of the institutions into buying and holding and doing things with digital assets which the Clarity Act is is the big thing for that. So it's a huge thing for their business to get Clarity Act. So they might have a double whammy catalyst which is clarity act is huge for for Galaxy and then approval of another one point whatever you said gigawatts like that's a huge moment for both of them if that happens. >> Yeah. Again it's just a speculation but there are just so many things that if you put them together it seems like it's it's very likely that it's related to Galaxy. And if that's true oh man. Yeah.

It's it's going to be a great month for portfolio. >> I'm surprised Galaxy hasn't been the first one to do what USDA did because Galaxy sits right in the middle of the infrastructure AI buildout and digital assets, stable coins, tokenization. Why are they not launching a competitive product to USDA? Like they are perfect to start doing that, right? I mean, the only reason they were able to get all this funding to do what they're doing right now with data centers is because of all the the digital assets that they hold, right? So, they have a huge balance sheet that they could get loans for to then to to then do this. Um, it's like they they could find a way to get very creative here and and um and compete with USDI or other similar products. Um, so I don't know if they're going to do it, but I would imagine

they've been they're pushing that way, but it' be pretty cool to see. >> Well, I think they they rather work as a platform that anyone can come in to Galaxy and say, "Hey, we want to build this. Help us build it." So instead of just hey we have this this our own product and >> it I think for business it it's better when you are a platform instead when you are just building that one specific product because then if you are lending to you know uh GPUs back uh borrowers you you should probably have you know deep understanding of that and it might still work. I'm not saying not not but I think like it's it's a different business than they are like good at and yeah >> there is another company that has actually done quite well in crypto

recently even though crypto itself has not um I don't know if the stock has I'm just pulling it up right now but figure I think had their earnings come out recently and oh yeah they're up basically up only since earlier this year um tell me about what happened with them they had good earnings Martin is this a are you still bullishing figure >> are we going to show my portfolio today Okay, I like that. Um, >> I just look at so >> I think the story of figure is pretty simple. We started the discussion that blockchains enable to create a superior super superior products but we lack the distribution or like people are not necessarily coming to using those products and figure story is a little bit different. Um they

started with their own marketplace for loans generation. So if you have home, you can use it as collateral and borrow against it. And they simplified the whole process driving the cost down materially like 90% down. And then they said, okay, this is pretty pretty good. What if we actually provide the same sort of loan marketplace for everyone? So now banks can come in to their marketplace and they can issue loan through their infrastructure using their own blockchain and you know people are coming in and they are growing like I think the marketplace volume grow grew like 200% or something and yeah the Q1 Q1 numbers were were just insane and we

could see yeah their revenues in Q1 grew 92% year-over-year and their adjusted Eida grew 192% year-over-year. So, we feel like the market and crypto is down badly over last year, but their business is just thriving. And that's like, you know, last week I was talking about Western Union. This week we talk about figure. I think that there are still companies who are able to leverage blockchains, but most people are just looking on the wrong markets. So maybe the opportunity is not in in tokens, maybe it's in crypto stocks because those are the companies that are able to really le

leverage what this new infrastructure or the blockchain technology enables. >> I don't even think it's tokens versus cryptos. It's you what you don't want to bet on right now is crypto trading volume, right? No one wants to trade digital assets right now. That that's not the thing, right? Um, what you want to bet on is companies that are using blockchains to provide better financial services, whether that be with stable coins or loans or other things. And that's like like Sky, I would say, is a token you definitely want to be holding.

But Sky is not a bet on trading volume, right? It's not a bet on a bunch of DGens interacting in crypto. It is literally just a bet on on on stable coins and and yield for stable coins. Okay. Um, figure, same thing. When you buy figure, yeah, it's a crypto stock, but it's not like you're buying a bunch of people trading crypto, which is what crypto's always been about for the last decade. You are buying, you know, a a kind of new version of of how to generate loans, right? And that's backed by by using the blockchain infrastructure. So, I I think it's less about token or equity and it's just about what is the product that these companies are making or providing. And the thing the thing is every L1, every L2, most of DeFi, even like a lot of Coinbase's business is just relying on

on trading uh and trading volumes, which is why they haven't done so well. Um, so I think that's a clear like >> but loans volumes are just skyrocketing on figure, but they are down dramatically on a is also just a loan marketplace pretty much. >> So >> yeah. Well, they're but they're down on a because of an exploit from RSC. Well, from layer zero. >> I'm not familiar. Never heard of it. >> Yeah.

>> So, it's not like people don't want to take out loans. It's just people don't want to do it in super high-risk things um that have a bunch of these random bridges and [ __ ] right? But in a more trustworthy company like Figure that's going to build something more secure, people are down, right? It's a better product. I'm uh curious about this better product question. There's been announcements recently that uh uh Fidelity is is going to be launching a tokenized money market fund that JP Morgan is launching a tokenized money market fund. The Bank of Japan is exploring tokenizing Japanese government debt and bringing that onchain. What do you guys make of that? Do you think that this is bringing higher quality assets into um the DeFi ecosystem into the

digital asset ecosystem and will there be a lot of demand there or is this sort of like a a prototyping thing that's still trying to find product market fit? What what's your thoughts on this? >> I would say it's a combination of both. Like it is probably more prototyping like I think this is the first time Fidelity is doing this if I don't Yeah, I'm not sure but um correct me if I'm wrong there. But like I know Black Rockck has already done this with Biddle of course and I think they're looking to do uh to do more. So it's less of a prototype for them because they've been already doing this for like two three years. But I think again when I go back to something like Sky for example, Sky, you know, it has a Sky savings rate which is giving 3.65% yield on stable

coins right now. It is allocated to Bidd, right? And it is always looking it's got 12 billion or 11 billion right now of stable coins that it's looking to to allocate. And right now, I think almost 4 something billion of that is just sitting in USDC at Coinbase because they don't really have anywhere else to allocate it to. So, they're looking for more things to come on chain uh and get tokenized so they can allocate to it to to beef up their um their their Sky savings rate. And so, yeah, I think if Fidelity comes on and brings a legit product on chain, you're going to see Sky go and and allocate to that. If Fidelity brings a a an actual like not just a a private fund, but it actually is is opened up on chain and public, it could then be used uh on a for example,

right? And you could take a loan out against it. Like there's they're going to I don't think that's going to happen right away, but like that's the things that we need are these like higher quality products by trusted institutions that people are actually using and then the financial services we've built in DeFi can like work around that and can do things for those assets. So that's that's the key. So, I think this is this is again why we need Clarity Act so bad because you'll get a lot more of these banks doing this when we have the Clarity Act. Right now, you've got, you know, Black Rockck kind of took a chance and was like, "Hey, we're going to we're going to build on Ethereum even without clarity regulation." Fidelity probably sees, okay, Clarity Act's coming. Like, now's the time to just do this and get

ahead of it. And so, I think again with good regulation, you're going to see more and more of this. And this is ultimately what I was saying before of like these are things we have to have for crypto to become valuable. And until we have them, crypto is just a bunch of financial services for nobody, right? And we have great products, don't get me wrong. Like, I'm very bullish on what DeFi is, but if we don't have good assets, then it's all for nothing. And so, right now, we are an incredible efficient, transparent. It's like this amazing thing that we've built, this new financial system, but there's nothing there. So, who cares about it, right? And that's my problem of why I don't want to invest in it right now. Once we actually get assets in here, cool. then this is going to be the greatest thing

ever and like you know greater than sliced bread but right now it's not greater than sliced bread. Sliced bread is more useful to me than using DeFi. >> What about you, Martin? Sliced bread or DeFi? >> Uh sometimes just things come out and I love it. That's a good clip. >> That's why we that's why we do the show. Yeah. Martin, what are your thoughts on this Martin? Yeah, I think for for our industry it's obviously a good thing, but I'm personally more excited about like more experimental yield strategies that are coming on online, which is like USDA. That's pretty sick. So, I want to see more.

>> That's not even experimental. Like like that's just financing GPU, something we've done for [ __ ] like for decades. And it's we're just bringing that on chain now. It is I understand it's experimental in terms of like it's innovative. So it's like creating better rates and it's it's a it's a more scalable way to do it, right, that blockchain is enabling. But like ultimately that's not a new thing. We've financed infrastructure for hundreds of years, right? Um and so all we're doing is bringing that financing something in the real world on chain so that it's better. Perfect. That's what we built this infrastructure for.

>> My main concern is that I want to see how USDA will behave when there is um bankruptcy or something. We don't know how the whole process is going to work. That's why I say experimental. So like I wouldn't >> put 100% of my cash to USDA because the product is great. Yes, it is. But I want to see it tested through a difficult times. And I think that's the that's the mindset that everyone should think about that okay have they already sort of experienced some you know bare market or some troubles and how they figure it out. So next time when someone is going to, you know, underwater and they're not going to be pay back their their their their debt, what what's going to happen?

How long does it take? Like what if I want to redeem, you want to redeem money, but it's it's locked somewhere in GPUs that are not used by by a bankrupt company. What is going to happen? Like I will be locked because there is not enough money to withdraw. So, like, you know, I get that it's it's a great story, but let's >> Hey, here's here's a question for you guys, and this is completely different than what we've been talking about, but I'm just curious. Do you see people wanting to buy Bitcoin over the next 3 to 6 months or wanting to buy Nvidia and Micron and the AI infrastructure buildout? Why why why are people buying Bitcoin today? I mean, no one is. That's why it's not going up. like if they were to uh let's say because Clarity Act or whatever the catalyst is for it, do do

you think that people don't care to speculate on that anymore and they want to just put it into AI or do you think Bitcoin still has a uh an edge here? >> I would love for people to stop speculating on Bitcoin and just start allocating to it. Um I think that there are a lot of catalysts that are going to lead to an appreciation in uh Bitcoin and in buying of Bitcoin. right now. I think at this moment the spot volume has dipped a lot. Um, but I think that as we see more products being launched, more digital asset adoption, more capital coming into the digital asset ecosystem, there gets to be a stronger and stronger thesis for holding um some of these digital assets like Bitcoin, like Ethereum, other things.

>> But how does that Bitcoin like more I'm going stable coins doesn't do anything for Bitcoin. >> Trillions of dollars in real world assets are stuck offchain. Real estate, commodities, private credit, all locked behind outdated systems that weren't built for a global 24/7 economy. The fix, bring those assets onchain. Problem is, most blockchains weren't designed for that either. Feros is. It's a layer 1 purpose-built for reali, a real world financial infrastructure that lets assets be tokenized, verified, and traded at institutional scale. We're talking parallel execution for serious throughput, compliance baked in from day one, and infrastructure that actually connects onchain and off-chain systems.

They've got a $10 million incubator backing builders who want to make real a reality. Join the Atlantic Ocean test net and start building at milkroad.com/faros network. >> Yeah. So, it brings it into the financial ecosystem. And you know, I'll just I'll point to one example that was something I discussed with Rick Edelman on the Macro podcast this week, which is that uh Morgan Stanley manages $7 trillion in their their you know, over their combined collective of 16,000 RAAS and they are now recommending a 2 to 4% allocation to Bitcoin. Um and so that is going to bring a lot of capital in as that starts to happen. It it's, you know, Michael Sailor um talked about this when they launched their preferred products is that you have to season the

market, right? like people have to like launch these products and then go out and sell these products and that takes a little bit of time to bring in that capital, but that is going to happen. Um, and I'm kind of like enjoying the fact that crypto has not been in this euphoric phase where everything is pumping and overvalued. The the water the tide has gone out. You can see who's swimming naked and you can also see who is really building a robust fundamentally sound business um of financial technology that's made to last for a really long time. Um, Bitcoin fits that description, Ethereum does, chain link, there's many others in the space.

Uh, but while so much attention and sentiment is focused on other things, it gives investors a great opportunity to educate themselves about digital assets and then make an allocation for the long term. So, yeah, I think that uh there's a lot of capital that hasn't ever had access to Bitcoin specifically, but to just digital assets overall that's about to get it. And you're going to see products and digital asset products launched by everybody on Wall Street, every asset manager, every bank and every financial or every uh technology company as well. Apple, Meta, Google, all of these players are going to have to come into the space to compete because there's too much capital at stake to not have it. And this is the reason, by the way, why both Coinbase and Circle are like, you know, you guys are saying, why don't they just merge?

Because nobody wants to merge. Everybody wants to play for the the world where they own the stable coins, they own the deposits, they own the chains the stable coins settle on, they own the products, they own the tokenized versions of the products, and they own the chain where the products settle. So that you don't ever leave your capital never leaves their their business. And that's a kind of like a infinity gauntlet type of financial technology. And so every institution of any kind from Google to JP Morgan to Coinbase to Ethereum is trying to create that world where they they have that Infinity Gauntlet, but they all know that they're all trying to play for this. So they're fighting over it and I don't think anybody's going to actually get it all together. But that's sort of the messy middle of figuring this out, right? We've seen like I think

like the the prologue of crypto. We're almost to chapter one, which I think starts after Clarity Act. Um and then we'll see this sort of like mad dash land grab for the digital asset world. My relationship with Bitcoin has changed so many times and >> I guess I started as Bitcoin max as everyone here and and now I hold again a significant portion of my portfolio in Bitcoin and the reason is that I am sort of scary what is going on and I I feel like I have no idea where the markets are going to be in one or three years.

And for me, Bitcoin is a hedge. Like if like right now all the momentum is in AI stocks, that's great. Um I think crypto still has some ketchup to do, but Bitcoin it's a different it's a different leak. It's a different asset. It's I'm not going to hold Bitcoin because the multiples are attractive or because the you know their business is growing. No, it's it's none of that. it's just better version of digital gold. And so when the markets turn bearish or the sentiment turns bearish, I think that many people could actually allocate into Bitcoin. So I think like I don't want my portfolio to go

>> whenever markets turn bearish, Bitcoin gets hit harder than anything. >> Yeah, it has been the case so far. Um but maybe gold is still, you know, the flight of safety, but I don't know. I'm just that's my hedge. That's my prediction and let's see if it plays out or not. >> By the way, just so everyone knows, I know I'm like being mega bearish on Bitcoin right now. I hold a ton of Bitcoin. You can see my portfolio again. Dollar trial. Go sign up. You can see my portfolio. I just like to question the things that I hold and see how people back them up, right? Which, by the way, answers, okay, didn't love them. Not super bullish coming out of that conversation. Basically, we're holding basically what I got from this was like

the world is is we're starting to tell everyone you should hold at least 2 to 4% of your portfolio in crypto and thus capital's going to come into Bitcoin, which is to me not the greatest sales pitch. You could be like, hey, you know, we're we're converting the entire world's energy into into intelligence and it's going to completely change the world. That's why you should hold Nvidia because you need the compute to to convert that energy into uh into intelligence. Like, okay, there's the story. I'm buy that. It's now at five trillion, you know, just surpassed silver. There's a [ __ ] story. Bitcoin's just like, you know, >> that's only one part of the thesis. The thing I like about Bitcoin is that all of these all of these thesis that you could put about investments of any kind all lead back to Bitcoin, right? So like

Bitcoin is heads I win, tails you lose. Bitcoin is if everything goes speculative and risk on, Bitcoin appreciates a lot in that environment. If the the market turns, >> we are so risk on right now, John, and this is the problem. We are so risk on and Bitcoin is not appreciating. So that's just not a fact anymore. That was a fact in 2021. It is not true today. We are so risk on right now. It's crazy how riskone we are. >> But crypto people are like there's no risk on. >> No, it is it's very bullish and risk. I think that um as all of this uh attention and capital as you say go in goes into artificial intelligence all of those that then leads to we have we have a world with we have trillions of agentic agents doing economic activity and they're doing that in rails that

settle back down to Ethereum and Bitcoin so like we haven't gotten to that instate either yet right like you're still using code >> does it settle to Bitcoin so I I'm waiting >> you should ask AI about this I think you should talk to AI about this because AI itself will tell you that in that world you know the token tokenized dollar and Bitcoin are are dual capital and currency assets that benefit a lot. >> Yeah. I So all I'm saying is like I super bullish on stable coins tokenization. Like I I obviously am not bearish crypto. I understand how we're going to completely change the financial system. However, 0% of anything agentic or stable coins has settled to Bitcoin today. Zero. So like there's also a world where like you know I fully 100% believe stable coins is going to take

over the world. Bitcoin does not need to appreciate 1 cent as a result of that because it literally has nothing to do with that. So that's my only other fear is just like I don't know the two things I'm most bull bullish on is like okay we're upgrading the financial system with with stablecoin rails and and you know smart contract uh blockchains etc. and we are converting energy into intelligence. Those are two huge secular trends. Bitcoin fits zero of those. >> Now now I'll give my bullish case. My bullish case is in the world of so much intelligence, there's so much abundance and so there's no scarcity in that world which is why software is getting cooked.

And so like Bitcoin brings scarcity. So like okay, I understand that. Um >> that's exactly the thesis. It's it's just like the stable coin is the currency asset of the agentic community. The capital asset of the agentic community is Bitcoin. Right? Like we have dollars and gold. They'll have stable coin >> or it's compute and energy tokenize comput >> was Bitcoin not really because I would say there's now now there's a better way to express your energy which is through compute and intelligence >> that's that is Bitcoin okay Martin what's your take on this >> question here is go ahead >> but I was just going to say one one thing and then I'm going to let you go Martin if you look at most of the Bitcoin miners converted their centers

where they do compute which is taking energy putting into Bitcoin. Most of not most but many of them converted over the last three years from taking the energy and using their compute to create intelligence rather than Bitcoin. So like if you're seeing it from the people that are actually doing what you're talking about John, you're already seeing a big trend of them moving the other way. Now, doesn't mean that's the way this trend goes for forever, but >> one thing to keep in mind. >> People the agents are not going to I I don't think the agents are going to transact in kilowatt hours, but we'll we'll see. >> No, dollars >> and Bitcoin Martin. I think the whole agents bus around agents coming on chain and

interacting on chain I agree it's it's definitely going to happen but not the way people think that like it will pump my bags you know it is going to happen there is going to be a [ __ ] ton of activity from agents but like the economics are not there so I would you know rather do not have high expectations there. I think interesting question is what is going to be native asset for for these agents because at some point they are going to be making money. They are going to manage their own portfolios. Are they going to be okay to to buy stocks and have some you know third party risks or are they going

to hold Bitcoin or ETH because those are like you know native assets that you can hold permissionlessly. That might be interesting story. But >> you're going to be able to hold any asset permissionlessly once we tokenize them all, right? Like once you have >> you're not going to be able to hold anything permissionlessly if the the I mean like that's what Canton and ARC and Tempo are for is that they're all permissioned and privacy compliant um uh blockchains so that you can conduct this activity in a KYCL way, but it's not permissionless. >> Yeah. Yeah. No. So I mean like let's say we tokenize every stock, every commodity, everything on Ethereum, for example, then you're going to be able to buy anything permissionlessly. at some point. I mean, that's the that's the idea of crypto, right? Like that's the big picture here,

>> right? We'll see if that plays out. >> But you still have to trust someone, right? If I hold Bitcoin, >> you don't need to trust anyone. >> Agreed. So, agents. >> Yeah. So, it is the one thing that I always go back to of why I remain bullish on Bitcoin and ETH is is they are two assets that you do not ever have to trust. And so when it comes to collateral, I mean, we've heard this before, you know, we call ETH money or Bitcoin money or or pristine collateral, it's like that's the one thing that is the the the clearest bullcase for these two assets is they are pristine collateral, right? And and I would probably even Yeah, they are pristine collateral. So like the thing is is like they're not really used as that today.

So it's just like that's the use case we need to happen for them >> for the big bullcase of Bitcoin and ETH to like exist. Um, and I just, yeah, I don't know if that's because it used to be ETH is what we're going to use onchain and it's it's the money for onchain. That that's not it. We realize stable coins is that, right? Um, it used to be Bitcoin was going to be money. We realized, okay, we're not using Bitcoin as money. It then went to ETH, then now it's stable coins. I think we know it's not going to be those, but we have to it has to become pristine collateral. I mean the problem is is like two weeks ago a almost completely blew up our one of our top DeFi protocols because it was using ETH as collateral now it was using

a derivative of ETH as collateral but you know what I mean >> that's not why it blew up. >> Um yeah so I think that you know we're coming towards time here so we'll land the plane. I think that what I think our audience should take away from this is that even people who are very uh passionate and enthusiastic about this industry can have relatively like sound thesises for different places different assets where value is going to acrewue from crypto's growth and adoption from AI's growth and adoption. So I think the thing to to watch for now is that um oh and also that that can change on time horizons too like short-term versus long-term versus medium-term where that value acrews is going to change a lot.

Um, and so that's why we have the Milk Road Pro research meetings, why we have the Milk Road Pro portfolios, because every analyst on our team has a different way of thinking about this and a different way of allocating around their thesis and and the way that they're approaching this. Um, and I think that the big value of this is like obviously Kyle and I think very differently about a lot of these things. But, you know, it's not a question of right or wrong. It's like what's right for us and and what we think makes sense on our our investment time horizon. I think that's important for the audience to remember, too. I I think uh we're we're at time here. the Clarity Act, I think, in about 30 minutes is going to be voted on in the Senate Banking Committee, so I Yeah. No, I know it's

going to be interesting to see what happens, but then it's got to go to the Agriculture Committee. I mean, this is not going to all go over the finish line today, but um I'm going to go watch that and see what happens there. Um but I think yeah, we we'll land the plane there. Thank you all so much for joining us, everyone. Uh we hope you all learned something today. Until next time, stay safe, stay educated, stay bullish. There's always a bull run somewhere, and we'll see you guys on the next episode of the Milk Road Show. Thanks for joining, everybody. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is

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