Cathie Wood: The Next Bull Market Is Here (…What It Will Look Like)

Transcript

My name is Kathy Wood, CEO and CIO of Arc Invest. When we were going out in the early days, nobody believed us. Economic activity is energy transformed. I think the market's never been more inefficient than it is today. >> Guys, welcome back to the rollup. Today we have a special guest, Kathy Wood, the CEO and co-founder of ARC. um a local from my hometown as well. Now a local but once up here in New York where I am in the Empire State Building, Kathy, welcome to the show.

>> Thank you so much. I'm happy to be with you, Robbie and Andy. >> It's a pleasure to have you with us and uh very excited. Uh you have such a vantage point on so many disruptive innovations and so uh yeah, we're really really excited to get into it. Um and so why don't we just sort of kind of set the the frame? you have five innovations, innovation platforms that kind of gave way to 15 technologies and now those technologies are converging. And so before we dive into the digital assets and public blockchains area of this thesis, just maybe give us just a broad holistic view of how you approached this space in general before we dive in.

>> Sure. Uh well the you mean the innovation space or the the crypto space? the the thesis around disruptive innovation in general. >> Yeah. Yeah. Yeah. Well, the seeds for uh ev everything that's going on today, they were planted in the early years of my career. Uh so in the 80s and 90s uh I watched seeds being planted for, you know, for for everything that we're seeing today. You know, we didn't get the cloud though until 2006. Uh so that tells you the 80s and 90s ended with the tech and telecom bubble uh uh which simply uh happened because investors were just throwing capital at

uh at anything that was.com or internet related uh and unfortunately the the technologies weren't quite ready uh and the costs were way too high. So, as I said, the cloud didn't even exist until 06 with AWS. And I remember back then trying to explain uh to investors and advisers what the cloud was. Uh it was such a foreign concept to them and uh we didn't get the really big breakthroughs in AI. So deep learning in 2012 and then even more important uh uh transformer architecture in 2017 which which

effectively led us towards chat GBT and natural language programming. Uh so again too much capital chasing too few opportunities too soon. We went through the bust and you know today we're in the opposite situation. We're ready for prime time with five innovation platforms as you say. Thank you for doing your homework involving 15 different technologies that are all converging and investors are fearful. They're really scared. Uh as a portfolio manager, I much prefer operating in this environment uh than in the tech and telecom bubble. It was crazy back then.

So I think uh and I know many people find this hard to believe. The valuations today uh are much lower than what we saw during the bubble and the technologies are ready and most importantly the costs are dropping at such an incredible rate uh that these technologies can be made available to more and more uh industries and more and more individuals. Uh so that's how it started. Why why did I start ARC in 2014?

I started ARC because uh thanks to the tech and telecom bust and even more so the 0809 uh global financial crisis um we now have risk averse investors certainly in the institutional world less so in the retail world. uh so risk aversion and I saw our industry go passive uh that that caused the boom in ETFs uh to begin uh and then even in the active world benchmark sensitive so uh watching portfolio managers um really guide their

screening for ideas um with benchmarks. We don't do that. The screen for our ideas is our research, our original research. So um yes, five platforms, 15 technologies and I think research has to be um reorganized. Uh in the traditional financial world, you'll see research organized by sector or industry or subindustry. Many firms have five consumer analysts, five healthcare analysts. We think that in order to capitalize on innovation correctly uh and efficiently uh that uh that you have to set up a research team

by those 15 technologies uh why because they're going to cut across sectors, cut across industries. So you have to be looking at the technology uh and not uh uh siloing responsibilities by industries. >> And why are investors so scared? Is it because they've not thought clearly about this organizational structure in order to really connect and and understand these technologies as they converge? >> Uh I think you know this convergence is confusing. Uh Tesla is a great example.

uh most directors of research handed Tesla to their auto analysts when rightly it should have been handed certainly at the very least to the technology analyst uh but even more specifically by technology uh to to three people uh collaboratively uh robotics analysts uh energy storage analysts and AI analysts Instead, it was handed to experts in the internal combustion engine and human-driven cars. Uh we're moving away from that world to electric and

autonomous. Uh so I think that is a source of the confusion. I I I think AI is moving so quickly and impacting so many industries at once that it's it's a little bit of a a shocking experience and um I think it's taking directors of research uh some time to say okay how do I organize correctly uh to be able to understand what's going on here uh so they need yes by technology but then also a very collabor collaborative environment. Instead, uh in the institutional world at least uh and I came out of it so I saw it regularly um

if an autoan analyst uh was given responsibility for the stock nobody else should touch it. That world has to change uh because again these technologies are converging and analysts have to work together in order to understand uh the potential associated with these stocks. >> Makes a lot of sense. We see a lot of tribalistic nature in in the crypto digital assets industry as well. It's no surprise that in the institutional world, you know, the auto industry wants their auto stocks. They don't like to cross-pollinate ideas or share what they feel is their their insight. Um, and so the digital asset story obviously starts with Bitcoin. You know, you started ARC

in 2014. Bitcoin was around, but it was still finding its footing. How did you initially approach the idea and what was your reaction to Bitcoin at the time? Was it ready for institutional asset allocation? >> Uh, no, not back then. Uh, actually we started looking at Bitcoin, talking about it, uh, at my last firm. uh and I brought with me to uh ARK uh the lead analyst who was the person most intrigued by Bitcoin. Uh he is now our chief futurist Brett Winton and uh I remember talking about it at our last firm and it was simply a curiosity.

Okay, let's see what happens with this. Um in 2014 when uh I founded ARC uh we we actually had instead of five innovation platforms we had four. We had combined AI and blockchain technology into something called the next generation internet. And that's actually still the name of ARKW, one of our funds uh focused in those areas. Um and the reason we did that is you know we had the deep learning breakthrough uh in AI. So AI was getting more and more attention but you know it was still

very fresh very young uh and then blockchain technology uh we were more intrigued uh but we still didn't know if it deserved uh its own breakout if you know people would even you know if their eyes would uh you know glaze over just uh not in a lack of interest. So uh but we were very interested and we wrote our first white paper on Bitcoin in collaboration with Art Laugher in 2015.

And we simply were asking the question, could Bitcoin serve the three roles of money? So means of exchange, store of value, unit of account. And Art Laugher, I'm not sure if you know Ler Curve, he's famous for that in the fiscal policy arena, but he's also a monetary scholar. His his mentor uh was Robert Mandelle who won a Nobel Prize for his monetary theory. And uh so we put the our thesis in front of art and from an economic point of view he helped us tremendously and I

have an economics background. So I began to understand Bitcoin uh in a profound way because he said to me at the time uh you know he said this is what I've been waiting for since since the US closed the gold window in 1971. And I said, "Okay, Art, that sounds like a pretty big idea. How big could this idea be?" Uh, and he said, "Well, how big is the US monetary base?" And back then it was 4.5 trillion dollars. Today it's a little over six trillion. Um, and Bitcoin was the equivalent, we called it network value at the time, of six billion dollar in market cap. Think

about that. Six billion. and he was saying trillions. So I personally invested right away. Um and we looked around for the best way to gain exposure for our clients and we had to we had to ask permission. New York Stock Exchange, SEC, you know, we we had to get through some regulatory uh barriers or or bottlenecks and we found GBTC. uh GBTC really I think they had to go through a year of seasoning before they could launch it. And uh so that's that's where we started. Uh Bitcoin at that time was $250.

Uh we took our first position in the summer of 2015 when Greece was threatening to leave the EU and we noted that wait a minute whenever there's a headline like that uh Bitcoin goes up. Hey this is pretty interesting. It's acting like a hedge uh a hedge against uh disaster. And so uh we thought wow this could be not only a risk on uh asset but it could be a risk off it could serve both roles at different times. So uh pretty interesting.

>> Yeah. And Kathy I think now looking back at that time a lot of the kind of common school of thought was this is going to get uh adopted by the world's largest asset managers in institutions. It's going to be, you know, a lot of the rhetoric was like, oh, the institutions are going to come and buy Bitcoin from us, right? Like we are, you know, finally in something before kind of the the typical Wall Street out back here, right? And like that was a lot of the rhetoric. And now it's 2026. We are seeing ETFs. We are seeing stable coin adoption. We are seeing tokenized assets. we are seeing this absolute explosion of permission blockchains of uh largest uh institutions in the world

launching PC's actual products stable coins etc and really like this the convergence that we spoke about at large in the beginning around all these different sectors it the main one in digital assets is the institutional adoption kind of collaborating with this crypto culture and all of the products and infrastructure that the industry has built over the last five, eight years, you know, post Ethereum really. I'm curious what your current lay on this um adoption from the institutional perspective as it correlates to the kind of interesting sentiment on the ground within the industry. There's a lot of apathy. There's a lot of kind of um

almost like internal uh disappointment from the inside, the cryptonatives, the people who are supposed to be the believers. Meanwhile, a lot of the kind of more newer adopters from larger sectors, larger firms are more are just frankly more bullish. Uh, right, you being one of them. Why is this happening and kind of what is your read on the state of adoption as this industry has kind of grown up and matured? >> Well, I think there are a few things going on right now. Uh, and and it was interesting. So I gave I we took our first position in 2015 and uh we we were uh really we were made fun of back then

>> and uh I you may or may not have been around and in the industry at that time but uh you know many people thought this was just a a marketing gimmick and that's when I really knew that wait a minute we might be on to something big here when that many people make fun of you or just dismiss it's and a lot of it was dismissive. Um that makes me even more interested in a in a technology. So we have a global monetary system uh that really is Bitcoin Bitcoin owns that space. uh DeFi. So uh so Ethereum, Salana um uh uh I think they they are

running with that space hyperlquid uh giving them a bit of a challenge as well. um the institutional interest. I think we needed Larry Frink actually to change his mind >> because he was saying uh he was the leader of the pack almost and it was interesting that that the leader of the largest asset management firm in the world um was uh making it his business to dismiss uh Bitcoin. But his conversion was so extreme.

Uh and and his conversion had to do with a vision and and imagining the tokenization of everything. Finally understanding that wait a minute. uh you know the the the internet was not built with a financial layer and because nobody understood that commerce uh and investing uh would take place on it. Uh in the early days it was just information exchange. Some people thought it was just for gambling and and other illicit activity as as much of innovation

um uh gets accused of that in its early days. uh and and so uh I think that hi his opening his eyes to future tokenization of everything um was really important for uh the institutional uh investor and product development specialists to begin to imagine participating in this new age. Uh so I give him a lot of credit for that. At first uh we were battling uh him and Jamie Diamond and uh but then when his conversion took place it gave the industry permission to say wait a minute

if I don't get on board here I might lose out if he's saying this is important and of course uh Black Rockck uh has something called Aladdin which is a uh a technology platform for asset managers. Well, if he's saying it's important, then I better learn something about it. Uh and and so now, yes, and I also think critical critical critical to uh DeFi was the evolution of uh stable coins. Um we just did a podcast with uh the founder of Binance, CZ, yesterday. uh and both of us agree that the biggest surprise to us from the early days of Bitcoin uh to now was uh the evolution

of stable coins backed by fiat. Uh that also was quite anathema to uh sort of the the crypto ecosystem in its early days. But now you see the Bitcoin OGs fully supportive. I mean, uh, Gian Carlo and Paulo at Tether, um, hugely supportive obviously, uh, of stable coins, uh, but they were from a from an OG point of view, one of the first two. And so I think they've brought, uh, the world along into this concept of stable coins, which is the bridge from DeFi in, I mean from tradi into DeFi.

Importantly, we thought Bitcoin was um going to serve the roles that uh stable coins do now and certainly in emerging markets. Um but even in emerging markets, they uh you know, the Bitcoin community uh considers stable coins the humanitarian kind of stepping stone into uh the the crypto world. um humanitarian in that most people in emerging markets cannot uh withstand the volatility of Bitcoin and other crypto assets uh for their day-to-day living you know their

hand-to-mouth as wealth grows uh and we agree with this as well uh they will move from stable coins into more um into more investments within the crypto ecosystem Uh so I think that's the other big surprise and and has become the glide path uh for DeFi. Um and uh and and so the big question there is for us and we were trying to noodle it through with CZ yesterday, you know, is this a winner take most uh world, the stable coin world? Uh and the network effect would suggest yes. And I think the delays in the Genius Act and the Clarity Act have

given Tether and Circle USDT and USDC uh really more running room to enjoy the network effect. Uh so ironically regulations which um should spur more stable coins um have the delay in those regulations have allowed for more of the network effect than otherwise might have happened. CZ thinks there's going to be a proliferation of stable coins and and our team does as well. Uh Lorenzo, David, and Ry um here at ARC, uh they they do believe there's going to be an explosion in stable coins. Whether or not that happens, uh I think everyone

believes there will be consolidation. Uh and again, based on the network effect to just a chosen few. >> Yeah. Um the thesis we've been noodling here on this show is that as this tokenization wave continues to progress, it seems to have started with uh the the nonspeculative assets, the stable coins, the fiatbacked issuance and then gone further down the risk curve to treasuries. Now we're talking about tokenized equities, so on and so forth. Um, there's a stat that you have in in your big ideas for 2026 that the global market for tokenized assets could surpass 11 trillion in 2030. Um, and my question is as more and more of these

assets become tokenized, end up on chain and land my our thesis that is that these tokenized assets land in DeFi protocols. I'm curious if you share this thesis and if so how do you see the DeFi applications and the DeFi networks where do you see most of the value acrewing? >> Um I we would tend to uh agree with you. So in in the world of innovation generally u what happens is you'll you'll end up with pure plays that can move faster uh and and you know become more creative um just more nimble and then you'll have

the traditional players uh embracing these new technologies first to lower their costs increase efficiency see increased productivity. Um but then those in the traditional world who who do so the most aggressively and thoughtfully uh end up consolidating the more traditional world. So the easiest example there is um you know when Amazon happened upon the scene and we were in the internet bubble I think the prevailing wisdom was oh my gosh traditional retail is going to be destroyed and of course a lot of boutiques have been uh displaced and

disintermediated by the internet but if you look at what Walmart has done in in particular Walmart you'll see how it has used uh the internet uh to build an online business and the guy who built it um I think they bought Jet I think that was the name of the company um and uh and that has ballooned and taken a lot of share from smaller traditional retailers. So Walmart has consolidated the traditional space. Uh but then you have Amazon uh which is you know the the the the big dog out there and growing much more quickly than Walmart but

they're coexisting right and uh in fact what we're seeing Walmart do now uh which could impact Amazon is it's going uh very aggressively into drone technology and drone delivery uh in a way that um I I think Amazon has struggled to do so. And the the way it has done so is working with companies who have worked closely with regulators and the regulators have been more forthcoming uh and enabling uh Walmart to move into drone technology than uh Amazon has.

it's made a few blunders with uh with the regulators uh and has been held back in terms of its drone technology and it was way ahead of uh Walmart. I remember in the early days of Ark writing about Amazon being on its ninth generation of drones and now it's been um it's it's just made some some uh blunders I would say in its drive to pursue that technology. Um in the world of of crypto likewise uh we're going to have the traditional players embracing this technology. Um it's very interesting to watch uh JP Morgan in particular especially since Jaime was and still is

in many ways the biggest hold out uh when it comes to Bitcoin. But you know he is letting his technology team overrule him uh and letting client demand uh overrule him as uh as JP Morgan uh uh uh approaches this technology. In terms of watching DeFi build out, I think the pure plays um are are are going to be there'll be the network effect there. You know, Ethereum, Salana, Hyperlid, we'll see. Um I would we we would place our bets on them and we are placing our bets on them. We've

bought uh some DATs uh for our ETFs. Bit mine uh immersion is one. Uh Soulmate in the um in the Salana space. And of course, you know, we're we're tiptoeing in. We knew there were just too many DATs being created uh and that there would be significant fallout. And and now because we uh we post our trades every day, you'll see we've been uh tiptoeing uh back in a bit. uh or we've been moving towards more pure play expressions of Ether and Salana when we're allowed to. Some of our uh platform providers do not want us to own uh a Bitcoin ETF certainly in the

flagship um or or the uh Ether or Salana uh ETF. So we have to we have to work with uh you know what our platform providers want and so you've seen us uh gain exposure there. So yes we think the defi world is going to be explosive. It has it has been already to some extent. We know there's been a lot of controversy about layer 1 ones, layer twos, where will the economics and and where will the value acrruel be? And that's still sorting itself out. So, we're paying a lot of attention to it.

Uh but we still think the big three uh uh or the big three I'll include Bitcoin especially now that you know we see wrapped Bitcoin and uh see it migrating to other platforms. Uh but we would go with the big four then as I've just said. >> Yeah. Yeah. Appreciate that Kathy. I think people are going to um listen to that and be like okay we've we've heard Kathy kind of speak uh quite quite bullishly about this space longer term. uh we are in the kind of the midst of this geopolitical turmoil agreed on the kind of longer term tokenization thesis right if we do get 11 trillion onchain by 2030 the the uh the like kind of like

the way that we're thinking about these blockchains and DeFi applications the mental model should get somewhat broken apart thinking just for crypto assets no we're going to be tokenizing all different types of equities funds um and other off-chain assets onchain and using those I think it's really starting to form the backbone of a of an actual economy not just the crypto economy right >> yes I just want to add one thing there because I just thought of it uh so I remember in as we were evolving our Bitcoin thesis and evolving our DeFi thesis um Art Laugher once again he's been a huge influence on my thinking he was my

professor at uh University of Southern California. >> Um, and but more important, he's a monetary scholar and he has vital interests in in in understanding technologies, especially as they relate to economics. And I remember he said he said uh in response to you know the crypto communities railing against Tradfi getting in and spoiling spoiling the picture. He said uh that if that did not happen then uh you probably would not see uh as strong a movement as we are going to see. uh and uh you know he

was very excited when he heard we were starting uh a spot bitcoin ETF. He said this is absolutely essential if this new world is is going to effectively um take off and and dominate ultimately. >> Yeah. Yeah. I mean, I think we and we've seen the effects of that already, just in terms of this kind of bearish period not being as as harsh yet, you could say, of of previous, but also just the consistent just barrage of announcements of adop of adoption from the institutional side has been has been very interesting. And I think this is

kind of getting to that sentiment question that I was driving at earlier where we just kind of went through this geopolitical turmoil. It's still it's still ongoing. Stocks are at all-time highs as of yesterday. Bitcoin's kind of lagging around 75K. A friend Ralph Pal tweeted total global liquidity is r is rising. Global M2 is rising. US total liquidity is rising. US M2 is rising. ISM is rising. China total liquidity is rising. Don't overthink it. And >> so I think for people thinking about the markets right now, you also mentioned a lot of this fear. you know, what is your kind of read on on this lagging from the crypto side as it as it relates to stocks and commodities and just

generally what's your what's your more macro view of the liquidity dynamics at play now? Because I think there's a lot of the AI uh driven attention and IPOs upcoming that are driving a lot of this uh narrative and and thought away from the crypto investing world. But I'm just curious kind of how you're seeing this macro picture. >> Yeah. Uh so I wrote a letter at the beginning of the year and in it you'll find a matrix of the correlations uh among asset classes and uh specifically trying to understand Bitcoin. Um many people because we call Bitcoin digital gold they think oh well surely it's highly correlated to gold.

It is not in fact and we did the analysis from 2019 um which is when real institutional interest started uh evolving uh uh a little more intensely. Uh the correlation between gold and bitcoin over that time has been 0.14. Uh but if you look at the last two cycles, you'll see that gold rallied before Bitcoin did. And uh we think the same thing is happening now. And we we monitor uh we monitor Bitcoin to gold.

Uh and I I feature it regularly in something called in the No, which I do uh once a month. And on that chart, you'll see uh yes, Bitcoin relative to gold has had a significant drop, but if you look at the longer term, you'll see higher lows in terms of the very long-term trend line. Uh and so we think that that the Bitcoin bull market is still intact. I realize we've been through what many would call a bare market and yet down 50% is a victory compared to down 85 or 95

>> bare market for ants Kathy. >> Yes. Exactly. Exactly. So, you know, that is still intact and uh we do believe that uh Bitcoin will um will get to uh you know new all-time highs um in this next cycle. Many people don't uh but we do and you know that we're uh on record uh saying that our base case uh for 2030 is uh 730,000. Our bull case is 1.5 million. We took a a lot of flack for or I did for for saying that stable coins had usurped some of the role of Bitcoin. Um which is true certainly in

emerging markets. Um uh but what uh what people missed when I was making that statement was that gold was rallying. So the store of value role of Bitcoin is also moving up. Uh and in fact the two cancel each other out. Actually the the stronger uh the stronger move has been gold relative to bitcoins in terms of the impact on the bitcoin price. Uh so uh we're we we're think that we've yeah sure we're in the bottoming out process.

Uh you know David Puel who does our onchain analytics says the absolute capitulation would occur meaning uh it we may get there. I doubt it the way Bitcoin and other assets are acting. Uh but that drop deadad uh price range is in the 50 to 55,000 range. Um as I said and and you also uh are alluding to, we're seeing liquidity moves around the world and uh many people because the headlines are always talking about the Fed being hawkish, not wanting to ease.

Well, guess what? The Fed funds rate is down 175 basis points. And yet the the narrative out there is oh they're too hawkish. They're too hawkish. They have started easing. And I think we're going to have um I think because inflation is going to surprise dramatically on the low side of expectations. Uh and I'll give you an anecdote. Um Pepsi. Now what the heck does Pepsi have to do with this story? Well, we noticed that Fredo Lelay about I'm going to say about 3 months ago cut its pricing 15%.

And today it announced that its volume surprised relative to expectations significantly. That's what should happen in a lowinflation world. You cut prices, you get more unit growth. And that's certainly the case in the technology world. And we're seeing massive deflation with AI training costs dropping 75% per year, AI inference costs, so how much does it cost chat GBT? Uh to answer your questions, uh those costs are dropping 85 to 95% per year. So I think we're going to see a massive wave of good deflation uh out there and that is you cut prices, you get big unit growth and that's why we

expect real GDP growth to accelerate as well. um when the Fed sees inflation dropping and I I don't know if you pay attention to trueflation, trueflation's um inflation rate even with gasoline prices uh doing what they have done uh true inflation is up to 1.8%. It got below 1%. This is a measure of consumer price inflation. It's blockchain based. It's based on tens of thousands of items measured real time. uh and the core inflation measure is up to only 1.3%.

Uh so there was a tugofwar in inflation by all measures including trueflation um that was in the 2 to 3% range for about two and a half to three years. Uh trueflation says all of those are going to resolve to the downside. Uh and if that happens, uh we believe the Fed will ease. And one of the reasons they'll ease more is because the unemployment rate, uh while it is low, if you break it apart, you'll see entry-level jobs are being hit here. So companies are not firing, but they're not hiring either. So youth unemployment or 16 to 24 year old that

is at 8 and a half% and now it did get to 11% it's at 8 and a half%. Uh but that that tells you that there is slack in the system on the and the employment side which is pulling wage growth down. Uh which is very interesting. If you look at any wage measures, you'll see they're decelerating as productivity is accelerating. So why would the Fed ease? The Fed would ease because the demand for money is increasing relative to the supply and that's a function of unit growth. Uh and its role is uh to equilibrate or to accommodate

real economic growth. Yeah. Um and so we have a new Fed chair coming in. Uh people recently were very excited because his uh portfolio was uncovered and there were some crypto funds in there. Um and so you're generally bullish that the the Fed is going to be supportive of uh sort of recognizing the good deflation as you put it. Um and we're going to see some form of easing either in the form of lower rates or quantitative easing. Um how much of an effect will that have on digital assets do you imagine? And how quickly do you think we can expect that

to happen? Um you know the four-year cycle is sort of playing out as we see um as we draw closer to 2027 and the next having in 2028. with each day it gets more and more likely to play out that way. Are you a believer that the four-year cycle is playing out or do you see the Fed's dovishness as a potential accelerant to higher asset prices sooner rather than later as the four-year cycle would suggest. So, uh, I think what's instructive is to watch what has happened to the ETFs, the the the Bitcoin and the ETFs. You know, how strong have those holders been? Uh,

and they've been pretty strong throughout this down cycle. Now, if you're an institution and you learn about this new asset class and you hear about this four-year cycle, you're you'll you'll start you'll dip your toe in and you know start learning more especially about this four-year cycle and you see a 50% drop in Bitcoin. And as a traditional asset manager, you know, that is a severe bare market, right? So that looks like an opportunity. So we do believe we've seen some averaging down here. Sure, you've had weak holders who have exited. Uh but

you've had them backfilled by uh institutions who are really beginning to understand what this new asset class is. So I think that's what's going on right now. Was this uh the four-year cycle? I don't think we'll ever know because we had the 10-10 flash crash that caused auto deleveraging. We who know a lot about uh the DeFi ecosystem. Uh and and I'm not speaking for Lorenzo, David, and Ray. I'm sure they knew more than I did, but as a portfolio manager, when I heard what auto deleveraging was where, you know, it happened automatically on

Binance and Binance did not cause this. I know I'm on record saying that I, as I learned more about it, uh, you know, it was another round of tariff turmoil that, you know, flipped the switch. But then there was a software glitch on Binance and there was auto deleveraging and those who thought they were hedged but were operating on two exchanges found out they were not hedged at all and that ended badly for a lot of people. I don't know if the final wash out was 28 trillion or 30 trillion. I mean billion, sorry about that. 28 or 30 uh billion. Uh but we think that has washed through. And so that washing

through institutional support, >> maybe four-year cycle, I don't know, maybe we're ailarating the four-year cycle now that institutions are learning more. uh but the bottom line is we're in the bottoming process and I do think uh liquidity is going to give us the next uh big burst increased liquidity will give us the next big burst in uh and and I'll tell you one other thing this is a little esoteric but if you're um your listeners are into economics uh what you see from our money growth rate going up it's at 4.9% right now nominal GDP is around 5% % so it's basically accommodating nominal GDP. Um

what the war has done maybe is caused uh velocity to slow down a bit. The velocity of money is the rate at which it turns over. Uh so if it's increasing then it's turbocharging that 4.9% uh in in terms of its impact on econ economic activity. If it's decreasing then it's a drag. Uh so you know that may have caused uh some turbulence as well uh some some changes in velocity.

So we have to watch that as well during the next few months. >> Yeah. Um yeah that that makes a lot of sense. You mentioned the institutional holders not selling, but also the the Bitcoin block reward is half every time this having happens and has less and less significance as a result. Um, I think, you know, as we we we have, you know, only a few minutes left, we really appreciate you coming on, but I think we'd be remiss if we didn't talk about the convergence that, you know, you you talk about so much, which is how these, you know, blockchains, cryptocurrencies, uh, these tokenized assets, these D5 protocols, how you see them converging with the broad landscape of these disruptive technologies as a whole. Do

you have any exciting focal points about how blockchain could converge with AI or healthcare? You know, it this was early on. This was one of the things people were most excited about putting health records on the blockchain and sharing information this way and we have gotten a bit financialized. I >> is this still, you know, a possibility for blockchain? How how do you see this this part of uh the convergence? >> Yes. Well, you've heard of the expression agentic AI. >> Um, agentic AI. So, we're we're all going to have a lot of chat bots working for us. Um, I may have fewer than others. I just like to keep my life

simple. It's like credit cards, you know. >> You don't have an open claw, Kathy. >> Pardon? No, I haven't. You know, it's interesting. I I'll tell you my go-to and I our crypto team's a great example of harnessing Claude co-work >> and doing reports. We put out a Bitcoin quarterly and a DeFi quarterly. The Bitcoin one I think drops today. Uh so this is Thursday. Uh and the DeFi quarterly will drop next week. I think it Rey Hadtie uh uh and David Puel um worked with obviously Lorenzo on this and I think they have cut the time to do

those uh very lengthy and with reports with lots of charts they've caught they've cut the time to do that by 75%. And it's only going to get better from here. Think about that. that huge productivity unlock freeing them up to do more deep research as opposed to you know all of this uh superficial and and the reports aren't superficial but actually making them uh there's a lot of administrative uh involvement there so uh but Agentic AI just pulling a thread on that you know at some point they're going to let their bots just go out and

and do those reports. And you know, there we're going to need payments. We have to pay Claude and uh and pay other robots who are giving us or or other companies that are giving us access to this data. It's all going to be machine to machine, right? Uh and uh and what better than the internet financial system um to uh to accommodate it. we, you know, taking out the middlemen from Tradfi is absolutely essential if we're going to unlock these productivity gains. Uh, and so Agentic Commerce, same thing. Uh, I don't I hate shopping. I I

I really do. And I will have a shopper for me who knows my styles and is going to actually be trained by my personal shopper Lillian uh who's semi-retiring anyway and uh you know it's just going to do shopping for me and I am not going to have to walk into a store. But Agentic a payments ecosystems are going to be essent essential and we do think they're going to be blockchain based. Uh so yes and even in health care uh we're we're seeing in uh drug discovery and um and and trials we're seeing uh really labs evolve that have no people in

involved in them but they're enabled by you know the the uh both DeFi and blockchain technology and peer-to-peer generally. uh to uh carry out trials. They're called um self something labs. I've forgotten what they are, but you can look it up. >> Um and and those are becoming the rage. So I think yes a a Gentic AI um enabled by uh block blockchain based uh uh ecosystems payments ecosystems uh are are going to take over. So

>> thank you Kathy. Uh when I'm back in Florida we'll get you your open claw all set up so you can uh >> Yeah. You know what they're called? They're called selfdriving labs. Look them up. >> Yeah. Okay. Kathy, thank you for spending some some time with us today. Um, we I think we share a lot of similar views and uh very grateful for your time. Hope you have a great rest of your day and keep spreading the gospel about innovation, about digital assets, uh, and the convergence. So, >> absolutely. Thank you so much, uh, Robbie and Andy.