EMPIRE Weekly Roundup Livestream

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All right, we're live. What's up, folks? Ro, Santi, how we doing? >> Yo, what's good? >> What's going on, guys? >> What's up? Um, we're live. Uh, Ro didn't know that until about two minutes ago. And Ro always says some some stupid stuff that we got to take out. So, this is pressure on here, man. >> I'm uh I'll I'll speak slowly on this one. >> Yeah, exactly. How's the week? How are things going? >> Good. Can't complain. >> You know, tweeting a little more, talking to people, chilling. Sant you're trying you're pumping the Twitter up these days, huh?

>> I don't know. I feel like I got I I used to tweet a lot in like 22 2020 20 21 22 and then I just sort of fell off and now I feel like the algorithm hates me. So I was trying >> You got shadowbanned? Anyone who sucks at tweeting just always says, "Dude, I got shadowbanned." >> Yeah. People are like, "Oh, you got to get bookmarks." I'm like, "Well, I gotta like tweet something people might want to come back to later, you know?" Like >> so you got to tweet some like 40page report and be like I just spent the last year working on this report because nobody actually wants to read it but they're like oh I'll save that and bookmark it.

>> Oh it's brilliant. It's brilliant. Yeah. There's like this guy this one account on Twitter. He just keeps tweeting like this guy literally tells you how to do this and it's like all these guides that but he uses the word literally every time and it just sticks. >> Yeah. Is this what it think takes? I don't know. Whatever. >> Yeah. Sanji, what's up with you? >> Not much man. I was thinking like has anyone run a correlation uh between like crypto asset prices and like uh follower account growth? Like we've all seen the M2 Bitcoin. >> I love that. We have a bunch of data on that. >> Yeah. You cuz like I look at my account it's so sticky. Like I haven't been able to break through 128 and it's sitting there. I'm still for the record beating Yano. Uh Yano has 127.8 as we record

this now and I have 128.2. Not that I look at this really. just leave >> I care but >> not that I care ladies and gentlemen but I'm just saying it has been uh it has been muted the the growth has definitely decelerated and the even the engagements like super low and uh you know this week is we'll talk about markets a lot is here to enlighten us because I certainly don't know what the hell is going on in markets nor have I ever but row might have a little bit more insight but yeah it's so the engagement just drops off a cliff as soon as prices go down. Yeah, I mean mo most of the media companies their page views went down 90% in the bare market and you you can't grow you can't grow Twitter in a in a in a bare market

either. >> But wait, but hold on. I I thought uh I remember going back like two years ago when it was like at the Nadier, you know, the the darkest of times and you said we're actually getting a lot a lot of >> page prices go up, we get page views. Prices go down. No, page. Actually, we don't we don't check page views, but like podcast downloads, new newsletter subscribers, that like podcast downloads is the metric I care about. That rips in a bull. It rips when prices are going down. When prices are flat, it's really bad for us. That's when when prices are just kind of like consolidating here. Yeah. Because people are bored. So, >> yeah.

>> Uh let's get let's get into that. So, I I mean, the thing on everyone's mind right now is just like the market, right? Ha have we topped I think would be a fair uh summary of what we should talk about here. And you've got all these what people would call everyone loves to be a top signaler, right? Everyone loves to call try to call the top. And uh here here's Ciao from Alliance saying Chimas SP spack filings, right? August 2017, three months before the top. Feb 2020, right before COVID dump. September 2020, nice trade. Got to give it to him. June 2021, six months before the top. Uh you've got Bitcoin obviously ripped higher and then has been pulling back. Uh you've got uh you know folks like Yuga Labs CEO saying you

know quote unquote this cycle is different. Uh you you obviously have all the DATs and the the MNAV of the DATs is starting to compress. And then outside of crypto you have things like a company that makes cold mattresses raising 100 million for an AI powered sleep tech which >> yeah listen I love my I love my age sleep. >> I will give it to them. They have a good product. >> Great product. Great product. they have a good product. Um, or you know, Ramp also a good product. Um, you know, Blockworks is a happy Ramp customer, but this, you know, this is a credit card and expense management platform raising at a $22 billion valuation 45 days after reaching 16 billion. And so there's a lot of, I'd say, frothy things in the market and it's really fun for everyone.

Everyone everyone wants to go out and be be the top signaler. But um uh but I I just want to get your guys' take. Like maybe Ro, you had a you had some interesting commentary the other day about where we're at in the cycle. Um maybe if you want to share your thoughts on just like Yeah. where we're at. >> Yeah, I know. For sure. Um and and also I I would just caveat like it's impossible like truly calling a perennial top makes no sense, right? Because you know you hold this stuff for the long term. Uh you really can't lose from a denominator perspective, right?

like calling it top is more of a cyclical thing and you know crypto kind of goes up a lot more than people expect and then it it tends to go down a lot more than people expect typically when it does there are in the latter case you know for the down case there are catalysts that could cause that right um and just kind of keeping your ears peeled for what those could be I think is uh sort of important um and and and to see kind of how flows can shift from one one to another and yeah look I tweeted that thing because I've been looking a lot at these stats and I think there's a lot to like about them and I think you guys talked about them on the Empire podcast in terms of all the good things it provides. Um, and you know, just to name a few of those

things are the marketing and the education that kind of comes with it. You know, people can learn more about these underlying assets, treasuries, whatnot. And I also kind of view them in an analogy to maybe like Pendle or like the early days of um even protocol where they had like fixed versus variable kind of yield where it's sort of like this capital arbitrage where you know if I go to people and I say hey give me a bunch of money to go buy Bitcoin spot the you know the type of people you can attract for that product are just people that are down to give money to you to go buy spot Bitcoin. But if you, you know, construct something a little different where it's like, oh, I'll pay you this yield. There's this knockout level.

There's this kicker level. After this, I keep the price upside, you keep this much price upside, and you can mark this on your books as yield, which like mutual funds, pension funds, all these guys love to do. They need to do. It becomes this different thing where you're making all these different capital sources uh you know, kind of uh give access to to to buying to to buying the underlying spot. And I think that there is something to be said there. Um and and that is impressive, but I think on the bad side like yeah, a lot of these things are uh at some point I think you know you do you you start with a good thing and it always kind of gets a little bit out of hand and I don't know kind of where we are in terms of it getting out of hand

but you know there were some signs here where people are talking about deaths as a better way to get exposure to the underlying um just owning it in the public market than the underlying itself. which I think is a very strong statement to make and has a completely different risk and volatility profile. Um, and you know, kind of the the the flows that are keeping these assets above their MNABs are a little more fickle than people think because they're not the type of people you're attracting are not here for three, four, 5x. They're here for um percentages, tens of percentages.

>> Ro, go a little deeper on that because I think that's something that people don't fully understand is that the buyer is a very different buyer set here. And you you called this out well. You said um one of the one of the main reasons is the DAT trades are all momentum. I've traded closely with the same wealthy trady apes piling into these DATs on public markets and what I know for sure is they're nimble. They'll mercilessly cheat at any whiff of weakness. Uh which is what what nicely nicely described, but go a little deeper on that. >> Yeah. And actually, you know, the funny thing here too is I and I I I didn't really have space to mention it or whatnot, but well, look, the guys that are buying the actual public equities um uh and aping into those that that's that's that cohort there. But there's

also this other group that's really important here, which is people I think grossly underestimate how much access um hedge funds like really good momentum draining like liquid trades have to access on on underlying assets. So, a lot of these guys actually just piled into say like ETH as this DAT narrative was picking up and they're the ones that actually drove spot in a in a good amount of way. And those guys, you know, they buy 2,000, 2500, 3,000. When you get to 4,800, 4,700, it's like that's an objectively good return for these types of people. And they they were here for that momentum that these DATs are going to come in with their telegraphed advertised flow that they're going to aggressively buy. Um, and like when you

say that you're going to aggressively buy an asset, like there are very astute participants in the market that can get ahead of that in a in a in a pretty profitable way. And, you know, there there's guys that have done it a little slower, a little faster. Some, you know, maybe even like uh I think I saw a tweet where, you know, you're going to advertise, you're going to buy as much as you possibly can in a single, you know, kind of quick minute or quick hour. Uh and then obviously that was actually the the the local the local current local top of Bitcoin. So yeah, I think you know a lot of these DAT flows that are expected are actually being um run in spot by people that can trade spot with size and they're not here to

make like a 10x. They're here to make that the move that the DATs are going to provide from a liquidity perspective. >> Yeah. Santi, what do you think about just where like market market cycle toppiness frothiness? Uh well, look, you look at the chart and you try to extrapolate all kinds of things and I'm not a chartist. Uh I'm also not a near-term kind of look, I've never systematic I've never met anyone that systematically is able to time markets. But, you know, I pay attention to uh Howard Marx. He put out a great um uh letter out there uh talks about the calculus of value. He published that last week. And look, you know, Howard Marks is uh he always kind of mentions couple things, right? The S&P 500's forward-looking P ratio is sitting

around 23 times. That is above the historical average and you know historically uh you know returns have like you know uh under like lower returns have followed when the S&P kind of trades above that historical average. Uh there's also you know things that people already know the concentration of the S&P is pretty high. you have like I said it in a couple of podcasts like a year or two a year and a half ago which was forget about JPAL just focus on Nvidia earnings um and or meta earnings and uh you and I having a private discussion JO which is like how do you feel about this market and I've been personally kind of rotating into a bitcoin I just feel that I feel really

comfortable there I think we're likely in the second half of the cycle um and again I just sort of work backwards I never want I never assume going to be able to capture 90 plus% of the returns. By that I mean like the major like if Bitcoin is going to deliver a I don't know has already gone up quite a bit right since the low was like 25k 30k right so it's gone up quite a bit uh it's 4x does it go to 200k possible like historically like in most cycles there's been like an like a pretty fast runup towards the end of the cycle where Bitcoin or Ethereum some of the majors kind of run up a lot but that is very shortlived so I never assume

that I'm going to be able to like understand in you're going to be a fork. You're going to be caught up in the trade or uh and so I'm very comfortable capturing 50 60 maybe 70% of the return like that's going into it. So I do think we're in the second half of the cycle. So I've reposition my portfolio. One, I'm less active. >> B I'm mostly in illquid stuff. >> Um and I feel really comfortable holding Bitcoin through the cycle. Um, >> and so I, you know, I think the things that I'm paying attention to to inform that view is stuff like Howard Marks.

He's been a bit of a canary in the coal mine to be fair. Like look, he's been bearish for the last like god knows since like 2008. He's been bearish most of the time. like go to chat GBT like dump all the memos of Howard Marks and be like um what percentage of his memos skew negative or like bearish and it's like a I would say like a 70% of them are bearish. Um he's a sound of like reason and caution. You got to understand the guy sells a credit product but you know I do want to learning from prior cycles. I feel comfortable holding Bitcoin. Um, I don't feel the need to like um punch out of it like holding it for the next 10 years. Justin Bram actually, if you can pull up his

Twitter, I think he had some really good takes that we should just like use as an anchor for a discussion because he took some profit last week and he was kind of going in through his calculus as to why and I sort of ascribe to his view. He's much more of a trader than I am, but I do think he had some pretty interesting takes. There you go. >> So, how Okay, so what Justin said is a lot of people ask me why I took profit at the top one. I expect BTC to go down 70 60 to 70% next year and want to buy. Two, sometimes enough is enough. And three, yes, dollars inflate away, but one week in crypto is a decade of inflation. Um, before getting into some of that stuff, how do you guys grapple with this idea that uh the end of the

the end of the cycle oftentimes is the most parabolic. Yeah. >> So like Ro, you mentioned this, right? But if we have another like it's often the most parabolic and actually I think that's the thing that Chiao misses here which is >> yeah go through those >> you know so maybe Roth talk to me about this idea that the the the end of the cycle is the most parabolic sometimes um and and how does that impact what you do with your money? Well, you know, I think it's like we're not at an inflection point here where you where it makes sense to be like, let's say 100% unallocated, but I also think you can't be 100% fully allocated, right? Because if this parabolic situation is truly true, you know, multiples on, you know, less thanif less than 70% or less than 80% or 50%, whatever you want of your

portfolio is still fine. Um, so yeah, I do think like look, like you could argue between now and Labor Day, pretty much anything that happens in the market doesn't really matter. Um, right. It's like summer seasonality, uh, probably the least lowest volume, uh, two weeks. And then historically, you know, crypto in years like this, uh, tends to do really well in October and then into November and December. And if there's going to be a parabolic move, that's kind of where it is. So, this is kind of like chop, maybe a liquidation or two to the downside, maybe not. Uh, but basically chop then up. I think that's kind of like where my base case sits.

Um, and I think like you know to Justin's point like it's 70 80% is a big number now and I think there might be a little bit more of a floor in Bitcoin because of the ETFs and the traditional flows like where you know what previously was normal for an 80% draw down is more like I don't know like a 50 or something in in a situation like where we are today uh where you know that's not terrible um if you can weather that through cycles. So like, yeah, I don't think that we've cycllically topped tier, but I think there are things to be looking out for that could could put it close. And then also, I think a lot of people, right, they look at stuff.

>> Wait, what what are those things? If you're if you're looking at So the thesis so far, it sounds like, is we haven't we haven't topped. Cycle's not over. It's getting a little frothy, but we haven't topped, but I am I am starting to be hyper aware of some things. What What are the things that you're starting to be hyper aware of? >> Well, datnavs is a big one, right? Like for me, everyone when when when closed effectively closed end products are trading at a premium to their nav, it's like great. Everyone's making money and you issue shares. It's all this good stuff. I I've had a lot of time spent with, you know, closedend products that end up trading at a discount to their nav and then it gets super messy and then it's like if you ever sell the underlying then you're kind of reversing

the whole pitch of like accumulating more units per share and it kind of ruins the pitch or you have to think of other creative ways to get financing which Sailor recently tweeted or announced or whatever it was that his plan there is to find credit lines. that's fine right now. Like, you know, he can get credit lines. And I think, you know, strategy is in a little bit of an league of its own where it maybe perennially always has access to credit lines, but I've also seen how quickly the credit market can dry up for a demand to lend to crypto strategy companies if people are not interested in crypto, right? So, I think the DAT MNAVs are like really the thing to watch for. And they're not too bad, you know, just yet. And um, you know, that's kind of like the the crypto idiosyncratic

part of the market. You know, of course, crypto trades in line with stocks. I I don't know. I think the S&P 500 is always like even if it's horrible, the S&P 500 might go down 20 30% at most. It's pretty dampened on the downside. So, it's like to Howard Marx's stuff about calling like PE multiple tops and things like that, I think that's a much harder game and it's kind of a game that you you don't really want to play. So, you kind of have to just look for like what could cause crypto to underperform uh stocks and other markets. And I I do think the DNA thing is is is a really big thing to watch out for. And there's other little things like you know people saying cycles are over forever. Kanye launching a memecoin like you know things are things are moving.

>> I would say uh well you have a really interesting chart here. Um and you Yano shared with me a something we've been talking about extensively here which is the performance and the volatility of some of these stats if you had bought him straight out of the gate and how like vastly underperform you you you like the Tom Lee vehicle I believe is the one that's like was trading at like five times NAV and then just kind of crushed and you know I think you know one you definitely want to steer clear of that and paying a premium for stuff um and especially this time in the cycle I think cuz like that's pretty much unequivocally that person that is putting these together or investing them tells you one thing which is this is a trade not investment. So if you kind of like and and so if it's a trade then

it's very much dependent on timing and if we agree that we're in the second half of the cycle you don't want to be playing the game of musical chairs with your entire stack. So if you're going to do it maybe do it with like less than 5% of your portfolio. Um but yeah like ESBet is just vastly underperformed. Uh so so for everyone that's not looking at the video for context you know um you know what is this Yaniano Espet >> I can read this I mean so there's this guy Victor by the way who who's great and has a great uh telegram channel and stuff like that he said I remember when ESP launched I was debating with a friend whether buying especi there was potentially dangerous because MNAV was six if you bought ETH on that day you'd be up 80% and if you bought

esbet on that day you'd be down between 40 to 60% and he kind of goes through like I'm not going to read this all but like the very unpredictable and irrational things these these are basically just like levered they're levered products right um they're well slightly levered products uh not not entirely but they're very volatile products on the under underlying and he uh concludes and says um uh they can go very quickly from overvalued to undervalued and this is what like anyone who wasn't around in 2020 and 2021 into 22 like Ro I know you were very close to some of these closed-end products. If you don't if you haven't seen some of these closed-end products before, uh, it can go from very quickly overvalued to undervalued to overvalued to

undervalued. And, uh, like Santi, you've been saying on Empire, right, it'd be a real shame if you got the thesis right, but the structure wrong. So, um, >> yeah. Yeah. >> Yeah. Exactly. I mean, and honestly to that point too, like this works both ways on the on the down on the upside case too in in the sense of like similar to how like GBTC was a better expression of Bitcoin from the absolute bottoms in 2022 when you could effectively get Bitcoin at sub 10K when spot was still at like 15 16k. Uh I imagine you'd actually be able to do the same with some of these treasury company stocks pending that you know they could uh they could actually survive. So there are opportunities in them. I don't think they would they're just they're going to fall off the face of the earth completely. Um but they they will go

through this reckoning cycle. They they they almost have to like they never you can never perennially sustain uh you know above MNAV and keep issuing uh at infinity without some cyclical uh movement. >> Right. Right. >> I think uh NFT prices is probably something that I would definitely also track. I think uh NFTs are one of those like they benefit from the wealth effect. Like crypto punks have had a pretty you know pretty decent I think it's 52. Yeah. 5. The top last cycle was 125. The reason I know this is cuz I bought a floor punk for 125. Uh, and ETH was at 4,000. So, you can thank me for that.

>> You paid 6 Oh, no. You paid Wait, you for 125? >> 125 for one of my bandana punks. And that was uh Yeah, ETH was at 4,000. >> How do you feel about paying 500k for a bandana punk? uh you know I I haven't I I feel look on this point ladies and gentlemen coping coping I don't consider what I I'm I consider myself a pretty big collector they don't compute my investing they don't compete to my net worth it's just something that it's like it's an expense right so I'm not there to ever sell it and I'm actually never sold other than one two NFTs a board ape that was gifted to me and another thing like a nifty island thing but um I have it soon as I walk into my house Yeah, you've seen it.

As soon as I walk in, it's it's there on rotation, but it's there. And it reminds me that, you know, we can all be stupid, right? We can all, you know, you're not infallible to getting caught up and buying stuff. I like crypto punks. I buy stuff that I love. I would feel way worse if I bought it with an investment perspective. And Jana, you remember that time where we were talking about like doing a levered bet like if >> considering NFTTS as like a levered exposure. >> Uh, and that's like a it could work again. works in the super last couple of months parabolic, right? If you >> What were we doing? We're gonna let Yeah, it was like exposure to soul be like borrow against your soul by tensorans which are going to probably rip as soon as they launched uh the the

their their token and you would have gone like crushed. You not only would you have been probably liquidated on your soul stack, but the tensor price just totally collapsed. Look at that. >> Oh god. And this is the thing that I'm trying to impress on people, which is why I'm going to Bitcoin. One, I think the the setup for Bitcoin is sort of pristine and it is broken away from the like there's a whole C now narrative forming which is we're kind of over the four-year cycle for Bitcoin. I don't know. Bitcoin goes down 65 50 65%. I certainly have more conviction that alts including like ETH and below definitely goes down 60%. Bitcoin I think is breaking away in a kind of its league of its own and that's just a function of

the industry maturing candidly which is you would have expect you you would expect that the correlation within crypto that intracorrelation kind of breaks as we form more thesis around like you know one is a commodity the other stuff is something else. Uh, I don't I don't think we're going to see this cycle, but I feel more comfortable. Um, I'm more and more paying attention to what is the size of the door on the way out. And for anyone that's been around this space, you know that that door really shuts down really quickly, especially for NFTs. Like there's basically no liquidity, even stuff like Terra and Luna, good luck trying to get out of that trade if you had size like and so, you know, you just don't have that problem with Bitcoin.

>> Yeah. Yeah. Bitcoin, you can really get out. >> Yeah. Or or or like bar against it or just like the V of it is uh it's a very personal like decision, but I just generally think that I don't know. I never want to put out predictions, but like are we going to see Bitcoin back at 50K? That's what like J Justin's kind of suggesting. >> I don't know. It's certainly possible. Like look, anything is possible. I'm things can >> for year end. That's actually very extremely unlikely. Hopefully I don't eat my word. You think it's extremely unlikely that we >> 50k before year end for sure is unlikely. I would say >> you said 150k.

>> No, 50. 50. >> Oh, 50k. Oh, 50k to the downside. I see. I see. >> Yeah. Yeah. There's just too much demand and especially even at like 75 80 like >> All right. >> Would you Yeah, >> we got we got to take we got to take a quick break. When we come back, we are going to talk about uh lending. Uh because the counter to all of this is that lending is uh still at least CFI lending is still at a low. Onchain lending is high but CFI lending is a low. We'll be back in like two minutes. >> Yeah. >> This episode is brought to you by Geonet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous

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>> Yeah, I was like, "What?" >> All right, let's talk about lending. Um, >> so >> before we talk about lending, by the way, I just one thought I had on the on the cyclical thing. This is something that I've started to think about and use recently. So, if you think about the cycle in terms of innings, right? Like, as Santi was saying, you're probably past inning. Oh, is Jason still here? Yeah. 4.5 or five or whatever. One way to think about it is you could take whatever inning you think you're currently in, divide that by some number. It could be nine, which is the total number of innings, or something higher if you want to be a little conservative or a little more aggressive. And basically, that's the percentage of your portfolio that should be in whatever you want to call your quote unquote safe asset. And I'm not

here to tell you what that should be for each different person. That in, you know, in many people's cases, that could be Bitcoin, right? Because of the riskreward being skewed over years. It could be the S&P 500. It could be stable coins. But, you know, if you think you're 40% through the cycle or 50% through the cycle, then maybe having 40 to 50% in safer risk actually is kind of the way to go. >> That's a decent that's a decent framework. So, what cycle what ending do you think we're in, row? >> I think we're past five. Um, so yeah, like I don't know, some somewhere over there. Yeah.

>> So, let's call it seven. Let's call it let's call it inning six or seven. So, that means >> um so six divide by 9 is 66. 7 divide by 9 is 77 roughly. So I mean 66 to 77% of your portfolio should be in your safe asset. So is your >> right that's if you want to be pretty safe you could increase the denominator to some number if you want to go like if let's say you consider yourself if you consider 50% cash like the safest or 50% Bitcoin the safest you could possibly be you know make your denominator um you know like 12 or something you know whatever.

>> I I don't I don't hate that. So what what is your safe asset personally? Is it Bitcoin or stables? >> It's like a mix. I would say of Bitcoin, um, index funds and stables that are >> and cash that's earning yield, even municipal bonds, whatever, like just things that are relatively safe. Obviously, there's a different ranking in in those things, but yeah, it's like it's like a grab bag of it, but really for years, honestly, the the the the portfolio like kind of the thing that you divide your total net asset value by and see how many units of that you owned was was very important to me. And for years, I was doing uh Bitcoin, then I was doing ETH, then I was doing Salana.

Now I track it in all the different things so you can kind of see like where where you are in terms of how many units of those things you have. >> Um but yeah like I think you know something like an index fund also it's like as you get later in your investing career you and older right that number tends to go up too. So >> yeah Santi how do you go ahead go ahead. >> Well I was just to say look holding cash is really hard. Uh you go back to Stan Damiller and you know some of the greatest investors of all time um uh Seth Clarman from Bowpost um they have held like Berkshire Hathaway they've held 40 up to 60% of their book for extended I'm talking

multi-year periods cash and and then it makes you wonder what is your cash allocation and again when going back to that discussion. Uh yeah, like they're sitting on 347 billion of cash. That is his historically way above its historical average. I have a kind of a couple stats here. Um that is roughly one-third of their entire assets. Um and so yeah, it's roughly one-third of their entire assets. That is that figure has more than doubled since 2023.

And so I think it's just a it makes you wonder like I always ask myself like what percentage of my book is in cash and so okay you overlay that with okay maybe we're going to get a rate rates cut likely by the end of the year right because you're now the market's kind of forecasting a pretty high probability like 60 plus of a 25 bips rate cut. Um obviously this week's going to be really important. The jobs data last week was important like look we're not here to talk about macro. I go listen to forward guidance. But, you know, that's sort of the other thing that I'm factoring in, which is I don't think we're like in inning eight because if you have rate cuts, there's likely going to be a pump.

Uh, if there's like a peace deal, there's a couple of things that obviously like the markets are kind of schizophrenic because we're a tweet away from the market dumping five to 10%. Uh, so so don't lo use leverage, ladies and gentlemen. Um, but I do think that like when I think of working backwards from I'm going to capture maybe 50 to 60% of the return for something that I think is pretty compelling. Um, I think that I I'm comfortable like just going more and more to cash.

>> Yeah. >> Like 10% of my book. Maybe a question for both of you like what your books in. >> Yeah, I think I caught the end of that. I think it was the percentage. Um I would say it's above 20 less than 40 but I I think a big uh question to ask and maybe Santi for you is like when you think about cash in the portfolio like what is that actually and is it like cash and a earning like 4.5 something like Athena or something a little bit higher or like you know basis trading on a DEX that's actually probably in the mid- teens right now like how do you think about what the c what is the cash earning as a as a yield right >> yeah great uh offchain for me I just don't want to take smart contract risk And I'm someone that was very much DJ

doing but I I just feel comfortable the best advice I got which is what Justin said there is if you can change your life change your life put money away far away from the industry that you spend day in and day out and allocated to treasuries and or fixed income stuff like super high-grade fixed income where you lock in a 6% 7% rate. Um, the other thing that I'm mindful of is as you go in the later parts of the cycle, um, I think the the the risk curve is not like a progression. So, if you think about, okay, I want to earn 5% of my on my stables. You can buy, you know, T bills and clock that, you know, that rate's

going to go down. So, you're going to have the reinvestment risk. you can then go fixed income and you know maybe go buy like Disney or you know Exxon or some like super like you know high-grade stuff if you want to go like high yield I think in the latter parts of the cycle the risk curve just just changes the the shape of the curve just does that where the incremental one percentage like a 100 basis points for you to get you're you're trading way like you're for the incremental 100 basis points you're you're giving up or you need way more risk units. So that's how we think of it, which is like in the earlier part of the cycle in a recovery, so the market crashes. Um, for you to go from like 10 to 12%, you're not c you're not trading

in that many like risk units, say 20. In the later parts of the cycle, for you to go from 10 to 12% return, you may have to trade in three times more risk units. >> Does that make sense? >> Sort of. What's a risk unit? >> Arbitrary number. It's it's just it's all everyone has everyone has a different risk unit, but that's how I think of it like >> like >> okay yeah >> for me to go I I do two things the law of 72 which is divide 72 by the percentage that you're getting. So if it's 5% right which you get right now in treasuries it will take 14 years for you to double your money.

>> So like you know 72 divided by five 14.4 you have reinvestment risk. So, say you want to say, you know what, anything that gives you 10%, you can probably get a high yield bond, like a an investment grade bond for like 7 8%. Maybe a bit less, but like that's, you know, you're doubling your money in 9 years. And then you say, "Shit, no, that's too much." You know, I I want to go from eight to I want to earn 12% of my safe bucket. Well, you're doubling your money in six years. What I'm saying is, if you think about the curve, from five to six, not that many risk units. From six to eight, more more risk units. From eight to 10, a lot more. Anything above 10, >> way like it's like a nonlinear. It's like a parabola, right?

>> Yeah. >> And that that change of that that shape of the curve actually steepens. >> Yeah. >> And you're you're you're taking way too much risk in the later parts of the cycle from go for the incremental 100 basis points. >> So what are you make? U so Ro is saying kind of what he's doing. Santi, what what are you doing? Are you flip? I'm rotating >> Yeah, go ahead. >> I'm rotating a lot of my crypto exposure to Bitcoin. Uh and and I'm feel good just doing that. And then I just have stuff in my ex crypto part of the book which is more and more uh positioned as like it's super

long-term focused but holding greater amounts of cash, >> not reinvesting it. So, I have like a bunch of stuff that is maturing structured products and whatnot. And so, I'm just kind of holding cash and putting it on treasuries and being patient. Like, you know, >> if I get paid 3 to 5% to be patient, it's not nothing. And so, I I'm I kind of do I'm comfortable holding greater amounts of cash for the next two, three years if it gets ugly. Like, I would love to buy Bitcoin again at 60K. >> Yeah. Yeah. For sure. You know, the interesting thing too about the late stage the later stages of the cycle because they have this kind of parabolic move and this strong desire for people to get typically you do see funding rates and forward rates and curbs kind of blow out a bit. So it makes like kind

of the cash allocation to me it's like almost a little more enticing right because like let's say hypothetically right hypothetically Bitcoin's 180k right like whatever tomorrow but the six-month out forward you can lock in like a a north somewhere in the mid 20% or high% basis rate like do you think the risk for like you know playing for another 20% in in in in Bitcoin annualized from that point at like 180 200k versus like getting that locked in forward rate just capturing a a quarterly future or like some sort of per with Pendle or like now Pendle does this Boros which is like kind of like a fixed rate per thing.

>> Um you know does it make sense and I think oftent times like later in the cycle you see that like yeah like uh you know put putting some of this into stuff like that actually is kind of logical. So yeah rates on cash and at least onchain >> you're saying because people will pay so much to get long >> right >> you it at this stage of the cycle you should just feed them that money >> but we're not there yet. we're not there. Like the basis is like all right and it's get like there's a lot more participants slamming it in. So it's like I I don't think you're going to see like the 45% annualized basis that you added April of 2021 into like June futures.

>> Um but you know when when that happened, Bitcoin did go from like 68 to 40 25K. So >> let let me let me counter all of this and the the counter the counter to all of this is um probably this chart I think which is the CFI lending uh CFI lending market. And Ro, you were obviously at the center of this at at Genesis in the last cycle. So I' I'd really welcome your thoughts here. So Galaxy has this great report on just um here here it is on the C5 lending market. And you can see like I mean for anyone like the last cycle if you wanted one word or one sentence on like what drove the last cycle, it was a leveraged driven cycle and this cycle has not been that. I maybe you could say it's a DAT driven cycle, what whatever it is, but

it's not a leveraged driven cycle and you can see that in the numbers here. the numbers really haven't come back. Uh the numbers are uh actually what they were a little above 2020, but nothing like what it was in 2021. So by this standard, you would say maybe we're psych we're you know inning three or inning four. Um and you know what what Nick Carter said was uh when people ask me if the top is in, I show them this chart. Watch the credit cycle cycle top not in. And uh Dan Tapiro said the same thing. said, "Bitcoin and ETH bull market still has a lot further to run.

No chance lending doesn't go multiples over where it was in 21. Americanization of crypto's driver. Lending only still in its infancy. Bitcoin and ETH legitimate collateral. Old world salivates at the opportunity." And boom, again similar chart. So what uh what say you Ro to >> Yeah. I mean look look the the lending charts actually you know they look pretty healthy um in the sense that they're not like completely overblown and it is true that one you know one of the things you need you you you don't need it but you you hate to see it but like yeah like if if if credit overexpands like that causes and you look at other markets too like let's say houses right people are like oh real estate's so expensive it's like bubble topy there's all these whatever but then you look there's no leverage in the system like oh wait lending originations

are super low mortgages are not being taken out rates are too high there's not anything that would cause an implosion there similar to this lending chart in um in crypto. There's not like insane unsecured loans and leverage being taken with, you know, very whatever counterparties that aren't deserving of it and whatnot. So, I think in that sense, it's pretty healthy. I mean, the other thing that I I would caution though on when looking at a chart like this, um actually one more thing I'll say is like there is still a huge hole here, right? like the the hole the SVB, Signature Silvergate Genesis BlockFi Celsius, all these kinds of guys left has not been filled from both the crypto lending indogenous perspective, but also even to like startup LP shares.

>> What do you mean it hasn't been filled? The demand side or the supply side? >> The supply side. Like I think the demand is still there. People still want to borrow against LP stakes and like funds. >> But what what do you mean the supply side? I mean, people have tried to offer the supply side. Like why why isn't it there? Uh it's I think I mean it's a good >> the lenders the lenders are not there. >> Yeah. I don't think people are lending sides like unsecured anymore. OTC they're much more careful about it. You know they want like you know Maple it's like very like if you go to their page it's like >> it's like designed where everything is like hey let's be as transparent and forward as possible.

>> So I think in that sense it's pretty healthy. But I will say like the one thing you know going back to the chart is that I do think there could be a little bit of anchoring bias in this chart because of the situation that you had in 21 was quite uh wild. Um and like you know I multiples of 21 like Tapiro says like with price appreciation for sure you could get there like multiples let's say in terms of units uh I I I mean I think it would it would take a long time to rebuild right. So that chart, it's growing, but it's not like a where it was was like this kind of like anchored crazy number, right? So you got to kind of keep that in mind.

>> So auntie, what do you think of like Nick Carter and Dan's takes on this that were maybe early days because the lending, it's all about the lending market and the leverage. >> Um, I don't I don't buy it to be honest. like um it's one data point and I don't I don't I don't think it would were early. By early they mean like third, second, third inning. >> I would love to have them on here and discuss this, but >> I mean >> you got to also believe they're institutional investors going out there and selling their own product. So I'm not selling any product other than warranting caution for people. So, it just I think if you were to survey some

of the like the general market and whatnot, um I I wouldn't place as much stock on just pure lending as a data point to suggest that we're early when other indicators are probably telling you that we're not early. And for that reason, I would just the waiting that I would give to this particular data point is lower. >> Yeah. that in with the abundance of other data points not by the way not just in crypto but also macro and it's also traditional markets and private rounds and I think one of the biggest risks that Janna maybe you should talk about which is you know secondary markets are also pretty interesting to observe the discounts and the demand and also in you know how rounds get constructed and we're in that

environment where like people are chasing the AI hype train is very real and I think that just will come to some sort of uh disappointment sooner around later. And I think that trickles into crypto being a super riskon asset class, right? Yeah. >> Because when you think about the allocator game, if their portfolio gets hurt in traditional markets or in other buckets of their venture portfolio, then they're definitely not going to go out and invest in a crypto fund. And so it's a liquidity game. And so where is the liquidity going to come from? And candidly, what do you think has a greater waiting?

DATs and MNAV or lending markets? >> Yeah. Yeah, it's a good question. Sorry, Jason, before you answer real quick, just to add one thing to that. I think you alluded to this really strongly, and I've actually recently done this myself with one of my indicators is that indicators can grow stale, right? Like cryp lending was way more important in 21 than maybe it is now. And like another example of why like an indicator I've recently started to weigh super less is Coinbase's app store ranking. Because before that was like a really important thing because retail was driving the market. Now it's like none of these financial crypto apps are like really at the top anymore. But it's like does that matter that much anymore when all the flows are coming from uh ETFs and DATs? Like arguably no. So like I've really unweed that indicator um in my in

my like kind of process. So I think that's like something to to to to think about with the credit market, right? I mean maybe another thing to look at is uh like maybe some of the lending has moved onchain. Is that what I don't know if I don't know what you >> Yeah. to Yeah. I mean that's fair but you know the onchain lending is like it's it's like it's money markets right. It's like oversecured like where >> Yeah. It's all over collateralized. Yeah. Yeah. >> It's all over collateralized. Bitcoin drops a bunch. There's a bunch of liquidations on a and maker. Like okay great. Like it's not going to cause like some systemic loss of like funds. Yes.

Yeah. >> What did uh out of curiosity, what did the lending markets um look like? And maybe this is part of the chart that I'm not fully appreciating, but like before the market crash and what was the what would be interesting to look at is the premium on the Bitwise products. Um and >> the Grayscale products, I mean, sorry, the Grayscale products. >> Yeah. Yeah. Yeah. I mean this is off the cuff but I think before um GBTC went negative it was like sustaining for years it was sustaining 100% plus premium constantly because it was like the only product and that was a little bit systemic like in terms of access but I think it went to like maybe like 30% premium then parody then it was hovering at negative10 negative five for a while and then um yeah this is probably not the premium chart or maybe it is I don't

know >> actually I think they made it private >> got it went to negative 50 at some point um so Yeah, that's kind of where it was. >> Yeah, >> but I don't Yeah. Yeah. >> Huh. Um, Ro, let's build on what Santi was saying before. Let's talk about uh fun fundraising. Um, what are you what are you seeing in the private markets right now? >> Yeah, I mean I think it's a lot of like A rounds, B rounds, things like that. Like some of the stuff like I I I know less about the the ramp and kind of you know um what was the other one? Eight sleep that that that you brought up earlier. But like some elements of that of crypto too, right? big rounds, big valuations, um later stage stuff. I I think like you

know seed and preede I've always said is like very insulated from this because like you know you're investing in something at a low valuation with good founders early in a bet like that'll always be like a bet that's there and like very much like >> you could argue now it it makes more sense and I think Santi maybe you're doing this because you probably are even more active on the angel side than any institutional fund is like >> definitely so >> yeah focus your you know focus your thing on uh on preed seed right like you know like go go a little earlier right like maybe it makes sense less sense to do like these big free TGE rounds, right?

>> Yeah. Look, one of my good friends, Omar, ping me like a day or two ago said, "Do you think you can still do a 1000x in crypto?" And I said, "Absolutely." Like, like you can do a,000x in pretty much any market. >> Mhm. >> If you understand that markets are deeply psychological phenomena, right? And I tweeted about this, but it's like, okay, sure, it's definitely gotten harder in crypto because like look, the the state of affairs was if you invested in 2000, like if you were early in crypto, this asset class went from like sub like 10 billion to 4 trillion. Like it was easier to do,000 X's. Um, it will continue to get harder as this industry matures. It's just sort of a law of large numbers. But you can do a,000x in

technology. you can do a thousandx in by starting a company or by investing in something that is totally overlooked and and again Howard Marks talk about talks about this a lot which is market pendulum swing to extremes and fundamentals just don't really deviate that much. Um, so I appreciate that. I guess if you do want to do a thousand X's, you want to be, again, as Peter Theo describes, you want to be suffic sufficiently early that it is overlooked, but not too early because being too early is kind of indistinguishable from being wrong. >> So it's it's that's that is the skill of venture.

One of the things I will say is at this part of the cycle, if you're investing in something at if if seed round valuations have gone up from 5 million to 20, it's really hard. It's just fundamentally harder. You might do a 100x but not a,000x. And the difference between 100x and a 1000x is that a 1000x retires you and 100x probably doesn't. Or a 1000x definitely returns your fund. 100x. Maybe not because the round is small, but it's still great. Don't get me wrong. If you can get 100x in your life, like you're sitting pretty. But um all this to say is for me it's like it doesn't I'm not jumping out of my seat

to invest when I see seed rounds like four times of what I saw in the bare market. Mhm. >> And I'm not compelled to do the AI rounds at like, you know, 200 or 500 million as no matter how big of an industry or how big of a TAM, it's just really hard. I'd rather like invest in the S&P, which is still going to benefit from AI, and you're still your downside protection is just much more there, right?

>> Yeah. But I'm curious, Ro, I mean, you guys are still very active on the private side and I think that's more of your mandate, right? >> Yeah. Yeah. I would say we we've been probably a little bit more careful and a little less um uh you know, kind of like doing every doing a lot of deals, you know. I think it's the pace has definitely slowed down. Some is like seasonality, but I think a a lot of it is uh cyclicality right in the cycle. Um, and like a lot of these rounds too that like the these bigger rounds that get done now like especially if it's a product that's going to take a little bit of time to launch and like it's probably you know next year or year you know late into that kind of thing. It's like oftent times you do see that these

things raise again at either flat >> or uh or or or a position where investors are in a little bit more strength whereas now it's like kind of like you have a good idea it's like it's done right. >> Totally. That's a good point. Yano, I mean, I don't know if you guys have this in your dashboard where one of the cool things to do would be take a look at all the last round valuations for company protocols that have launched the token >> and what percentage of those tokens are trading below the last round. >> I think that's a good question. >> That's that's a good barometer that I'd want to monitor, which is like you want to be investing when greater than 50% of all new token launches are trading below their last round. That probably tells you, yeah, it's a it's a decent time to

go token picking for sure. >> Um, and right now I don't think we're there. Although to be fair, like some of the newer launches have just not performed well. Like Hyperliquid's been I guess I wouldn't consider it didn't have around, right? Athena has done fairly well. Uh, but it's few and far between. I would say there's a lot of protocols out there. Again, you can do a,000x in a raging bull, you can do a,000x in a raging bear. there just there's always going to be assets in pockets of the market that are totally overlooked. Uh Gamefy or gaming, it hasn't performed well at all. And you know, I'll tell you, one of our one of my best investments was a yeah, it was in a bare market, but you

were just sitting there and saying it has a team of like 20 great engineers, survived the bare market, kept shipping, the token has not moved. There's another company called Compound that just raised around from A16Z and has all the you know five times the valuation. You can make a compelling argument that that's like mispriced. >> You had to have the bit of it of luck and you know but anyone could have bought that token. It was listed on Binance and it done an ICO and it was just sitting at like sub$10 million market cap. The value of the team godamn it is worth like 50 or 100 because someone was willing to pay for an inferior product. No disrespect to Lesner, but it was just it was not as

developed and one was live. And so anyways, it's just um there you could argue like DeFi has DeFi conid uh like caught bid. You know, you >> the narrative might be evolving. You know, you got fundamentals, you got cash flow, you have, you know, potentially DATs that are going to put money on chain. Hey, look, maybe >> I'll be right back. One sec. >> Yeah. Keep it going. Yeah. But look, this is quite interesting. >> Yeah. >> The chart you have here, what would you attribute that to, by the way?

>> This >> Yeah. >> Lesser leaving and Stani staying. >> You and again, this is something that >> you got you got to be you can't you can't start up and not be founderled. Like >> I mean you you're you're a great founder, right? So you understand this and you've tweeted about this which I think is someone should put together an index, right? Founder didn't you create this by the way? >> I I said that I would like to just invest in founder companies. Wait, why don't you create an AI bot that just buys just companies that are founderled or have like a resurgence of a founder? Like Apple, when Apple when when Steve Jobs returned to Apple, boom, the agent would have invested in that. Uh when Kane returns to SNX, boom, invest in SNX. Uh or companies that just have

strong uh founders and closely held control, right? % held by insiders and the amount of stock that the founder holds and has not sold. You know, look at 13Fs and bunch of other stuff. There you go. >> Exactly. >> Um, yeah. >> All right, folks. >> Sorry about that. I >> I'm the only one here. So, receiving packages is a thing. One thing I wanted to add and I maybe hopefully you didn't touch on it, but like yeah, the sector I think matters a lot when you when you talk about stuff like this. Like for example, like like AI and crypto like intersection deals right now. I think the bar is like a lot higher for that because you are seeing maybe a little bit of like I'm super bullish AI long term for sure but it's like you know meta announcing uh you know these kind

of layoffs and like just get like the timeline for how close we are to truly like really AGI level stuff like with the AI 2027 thesis I think a little bit of reality is setting in where it might take just a little longer than people think what what previously maybe was like a two to three year thing could be like more of a six to nineyear kind of thing and that can temper expectations quite a bit in terms of like how to price these like kind of Yeah. that specific sector, right? >> Yeah. All right, we got to take one more ad break. We'll be back in two minutes. Do not That's how you know we're in a bare market. >> No, old market, babe. We got We got a lot.

>> We got a lot of ads. >> We got to do >> pump the ad. Pump the ad. Let's go. >> Yeah. >> This episode is brought to you by Geonet, the world's largest decentralized RTK network, delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics, Geodet shows that blockchain can be a truly transformative force by delivering realtime centimeter level accuracy. Geodet enhances emergency response, boosts construction precision, and enables advanced navigation for drones and surveyors far beyond the limits of standard GPS. To find out more, click the link in the show notes

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With Citria, developers can build scalable payment systems, tap into Bitcoin's liquidity with financial applications, and build privacy systems. Citria is currently on testnet and approaching mainet. To follow their progress, click the link in the show notes or follow them on X at Citria_XYZ. As always, investments in blockchain technology involve risk, terms, and conditions apply. Well guys, uh I was quickly browsing through some of the comments that people wanted us to talk about. Um I think it it it it dovtales naturally into some of the discussion we're having which is are there sectors right now that are totally overlooked and we're talking about like

DeFi. Um you know obviously GameFi uh Deepen is something that you know you could argue has been you know great traction in the real world. Stuff like Helium and um you know Hivemapper and Geonet but the token prices have actually not reflected that at all. you could argue. Um, so, so maybe go around the table and like we can talk about like a couple sectors that you think are overlooked or particular companies like obviously none of this financial advice, but like u just kind of curious Ro if you have a a you know couple strong views there. >> Yeah, I mean I can start >> overlooked or totally overhyped by the way like >> Yeah. Yeah. Overhyped is a different question. Maybe I'll start with overlooked. The first one you're gonna hate me because it's so simple. Um, and I think maybe Cosmo was talking about it

too, but like yeah, you know, it's like with ETH making this move and like if you know the last stage is parabolic and oh, which is the next product that doesn't have an ETF like obviously one clear answer there. It's Slada. It's still like really popular and it's a good chain. Uh, so I don't know. I don't hate like I don't hate SL I don't even know what's at 180. Yeah, >> the the sole ETH ratio has also come down quite a bit. >> Soul ETH ratio has come down. A lot of ETH ratios have come down. Um, so that's Oh, yeah. Hyper liquid actually is now 40 today which is kind of that that's surp anyways. Um yeah so like something like that I think is like as far as like not going too crazy down the curve and whatnot but you know going back to like

where this kind where we're sitting with like this admin and and how people can actually now value uh flows to uh or value um yeah like bring flows into tokens and like make these like kind of like really drive revenue back to them like you have bunch of individual names. I don't want to get too low cap are doing this. I think things like that where it's like, hey, look, like here's something that is making money or can make money and the valuation relative to the amount of money it's making is pretty uh reasonable. And I think there's a few of those things out there.

Um, >> what do you think outperforms soul or hype? >> That's a really good question. I mean, I think from I think you gota >> Yeah, that that that's going to make a clip right there that Jared listening to >> the title of the episode would be like where are we in the market cycle and Jared that will be ro like >> Dr. me. >> I would have to pull up a soul hype chart. Honestly, it's one of the charts that I actually I I I get it sent to me a bunch of times. I should, but it's one of the ones that's not like on my trading view right here. But look, like from a market cap perspective and just like amount of owned and like room to room to own. You got to go with maybe hype there. I mean, hype is a pretty

interesting product because the airdrop has happened, right? And it's maintained loyalty and the spot order book is getting more and more liquid. Like unit is kind of like crushing it. Uh it's really impressive stuff and like they built like this kind of like coalition around that around that uh you know that product. Now at the same time like you know >> historically you know people have gone through rotations with their favorite effective trading platform right it was like GMX in November 2021 outperformed literally everything into November 2022. Then it's like a couple other ones and then it underperformed severely and then it's like DYDX had its moment. Hype has its moment. there's a little more rotation there whereas Salana I think is a little bit more >> I mean like >> after like ETH yeah >> to your point like uh you always two

things there one what rebounds the hardest is pretty indicative of what in like what catches a bit hardest and I think hype is that asset that always leads the rally um and and again it's a $40 billion fully deated market cap protocol soul is three times the size so from a funds perspective like how much flows does it actually take for this thing to like you know double you know hype from that standpoint much less right >> yeah exactly it takes a lot less movie money to move it and >> exactly >> yeah like >> and that that's just a simple math that I've just had to pay more attention to over the years right the other thing is I would caution because John from DBA was looking at like hype's like 30-day

revenue and annualizing that ladies and gentlemen please don't ever do that as I have ton of respect for John we're going back and forth on the timeline And it it's just it never serves you well to kind of analyze that. Now, I do appreciate for all the hype bulls that are going to come after me, Maxis, the earnings for hype have been fairly actually consistent over the last like six like uh like a sustained period of time. So, you look at the average and say, okay, what is going to be the earnings of this protocol um over the you know in a true bare market. Um but I do think both both assets um other than Bitcoin, I actually think Soul and Hype are pretty interesting.

on a relative basis. Soul like ETH has been all the rage these days. Um, and I'm not dismissive of ETH. I think ETH is important to, you know, perform well like rising tide all boats. But I do think that these two assets have, again, check a lot of the boxes. Majors have a lot of liquidity. They're still at a fraction of Ethereum and in their own right, they have interesting ecosystems. And you know, from a fundamental standpoint, you could you could look at their earnings profile and say, "Yeah, these are >> Yeah. Um I I've got a different one or uh are you guys big investors in in Athena?"

>> No, no, I mean huge I huge abyss probably. I I know uh no guy great guy like super smart team. They're they're crushing it. Uh yeah, that that thing's been doing pretty well, right? I I'll just I'll just say like the thing that we haven't really we haven't really discussed any of the news this week but like if I was thinking about the news stories to put together for for this week's roundup like and here here were the three pieces of news I put together. Bullish raises one of so okay so Bullish did this IPO a billion dollars of the IPO IPO proceeds came in stable coins. The other one was MetaMask just announced their st their stable coin uh like MUSD.

>> Oh wow. Did that last get announced? I didn't. Wow. That's pretty. >> Yeah, that got announced. And then Wyoming uh just it became the first state to launch a stable coin. This is like stable coin stable coin stable coin. Um however, circle uh if you look at the circle stock like it's just getting it's getting crushed obviously. Um right. So look at look at the chart of look at the chart of circle. So, Circle's kind of coming back to reality, but I still think people want ex uh to express a long stable coin trade. So, and look, we we do these like we've got financial disclosures like it's one of the I own eight coins right now. It's one of the eight things I own is Athena.

Um just because I like I just think people want to long the stable coin uh long stable coins. They they don't really know how to do it and it was Circle, but then Circle got over. >> Yeah. By the way, I think this is interesting. like the left curve might be um Athena is going to trade like Circle. uh the right curve might be if the the bull case I think for Athena is that if people understand that as rates come down circle actually takes a really big hit Athena benefits from that if you believe the market rips right Athena sort of I think that's like the Uber I've talked to like guy about it which is like clearly people want to go long stable coins it's all in the limelight it's all being discussed

but I there could be a version of this world where the stable coin thesis says people sour on it if people lose a lot of money on circle if rate and and you could envision like if rates go down for every I think Omar from Dragonfly had a good like analysis around this for like every 25 pips um rate cut the impact of circle's earnings is pretty dramatic >> and so like extend that to you know two to three quarters from now we're in a different rate environment what are circle earnings like maybe they vastly underperform Unless you believe that like the market cap of USDC goes through the roof, which again, you don't really kind of like have reasons to believe

that because there's everyone under the moon is kind of launching their own stable. Um, and you know, Tether hired Bo Hines. I mean, there's like a couple reasons why I think like USDC's market share actually is the one that degrades the most. Um, and if Circle vastly, people may not want to long stable coins. >> Yeah. Now the counter the counter to this is that everything that we're talking about with leverage it could Athena could be could get whacked there and like like one thing I saw is so Athena had previously said that um Athena should limit its initial allocation of stable coin backing to A to at most 10%. And that was the onchain vote basically and now it's at 25%.

There's currently 2.7 billion in a um uh of USDC and USDT uh allocations. I actually think it's the I think Athena right now is the largest lender of both USDC and USDT uh to A. And it seems it seems like they're kind of cranking up the risk parameters at Athena. So, and again, a lot of respect for Guy and Athena and I obviously own the coin and stuff like that, but that that would be like that maybe be the counter to this trade. >> Yeah. I'm curious why that proposal like is it like a diversity thing? Because like as far as like a you know battleh hardened Lindy smart contract goes I mean a would you want to go to a and then do do like the second money or the third or the like morpho is still great whatever

but after that like you know it kind of falls off so I don't know like what the purpose of that was like I I don't know Athena having this much in a doesn't really ring alarm bells to me personally. >> Yeah. Yeah. Um but back to you know back to Santi's I I actually think what you brought up on the whole you know basis point versus like the basis is quite fascinating uh as far as like the revenue divergence goes. But maybe think of how how low would rates have to go for circle to actually consider basis trading. Like 1% is probably still good. Maybe like 50 bibs, 25 bs if they go negative hypothetically like Germany then I get you got it or something. I don't know.

>> Yeah. Yeah. I mean again stuff that I don't necessarily feel compelled to own. again the the in the public markets you would you rather own a DAT circle Coinbase Robin Hood or something else but like I feel like crypto exposure kind of boils down to that maybe bullish but in that in that bucket Yano what are you buying what are you selling >> what's your what's your give me the bucket again >> um Coinbase Circle Robin Hood I'll kind of keep it at that >> I mean you you you know, I'm buy I mean it's probably >> or like Kraken Kraken primary or secondary 50 million

>> for me it's for me it's Robin Hood coin for me it's Robin Hood Coinbase and I mean and and nothing else I'd say like I don't think you need to buy another Oh and then and I wouldn't I don't own any circle um I wouldn't buy another crypto exchange because I would just buy Coinbase and then I think Robin Hood is a better buy right now because >> I do think the crypto market feels a little frothy and like crypto coinbased stock could get whacked like Bitcoin >> Robin Hood will also get whacked but maybe not as much not as correlated >> like like Robin Hood has different other business models right and so it's a it's a it's a bet on crypto but they have a bigger funnel to acquire more customers and serve them like traditional stocks or whatever uh what about a Kraken

primary I secondary 15 billion >> 50 oh man >> 15 >> oh 15 oh sorry you just said hypothetically >> because that's what they're rais that's what they're raising >> that's what they're raising now like would you buy that and would be one of the hold it or would you go and just hold prefer to hold liquid coin or hood? >> Is this for Yan or for me? I can answer both >> both. >> Um well to to answer your first question just to repeat it like a big huge disclaimer here. I own a lot of hood. I think Hood is the clear number one of the of that basket because >> the pace at which they've been saying what they're going to do and then actually executing on it over the last four to six earnings call has been insane. They're like, "We're going to do

this." And then they're doing it. We're going to do this. We're going to do it. The user base, the growth, it's a good product. >> The UX is super slick. Everything about it, like transferring stocks in, IRA product, card, all of it. >> Oh, fellow fellow hood pumper. We need it. >> Yeah. It's just an incredible company. And I think they're just a little cleaner and tighter than something like Coinbase, which is like their messaging, you know, there's two instances of it. There's Prime, there's normal, and then it's like, you know, they're really jamming uh, you know, base down, you know, come to base, come to base. They renamed the Coinbase wallet base. I'm like, where the heck is this on my phone? I'm like, can you uh the apps are getting renamed and it's like a drrome, right, is now got integrated into Coinbase and that was actually it didn't

really that that was like the top of its price at the time, right? It did it didn't have that second leg up from there. I think Kraken given how bullish has gone and like you know, Figma and Circle and all this kind of stuff, I don't think the juice is out of that just yet. I mean, if you look, you can get pre IPO shares and whatnot and and >> they have a lock up, right, for six months. >> They have a lock up if you do >> 90 days or 180 days. >> I I I don't want to quote it. Maybe it's 180, but that's if you buy secondaries. Now, if you can get the allocation into the IPO, you don't have a lock up, but then of course, if you sell it, you know, your brokerage might be like you're banned from doing IPOs for 60

days or something. Um, especially if you do it the same day. So, I don't know. I think from from that perspective, it's pretty good. Uh, Kraken's solid, you know, long term. I think that they have a good product. I Yeah. So, probably works if if you get 15, it's a good entry for sure. >> Not NFA. NFA. Also, I don't own any Kraken. So, >> I got to I got to take us in I got to jump in a sec for for 130. So, I'm going to take us into content recommendations. But before I do that, I'm going to round this out with a chart I just saw. Um, which is Bitcoin season seasonality. So, this is Ryan Res Mucusen who's the head of research at Bitwise. This is Bitcoin seasonality average monthly performance, which is just a good reminder that even though we're talking about toppy toppy

top. I I actually personally, I know you guys have been talking a lot because I've been asking the questions, but I I don't think we're at a top. I think the market's pretty frothy, but I don't think we're inning nine of of nine innings. I think it's maybe, you know, inning seven or something like that. And I think what's happening right now is we've just got like I think I think the market would have been extremely slow this August and into September if the ETH dats hadn't happened. If Tom Lee didn't exist, it would have been an extremely slow August. And you can see this in this chart like August and September are just always slow. I think we'll have a great October and a great November. Um I think the market's frothy, but I don't think it's I don't think the cycle has topped yet. So

that's my that's my closing thought. Santi Ro. Uh Ro, we always do content of the week. Any content recommendations? Santi, you want to go first? >> Well, I'll give one earlier today. People should go go read Howard Mark's uh investor letters. Not not just the one that he publishes. Um he has a collection of letters that are free. Uh you can also buy his book. I think it's the most important thing. Uh it's really good um uh content. So I just encourage people to go read that. Yeah. Do you guys This has to be It's always crypto content. Can I give one crypto?

>> Actually, we prefer no crypto content. The only crypto content people should be listening to is this one. >> Yeah. Yeah. I I'll give um I'll give a the crypto one and then maybe like a fun non-crypto one because I've been enjoying it. But um I don't know. I've been looking at now with like kind of piggybacking off the hood discussion. like I've been thinking a little bit more about like tokenized um stocks and equities and and as a disclaimer too I'm not an investor in Xbox but Salana on their official website put out like a blog about tokenizing equities on Salana um about Xbox specifically. Now, I don't know if Xbox is necessarily the one to like win this game or whatnot, but I do think this is an area that will probably grow like tokenized kind of equities and this is like a good intro like case

study and it has some I think links you could sort of um piggyback off of and go read more about it. So, I thought that was interesting. It's a sector I'm kind of looking out for. Um, still a lot of questions in it, but then separately, I've been reading uh I just finished the third book of uh the Red Rising trilogy and I'm starting the fourth one now. Incredible, incredible science fiction. If you like science fiction, go read that. Super good. I was like mind blown because I've been reading a bunch of I try to read one fiction, one non-fiction at all times to kind of mix it up. And I of all the non-fiction books I've read this year, it blew it out of the water. So or of all the fiction books, >> I I have a I have a fiction recommendation which is a book called

Replay, which is I'm only I'm only four chapters in. It might be my book of the year so far. It's this. about this uh 45-year-old guy who dies of a heart attack in 1988 and he wakes up in 1963 in his 18-year-old body and he's actually a student at Emory which is uh where I went and he actually is in the so it's like if you went to Emory you'll like it a lot but if you like sci-fi and like it's a very kind of makes you reflect on life and stuff like he basically re relives his life with his all of his memories intact. Um but then he I will actually I won't that's I won't give away spoilers but um uh he yeah he can't prevent his death so he

kind of just is just living out his life and with all of his memories intact. So it makes him realize like all the time that he should have spent with his parents and >> his his college girlfriend and you know his relationships and friends and all that kind of stuff. So it's a good it's a good uh sci-fi fiction but also kind of reflective book. Just going to say one. Have you read the latest or I think Neil Stevenson's books, but I think he he came out or is coming out with a new one called u Polo Polo Stand. Polo stand. >> I haven't. I don't know. Yo, if you have >> no Polo stand. No, I don't.

>> Yeah. >> The things I mean obviously Snow Crash people like if you like >> He's the Snow Crash guy. >> He's a snow crash guy. Yeah, he's super famous. Like people love him. But yeah, Snow Crash is kind of his >> most um known one. Yeah, >> that's where the beam you will eat the bugs came from, I think. >> Exactly. Cool. Ro, thanks for joining us. Santi, good to see you. Thanks everybody for listening. Uh, hope you guys enjoyed the live stream and we will on Monday, I think the episode on Monday is with um just recorded an episode with Kraken CEO. So, it's all about um >> uh so we've had Dave Ripley who's the co-CEO um and this is with Kraken's other CEO. Um and it was a really good episode. It was uh Arjun Sethi um who he

also founded Tribe Capital but is really really good look into what's going to come for Kraken their IPO acquisitions all that kind of good stuff. >> Yeah, I'm also excited for the episode we're recording tomorrow which I don't know if we can announce or not but Hester Pierce >> Yeah, we've got uh both Hester Pierce and then um uh the the lead of the crypto task force at the SEC. So, we are going uh very deep into what is coming from the SEC. >> Awesome. That's right. >> Yeah. >> Thanks so much everyone for listening. Have a great weekend. >> All right folks.

>> Thanks guys. Take it easy. Bye.