Michael Van Poppe on Why AI Capital Will Rotate Into Digital Assets

Transcript

So let's get him on, Michael. Welcome to the show. >> Thank you very much, Thank you for being here. It's a pleasure to pleasure to have you here, Michael. >> Thank you. Thanks for coming by. How you How are you finding Miami? Uh pretty good actually. It's a little bit hot, but uh we flew in from Amsterdam on Saturday. It's okay. I like it. Beautiful. I like it. Yeah, man. Go ahead. There was just like a a Money 20/20 conference coming up in Amsterdam as well. >> Yeah, yeah, yeah. It's one of the biggest finance European conferences that are taking place. It's huge and very expensive, by the way. And so so what are you doing here in Miami? What What is you know your your purpose here in the Tokenized Capital Summit? What are you hoping to kind of get out of this? For this, primarily we were

looking for allocators for our funds. Okay. Um other than that, the coming few days I'll be doing your job. So I'll be doing podcast interviews and being on stage, but primarily podcast interviews. Yeah, tell us more about your fund. I I was unaware actually. I saw that you had this kind of uh new X account, but what's how How did this start? What is the fund? What's the kind of thesis? Well, um I always wanted to have a fund, but I never felt I was ready for it. And I think that within the Netherlands, the funds that exist are not really good. They either are building a basket of tokens and then praying for a bull market to happen, or they are market neutral. And I wanted to be in the middle there, and that's why

we created a multi-strategy hybrid fund. It's a lot of words, but uh it's three strategies in one in which we try to aim for a return in any market condition. Um we have a full trading strategy in there. We have fundamental tokens that we that we buy as a basket, but depending on the structure of the market, we allocate more or less. And then we do a lot of OTC trading. I I'm most curious about the fundamentals of the market that you're talking about. What are you targeting? I mean, we've we've had back-and-forth conversations about how Bitcoin has gotten institutionalized. Zcash feels like the new Bitcoin. There's obviously the entire D5 complex. When you're looking about fundamentals, what kind of fundamentals are most attractive from an allocator's perspective? Um well, use

case is if they have a lot of um activity on the chain itself. One of the prime tokens that we hold is near just simply because of the amount of revenue that it generates and the growth rate that it currently has. And then you can start model it for the coming years to come and then you can start building a a fuel where you can say, well, the current price is heavily underpriced based on market circumstances, not on the token itself. But I need to be honest that 95% actually 99% of the tokens have no purpose, have no value, and even if they have a value, stuff like Ave can still happen. Yeah. So, Ave is one of the tokens that we hold, but then if something else happens within the ecosystem, you can still have a drawdown on the

position itself. So, it's not easy. That's why they are not having big allocations within the fund, and most of it is actually the vault trading, but these are the core principles of it and that's why most of the tokens don't have an allocation with us. Yeah. Man, I'm curious to understand how you're thinking about investing in this market compared to when you started, right? 2015 2016 2017 right? How how much has changed in the way that you approach the markets now, right? Like back then it was much more it was much less sophisticated in in the sense of the average participant had less understanding of what was happening compared to now, whether it be unlocks, VCs dumping, market makers, decentralized exchange cabal. There's so

many different factors now and then throw in kind of this institutional era. Like what has materially changed? Like how has your strategy changed as you navigate the current the current market versus back then? Oh man, I want to go back in time. 2017 was so much fun and I back in the day it was just retail traders trading against retail traders. Everybody had the same information and knew what to trade on. And the current markets are just as you explained, super complex with a lot of insider info. Like for instance, we have taken some OTC deals back in 2025 and those were so large that you can actually just see what the price was doing and when the unlocks were going to come, which were not publicly available. But they were

trying to lure in some people into that position and then you the unlock happens and people start to sell or the investors start to sell and retail again gets hammered on it. So, when it comes to investing in the markets right now, it's either you need to just stick to Bitcoin and ETH or you need to dedicate your entire life and find the edge of some particular projects or strategies and that is just getting harder and harder. Yeah. This is the barbell approach that we've thought about for so long. We've also talk talked about this in reference to, you know, consumer facing applications like Polymarket calls you have found the product market fit. And then on the other side you have infrastructure. You know, the infrastructure feels like it's just continuously getting commoditized.

Do you see this the same way? Do you think we're going to get another L1 trade? Do you think we're going to get another piece of net new unlock when it comes to Remember how innovative like the Uniswap XYK model was? It feels like we haven't got something like that in so long. With AI maybe it's becoming easier than ever, but then it also feels like it's never going to come again. It's been so long. Do you think we're going to get some unlock that's going to unlock new infrastructure or do you think consumer facing applications is where a lot of the new founders should focus? I hope we get one. I was actually thinking that DeFi would have been that unlock already.

Um they are getting battle tested right now and I ultimately believe that with the Clarity Act and the fact that stablecoins the markets of stablecoins have been growing, but the genius act isn't yet applicable. It's later this year that it starts to be applied. So, I assume that within stable coins and DeFi, we will see that big unlock taking place. And the convergence between AI and crypto is going to be massive. Yeah, I think that the entire market is under valuing how big that is. But, it's not obvious.

And I think really finding stuff like smart contracts through Ethereum or Solana as an unlock or hyper liquid is most recent one I feel like. They are obvious in hindsight. They are not obvious in the moment itself. So, I think that some protocols that are building right now maybe BitTensor, maybe Near, maybe some other ones there that are actually building some really cool stuff. In 6 months time, we will talk about it like, "Yeah, it was so obvious." So, your so your AI thesis here for the kind of crypto market is very much like BitTensor and Near as like the two leaders there. Two categories. I think BitTensor and Near.

But, also decentralized compute is going to be massive. Okay. The reason is that you you just need more compute for AI. Right. Um and everything is still centralized and I think the topic will quite quickly switch towards decentralized compute. You know what we haven't seen so far despite all of the hoopla around data centers, you know how they say 40% of the data centers are not getting built out? They agree, they contribute all of this money and then they don't get built out, they get struck down for regulatory reasons or political reasons. We haven't yet heard how decentralized compute can can help that. If If all of these data centers don't get built out, we still need the compute. It can be brought to the market via this decentralized distributed network. All of us can contribute the latent compute from our computers. Doesn't need to be there from

data centers. Is this part of the thesis or generally how do you see decentralized compute fitting into the more centralized compute market like data centers? It's a tough one because the first question is do you actually need decentralized compute? And if you look at Nvidia and all those bigger ones, you I think you want to have control over the compute that you use and you want to have efficient compute and you want to have a market that is even stronger, which is fully decentralized in order that if there is any attacks or whatsoever, that you still can continue to use the entire chain or entire ecosystem.

So, decentralized compute, I think there is a use case for it, but we still need to find the fit for that. Hmm. Yeah. Um a lot of protocols are working on it. Uh Loadstar VM is a protocol that works on Arweave, Filecoin, Render. They are all working on this particular niche. Uh decentralized AI, verifiable AI, true tokens, all those things will be really big because now it's just the prime focus is to use use AI, but everybody wants to have control over how they use AI. They want to have privacy when they use AI. So, all these factors will become bigger.

>> Yeah. Yeah. I'd imagine open source AI or decentralized AI runs on decentralized compute. You're probably familiar with Venice, the Eric Voorhees, you know, privacy-enabled LLM. Well, it would make sense to me that, you know, something like a Venice would rely on something like a like a decentralized compute like an Akash because in this sense you don't have a centralized bottleneck, right? All these other players have more verticalized stacks, but in the decentralized world, you don't want to be one of these on-chain protocols that has AWS, right?

Or like a centralized front end. If you're building a decentralized stack, you want the entire thing to be decentralized from from top to bottom. Mhm. Actually, that's a good point. Like all the attacks that have been taking place on Cloudflare, AWS, and all those things, that's the reason why we need decentralized compute or decentralized servers in order to continue and have a higher uptime versus to what it used to be. Yeah. But the complexity is how are you going to build these decentralized servers and and systems when they are so complex. >> Yeah. That's like the the balance that we need to like figure out how that You can't like Akash is a great product. But if I look at Jensen and if what he's building or all those servers, I mean,

a small team cannot build that. >> They make it so easy. Yeah. Yeah, but like it's not worth it. No, so that's what we need to figure out in order to get there. But the reason that we want to have decentralized on everything is one, you want to have control yourself, and two, you want to have higher uptime. >> Right. And I I think the pendulum feels like it's swinging back. It feels like, you know, for for the hyper liquid era, it was like, "Okay, four validators, we're okay with that." Like, you can make a lot of money just with four validators. You don't need a lot of decentralization. Then you see these one-of-one DVN constructions, layer zeros, Kelp Daos, these sorts of things.

We say, "Oh, we actually built these decentralized systems for a reason. We actually need decentralization." And so now it feels like the pendulum is swinging back, and we'll start to see decentralization more embedded into some of these conversations. Yeah, I fully agree on that. I don't know about like hyper liquids is a great example, but it's still a lot of questions on how things are executed there or what the future can be there. Um I do not see it as a decentralized exchange entirely. Mhm. But it is a great product, and that's why it's getting so much attraction. Are you are you bullish on Zcash?

Actually, I am bullish on privacy, yes. I'm not sure about Zcash, either. Yeah, sure about Zcash. >> At this point, I feel like, well, that ship has already gone. Yeah. I'll just take the next one, yeah. It's been on a tear as of the last couple >> not sure about the price right now. But I'm like I I used to I'm trading crypto, so if the thing is just flying off, I feel like there are so many other opportunities out there. But I can be wrong. It can go 10x, 20x. If all those big guys are still talking about Zcash, Yeah, for sure it can. I'm happy to miss the boat. Yeah, yeah. So, this uh I think this week Michael Saylor's Stretch product is going to have its next set of dividends be unlocked and then thus more capital is going to be able to enter

this product and then he's going to have more buying power for Bitcoin. I think he's up to like a couple billion now in terms of this product size. People are a bit worried about how big this product can get until it's you know, until there's not a material rise in the price of Bitcoin to kind of support the product. How do you think about what Michael Saylor is doing and then how it how it impacts what Tom Lee's strategy might be with ETH and Bitmain. I think that we'll probably see him launch a similar product to Stretch as well for ETH. What do you think about these two guys kind of changing the way institutional market adoption of crypto is happening specifically for these two big assets?

I think Jack Mallers said it correctly or even someone else was it that if people are willing to borrow money to Michael Saylor at a 11 or 12% rate, then you should be happy to take that money and invest it into Bitcoin knowing that the growth rate is like 40%ish. I'm not sure whether Michael Saylor's strategy is going to last when there is going to be a 5-6 year bear market. That's going to be tricky. But if he's not doing it, someone else will. Yeah, yeah. >> So, in that perspective, I'm like, yeah, why not, man? Just get that stupid Bitcoin price up and then we can start seeing some more flows happening again. And I think that's That's what is super important here. If we get Bitcoin up, VCs start to deploy again, the entire sentiment starts to

switch and then we can start getting that innovation again. But other than that, we'll see in the future whether Michael Saylor is going to be right or not. Yeah. >> If Bitcoin goes to a million, he's still going to be right. He's going to be one of the richest guys in this world. Yeah. >> Well, congrats for that, right? Yeah, yeah. >> Yeah. Do you think um Do you think that this So, we had all these kind of for lack of a better term suits come on the show last year like Q2 Q Uh-huh. to Q4 and they were basically like the four-year cycle is over and obviously you've had this conversation before but I'm just curious what your current read is right like all all of these institutional allocators are saying like guys like don't be bearish here like Bitcoin's going to you know overtake 85 90k we're going to

get back into kind of like this bullish market much faster than people expect we're not going to have to wait till Q4 for a bottom you know where where do you think we are at right now what are your levels that you're watching for for the current environment on Bitcoin specifically what are we waiting for here? So if you go on to social media everybody says October is going to be the bottom Right. but if you go back to what these guys have been saying in 2024 I'm sure nobody was expecting Bitcoin to do an all-time high prior to the halving so the markets are constantly surprising and if you look at the structure of Bitcoin and what it has been doing it never captures more of a downside volatility than the upside has been so the upside has been two sigmas as it

is called the downside has been exactly the same so there's no reason to go deeper than we have been going and if you look at it from the semantics of Bitcoin versus gold the reason that Bitcoin has been selling off when gold has been going up is because if you have a basket of gold and Bitcoin and the gold volatility goes up your risk goes up for the entire portfolio so you need to sell the other one and gold volatility has now gone down so that's why you start to see the ETF flows coming into Bitcoin again last Friday was like 600 million that continues to last and continues to build up as long as gold goes down and volatility goes down so I think that we are in accumulation phase I think that 93k or like 90k is where we probably find a resistance go

back down again everybody will be saying it's a bear market or will continue to be and then we start to swing back up after the clarity act so I think the chances of a bottom being in is significantly large. Yeah. The the analytics that you shared, the deviation away, is very very compelling as we look at Bitcoin specifically. How much do you look at markets that are adjacent, look at stocks, you mentioned gold, you know, some of these things, you know, S&P's pushing 7,200 now. Do you think it's helpful for for Bitcoin, you know, if stocks continue to charge upwards, it kind of adds to the wealth effect? Other people have said, "Hey, why am I going to go into crypto when I can continue to allocate into stocks and just continue to get these

amazing returns?" Do you think stocks need to come down in order for the the reallocation or the or the the pivot, if you will, the rotation into crypto to return? No, I think gold needs to come down. So, what the idea is is that if the uncertainty in the world goes up, the first thing you sell is Bitcoin. It's the riskiest asset out there. That's why in February you saw it crashing down then the Nasdaq came after that 3 weeks later. If you use the inverse on that, which is when the markets go up or when the markets become less uncertain, when some peace in the Middle East starts to take place, the first thing they will buy will not be Bitcoin, but it will be the Nasdaq.

Because of the fact that it's less riskier, you go into those assets first and then later Bitcoin. Oh, okay. >> So, if you look at the statistics of any of those bounces, the Nasdaq goes first and then Bitcoin follows with like 3 to 4 weeks after that. >> Interesting. And then altcoins are just way down the line. So, it makes sense that the Nasdaq goes up and then Bitcoin follows through. And we need the Nasdaq to stay strong >> Yeah. and then the money flows into Bitcoin. There's a reason why at the beginning of the month the ETF flows are so positive for Bitcoin is because of this entire methodology. Mhm. So, I'm very positive and I think that Ethereum is going to get killed for a little bit longer, but the money goes into Bitcoin, we stabilize higher, some

verticals will start to do well, and then later in the year we start to see Ethereum do well. >> Yeah, I mean last thing on this note on this kind of capital rotation, I think the other big headwind right now for the industry is the AI trade that's happening. There's like this like bottleneck trade, semiconductors storage memory and then also you have these massive three IPOs coming, SpaceX, Anthropic, OpenAI this year. >> Yeah. I'm kind of developing this idea that as these IPOs come into market and launch Q2 and the Q2 Q3 and the Q4, there'll be a lot of that AI speculative capital that likely wants to to rotate take profits from those names and rotate somewhere else. I'm developing a thesis that they're probably going to rotate that at least some of it into Bitcoin. A

lot of these early investors are also crypto investors. They have a history in this industry. How much do you think this AI trade is affecting the attention and capital rotating in in into cryptos? Is it just purely a gold kind of commodities attention market or is this AI kind of hype public markets launch affecting how investors are allocating to crypto now? It's interesting because AI has gotten the entire hype right now, but smart investors will take their positions from AI and move it elsewhere. And the only asset class that still has a lot of upside to get there is crypto.

Yeah. There's no asset class out there that can yield the upside as crypto can. And if you're a smart investor and you're in one of those rounds of the AI companies, it's going to drop off from a cliff. Yeah. There's no sense of a listing at two trillion to be actually making sense. It's just a peak bull market mania that we're seeing on the indices or whatsoever. So, I think that the money rotation will happen, and most of that money from AI is probably going to go in anything else from Bitcoin and Ethereum. Bitcoin is just a gold play, and if the gold market cap stays as it is, Bitcoin can go 5x from here and still not reach the same market cap in terms of percentage as it was in 2021.

>> Yeah. Yeah. Michael man, enjoy the rest of your week in Miami. >> will. >> for joining us. Good luck, guys. We will. >> Hope you raise Thanks so much. Good capital for the fund and Thank you very much. Good luck, guys. >> Thanks, man. >> Thanks.