Why The Fiat Debasement Trade Is Set To Explode Soon (Full Portfolio Construction)

Transcript

Does it really make sense to give 99% of the fees away to token holders versus reinvesting in the company and growing? Because what if that equity value hundreds x if you reinvest? >> Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not subscribers. Yes, you. Every week, we interview some of the best entrepreneurs and investors in the financial industry. The easiest way to support our channel is to hit the like and smash the subscribe button. Now, sit back, relax, and enjoy today's show. All righty, guys. Welcome back to the tokenization tower. We are here with Felix Javin, head of content at Block Works, also my macro uh expert, in-house macro expert. Great to have you.

Beautiful day in the city. >> Amazing. Good to be here. Good to be here in person in your studio. Like, this is I think the third time we've done this, but never actually in your studio. So, cool to be here. Yeah. >> Yeah, man. I mean, we've had a crazy 24 hours here with this SEC tokenization innovation exemption. uh you know so we got wind about this and it came out and it's looking like a lot of funds are going to start tokenizing their assets bring them on chain um and it just looks like this tokenization mega trend is going to continue. I just want to get your take on kind of like this new regulatory regime and then I want to get into kind of how to invest in this new era of crypto.

>> Yeah, I mean it's it's nice to just finally know what you're allowed to do and not what to do. Like I've had this belief for basically since I don't know 2020 like the you know the Gary Gensler era where you know they they were it was regulatory enforcement by just uh litigation effectively and you know sending cease and desist and that sort of thing. So, nobody really knew what we were allowed to do or not, which I think really hampered innovation in in so many ways. Like, we we built obviously the infrastructure of of crypto and blockchains over the last decade or so. And that's really all well and good, but then, you know, anything that was really tied to securities, um, you know, it felt like we really didn't know what we were allowed to do or not. So, everybody just, you know, you didn't know if, you

know, if you're unis swap or whatever, you just wake up one day and you just get a Wells notice from the SEC, which is just like you can't operate like that. year. So, you know, you're trying to revolutionize the finance world with basically one arm behind your back the entire time, which is kind of ridiculous. So, to me, it doesn't really surprise me that we've been through this, you know, call it a five five year period where >> it felt like there was this idea of like, you know, financial nihilism and all that stuff and like, you know, we're just trading meme coins and I think that's super cool. >> Yeah. I mean that's still a thing in in certain sectors like obviously it's going off right now but that other component of the industry of just like true innovation on on you know the

finance like fundamentals and the bedrock of the industry we just haven't really been able to explore that felt like the only thing we could really do was like governance tokens that really didn't mean very much and uh >> now under this new SEC under the CFTC um and this potential yeah clarity bill it's like okay now we can start to actually know what we can do or not and now all this incredible efficiency and you know transparency and quick instant settlement that we developed on these crypto rails. We can start to actually experiment with it. So you know you're starting to be able to see what can we do. We're starting to get you know this cryptoreg thing from the SEC where they're talking about okay now we know how much we can raise um before we have to you know file certain disclosures and

that sort of thing. So yeah I'm I'm incredibly excited right now. I think um like for me for the last year or two ex except for a few you know you call it like the revenue meta tokens like other than that >> um it felt like I was pretty bearish on a lot of those you know kind of useless governance tokens that didn't really mean a whole much and now suddenly you have a lot more tangible value so it's just like off to the races. I think we need to reset all our priors and just look at the landscape for for you know with a fresh set of eyes right now. So that's that's what I'm focused on. Yeah. >> Yeah. And for those of you guys watching who don't know, so at Permissionless 2025 last year in June, I believe um it was in Brooklyn and it was really hot

outside and we first time first time ever doing our rollup outdoor setup, right? And it's 94 degrees, but shout out to Blockworks. They got us a killer sponsor. They got us a good setup right in the middle. We had great, you know, traffic and it was, you know, kind of like the like the first like TVPN crypto conference, you know, thing. And it was sick. It was like, you know, it was a great conference. You know, things were bullish. >> And and and I'm like, the revenue meta is like the biggest clip that comes out of it. That and like is staking dead? Cuz that's what we were like L1's are cooked their inflation is is bad. They make no money. Why do we need all this inflation? And it was really what we were really getting to was like what are we really buying here? Like are we is

there any businesses that we can buy in this industry? And so, you know, let's take this tokenization mega trend and kind of unpack the second and third order effects because I think what we're getting to is you think about the a of the world and the unis swaps and the morphos and the hyperlquids and the lighters and the aerodromes and just you know all these names, right? >> We've thought about them as being the backbone of the crypto economy. >> Yeah. >> Right. When you say reset your priors, what I think is we need to start thinking about these as the backbone of the future onchain finance world and that is not $3 trillion of total market cap and 160 billion dollars of TVL and DeFi.

>> That is like trillions of dollars on chain and multi- you know eight, you know, 9 10 11 figure in market cap. And so talk us through like what this resetting your priors means for this kind of tokenization wave for just onchain assets. >> Yeah. So so lending is a good dropping off point there because yeah you know it's incredible. Okay. So when you compare what happened in '08 right in the financial crisis so much of what caused so much havoc there was nobody knew what their counterparty was and how much risk that they had on their books.

They didn't know how rehypothecated all their assets were. Right? So you didn't know what kind of risk you're holding and then you look at what we have now with DeFi with yeah lending you know a and morpho you know exactly what kind of risk your counterparty has and you know how like yeah how leveraged those assets are and everything. So, I mean, yeah, something I've believed for a really long time is that if we had that sort of line of sight into these prior historical financial crises, >> I think they would have been a lot less damage because, >> you know, it's not just like we don't know what risk we have here. This whole book is toxic. Like, let's just get it out of here. Um, you know, you could have a bit more of a nuance view and say, okay, like look, I know I know how,

you know, levered my counterparty is here. I know the quality of my book. Um, so yeah, imagine that just being applied to the rest of the finance industry where suddenly these, you know, it's obviously right now everybody's talking about tokenized equities, right? And that's all well and good. I think the thesis there is that obviously it's really easy to buy Apple stock when you live in the US or Canada where I'm at or whatever. Uh, it's not so easy in a lot of other countries. Um, so obviously that's there's really good compelling ideas there to be able to own tokenized equities in countries that don't have direct access to those financial markets. So that's awesome. But I think what's more exciting for me on the tokenized asset aspect is these more exotic uh QIPS like you know treasuries assets where there's just a lot more

individual you know expireies, maturities, durations and that sort of thing where suddenly you know some of those assets they can be super liquid and you know you don't really know where the price is at and those sort of things. And if you have just much better settlement, instant settlement, you have much better line of sight into the amount of leverage in the system, suddenly I think those more longtailed exotic assets. I think I think the opportunity for for tokenized assets and the structure and the infrastructure that we've developed is like just absolutely incredible to be applied there.

>> Yeah. Okay. So, kind of taking this from the lens of like the value prop here, right? which is >> this kind of open transparent 24/7 global market that has created >> to you know in effect you know the Bitcoin white paper came out after all the bank crisises and so you know now we've got this onchain financial system these new rails as a result of all this kind of opaque kind of stuff that we see just down the block here right and so >> so that's like the value prop and I think the institutional allocators are starting to get that but what are they going to buy >> like like I'm I'm an allocator this is happening. What am I buying? And like how can we get in front of them?

Right? Like this stuff comes through with the, you know, with the exemption, with the Clarity Act, whatever, >> right? They're coming in. >> Mhm. >> Let's say, is it as simple as like, oh, I'm ARC. I'm tokenizing my fund with securitized. I'm going to put my fund shares in Morpho Vault, so I'm also just going to buy the Morpho token. Like, is it that simple? Like, what are they buying and how do we get in front of them? >> Yeah. So obviously there's just this like huge title wave of assets coming on chain and that's awesome and like to your point the second question from there is okay with all that flow coming on on chain where does you know what gets pumped in in that process?

>> Um and that's like honestly billion dollar question. >> Yeah. Yeah. Exactly. And that's what's so confusing right now is that we're in this transition moment where I would still say 75% of the tokens that exist right now have no meaningful acrruel of value related to that title wave coming in. So that's confusing. And then the 25%, you know, you're calling it the revenue medic tokens. Like it's suddenly anything that has a mild whether it's a buyback or or what have you. Anything with a token that associates with those cash flows is getting marked up at a premium right now. So obviously, you know, there's the hyperlquids, there's the pumps, etc. Um, and I think I think that's that's the first shot of of of this next bull market of of what things look like. And so the next question from there is I would say the next six the

last six months or so was just this uh you know this divergence between those revenue generating tokens versus you know the the useless governance token that has like no meaningful claim on anything. Um obviously an important part there is because of this you know Gendler approach to the SEC for so many years so many of these tokens had this dual equity token structure that has just been a mess to churn through and you're starting to see that get solved. So like Morpho is a great example of one where they just had that singular version. You have you know Athena recently they just had their >> uh they consolidated and and have been focusing on on value occurring to the token and and buybacks there. So >> and you guys are doing great work there >> just as a side note on the token transparency stuff on you know it's now

like look if you have a good token transparency report on block works and >> Andy likes your economics you're flying. You know what I mean? It's not that simple, but it's like this is what we're trying to do here. >> Yeah. So, we're trying to help accelerate. Yeah. To your point with the TTF and stuff we're doing at Block Works right now is we're trying to focus on on shephering and accelerating that transition through this choppiness that we're in right now where we need to figure out what's what's the value or not. So, the first phase of that is yes, understanding what has value versus what does not have value. The second part which I think is going to become a lot more meaningful over the next year or so is understanding what sort of multiple or price do we attach to those revenues right because

right now over the last six months it's just been oh they have revenue and it goes towards a token and there's buybacks okay buy um but then you start to have the questions of okay well like how much um and should we just be you know for a bit like just you got to go back to like basic finance 101 right which is that okay you have a corporation that is making you know profit retained earnings what does a company do with those retained earnings? Do they give it as a dividend to investors? Do they do equity buybacks? Do they reinvest it in the corporation into operations? Um, and I think this is a nuance that is being missed right now in crypto because you have, okay, you have Hyperlid where, you know, the vast majority of their fees are going towards buybacks and burns right now.

>> You have pump, which is a bit more discretionary, right? You know, they they don't have a set schedule in terms of their buybacks. They're a bit more nuanced. And I think these are going to be really important questions, which is that, >> you know, if I'm really bullish on a token that has some sort of claim and, you know, closer to like a tokenized equity in some version or another, >> I want to be able to have a management team that is making decision on the best use of those profits that they're generating. You know, does it really make sense to give 99% of the fees away to token holders versus reinvesting in the company and growing? Because what if that equity value hundreds x if you reinvest? And so >> that's the morphothesis. That's exactly that's what Paul says. He's like, "Look, I'm not going for a 10% move here. I'm

going for the 100x." Like, "Why am I going to?" >> And so, what you're getting at is like >> Hyperlid had this massive run in success. >> And everyone is now looking at them being like, "Okay, that's the model." >> Yeah. >> But what you're saying is that that's not always the model. I mean, you look at equities, you look at other companies, >> you know, one could argue that Hyperlid could probably tone down their buybacks a little bit at this point. Yeah. >> Right. Like, why why why keep doing it? Why not go from 99 or whatever it is to 92? >> Yeah. >> Or 90. >> Yeah. Problem is baked into the price. >> So, so as an investor, right, you're looking at >> I I own a lot of I'm very bullish on the same, >> but I'm just saying like buying back all

the hype at 90 is different than buying it back at 9. >> Yeah. >> Right. So, >> and so you start to kind of look at these like discretionary decisions from the CEOs and founders. And I guess kind of like what you're saying is like we're entering that next kind of era of market sophistication. Yeah. >> Within the sector of the companies that are actually making money on chain, there's still this massive fat that is just like you're either making money right now or you're figuring it out or you're going to shut up. You know, you're going to shut down >> because that's what's going to happen. But there is now this kind of like tier tier creating in the revenue meta category or we call it just like onchain businesses.

>> Yeah. And there's more kind of like sophisticated actors coming in not just not just being like oh company makes money buy. >> Yeah. Yeah. I mean so basically we're just getting back full circle to we have this really interesting new innovations and infrastructure and then we're attaching traditional financial analysis towards it. like >> yeah, we're getting towards just analyzing companies so I can find like I'm not saying that DCFS are the only way to go here to decide whether you buy something or not. But the nuance like you know there's a lot of people in this city that are spending all day and night deciding on whether a company should you know issue debt, issue equity, buy back equity, um give it as a dividend or reinvest in operations. Like that is that is finance. And now we're going to

be doing that for tokens because the tokens actually have, you know, cash flows associated with them. So it's great like we're we're finally getting to that point where we've been paused for 5 years and the only thing we could really do is just keep, you know, repeating this quote unquote innovation of of infrastructure. But we have plenty of infrastructure now. We're good. Like, >> you know, we're not paying $150 for a gas like for a transaction on mainet anymore. >> Um, we're in a good spot. So like, let's go to the next phase now. And we got the green light from from the from the regulators. So like, yeah, it's time. It's time to really just get going on this.

>> And so I totally agree and a lot of my portfolio is positioned in a lot of these names. >> Yeah. >> The other part of my portfolio and how we're thinking about it is this barbell thesis which is you've got onchain revenue producing businesses >> and you've got these kind of store value assets, namely for me right now, Bitcoin, gold outside of crypto, Ze and ETH. And so these are like my four reflexive less clear value acrruel if any less revenue if any but defined properties of monetary policy potential for massive reratings especially Bitcoin compared to gold and I think ETH compared to Bitcoin and I think Ze compared to Bitcoin. Um, and so this is

also like a separate tide. And you know, if Rob was here, we'd go so deep down the macro rabbit hole, which is >> Besson's coming out tomorrow and he's going to buy a bunch more longdated bonds. >> It's unlikely that Worsh hikes in September. >> Um, and Arthur Hayes comes on the show and says the Euroyen is going to collapse and we're going to see massive printing across the board. the AI expenditure has gotten to be so crazy that if politicians go and lobby for midterms and say we're going to stop the spending of AI, we were wrong. That is just that is outlandish to think that's going to happen.

>> And so you've got these all these factors lining up for kind of like the fiat debasement part of this barbell and it makes a really good portfolio. Give us your sense here on the macro side. Arthur says Worsh is irrelevant. Arthur says, "We're we're kind of in this transitionary phase into much more accommodative financial policy. Give us your read of the macro and then how that kind of pertains to what I come to understand is kind of like your you're also kind of like reflexive fiat debasement portfolio." >> Yeah. So, first off, I fully agree with that barbell thesis. Like I'm positioned very similarly. I think it's the move.

>> It seems too consensus. Like why is it so consensus? >> Yeah, I know. I mean, it's consensus cuz it's early and everybody else has like basically left the space. So, there's only the people that are just insane enough to actually be here. Like I don't think it's yes consensus around the 20 people left that were just you know resilient enough to go bail to not just go bail and work in AI right so I mean I don't think it's a bad signal that we're all aligned like we're I don't know I feel like you're very smart person and and pretty tapped in so no I think it's good um okay so on the macro side of things >> yeah so we have Scott Besson and I agree uh on Arthur Hayes's point that more and more the Fed is more and more relevant versus the Treasury and versus what

fiscal author authorities are up to. Um, yeah, we're moving a lot right now in that direction. So, tomorrow, Treasury, uh, Secretary Scott Besson is going to be doing his his first buyback that he announced. And what was so interesting about when he announced that a couple weeks ago was that, you know, typically the the guidance for how much debt they're going to issue, the composition of that debt, and how much buybacks they're going to do comes out every quarter, right? The the quarterly refunding announcement that happens every quarter. So that happened that QR happened like two weeks before this announcement >> and then suddenly you know in in that announcement you would think okay if they're planning to do more buybacks on the long end they would have announced it then >> right >> but then suddenly two weeks later out of the blue on just a random day comes out

and says hey look we're going to increase longend buybacks from 2 to 4 billion on September 9th. Um that is really interesting to think about like what what happened there to cause that and in the leadup to it obviously there's all this stuff going on with the yen um Japan obviously you know we've seen some pretty meaningful interventions the first you know aligned intervention between the US and Japan I think in 30 years or something like that. So, so very meaningful moments and couple interviews there from from Besson saying that you know there's there's information there's information asymmetry that he has that the market does not quite yet in terms of what's going on with Japan.

>> Um feels to me like you know there's some some news over the weekend. We got the the monthly release from the Ministry of Finance in Japan where they talk about their their foreign exchange holdings of like how much treasuries they own and they saw the biggest decrease on a month over month. They $87 billion of sales of treasuries in August to fund that intervention >> of their own or of US treasuries >> of US treasuries that they own, >> right? >> So they sold the treasuries to to buy to buy dollar to have dollars to then go and buy the end. So got it. I have a feeling that's what he was kind of referring to in terms of that information asymmetry, which is that look, you know, if if the if Japan's selling treasuries, that's not a good look right now for where we're at. You

know, we have the 10 year, the 30-year knocking on 5% yields right now. So, you know, any sort of huge holders and Japan's, you know, the biggest of of treasuries, that's obviously not a good thing. So, it starts to make a lot more sense about why he was being so proactive and and how he was talking. So, you know, obviously as soon as we start to talk about outright fiscal intervention like that, especially in currencies, um th those classic debasement assets that you mentioned start to perk up. And obviously on the day of that that buyback announcement, we just saw gold and Bitcoin rip. Um gold's given up quite a bit of those gains in recent weeks, and I think that has to do with this war hysteria or fear. Maybe not hysteria, but it's just, you know, the market's been so used to

for so long knowing exactly what the Fed is going to do every meeting. Um, and now like my working thesis is that been going into every meeting, we should see odds of 50/50 between where we're at and where we might potentially go. So I think it's, you know, last meeting in July, we had it at 50/50. Where there's going to be a pause or a hike, we got a pause. Right now we're coming into the meeting next week and we're around 50/50 as well. We have this really important CPI print on Friday. that'll probably be the deciding factor on where we go. Um, but in the interim, you know, if if there's hawkish policy coming from the Fed, just the simple correlations and and algorithms reflecting that are going to sell gold. So, obviously that's been been taking the brunt of it and gold's and sorry, Bitcoin's been chopping

around. It hasn't really given back as much gains and I think that's just because it was so sold down in the last year or so and there's so many shorts. So, >> you know, all that to say, I think um obviously a lot is going to lie on the on the CPI print on Friday. I don't think tomorrow. I mean, look, if if Bess comes in tomorrow and just does the four billion like he says, I don't think that's going to really be much of a market moving event. >> Not like a buy the rumor, sell the news or or buy the news and pump it. It's just kind of like happened >> except for the fact that in that initial release, he said 4 billion was a floor. Um he really made it seem like that's the absolute bare minimum. So, I don't know, maybe he comes out and actually

does five billion tomorrow if he wants to get that certain reaction that he wants. Um, the fact of the matter is like I don't think it's, you know, there's a lot of people that are trying to fade this and fight it. And, you know, there's a certain cohort of of macro, uh, thinkers right now that believe that, you know, the Fed is going to hike and that Bessant can't fight the bond market. Um, I mean, they're saying the same thing about the yen when it was at 160 and, you know, they did this intervention and it went back to 160 and everybody was laughing at him and and, you know, taking laps and now suddenly, I didn't look this today yet, but we were trading around 153. So like, >> yeah, >> it's working.

>> So on that point, Worsh. So I was at Jackson Hole. It was It was wild. >> Yeah, that was crazy. >> Yeah, I met all these cool people. I was way out of my own league, but it was fun. It was fun. >> And so >> um Wars starts that hike or sorry, starts that speech. >> Yeah. >> Literally referencing two physical hikes that he's done in Jackson Hole. Like total trolling, right? >> Yeah. Yeah. Just messing around. >> And then he spends like five minutes talking about how he hates forward guidance. >> Yeah. And so my left curve smoothbrain take is like if this guy hikes >> Yeah.

>> He literally just he literally gave it to us on a platter by his five minute monologue trolling us about hikes. >> And I know it's not always that simple, but all that to say, do you think he hikes? >> I don't think he hikes, but I'm I'm ready to get proven wrong. But, you know, that's where I'm staking my claim. I don't know. Like obviously, again, it's going to depend on the CPI print. If we get a scorching hot inflation print on Friday, like that is, you know, especially with the super hot Jaws report that we got last week, like yeah, probably they're going to hike and I'm going to have egg on my face. So, but whatever. I mean, you just got you got to make these bets in the markets.

Um, >> estimated CPI is 3.4%. Core is 2.4. >> Yeah. Yeah. So, I don't know. I mean like >> how much higher do you think than the estimated number would it would like would would just breaking even be a hike would.1% higher be a hike.3% what's kind of your >> yeah it always it always depends what part of the the inflation structure is moving because obviously like headline includes energy and food and that sort of thing so energy you know it's super volatile especially with an Iran war happening right now like obviously over the last month or so we've seen oil go higher but this for the previous month's uh print and the oil prices were pretty reasonable. So, you know, if headline is

a little bit hot, I don't know if that will be what breaks it. Um, but if you start to see just this wide spread of like, you know, what is what is the median rise in inflation across the board um or certain certain sectors of that like it really depends. So, you know, if I see core probably the most important one I'm looking at is core CPI month over month basically. Yeah. um if that's hot and you know I think don't quote me on this but I think you know it's roughly been around like 20 bips month over month for quite a while now between 20 bips 30 bips something like that um if you get 40 bits core month over month yeah they probably hike um >> but I don't know like I just don't really see that happening like

I think I think it's it's it's warranted to say that a lot of this inflation has been the AI thing and the AI buildout like that's been pretty clear-cut at this point like >> we're not quite in the productivity boom side of things. We're in the investment boom side of things right now and that's just going to be inherently inflationary. Um so you know I just >> So you think he could hold rates steady like he's been doing in July and maintain credibility amongst the American you know the American people? >> I mean no I no like he should this is the thing. There's what he should be doing and what he will do.

>> What yeah what he should be doing is probably hiking. >> Um or at least you know one insurance hike. just get it done, establish credibility. So, you know, there's there's a certain narrative there, but you know, you just hear, you know, again, I'm just so much more attached to this idea that the Fed is a lot less independent than it was. You know, it's never really independent, but it's a lot more influenced by fiscal authorities. Um, you know, Besson and Wars are meeting every week. Wars is talking to Trump all the time. You know, >> yeah, >> Powell only talked to Trump a handful of times in his entire tenure. So, there's a lot more coordination. And then you have an interview where Besson's talking about, you know, what should Wars do?

and he says, "I'm not in the business of predicting, but typically you don't hike into a supply shock is what he said, which is kind of like a, you know, don't hike." Um, and then obviously you have Trump tweeting plenty last week talking about, you know, we should have rates at 1% because we have the the best credit and that's his perspective. And so, I don't know. I just I just don't I don't see how you can square that with Wars' background and had he gone to the tenure for him to commit unless he says, "Hey, look, we're going to do one hike and just establish credibility, right?" >> Um, >> but I don't think we're going to go into sustained hike cycle. I I truly don't believe that.

>> So, you think Worsh may feel some sort of pressure or kind of feel the anguish of central banking? >> Oh, yeah. His committee is super divided. I mean there was multiple descents last meeting and I think I think there'll be more. But this is the thing right like there is a Governor Waller was out last week with a fairly maybe dovish speech. Um but again this is his his whole way of doing things right now is he says look if we so his framework getting back to CPI is that if we get a hot CPI I'm voting for a hike. Um I think like there's a decent probability you have an almost evenly split FOMC in next week which so yeah like he has pressure in the committee right now

>> to get that done. So it's about whether how he navigates that and whether he says okay fine you know we we'll get it in there we'll get the hike and >> um >> and I think that hike would actually help bring lower long-term bond yields. Um depending on how that hike is is perceived. if if it's perceived as this hike that the market is kind of screaming for, which it kind of is. Like if you look at the July meeting, um you know, we went in 50/50, he chose the pause, and then the long bonds sold off and and yields went higher. Um so if you get the opposite of that, I would imagine that long bonds would go lower.

Um, you know, a lot of the move higher in yields recently has actually been like we don't need to get too nerdy here on on on bond math, but you know, you either have this inflation expectations component within within long bonds or you have this, you know, term premium term premium, which is just basically this uh premium that investors want for holding a longer duration asset. Um, you can almost view that as a as a component for for Fed credibility uh in general. And a lot of this move higher recently hasn't actually been the inflation expectations going higher. It's been the term premium going higher. So >> because that's what's been going higher, I feel like if we saw a hike, long bond yields would actually go lower, which I don't know like if that's perceived as

just like the one and done hike and long bond goes bullish. >> It's kind of bullish. Yeah. Yeah. Exactly. >> But if it's perceived as like, oh, this guy's a hawk and he's starting a new hiking cycle, then we're in trouble. I spoke to um senior economist Adam Poston in Jackson Hole. I'm not sure if you're familiar with any of his workers. The name he's a president of a economic institute out in DC. And >> he basically gave me a shrug of a shoulders of for the September meeting. Yeah. >> But he gave me 100% by December. So if it doesn't happen in September, it happens in December.

>> I can see December. >> What is your what is your read on this kind of quote unquote insurance hike? >> Is it better for us? Because I'm gonna ask you what you're new with your portfolio, you know, in these different, >> you know, events. What, you know, what what is better for the market, do you think >> now or then? >> Uh, >> I mean, yeah, he could I mean, this is the thing. He says he doesn't like forward guidance, but he could be like, "Yeah, >> we're pausing here, but like maybe hike in December." Yeah. I mean, man, if he if he doesn't hike in September and we still get, you know, pretty positive hot economy like we have right now, I could totally see December. And you know that's after the midterms too. Like right the Fed isn't going to >> if they really have to hike they will

hike in front of an election but they would prefer not to. I think it would be >> like the month before. >> Exactly. Because we have midterms coming up in November, right? So to hike in September is >> kind of messy. >> Yeah, it is. >> Um versus in December I feel like it's it's a lot. So I imag like what he's thinking and I would definitely agree with that. Like >> yeah, >> I don't know. It feels like eventually we have a hike coming whether we like it or not. Um >> Sure. Okay. So then let's talk about you know your portfolio. I imagine you're you know >> diversified across equities, bonds or stocks or commodities etc.

>> But on the crypto side >> what do you do here? Right. So you're bullish I assume. >> Uh I think you're in the camp that the bottom's in. >> Um and you know maybe there's some volatility but you're you're looking for like a cycle level return from your Zcash entry. you told me around like 700 bucks or 800 bucks. I don't know if you're coming without being public, but here we are. We're live. Sorry, Felix. Um, >> you know, what's your take? Like, are you trimming on a hike? Are you buying dips on a hike? Are you getting cash ready for a hike? Are you just holding through it? You know, what's your take?

>> Yeah. So, on the Zcash thing, I So, you know, near the bottom there between, I don't know, 55, 60K or whatever. I was just like slowly accumulating Bitcoin and just like, you know, it's time. Um, you know, back in July, I thought that max hawkishness was was priced in and that we we we couldn't really go any further. I I don't know if that's been proven right. I don't know if it's proven wrong. It's just kind of taking longer to play out, but I was like, "Okay, look, like this feels like a good spot to start building in there. We've had a lot of pain in crypto markets. I'm going to start allocating." So, started to do that. Um, and then really just start to to research more and more on the Zcash side of the thesis. Um, yeah, to be honest, like, you know, I I always

have like long-term holdings and then maybe I'm just like trading short-term stuff and then, you know, held held Zcash for for little moments in here and there as a trade and and that was all well and good, but never really dove deeply into the thesis of it. And, you know, got more into more into it more over the last little bit and I was like, look, I think I'm going to rotate some of that some of that Bitcoin into Zcash. Um, I like that it's private. It obviously has this shielded thing and I think that's that's really important. You know, you hear hear guys like Ray Dalio, right, talking about bit, you know, he he loves gold. He would like Bitcoin, but he thinks that privacy should be a core tenant there.

>> He's going to love Zcash. >> Exactly. And then and then, you know, for for those those big institutional allocators as well, the the quantum thing is also really serious is serious. >> Yeah. like it's, you know, it's not we're not going to go to zero overnight because of it, but we're not going to see as much allocation towards it if there's this hangup over the next eight years or so, right? Like these are long-term allocators. >> Well, part of an asset that you want to hold as a out of the system asset. >> The whole point with these assets is to be able to put them away. >> Some people bury them, some people put them in banks, some people put them in ledgers, >> and you want to be able to have the same asset 10 years from now without having to go shift to a quantum secure wallet.

Yeah, >> that's the whole point, right? Like you want to go get your gold from the ground and pick it up and it's still going to be that same 1 oz of gold. >> Yeah. So, so with the privacy, with the quantum aspect, >> I just think it's it's, you know, they have a much clearer road map right now for for for getting to be quantum resilient versus Bitcoin right now. >> Yeah. >> Um, the core devs are a lot more aligned on that and proactive versus just kind of I head in the sands approach of >> Sure. >> Bitcoin core. I still own Bitcoin, but it's just like >> look at the price. It's it looks really good and you know that that the hang-ups of it like I don't think anybody would be surprised to hear that I've been critical of like Sailor and that whole

thing of course. >> Um >> and so I just it it just feels a lot cleaner. So I'm like okay well >> you know on a on the next you know say two year time horizon I think it's it's a pretty compelling idea to to buy it down here sub a thousand um on those thesis. So So that's that and then some gold and some good coin. That's again I'm fully aligned with you on the barbell thesis. So that's my barbell. >> Good to know. >> Yeah. Um >> smart guy. Yeah, >> that's all. >> Yeah. And then the other side, it's it's the whole, you know, everything we talked about at the start of the show of actual value occurring tokens. So, yeah, Hyperliquid, um, Lit's great, like Lighter. Um, >> okay. So, that's your portfolio, right?

So, you know, we don't get into all the names, start pumping Um, but not financial advice. Um, but what we do need to know is what do what's your plan? >> Yeah. What's your plan with both sides of this barbell with relation to the hikes, but really just like going into 2027, right? Cuz >> I mean, man, stuff's gotten crazy fast. >> I think it's only going to get crazier faster. >> Yeah. >> But then like are we Yeah. Like what's your plan? >> Um Yeah. So, I mean, it always comes down to the price you got into the positions. I have enough of a buffer in now that I'm willing to again, if I'm wrong on hikes in September and I get smoked, whatever. That's fine. I think over the next year or so they'll be a lot higher anyway. So I don't really care. I'm

willing to to ride some some pain in the short term to to have that bet on. So yeah, I'm I'm not trimming into it. Uh >> and then lots like >> yeah 2027 it's you know everything I own right now I plan to still own over then. Um but that's like the core holdings. Um >> and then you know I always have like an active trading book which is just you know her and all that stuff. And >> yeah I caught that Venice long this morning. I was feel I I was euphoric coming to the office. >> The day 16Z long. >> Yeah. I was so euphoric. I smashed it in size and then 30%.

>> Yeah. Yeah. I uh Yeah, I missed that whole thing. But >> I mean, but that's why I have a purpose account. >> Yeah, exactly. Small, you know what I mean? It's just like for fun almost, but it's But in bull markets, you can run it up. >> Yeah. I'm always I'm always a fan of having it be separate. Like I have >> the boring, you know, spy ETF. I don't touch it ever. I have, you know, the core holdings that I'm going to have for the next couple years and then maybe a small portion that I'm just messing around with and, you know, maybe try to run it up and and try to rotate that into the long holdings and just >> Yeah. That's my take like my >> like my per account is a funnel for spot Zcash.

>> Yeah. Yeah. Exactly. >> That's what it is. It's just this constant like and I literally was writing in my trading journal on on my flight. I was like, "All right, >> I've round I've almost roundtrip my ps account twice and brought it back to new alltime highs." >> Yeah. every new all-time high or every new big trade, I'm taking my profits into Ze into into Ze in a different account and I'm just storing it there. And if I need to run it up again, I'll do it again. But I'm not just doing this whole thing where I'm like, you're up 50K and then you're down 40 and then you're up 50 again. It's just like, dude, I just made 100K, but I only have 20 left. It's like, what did I just do? >> Yeah. So, >> yeah, it's insane.

>> I guess just to close out here, >> um, damn, what was I going to ask? >> I mean, just I'm just bullish, man. I'm just bullish. Like yeah, yeah, >> I mean it's not like maybe we could talk a little bit about the state of the industry because obviously over the last year or so there's just been this kind of >> I don't want to say existential crisis, but like you just see everything popping off in AI right now and it's incredible. Yeah. >> Um and then we're all left here being like, you know, >> are we doing the right thing right now? >> Like there was obviously some some pretty dark moments there over the last year and it's I just feel like yeah, the vibe has shifted started to turn and you know I am a believer that you know Christ leads and narrative follows. So

obviously, you know, we had this uh this moment a couple weeks ago where there's just there's a lot of shorts in in Bitcoin and there was a lot of people who if they wanted to sell had already sold and it's just like a beach ball underwater and then there's just that one moment like it doesn't even really matter how true this debasement thing is or not. it was enough to spark something. And then you get the shorts close, you get the short squeeze, suddenly we're above the 200 moving average and it's like, "Okay, we're back." And then suddenly people get excited again. And then suddenly you have the SEC come out and say like, "Here's what you guys are allowed to do or not do. So go out there and experiment and have fun and you know, create some really cool stuff." And like >> yeah, I don't know. It's just it feels

good to see the tide turning. Um >> but you know, I don't think I don't think everyone is on board yet. >> No, definitely not. >> I think so. I always think about and you know I've learned these things through now four cycles of getting wrecked. Yeah. >> Right. Which is who's the next marginal buyer. If you can't even if you can't answer that question the the position probably needs to be sold. >> But right now I mean I feel like it's cryptonatives one. So there's still a lot of cryptonative you know capital people that left but people who are still here but just missed the lows and are waiting for a pullback. Like thread guy keeps saying bro bitcoin has to go to 72k because it's guaranteed to go there and you're going to buy the dip perfectly and everything's going to be great. So still that kind of like who's

in and who's not in the industry. I think that capital takes us to mid80s to like >> high8s on Bitcoin and then FOMO on alts >> probably some pullback whatever chop chop chop pullback on like big moves and I think the next buyers after that is the smart high net worth individuals. >> Yeah. >> In ETFs and then funds >> and like people are like oh we missed Bitcoin. >> It's at 85 now it's down from 93. Let's get in now. So that's like you know all your big funds and your rich friends who are calling their adviserss who you know 5 to 10 mil net worth and you're like hey like I I you know 5% allocation of Bitcoin let you know just just get me in.

>> Yeah. >> Yeah. >> And then that takes us to alltime highs in my opinion. There will be this FOMO. There'll be aggressive institutional buying >> and then I think then we get retail. >> Yeah. >> So that's kind of like my path right now of like who's going to buy my positions higher from us. Yeah. >> And obviously I'm not really like thinking about selling quite yet. >> Yeah. >> But that's who I'm thinking about as next marginal buyers. Do you agree with that? >> I broadly agree. I feel like this initial move was Yeah. short squeeze people getting smoked >> and then I think it was the the hot money momentum traders coming out of the AI trades like all the bottleneck stuff, the the memory stuff like they all are like oh crap like kind of you know bought the highs of the memory stocks

and now I'm going to go buy on the on the hot money in in crypto. So then you saw that continuation and then it got into like Bitcoin just hitting resist like that was that was the move I feel like from I don't know low7s to to 82 or whatever was that money coming back from the AI trades and and pushing it. >> Um and now we're just sort of digesting that and yeah I think it's a little bit of a lull period that also aligns with with macro and and the whole war thing that we talked about. Um >> and then yeah I fully agree. think it's the, you know, that bigger long-term money is just going to slowly move in and and I think that's where you need to make decisions of of what are they looking at and what are the time

horizons that they're they're playing for. And then >> I think what'll what's get what gets a bit confusing there is that I think it's important to look at you know crypto tokens as much as as you know equities on on the public exchanges. Like I think it's all going to come together, right? like there's not going to be this like you know crypto equities and then crypto tokens and then governance tokens or whatever like I think the form factor is all coming together which is just like a it's a equity security y >> um that is built on better infrastructure and it's your job now to look at how much money those companies are making and whether you think it's a it's at a good spot relative to that multiple on on its revenue and how the management team associated with those

companies is planning to use those profits that they're generating and and whether you agree with that or not, whether you agree that it's it should all go to buybacks or go to reinvestment into the operations or as a dividend or what have you. Um so I think like those are the things that also those big institutions are going to be thinking about. Um and then same thing on the store value thing like I think obviously there's a certain cohort of that money that is you know you just you just go to the top two or three assets or whatever you know yeah bitcoin or whatever just kind of like accumulate accumulate. >> Yeah. But then there's also the more nuance takes of those that are looking at stuff like what's the roadmap for quantum for for Bitcoin versus Zcash and like how serious are they there? Because

if I'm holding this and I have to go to an investment committee and say look this thing can go to zero if if we get to to Q day. >> Yeah. You don't want to be there >> and and uh you know the core devs are just saying it doesn't exist and I want them. Yeah. It doesn't matter. Too much to care. >> Yeah. Like you think a you think a risk committee is going to agree with that? Like no. They're going to be like show me a road map. Like what's the plan? >> I love this dcash bull thesis right here. I love it. >> Yeah. I mean I I I just you know I just got on on board and started to understand it all. >> No, but it's it's mind it's it's all consuming. Last thing, do you own any SpaceX? Are you a SpaceX bull?

>> Yeah, I do actually. Um I so I'm like I I'm a huge AI believer in bull and I I I try everything and I was just I tried Grockbot >> and I was absolutely blown away. >> It's incredible. So, so that so that cursor purchase, you know, plus all this incredible data that they have from X, that is a huge like data is the moat in in AI now, right? >> So, you have that you have this cursor team and then you have these products like Grockbot come out >> and dude, I literally just like bought because I was so blown away by Grothbot.

Like, I was like, I don't care about the lockup. >> That was like a couple weeks ago then. It was at like 1:30 or something. You had a great entry. >> It was great. I was like, look, there's lockups, but everybody knows about them. I don't know. Like we >> Yeah, I have Dan Held here. >> Too good. >> OG Bitcoin guy. >> Yeah, >> he's now half port in SpaceX. >> Yeah, I'm not that big. >> Yo, could you press number two? Uh half port in SpaceX. >> Yeah. >> Half port Bitcoin. >> He he held Bitcoin from 2012 to 2021. >> Yeah. sold some of his Kraken equity and some of his coins apparently and is now h he bought SpaceX equity at 100 bill pre-launch five years ago and is now half he's he he he he told me$undred trillion dollars market cap in 20 years

biggest company in the world >> I mean it's plausible man I don't know like I like for the size that I have in it was just like a wow this product is insane and I can see what they're doing and like they're really catching up to the Frontier models like >> yeah worth a shot. And that was it for me. >> Um >> maybe if I start doing more research, I'll put more into it, but for now, I was just like, man, this thing's really good. Like, >> yeah. >> Yeah. Blown away. >> Beautiful. >> Yeah. >> K, man. >> Yeah. >> Yeah. Always pleasure. >> I mean, we're just >> we're just so bowled up here, guys. We just I mean, look at the market. I mean, we're about to if we get a big breakout here on ETH and Bitcoin to to the next

kind of level, I mean, we're going to be in euphoria.