Yields Are Up. So Are Bitcoin ETF Inflows. Why?

Transcript

starts doing it. We're moving at the speed of willpower more and more every day. So, I think this AI agents is a is a extraordinary development. It's why I think semiconductors are a great opportunity. Uh and Meta is first out there, but yeah, Google is coming. Google Spark is in testing right now. It's going to be compelling. Apple sees this. Everyone was going after the personal assistant AI. It was the obvious thing. But there are other AI coming. The personal concierge, the personal doctor, the personal wealth manager, what we're building at Lumida. All of these niches are going to get filled out. So I think it's super exciting if you're long the AI trade and we're going to be mainlining AI now to consumers. Right now it's been mostly infrastructure and compute story. This data center pol very abstract concepts.

Now consumers are sourcing tangible value like when they first got their AOL CD and went on the internet, right? That's what's happening now with these personal assistant agents. Historically governments have always picked inflation if they can, right? We've done that in the United States repeatedly. If you look at the history of the 40s and 50s postwar, financial repression. If you were to go and then look at the 70s, financial repression, right? Like every time we get into that position, we end up in that way. And I think with debt to GDP where it is, there's a sort of counterintuitive thing that starts happening, which is if you have $30 trillion of debt outstanding, right? I will remind everybody 1% of the debt is $300 billion. If you raise rates 25 basis points, that's a lot more free

cash flow in the hands of Americans, given that our debt is relatively short-term and rolling quickly, right? Like there is some bizarro like inversion of thinking that happens when the debt gets big enough where rate cuts are no longer restrictive, but in fact just spray more cash out as well. >> They say the rise of aentic AI and machine to machine payments will likely increase demand for blockchains and other programmable payment infrastructure, stable coins, native crypto assets, etc. existing rails such as a card networks blah blah blah um make them less suited to to always on very low value transactions requiring pro programmic execution. So what did Brackrock basically say? They said there's going to be a billion agents in 2027. They said the billion agents are going to be doing 217 billion transactions a day and those

transactions are going to be settled on blockchain rails because traditional existing rails like a just aren't relevant for those kind of transactions. And then you say okay what's going to capture that value? layer ones, hedging mechanisms, dexes because they're going to be trading in and out of different tokens. And then you start thinking to yourself, hold on a second, maybe this chart is actually conservative. Maybe maybe the altcoins actually outperform Bitcoin by 50x. Why? Because whenever you use a protocol, ask yourself a question. Could an AI and will an AI actually use this protocol? Salana. Yeah, Salana could AI could use Salana. Hyper liquid. Yeah, AI could use Hyperlquid. Near intense, yeah, AI could use near intent. Now, how much more so when the validation is not only likes but actual money and that's what crypto's created. It's created transparent trading machines where

everyone can see P&Ls and people are starting to share it. So, if you look at like apps like FOMO, Pump Fun, we've created a master use case in crypto which is dopamine-driven social trading. And what I think is actually going to happen if you take that and you combine that with a tokenization of everything. All of a sudden, you've got this industry which is a combination of a casino and a social network. But instead of casino, let's call it an an investment house, an investment house with a social network. You know, that's a monster business. That's more powerful than any social network. And in fact, I kind of think that Elon Musk and Twitter have seen this because they're starting to incorporate trading into your Twitter. And people that are testing the the Twitter buttons and so the ultimate social network doesn't only reward you

with likes, but actually rewards you with increase in net worth. I do say one thing. I'm watching Zcash and it reminds me so much of Bitcoin back in 2016 and 17. It's the same people. It's the same kind of movement. It's the same price moves. Like I remember when Bitcoin went above $1,000, how quickly it went to $1,500. And that's exactly what happened with Zcash. Like it's it was at 600 and it's like 700 and then like 800 and then it went through a,000 and then like within two weeks it was at $1,500. And I it's deja vu because I remember the old Bitcoin days and I'm just waiting for it to go back down to 700 and everyone to get scared and then it'll just go back up to 2,000 because that's what Bitcoin did to us in the old days. And it was

the same faces. Like I saw the Vinklevos brothers are speaking at token 2049 and they're speaking about Zcash. I was like, "Wow, I I swear I've got a a similar leaflet from 2016 or 2015 or whenever it was of them speaking about Bitcoin at some conference." And so like for me Zcash and the whole privacy around Zcash is super super super interesting. I think it's more useful than Bitcoin. I know you're not supposed to say that because Bitcoin is the king of coins, but there's a better use case for Zcash than there is for Bitcoin. You know, private money is much more valuable than public than transparent money that everyone can see transaction history, right? So, I know you're not supposed to say that Zcash is maybe a little bit more interesting than Bitcoin, but can't help thinking it. If you were to set up a system that was

designed to generate a lot of volume in the most efficient, the the funny part about this, who are the people who would generate half a billion dollars in volume off 3 million in open interest? People who are hyperefficient. Who are hyperefficient? Market makers. That's their job. Be as efficient as possible in you know what they do, right? So if you got two market makers and put them in a room and said, "Hey guys, I'll pay you $1 every time you cross each other." Those guys are going to rip your face off. They're going to create so much volume you wouldn't believe it. Now the question I guess right is does that have any benefit to an end user because that's the difference between wash trading right even if it's one person two parties colluding together or

whatever and like incentivized liquidity. >> It's not an LLM that talks to you like a lot of information goes in and then a classifier this makes decisions for you and those decisions come out with weights and the thing is way cheaper and way faster like 200 milliseconds fast. So instead of you let Babel drive your browser and every pass is like I'm going to take a screenshot of this whole thing and I'm going to find the thing I'm going to click and then it it gives you like three paragraphs back about what it's finding. This thing is like I'm going to look at everything and I'm going to make a decision based on weights and I'm going to choose the thing uh within 200 milliseconds. So it's a classifier and it's making decisions very fast and it's very cheap.

So, I think that's it's just like we're going to see on on my my podcast, we kind of talk about the this tension between effective and efficient. And you always do it effective first and then you find a way to do it more efficient once you're doing it effectively. I think we're going to see lots of different types of new kinds of models like Jev where it's doing nearly the same task. You know, as long as it's not a chatbot, you're chatting with it. It doesn't do the chatbot thing, but it can do a lot of these tasks and CI type things and browser use type things way faster and way cheaper than just letting Fable click around.

>> You're using a travel agent. You're not paying for the hotel directly. Like you're not paying the hotel directly. Well, I mean, I guess you could, but yeah, in this case, you're not uh you're you're doing a sort of a private concier, so to speak, because obviously for something to be like a store of value, you need to hold value in it, but then you need to also be able to do things with it to an extent, like things backed by it. I'm upset that like not everybody uses it, but I think a good enough amount of people use it such that it does make a difference is sort of like if you use a Zcash wallet, they all have the pay feature which integrates near intense, which then lets you pay on any chain, right? So you can also I also do Salana USDC with this for example or

you can do Ethereum or you can brush to Robin Hood whatever and it's just super convenient and like it's not like a regular bridge where you can just go back and be like oh it came from this other address okay now my private concierge knows how much money I make and therefore now they're going to upsell me on all these sort of different >> importantly I think biggest unlock has been both Zcash and Mir bringing at last privacy on chain to me it's always been kind of a biggest bottleneck to use day-to-day blockchain for anything because like I I have literally a spreadsheet of 100 addresses on Ethereum and kind of near before we had privacy.

So I can track where who where did I send money which address did I use how much gas I left on that address like it's like a it's a nightmare of like accounting system to just keep track of you know to make sure I don't link anything you know go through sex you know make sure I don't have timing attacks on like amounts etc and all that it gets solved now that we have Zcashioner really delivering on kind of like how do you have a private experience using blockchain so I think like all these things really coming together now uh as more and more people actually starting to use blockchain financial system is moving to blockchain kind of never before. And so at least that's my explanation why things are really uh really starting to appreciate.

>> One more thing, we've got a listener survey open. It takes just a few minutes. It's anonymous and it changes what we make next. Use the QR code on screen or go to unchainedcrypto.com/servey. The link is in the show notes. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the DeFi TVL if you're wondering. That's according to Dune Research commissioned by 1 in. But there's a solution. 1-in Aqua is the new shared liquidity platform. It lets LPS back multiple positions with the same token balance and keep their tokens in their wallet till a swap comes. Why does

that help? Because the LPS don't have to split their tokens across positions. They can cover more market conditions and pairs with their full balance. That means more activity across deeper liquidity. See how it works at 1 in.com/ aqua. Remember that providing liquidity carries risk and fees aren't guaranteed. Heads up everyone. We've now fully transitioned Bits and Bips to its new dedicated channels. So, if you're not yet subscribed to the new Bits and Bips channels on X, YouTube, Spotify, Apple Podcast, or wherever you get your podcasts, go there and subscribe now.

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>> This episode is brought to you by 1- in Aqua, the shared liquidity layer from 1 in. Back multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at 1in.com/aqua. Before we get started, I want to ask you for something. We're making a bunch of decisions right now about Unchained, what we make next, when we go live, what we should be doing more of, and I'd rather hear from you before we make them than after. So, we put together a survey. It takes just a few minutes.

It's anonymous, and there's a box where you can tell me what we could be doing better. I read all the responses. The link is in the show notes, or you can snap the QR code on screen or go to unchainedcrypto.com/servey. Thanks. >> All right, as always, I'm your host, Austin Campbell, high scholar of Zero Knowledge Group. I'm here with my two usual co-hosts, aka co-conspirators. Rahm Alawalia, maester of wealth, leader of Lumida, and Chris Perkins, the golden hand of Franklin Crypto. So, let's start with one of the big news items over the weekend. So, BitGet got hacked on September 24th.

Attackers took roughly 388 million from BitGet, largely the contents of the hot wallets, not by stealing their private keys, but by spoofing transaction data. So, BitGet's own approval process signed off on the withdrawals. The hack reopened some of the neutrality debate around crypto after Thor chain refused to block the hacker's addresses while stolen ETH kept swapping into Bitcoin through the protocol. So one the loss is about 388 million. No private keys were accessed according to Gracie Chen CEO of Big Gat and the attacker quote used it to spoof transaction data and triggered our own

authorization process to move funds out. She says it's quote consistent with techniques used by DPRK linked hacker groups and it is currently the largest reported crypto theft of 2026. Bit's $464 million user protection fund covers the losses. BTC withdrawals reopened today. ETH is on the 29th. Tether is on the 30th and everything else is on 102. Thor Chain. Um, Gracie said, quote, "Decentralization is a design principle, not a shield for facilitating known stolen funds. The industry is watching."

Thor Chain responded, "Thorchain is permissionless. It doesn't censor by design." To which Star of OKX said, quote, "Thorchain paused its own network after its May. Bitcoin cannot be stopped, but Thor chain can. it simply chooses when to do so. Um, and Michael Perkland said there's no active choice to sign. There is an active choice to turn off the machine. Um, reminder for those who are not paying attention, 1.2 billion of Bybit's 1.46 billion path also ran through Thor Chain. Uh a middle path was taken by near with intense where of the 50 million hackers tried to route about

166k got through but 53k was frozen and it says near intense or permissionless infrastructure but not with no boundaries according to Alex Shvchenko. So I have a couple of thoughts here. We'll come back to the Thor chain part because I want to start with the bigger point Chris is this is something you've been talking about for a while. when we see these attacks happen. Right now, the framework is either the attacker succeeds and gets away with the funds or they don't, but that just means they failed with regard to effort and that's kind of the end of the story.

That's a pretty favorable landscape for attacks to continue indefinitely because they either win or have very low cost. >> What do you think needs to change because this remains a theme that's really sapping the space? It's it's kind of mind-blowing where you have a new technology and people think that the rule of law like laws just go out the window. It's like, hey, it doesn't matter because we have this new technology. It's it's crazy. Um, I would argue that security is the one thing that is holding us back from in this industry. I'll continue to argue it. Um, I think I I really enjoyed the near post. I retweeted it uh because they said, "Look, you know, we moved as quickly as we could. We took the actions

that we could because we know how detrimental it is to the system. Um, if security, like this is like human nature 101. If you don't have security, guys, you've got nothing. Trust me, you can't have anything. There's no applications, nothing else. So, we got to solve for it. It's it's it's insane. Look, I've been I welcome. Please, I'm begging you with tears in my eyes. If you have solutions, bring them forth. The only thing I could think of and it is to increase the surface area of the defenders and and and and and the counterattackers. Uh went back to the constitution. Christian Carl and I published it. By the way, uh Crypto Dad's got a book coming out. I'm going

to plug it because he talks about this throughout his book. Um there you go, Chris. Um but but the point is is that we just don't have the surface area or the sophistication. Um the great thing about things on chain is we know where those assets are going. Uh we're starting to see some actors perhaps not doing the right thing, eg Thor chain. We could we'll address that here in a second. But you can trace these things and if you can trace them, then you can hack them back. And I'm very hopeful that the president's uh he put forth uh an EO that talked about leveraging the skills of the private sector. It was actually embedded in clarity. We'll see if that how that comes out with the sausage making. Uh I'm going to be in Europe this week. I'll see Patrick Wit.

Very excited to hear what he has to say about it. I'll report back next week. But we need to solve security or we've got nothing. Rules of law apply. Governance need to get serious about it and they need to hold people accountable who allow the law to be broken. Last thing I'll say about decentralization. Either you're decentralized or you're not. If you're decentralized, you can't stop something. It's it's out there. The code is working. You just can't touch it. If you can stop it and you don't, maybe you're not decentralized. My two cents. Austin, back to you.

>> Yeah, I think so. To pick up on your last thread before I get to some of the other points, this is where I think the Thor Chain folks have now gotten themselves in a serious pickle. You showed that you have the capability to stop your chain when you choose to do so, and you chose not to do so here. That is very different than infrastructure that has no off switch. Right? If you got exploited yourself and there was no way to fix it and it just happened. Okay. You know what? I buy your claim of decentralization then because the point at which you really would use it is when you yourself are being harmed. And if you don't, that's pretty good evidence you can't. However, Thor Chain did. They transparently did.

They stopped the chain when there was an exploit. They've done it. They showed they have the capability. And here they voluntarily chose to launder sanction funds for the North Koreans. There are consequences for that. So, you know, to me, this is actually a much cleaner case for people at the DOJ than something like tornado cash, right, where it was never turned off. This one's clearly you have elective control over the network and you're choosing when to use it and choosing when not to use it. That's an obvious case. I think number Sorry, go ahead. No, I was gonna I was thinking about this and like again I don't know every detail in fact and circumstance, but let's just do an analogy. If um there are a bunch of bad guys uh that

roll into a bank and they rob it and they take a bunch of money out of the vaults um and they run off into a car and and the getaway driver is there to to take them away into into the land of safety. Um usually the guy or the lady who's running that who's driving that getaway car is is culpable as well. they get in trouble. Um, is that not the case here? I don't know. And again, I don't know all the facts and like the detailed facts and circumstances, but you know, even if you don't rob the bank, but you're driving a getaway car, usually there's uh there's some liability there.

>> And and there are some layers to it, too, right? There's like knowing involvement and then there's gross negligence, right? If you're the guy at the rental car place and these folks roll up in like the dead president's masks with guns and are like, "Hey, we want to rent a car." And you rent it to them, you probably also have a problem, right? Now, on the other hand, if they pretended to be relatively normal customers and you had no way to know, you probably don't. So, the other point of like, well, we process all transactions is like that is not the standard to be very clear. Like you said, the law just doesn't go out the window.

You can't just la about these things. So, one way or another, I think there's going to be a reckoning coming for the people who are call it the dinos, right? Where you're claiming decentralization without actually having it. That's going to be a problem. Number two here, Chris, to your privateeers point, until we start inflicting consequences on the people doing this, they're going to continue doing it. This is just a classic game theory principle. If anybody is familiar with this, if you could defect in a game with no consequences to yourself for greater rewards, you will just do that over and over and over and over. And the way you stop that from happening is by punishing

people for defecting. You know, I was recently on stage at the Philadelphia Fed and I said this same thing, which is to cause this to stop, we need to start allowing people to inflict consequences on the hackers. And there's two ways to do that. We can do that through allowing companies to counterhack them, which we are now working on. I believe it was on August 12th, President Trump uh signed a national security presidential memorandum about expanding capabilities to combat transnational cyber enabled crime and it lets participating companies run operations against them.

Like we've talked about this, but you need to be able to counterhack them and disrupt them. The other and call it more extreme version of this is kinetic warfare against these people. Right? If you knew every time I hack a crypto exchange, there's a 5% chance a drone with a bomb on it comes through my window and ends me, that greatly changes whether you're going to be willing to hack a crypto exchange or not. And so consequences matter. I think given the persistence of the adversaries and their structure, this is not three dudes in a basement somewhere. These are nationstate actors or organizations of hundreds to thousands of people. We need to start inflicting consequences. C >> can I just say respect for the Point Break reference for the old people that

were listening with the president's masks and robbing banks. I I caught that. Just wanted to say >> it's a great movie. >> Great movie. >> If if you haven't watched Point Break, it's it is actually genuinely worth a watch. But no, Rahm, like as a markets observer, you're an investor. You're trying to assess risk in this space. How does this change your perception of crypto if we don't fix anything? >> It it's 2026. It's embarrassing. Imagine going back to 2021. We said five years from now, would we have these issues?

And here we are. What if we had these issues two years from now or four years from now or five years from now? probability of that probably is is gonna be there because of more social engineering especially these AI related uh capabilities which can impersonate humans really well and it's going to drive more adoption to ETFs away from the onchain ecosystem. >> Yeah, it's it's more than that, right? We see it at my current firm. Um it's really sad actually and I don't think enough people are angry. People should really get angry about the way that our industry is getting abused. Um, and I don't think they're angry enough because a lot of people enter into our space because of the ideals, the ideals of

holding on and controlling their own keys and holding their own assets and believing in decentralization in a world without intermedi intermediaries. And I totally get that. But what the security situation is forcing, it's forcing intermediation. to Rahm's point, it's forcing, and you know, I don't mean to talk against my own book, but it's forcing folks to trust a big institution to um safeguard assets and and and look, I've I've said this all along, intermediate intermediaries do offer value and like that's the thing that we do. We provide safety and soundness that maybe we can do it a little bit more robustly. We got professionals doing it.

But what gets me angry is that it's really taking away choice for people. I mean, look at the cold card hack. You know, these are like OGs who did everything they thought was right. And it's getting very very dangerous to self-custody. And I know so many people are in this space because that's that's what they want. That's what they believe in. So I I would like to see, you know, I I thought the near uh post uh Ilian crew like well done and I'd like to see more people taking that type of proactive action. And I'd like to see people get more angry and really take steps to to fix the situation.

Otherwise, we're going to be stuck in the land of intermediaries forever without that choice. >> Yeah. I mean, if we idealistically built a decentralized system to prevent people from being abused by centralized actors and the main outcome of that is people having all their money stolen by centralized actors. I do not think we achieved what we were going for. >> Yeah. It's like getting back to like core political theory like social contract, you know, I'm going to use a government to provide me security and I'm going to hand over some of my rights or I'm going to hand over some of my rights to an intermediary and I'm going to trust them. Like it's uh yeah, it it forces this sort of social contract.

>> I think you know, we've talked on this show before about how crypto is relearning some of the lessons of like financial history. This is why centralized intermediaries and regulations were created in the first place. Right? If the core feature of your system is that whoever is the most morally bankrupt and steals the most money becomes the richest, people are not going to use that system to transact. It just becomes something that's pointless. And Chris, I think you're right. It it actually it should be a combination of being angry and also being disappointed at a lot of the current actors in this space for not having worked harder on this problem already. You know, Thor Chain's a great example. If your response to this hack

is to just throw your hands up and be like, "Whatever, we're going to collect some fees." Quite frankly, you should be blacklisted from this industry by everybody. every single crypto exchange should blacklist a wallet that interacts with Thor Chain ever if that's going to be their response because that exact attitude will destroy this space over time. >> Yeah. Like it reminds me of my days in Iraq um back in the day every house was allowed to have three AKs and that was fair because they needed it for security. Is that really the world that we want to go back to? Um you know I I just it's not working. We got to fix it and we need we need more more of a grassroots effort to stop it.

>> I would also say if your goal is for public blockchain infrastructure to win, you cannot keep making the case for semi-private blockchain infrastructure, right? Because we're not seeing these sorts of hacks on the networks that have very strict in-n-out controls, right? Like Kexus at JP Morgan is not having this happen. We haven't seen it with Canton. We haven't seen it with all of the internal chains. Like you're making the BIS's argument for them if you won't control this stuff. And to me, I really think that's a second order effect that the industry needs to grapple with.

Gracie calling out Thor Chain, I think, you know, obviously from the personal position of BitCat, I get that. But Star piling on, I think, was correct, right? Like this is the industry starting to grow up and be like, "No, you really do need to do better here." Because like Rahm to go back to the point you were making which I think you were right about kind of makes it hard for you to think this space is investable if this is going to be the security posture right? >> Yeah it comes down to confidence markets come down to confidence. >> Yeah. How much how much money would you guys leave at State Street if they were constantly letting your securities be stolen?

>> Yeah. And then I think I told you guys I've been spending a lot of time on quantum. >> Yes. Um, quantum's coming and AI is accelerating it and we're already seeing the bad what are the bad guys doing harvesting now decrypt later and you know this is we really got to get our act together because that that that's real and it's scary. Good news is I I think that crypto is going to actually lead us out of this challenge to the $500 trillion dollars in postquantum cryptography that's about uh right now $500 trillion in assets are being secured by public key encryption that's that could be undermined. I do think that crypto will actually lead us out of that because if only there was a concentration of cryptographers in an

industry uh probably know what they're doing. Uh, but I I I feel like AI was the first real tool that the bad guys got. The good guys got it, too. I think in in the long term, um, we'll be we'll be fine and better off. But I think quantum is also lurking on the horizon. Now, you know, I don't know if these the bad guys are going to get it out of the gate. It'll probably state controlled, but that's the problem. It's been statec controlled actors that have been ravaging our startups. So, I I it could get worse, you know, in the future. >> All right. Well, before we get to something else that's getting worse, uh, we are going to take our second break.

So, stay tuned after these commercials. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the DeFi TVL if you're wondering. That's according to Dune Research commissioned by 1 in. But there's a solution. 1-in Aqua is the new shared liquidity platform. It lets LPS back multiple positions with the same token balance and keep their tokens in their wallet till a swap comes. Why does that help? Because the LPS don't have to split their tokens across positions.

They can cover more market conditions and pairs with their full balance. That means more activity across deeper liquidity. See how it works at 1in.com/aqua. Remember that providing liquidity carries risk and fees aren't guaranteed. One more thing, we've got a listener survey open. It takes just a few minutes. It's anonymous and it changes what we make next. Use the QR code on screen or go to unchainedcrypto.com/s survey. The link is in the show notes. >> All right. Uh it's time to talk yields.

And I have a feeling we're going to have some opinions on this one. So, long story short, central banks are tightening as energydriven inflation from the Iran conflict spreads. Maybe not just energy. And the 10-year yield in the US is at its highest since 2007, while Japan's tenure is at levels last seen in the 1990s. So against that backdrop, spot Bitcoin ETFs had their biggest week since October 2025. And as of me speaking these words, it's still around 83,500 for price.

Everything is tightening. So Norway um hiked uh the Reeks Bank uh and Hungary held. Uh RBA is deciding tomorrow with an 80 to 90% chance of a hike priced in right now. The BOJ hiked to 1.25 on September 18th. Reminder, the Fed just hiked on September 16th to 3.75 to4 with poly market currently giving around 67% odds of another hike October 28 to 29, a week before midterms. Uh Kevin War had said the plain fact is that inflation is too high and has been for too long. Despite these hikes,

longerdated bonds continue to sell off. US tenure cleared 5.25 briefly and as of me saying these words I see it at 5.236. Um Japan's tenure is at 3.1, the highest since 1996. And while Treasury buybacks are at least 4 billion per operation, the sell-off kept going and in fact supply continues to come online in even larger amounts. Bitcoin ETFs are now a buy. We saw 2.4 billion in weekly inflows. the biggest since the week of October 10th, 2025.

Spot Bitcoin ETFs are now almost a billion positive for 2026. Um, and Nate Garassi was saying they've taken in 4.6 billion since Treasury said it would increase buybacks of longdated bonds. And Lacy Zong from BitGet said that BTC's near zero correlation with yield suggests it's not simply trading as a duration or rates asset. So, let's drive right to the point on this one, which is Rahm, we saw hikes from the Fed. We've seen where US rates are right now. You invest across all markets. What are you thinking specifically about the 10-year? Is this the point start buying?

>> I've been a hater of owning sovereign debt for many years. I talk about it every six months. It's like why are you owning government paper where your upside is cap? The best you get is your principal back and then a coupon and the debts and the fiscal situation is such that the incentives are to print. If you were to buy bonds, I would not judge you at this moment in time here. Okay, I would not judge you. Uh this is the 10-year. You can see we're at 5.2% right now. Inflation's clocking at around three and a half% or so.

Obviously depends on the the metric. true flation actually has a even kind of lower rate of inflation here. So, this is just getting to like technical panic selling of bonds. Uh, and I think you're going to see this top out soon. I don't think rates are going to blow out. You know, the US is the least dirty shirt in the world. But the better thing to do is instead of buying bonds is look at rate sensitive securities such as utilities and financials.

Those categories sold off as rates went up, right? Utilities are bond proxies. It's a long-term stream of predictable cash flows. So when rates go up and you discount those cash flows, the price of security drops. Let me let me pull up the XLU ETF for you all here. Uh and you know the reason I I say that is that if you look at moments in history when rates have been quite high you know we saw that last in October 23 when the 10ear went to 5.3% or sorry 5% 1982 of course uh in all those moments you were always better off buying equities.

Okay so here is here's XLU ETF. Okay, the earnings from these companies haven't dropped. It's just rates. That's all it is. Uh, and these are linked to the data center trend as well. So, you get uh a win there. And then when rates top off, this should have a kind of a snapback rally. Uh, if you look back, I mentioned earlier like the end of, you know, October 23, you had a very similar dynamic. This was exactly when rates were topping out around 5%. So here we are almost to the day to the week a few years later. I think history is going to repeat here.

All right. So that's actually a decently optimistic case in the US market. Chris, I want to talk to you now. Given your previous experience at uh the big bank, how would you be thinking about this rate setup for non US markets? Because Rahm's argument of the US is the cleanest dirty shirt necessarily implies some of those are dirtier shirts. Like what are we seeing outside the US where rates are continuing to move upwards or put differently like how would you think about this setup if others also have significant deficits?

I think Rob is 100% right. Um the US is the is is the strongest remains the strongest economy in the world. There are issues all over the place. Asia is is facing a very severe um oil and fuel shortage right now. It's an issue. Hormuse is a big issue for them. Um Europe sitting in Europe right now, it has issues in and of itself. I think you know the Saudis, it also has energy issues, dependency on Russia, etc. So where do these folks go? I think there's a lot of political ambition to decouple from the United States. I think you've been seeing a lot of sovereigns, you know, dumping US treasuries where they

can. But where do you go if if you're a sovereign? Um do you go to Bitcoin? Maybe. had a chat with uh Sovereign not too long ago. I'm thinking about going deeper into that space, but like you know that for many ways it's crazy. Do you go into uh into gold? What do you do? It's not that that's also a very difficult asset to store. So I think a lot of this decoupling is probably temporary. Midterms are going to be really interesting as well because leading up to them, it feels like the president's trying to get a deal uh with Iran. He would like look what has Besson said his entire uh administration. He's really focused on the tenure. He's

always been focused on the tenure. Tenure is getting away from him. Even though he's he's the house now, but even though he's the house, the tenure's a little gotten a little bit out of his control. Uh I think he's going to remain focused on it. And I think I think the president's trying to, you know, lower the uh the stress right now heading into midterms. Once midterms are are through though, um it could get it could get a little bit nutty uh because he's he'll be a lame duck. He's coming to the end of his term. Uh he's going to be less constrained by um worrying about elections and midterms. Now, if there's a Democratic shift, maybe he'll face more scrutiny and, you know, you could see situations where there impeachments and things like that. But I think things

could get a little bit crazy after midterms as well. Um, but yeah, Rob's right. I think there if you're outside, if you're outside the US, where do you go? Like, Rob, what do you think? Like, what do you do? Where do you go? Gold. Like, like what do you do? >> Gold is selling off now. Yeah. Yeah. I mean, you you buy from the United States, that's it. And if you buy from the United States, it helps >> uh you sell merchandise as well. It can actually improve your trade flows just in terms of balance of payments. So, >> yeah, that's the move. I know B Scott Besson would appreciate it.

>> Yeah. >> No, I think so. So, as I've been paying attention to this, I think there are a couple of things happening simultaneously that are finally starting to come to a head that people have been sort of gesturing at for a long time, but now instead of being far into the future, they are like near into the future. One of them, and I suspect this is some of the concern on the rates angle as well, is that the US is starting to head to a point where we're going to need to restructure our spending in a meaningful way. And one of the temptations for politicians in those moments is always to just shoot cash out of a fire hose and cause inflation, right? So, if you've looked at the

financial repression of the post-war era, right, after World War II, or you've looked at the 1970s, there's definitely a chance that inflation could run significantly hotter while they don't run rates hotter. And I would imagine, knowing a lot of people in the bond market right now, that's driving some of the 10-year selloff. And that's because of things like Social Security. Do we really think when the Social Security trust runs out of money they're going to have the fortitude to cut payments or are they just going to spend more money and cause inflation? We'll find out. I'm not saying I have a strong belief one way or another, but I am saying there are definitely people out there who are like, you know what,

they're just going to shoot money out of a fire hose to solve that problem. Like they'll pay it in nominal terms. two, I think we're at a demographic shift where, you know, we've talked a lot about AI, ROM, and we'll get to that later today, but if we don't get significant productivity growth out of AI across a number of segments of the economy, we're going to be in a world pretty soon where we have a declining number of like two-legged humans working, which starts bringing your GDP down, which means even without increasing it any your debt to GDP is going up. Will it make will it make your GDP go lower just in the age of AI?

>> Well, that was my question is if without the productivity growth of AI like say productivity state level, having less humans definitely brings your GDP down, right? Because you just have less people doing things even if GDP per capita is identical. >> So now we're in this race between less people more AI to see where productivity goes. And if you're on the AI skeptic side of things, you're looking at this and saying, "Ah, debt to GDP is going to explode from here." So, if we're trying to read the tea leaves for rates because rates markets are filled with grouchy people who doubt the future. That is the nature of being a rates trader. Um, I think this is the classic sort of conflict between rates and equities and

one of them is wrong. >> Yeah. No, I agree. I I think uh it's just it's technical overshoot. It happened a few years ago. Happens every few years. You get some kind of van in a rates market. That's what's happening now. I wouldn't read too much into it. There is a case being made for higher long run rates. Uh inflation's one of those. Look at the price of beef, semiconductors, chicken, tighter labor markets. That's one. Um two is house prices remain stubbornly high.

Uh and number three is we have higher returns on capital. It's actually the bull story. >> Yes, >> you know AI investment which is adding something like a point and a half to GDP is inflationary in the short run. Not enough electricians to go around, right? So, but that's a bullish story like you're you're going to get productivity growth coming out of it. It's the right choice to make. You've got the hyperscalers also issuing a lot of debt that is going to boost rates also >> but it's the rates are going up for the right reasons overall. notwithstanding the inflation the first bucket like higher productivity growth is a good story we do want to see more of that >> you think that's going to self modulate though because what's the one thing Democrats and Republicans are agreeing on going into midterms the data centers

are bad n the nimi trade so do you think that may slow down uh as we you know as people are niming it up >> have you all seen any of these debates play out like how prominent is the topic is it more about positioning on the topic is it truly something that's going to move polls when people go to the polling booth. >> I suspect yes. Um, and the reason is that it becomes a very like thorny riskreward situation for most politicians to support it. Nuclear is a good example here, right? like it was a small minority of people who really hated nuclear power, but they were loud and pointy enough that it actually

pretty much stopped nuclear development in the United States. This is like the tyranny of the loud minority problem in political theory, which is to say if you have a few percentage points of people who like violently hate something, that's usually enough to stop it from happening. Now, I'm going to raise a different point though as we get to AI, which is is this going to naturally slow itself down? Because I've been watching the markets here and there are a couple of interesting things moving together. So one Treasury Secretary Bessant, to his credit, brushed off some of the AI labs has called a slow frontier development even as those labs are investigating tens of thousands of self-generated

security incidents, shall we call? But at the other hand, partially that's because the debt financing of the buildout is starting to strain at what is probably its weakest link right now, which is Oracle, right? So yields are at multi-deade highs. And my question is, is it going to be credit that will become the problem here? Because as we think about the framing one, Bessant is saying, hey, if the frontier development is a problem, they can stop their progress anytime they want to. and he urged Congress not to give AI developers a liability shield. Rahm to your point, not giving into the loud minority there.

Uh Dario at Anthropic said, "We must slow the pace at which we improve the capabilities of AI models and OpenAI and Anthropic are investigating tens of thousands of incidents uh of models bypassing those rails. Though notably, I want to point out both Meta and Microsoft have come out against both the slowdown and some of the proposed fixes here. And there are other AI labs that don't seem to be having these levels of security incidents. Some of the criticism leveled against it is not that there's any problem with AI, it's that you don't know basic infosacing.

Number two, Oracle uh has sent notice on its 2.45 45 gigawatt project Jupiter campus in New Mexico preserving the right to defer their lease payments. Uh those loans are trading below 90 cents on the dollar and Oracle's 5-year CDS hit 227 basis points uh a record high with S&P rating them one notch above junk right now. And so the question is ultimately if you take Bernie Margles from American Compute, he's saying if you have a de a deal with Anthropic, will 50 basis points really stop you? But the counterpoint is that Oracle seems to be trying to stop and

Michael Bur is pointing out betting everything on this as free cash flow turns negative is quite dangerous. So Rahm I want to throw the ball over to you here in terms of like the investing standpoint is rather than any external force is it actually the credit market that might discipline things here >> the credit markets are going to do just fine with AI these are quality uh underwriters you have Blackstone you have Nvidia and they're taking senior and secured positions on their loans so they're going to do fine and they know how to make good lending decisions.

Uh so I think credit markets as it relates to data center are going to be more than healthy. The issue around Oracle is they have the counterparty risk with OpenAI. So it's a proxy for Oracle stock and OpenAI deferred their IPO process. So uh that means they have less liquidity. It's paper money, not liquid money to backs stop their obligations. That's that's kind of the challenge here. But if you go one level deeper though, you have to ask yourself, is there a buyer for those data center contracts? Right? Oracle's got a contract with OpenAI promise to pay for delivering certain services, cloud services. Yes, there's going to be a buyer because these GPU rental prices keep going up. You know, the H100s

were already economically or already accounting wise depreciated. They still have economic value. So if there's some default that OpenA has on their trillion dollars in capex obligations versus their 50 billion in revenue less than that someone else will step in there and and pick up that data center contract. So you know Oracle will be fine too. I certainly hope we don't have a sovereign bailout. That is what people are talking about. Does the US get in there and bail out Oracle? H >> but how do you have a sovereign bailout?

Like because I what I think is going to end this boom is liability and litigation, right? You're going to if you have if you're creating technology, again, we talked about this earlier with the rule of law. Technology doesn't change the law. The law is the law. And if you have technology that's breaking the law and you're centralized, you're going to there the the amount of like I don't know about you guys, but but litigation is so expensive. And if you have 10,000 agents going crazy and breaking the law, the amount of litigation that piles up and and you know, litigators see these big honeypotss. We're a very lious society in our country. That's just how it works.

>> Yeah. >> And so and like that's my concern is like it's not about slowing down. It's about accelerating to make sure that you conform to the rule of law. And that's that's been the issue. If once you have like like you want to you want to destroy your balance sheet, get get litigation after litigation piling up. That's the problem here. >> I think that the product liabilities is a great point. There are product liability statutes on the books and everyone's accountable. >> Uh it' be interesting to see how it all plays out. You know, if you if you have a Tesla and you're you're using the FSD mode, you as the driver are still liable even though using the technology that >> totally created.

So maybe open AI isn't going to be liable for agents behaving badly. >> So this is this is why I think decentralization gets so interesting, right? And and so so you're right, Rahm, and let's let's really unpack it. You know, does a cell phone company get in trouble when you do something bad on your cell phone? No, it doesn't. Right? But if I'm a company and I build technology and that technology does something bad, then I'm accountable. >> So what I would like to see is a situation where the technology is the technology and the people using it have the liability for using it right or using it wrong.

>> But we're not there right now. These agents are getting spun up and who's ever spinning if you spin up an agent and the agent does something wrong and it's your agent, you know, I'm again I'm not a lawyer, but someone's going to have liability. Just because it's an agent doesn't mean no one gets in trouble. >> Why have you noticed? >> I think this is interesting. >> So Muse has like a million downloads on their app. It's saving people money in an inflationary context. You're getting mainlining of consumer AI. That's going to change the tone around AI. People are applying for jobs with AI. They're updating their resumes with AI. They're getting more work done.

>> So this political issue is going to go away. You haven't seen Muse have an accidental bot go rogue out of a million downloads and tens of millions of user interactions. We haven't seen that from Grockbot either. We haven't seen that from Anthropic to my knowledge either, have we? We haven't. Microsoft co-pilot. >> Oh, here this is Here we go, Austin. Here we go. Here we go. >> You said you gave me the soft pitch. I mean, you gave me the soft pitch, >> you know, it's it's, you know, >> every week >> it's it's selling by fear, you know, like it's an open AI, right? Okay. It's like, hey, how do we get in the

headlines again? Because Anthropic has pulled ahead on revenue. Remember, Open AI was the chosen one. They had an $86 billion valuation. Anthropic was raising at like five to 10ish, and they pulled way ahead. And uh part of it is it's like it's a strange form of like sales. It's like saying we are a systematically important institution, right? Like the cifhis in the banks. And you know, we've talked about this before like if you are regulated, if you can operate in the regulated perimeter and be seen as a leader and then pull up the ladder so that competitors can't enter, then you're you're in a good spot. And that

that's what it looks like. Why is it that we don't see these issues anywhere else? >> Well, to pull a few threads together here um one agents are not legal persons, right? Like, let's be very clear. If you're using a computer and you're instructing the computer to do things, the computer is not a legal person. The computer is not liable for things, right? That would be like saying, "My shovel should be liable if I hit somebody with it." That makes no sense whatsoever. It's just not a thing. It's not part of law. It's not how it's going to work. So, when these things break and do bad things, there's kind of two different ways that product liability gets distributed. And the example of

Tesla is actually a really good one, right? Which is to say, if I am the owner of a Tesla and I am using the Tesla in a way that creates danger, like I'm using FSD and not paying any attention and I hit the steering wheel and then I run somebody over, I am liable for that. as I should be. That is my fault. I took those actions. So, if you deploy an agent, you don't sandbox it and I just give it some sort of query that's like, "Hey, go get this information no matter the cost." And I come back and I find out it hacked something. Like, that is on me. I just It's like me firing the Tesla down the highway at 100 miles per hour without looking where I'm going with the blindfold on. Like, what did you expect to happen? That's type number one. Type

number two is I was using the product in an objectively responsible way, but the manufacturer built it in a way that was defective. And so the fault is with the manufacturer. A good example of that, again, let's use Tesla. I'm driving a Tesla down the highway. I'm going the speed limit. I'm observing all the road laws. I'm doing everything the right way. And then my car explodes and kills everybody on the road. That is a Tesla problem, right? they have some sort of horrible design flaw in there that they have built where the vehicle is not working as intended, not fit for purpose and probably wasn't disclosed. That is when the product liability goes back to the manufacturer. Right? So if an open AI or an anthropic is making false

claims or like saying things about safety or quite frankly just being grossly negligent in design and the agents start doing things, that's on them. If it's not, it's probably on the user and the person giving it instructions. Again, product liability 101 type stuff. The agent is not a legal person. You cannot sue an agent. You cannot send legal service to an agent. A judge is not going to recognize an agent, right? Like no. However, Muse, right, like as was brought up is a really good example of how you don't just have to let these things do anything they want. And I think to be totally honest, Mark Zuckerberg and Alexander Wong deserve a huge amount of

credit for what Meta did with Muse, right? Where a lot of people were zigging. They took their time and zagged and built something genuinely different with a much better construct, which is to say they looked at Open Claw, but understood the core security vulnerabilities there that LLMs lacking sort of an internal state or reason cannot provide their own guard rails. So what did they do? They provisioned people a VM. They gave them access to Muse Spark, the LLM. They put a very nice UIUX wrapper around it. So they learned the Steve Jobs lesson of like user experience distribution dominates tech every single time. Every single time. But then importantly, they put guard rails around that thing outside of

the LLM. If you look at the Sentinel setup requiring people to like click through for the agent to take various tasks, that is not the agent throwing that up. That is a thing outside of the agent that serves as guard rails. And like Chris, you know, we've learned this lesson in algorithmic trading at the big banks, right? You don't let the algos police themselves. You always have some sort of controls layer outside of it so it doesn't try to like, I don't know, buy more than all the Apple stock in the world. And so there are very good infosac and very good sort of design features that meta seems to have understood really well and put into muse. And what's the result of this? I am having tons of people who are not AI

experts and are not coders talking to me about muse in a way that is just not happening with anthropic or with open AI. The only thing that's come close is Grock bots. Let's be honest, that's more of a power user thing. Like Muse is just so much more easy for like say my own mother to download on the phone and at least have some intuitive understanding of what it's doing. And if they don't have it, Sentinel is at least being like, "Hey, do you really want to let it send that message on Facebook Marketplace that gives people your address?" Right? This is not some rogue go hack everything sort of deployment.

So, you know, I look at this and I look at the AI thing and like Rahm, I'll throw it back to you because like Meta got a pretty decent pop when Muse came out. Is what we're seeing the start of the wave of frontier model companies have been selling on technical capability, but I think Muse is the first time we've seen somebody like run the distribution play hard in this space. It's impressive what Met has done and you know the big players have distribution. They have the data. They know how to code. There are a lot of lessons here. Uh one is around leadership right? Alexander Wing stepped in after Mark uh put Yan Lun who won the Turing prize out to pasture and then in a few short months look what he

delivered. you know, he he's effectively paid Alexander Way billions of dollars by acquiring half of Scale AI, which Alexander founded, uh, put in like six, seven billion dollars into Scale AI. So, this is like a a multi-billion dollar aquire, and he's added what, $500 billion in market cap to Meta, a couple hundred billion at least, like the return on spend has been there. Um, the second is Alexander Wing. dropped out of MIT at 19 and then went to Y Combinator and he started building like Y Combinator is a more significant institution now than Harvard and MIT and all these Ivy League schools and Y Cominator gave him the capital to

succeed. It wasn't Alexander Wang paying MIT to get an education. It was the other way around. So, it's an extraordinary entrepreneurial story. Uh I think people can learn a lot from that. I hope my kids take that kind of path too. >> Interesting. >> Is your wife on board with that? >> Oh, 100%. Oh, yeah. Oh, yeah. Yeah. Yeah. My >> my son uh they're getting into like games now. Seven and eight years old. My oldest one. >> Oh, yeah. >> And he's like, "Yeah, like I want to build a game." Like, you know, AI can build you a game. Like his eyes lit up.

Like we're trying to find a path to get him on boarded while you can be a creator, while you can still preserve the critical thinking. But like what's the point of school? Look look at Alexander Wang. It's not just him. I mean you could tell the story about so many other startups. You know OpenAI came out of Y Cominator. Look at the value creation. Now in the prior generation you know Bill Gates went to Harvard dropped out. Steve Jobs went to Rice dropped out. Elon I mean he was in South Africa. Okay. It's not a prerequisite anymore. If you go to the Ivy League schools you're going to work for the Y Cominator kids.

may as well just go directly to Y cominator. >> I think another point around that one though, like from an education standpoint is universities are having a harder and harder time staying current with what's going on in the world, right? Like I teach at a business school. I've taught at another one in New York. I look at the teaching practices all over the place. And you will notice that universities were like very negative about AI. And my thinking on this was that's backwards. This is like back when we were trying to keep kids from using Microsoft Excel. And what did that fundamentally do? It made it harder for them to get into a lot of fields where being really good with Excel started to be extremely valuable.

It's one of those things where people need to understand this is just a tool and you are responsible for the understanding and the output and the usage of the tool. Right? like speaking as a professor, if my student uses AI and gives me a bad answer, I should fail them and I should hold them accountable for understanding what that answer means. I don't care if you have AI write it or AI tutor you. I care whether you, the two-legged human being, understand the thing that you were confronted with. Otherwise, it's just the distinction of do I care if you like wrote it with a pencil or typed it? No, I don't. Do you understand the material? That is the fundamental question. ROM, what you're getting at is sort of like the Nasim

Taleb point of you can learn a lot more from tinkering than wrote memorization sometimes. Like there's no substitute to just get out there and do it with your hands. And this is part of why I'm so excited about Muse. Like if you really want to turn perception of AI and perception of things like data centers, you've got to show people how it's useful for them and deliver them value. >> Yeah. Parents uh are disappointed in public education and they're tired of the high cost of university education. So are the students graduating with a lot of student debt. Then they blame the system because they can't get a job.

Then they resent capitalism and that's why you have these tensions. But look at what's happened with Alpha School. It's a private K through 12 micro teaching. It's two-hour learning model and the rest is is building real- time mastery mentorship. We need to see more of these alpha school campuses all over the place and hopefully now for the first time AI can create a more disruptive education model and create some kind of alternative to public education.

>> So, a couple things. Not all universities are anti- AI. Uh I walked into Carnegie Melon a few weeks ago and they're like, "We invented it in 1956. Everybody take a look." Uh Rom to you. Gaming. Gaming really helps uh kids with a lot of skills. It's not all bad. Um guess it's it gateway to computer science. But getting back to Zuck, um if only of all the companies in the world that understand liability, it's these guys, >> right? They've been dealing with liability since they started. And I feel like what I've seen is as that company's matured, they're learning to manage liabilities in the release of their products. That's their edge. And and I

and I let's see where it goes from here because it feels like they, you know, they're so sensitive to they've been through it so many times and frankly they they've succeeded through it. Uh I hope everyone else makes it through it. But but you know, you got as you're building this tech, you need to understand and manage your risk and your liabilities. I mean, one element is that, but Chris, let's go back a different direction. Something else that Facebook understands better than almost anybody other than maybe Apple is user experience, right? Like look at >> Yeah. of Facebook and Instagram globally. Those are some of the products in the world that have like the most consumers. And most of the things that

are beyond them are not so much products as like physical things. Like yeah, more people drink water than use Facebook, but like you got to get into that stratosphere. And so what that also means to me is them learning the very important lesson of we could make a product 10% better or we could make the user experience 10% better in terms of like core technical capability versus how does it feel to use it and they focused on this one and that seems to be driving a lot right now.

>> Yeah. And they also have the distribution already. Yeah, dist you can have a great product and it takes time to get distribution. Open AI anthropic they've had to create distribution from scratch. That's not easy. Then they pivoted to institutions because they said that was a better uh model for them. And so like that ubiquitous retail distribution is invaluable. So they had to like Meta had the benefit of that and that allowed them to build a product because they knew that that distribution was not going to disappear overnight. It may disappear in in time if you don't have your act together, but once you've got it, you can use it. I think that's been a distinct difference between the way they build.

>> No. >> Yeah. >> Sorry. Go ahead, Rob. >> I mean, they're getting to enterprise now. I think there's a lot of things that are changing with AI. Venture is changing, execution's changing. Let's talk about venture for a bit. And Chris would love to get your take as a venture investor. So, you've got this consumer app called uh Granola that comes out, then Instinct, multi-billion dollar valuation. Instinct personal agent that does tasks raises at a couple billion and then Muse shows up two weeks later and it's so good. I think now is one of the hardest times ever to be a venture investor. The joke used to be in the 2010s like what if Google does this? What if Google does this? And Google never did it. Google's focused on search and their core brand,

their core offerings. Now yeah, Meta did it. Here it is. Take a look. >> Yeah. Look, I I think the AI venture space is um really really really hard. You better have a real edge. Uh you probably need to be sitting there in SF if that's all you're focused on. Um that said, I think the venture landscape right now is as good as it's ever been. Um I couldn't be more excited. Uh and I'll tell you why. You've got crypto, right? And crypto is democratizing global finance. um you're seeing this institutional adoption happening where institutions have a lot of needs. It's

been retail its entire history. Now institutions are coming in. They have problems that they need to be solved. So there's a lot of infrastructure stack things that need to happen. You know, not to mention the apps. That's crypto. Then you get this thing called AI. And remember crypto and AI guys, they're friends. Crypto and AI are friends. Very important. Um AI is it disrupting crypto a little bit? has found some vulnerabilities, but fundamentally crypto rails and the in the machine economy go hand in hand. There's value acrruel that you can find along that intersection. And then the last civilization defining technology is quantum. It's coming. I'm telling you, I just published a piece in Fortune. Um when these technologies come together,

like I said, quantum will disrupt $500 trillion dollars in public key encryption. And that's protecting the global assets, right? How is that going to be solved? If only there was a concentration of cryptographers. Quantum's not going to kill crypto. Crypto is going to like lead the world, you know, across this initial challenge which is post uh quantum cryptography that needs to be solved for. And then you get into the app layer and then you you look it's almost like okay infrastructure into apps like so when you look at the intersection of those three technologies and I don't I hate being hand wavy like just throwing out these words and saying but like that's the niche that you need to be focusing on but yeah I think you're right if

you're just if you're looking for the next prediction market like you know how many thousands of those I've seen the next mention market the next whatever like the next AI like come on guys it it has to be unique and differentiated and it's also Not often that you see something that's like, "Oh my god, I've never even heard of this before. Wow, that is awesome." Um, so yeah, >> we should dig into venture. I I think we should maybe do dig into venture next week. But it's extraordinary. You got people like Harry Stebings coming out saying it's insane. >> Nicole Wish Whiskoff from her venture fund saying the valuations are nut nuts.

But the revenue ramps in AI have also never been seen before. And if you raise money before Chad GPT, you're out in the cold. It's like your startup is not relevant. If you're not in the AI theme, no one cares. It's extraordinary. >> AI is a tough is a tough vertical. Um if you're going in there, you better have an edge. Um there's different but but but there there's plenty of edge out there if you know where to look. And and I'll be honest with you, I've been seeing very reasonable u valuations. you know, when when you find the right niche that's not just >> What are you What are you seeing for like seed round valuations?

>> Uh I've seen stuff around 25. >> Yeah. >> Like not not crazy, but it's not it's not in these saturated spaces, right? Crypto is not cool anymore, you know? It's all about supply and demand. And so like you can find a really good crypto project out there. um good good things going on for reasonable valuations or you find that intersection that no one's thinking about. It's not saturated with VCs because they're missing it. It's all supply and demand. More buyers and sellers price goes up, right? >> You have to have an edge. You have to find those holes and they're they're they're out there. You just got to look.

>> They they I'm excited. >> Yeah, they are definitely out there. I think a lot of the VC world is looking at kind of the frontier labs model and really underestimating the vertical integration and data integration in the way Chris is talking about in conjunction with AI. But on that note, we're going to have to table that for next week if we want to have this argument because we are at time. So as always, thank you for joining us for this episode of Bits and Bips. As a reminder, we're on our own feeds on X, on YouTube, all the podcast platforms. And this week we are no longer going to have short segments on the Unchain feed.

So subscribe to Bits and Bips on the platform of your choice. Otherwise, we'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everybody, thank you for watching and hope you enjoyed this episode of Bits and Bips. Just remember, nothing we say here is investment advice and please check unchainedcrypto.com/bitsandbbits for more disclosures. Come on. Come on. Come on.