Crypto's Great Rate Cut Cycle | Roundup

Transcript

hey everyone this episode is brought to you by SE the Blazing fast parallelized blockchain which is unlocking salonik performance for the vast ocean of eth devs out there now you're going to be hearing all about say and their new V2 upgrade but if you take away one thing evm is here to stay there are some problems with it which we're going to get into later in the episode but say and especially their V2 upgrade is helping solve that so thank you very much say for making this episode possible all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax

legal or other advice you know the deal now let's jump into the episode all right everyone welcome back to another Roundup of B Cur you got Michael's one and two fans all the fellows here how you guys doing how's the week we is good good big week soon TM soon two two weeks TM yeah yeah doing well though feel like every week there's like a new uh there's most of the stuff that I've just been seeing is Mo mostly around the political front which is a new for crypto and uh yeah we definitely I I went back and looked at what we've

been talking about for the last couple weeks and it's been honestly a lot of politics stuff um and I know we've got more of that today but I mean it it's it's the X Factor right now it's you know stuff is working for people that are paying attention to it a lot of the people who haven't been paying attention to it don't really kind of get what's going on or they don't see what's going on and what they do see is the political winds changing you know the 71 Democrats that voted for fit 21 in the house um the ETF the eth ETF um looking like it will be a approved here in the next 4 tweets obviously this runs counter to what happened with Sav 121 but there are a lot of really

interesting kind of perspectives that I think people are starting to see from the political winds shifting and it's not really I think now a question of if this is going to happen it's more just a question of when um so we happy to talk about it but there was a new uh theory that James safer kind of put out um which the rumor last week at least was that it was someone in the White House someone in the Biden Camp kind of gave the nudge to someone at the SEC that it was time to just let the EF go through the new theory is that there's someone who um his name is lizar uh who's one of the SEC Commissioners who used to be kind of the the number two or or one of

the lieutenants within the Nancy Pelosi camp and that the new theory is that it was actually someone from the House of Representatives potentially Nancy who gave gave the nudge um and a lot of that stems from probably what people in the House of Representatives which are much more tied into their constituencies than anybody else um you know you think about it as the the congression the Congressional members then the Senate and then the the White House in terms of ranking level of connected to their constituencies we've been talking about this for for months now you know 50 60 million people in the United States are in crypto this stuff isn't going in anywhere and it's probably going to be the House of Representatives that

recognizes this first and I think that that is probably this the the through line that brought 71 Democrats over for this vote but it's also now suspected that it's someone who also push the EF it also lines up with you know the veto that that Biden made of sap 121 even though that was also a bob harison effort within Congress so a lot a lot of stuff is kind of circul and churning and one thing that happened last week which wasn't published by the time we talked about it but there was a great debate um between Marvin um and uh from Unis Swap and and Ryan selus at consensus um and it also happened to be

about a day before the veto was actually done um but it it seems like we're back into crypto at least for the next six months being a partisan issue um generally from an election standpoint and I don't think there's really any debate around that anymore um maybe eventually we can get to a bipartisan stance but it is partisan at least for the next six months we've also got igalia uh putting the industry on her back which is igy yeah that it's it's funny you know it's a it's a little bit of a slow time in the development standpoint of crypto when you've got people either talking about politics or whether or not celebrity scam coins are good or bad and that's been an enormous

amount of the debate uh this week that I've seen but I don't know where you guys fall in that particular Spectrum but I'm more of just an enjoyer of the of the spectacle than than really having any heart P we literally can't even remember what we were talking about like a month ago so you know I'm I'm an observer enjoyer I'm not I'm not a thread writer nor am I nor am I I'm not a thread reader either yeah but I'm not reading all that there's been uh I I know if you've seen this guy on Twitter I guess I'll give a minor shout out here to this guy Emanuel aosa um e aosa on have you SE this guy he's a he's a technical writer for the

EF and has been writing these like massive threads he has a very pointed perspective on ethereum and what the L1 should be doing versus the rollups but I don't know if this is just my feed or if you guys are seeing him everywhere also but um I mean people can't stop talking talking about ethereum no it's really hard for them to not talk about it but you know there's all these things happening and all all this amazing you know application development but coming back to eth all the time no is bad press agreed agreed all right I've got a question for you guys on that so we have the announcement that we're we're getting ethereum ETFs we don't really know the timeline Gary gendler

came on this week and he basically my the tldd was that he tried to calm people down said we're going to be thoughtful about this and tried to you know send the expectation that we're not approving in the immediate future but F yeah love his CN appearances yeah that's just Gary being Gary at this point but what do you guys think um like putting yourself from the perspective of a traiter do you think that eth performs similar L to what you know when we when the market kind of woke up and realized that Bitcoin ETFs were going to happen and there was sort of a grind up or do

you think that people won't really be incentivized to front run until we have a hard date on the ETFs and whenever we get that then people are going to start really piling in what do you guys think about relative performance there doesn't really matter at the end of the day but I mean the the the biggest price action happened after the launch right so with Bitcoin ETFs so you know January 9th or 10th I think was the date that they officially launched and it took a little while like the the biggest price action happens in the later half of January and February was up only chart chart looks great the the long-term chart if you uh if you want to throw this up maybe so like it's already rated you know it's

like you know 0.54 eth BTC and this is the setup that you want right you want like the super robust BTC flows with the Positive price action with macro easing with you know weaker jobs with central banks cutting rates with all the tokenization and adoption narratives that are happening on eth and I think you can kind of see it as well with like soul eth and and that starting to kind of maybe just Plateau um and maybe that's like a permanently higher Plateau but a lot of the Market's attention is shift to eth and I think if these flows are any

fraction of the Bitcoin flows which I think there's a case where the eth flows are going to be higher than the Bitcoin flows like you'll probably see a few days where it's like eth and Bitcoin have roughly similar flows that just means so much more to an asset like Ethan I was looking at this on Twitter the other day uh the lowest amount of e on exchanges since since September 2015 wow like and you know like I think that is it kind of reminds me of like the Ico bubble when everyone was taking eth off of exchanges um and that was it's like you look at the eth like Supply and exchange chart it's like September 2015 then the very kind of like start of the Ico bubble and then now but you know if

you don't have a ton of these coins like people are trying to like put them in these ETFs where they generally don't leave I don't know it's funny to like look into crypto Twitter just tearing itself apart and then you kind of zoom out and look at like the long term of these charts and the long term of like the supply Dynamics and feels like it's going to be a fun summer so I mean the other the other data points that I think are interesting um with Bitcoin relative to eth um and you know think about all the different places that eth is currently stashed right now you've got obviously all the staking capabilities but uh you know in addition to the state eth you've got eth and and generally it's double counted in that respect but you know 20

billion is now an i layer you've got hundreds of millions if not I know kak just announced a billion in their in their private test net you've got all the eth that's locked up in maker you've got all the different use cases of eth is collateral within in and throughout def5 like there is not really the same Supply demand Dynamics even if the demand is lower the the supply Dynamic are are not there the biggest Catalyst for you know less Supply was a couple months later 3 months later with the happening that's now in and so we're seeing the ramifications of that and that's why you saw you know nearly a billion dollars of inflows yesterday and or two days ago and I think it was like 600 700 million yesterday like these are these are massive numbers from an E from a Bitcoin ETF perspective the other

thing that I think is going to be really interesting that happened with Bitcoin was Bitcoin had an up only month in February but the other asset that also had an up only month was eth and it was it was writing the Bitcoin wave the thing that I think will start to happen is you'll have eth actually drive a lot of the price action in Bitcoin which will be one of the first times that you see that because the attention the flows um will all be on ethereum as it's going into that ETF for the first few months and and then we'll see where it net settles but I think you're going to see kind of a narrative shift where Bitcoin will ride eth for for a while and then the other thing that I've seen this week yeah 900 million 500 million last two

days um also 30 million join into gbtc and then 15 million joined into like are these people yeah someone fat fingering something let let me let me uh let me put a take that I saw out there that I thought was really good so uh split Capital 900 million in inflows were required to keep eth BTC flat that's gonna trigger some people if they can read um but like it is remarkable that eth BTC is hanging in there it's kind of remarkable that the alts are like I mean the alss are getting absolutely slaughtered against Bitcoin and eth but like the fact

they're hanging there a lot of I forget who asked us this but someone was like when are when are the alts going to pump like they did in 2021 and it's like well it's like kind of a different cycle the capital is more siloed it's not like the ETF buyers are like going to rotate into altcoins like they're they're not in the same B Park like they're they're like off in Morgan Stanley you know Prime brokerages they're not like rotating into alins but I think what could happen is that the majors run so hard uh like Bitcoin over 100k you know eth over 6K 7K whatever that like that would be the level of wealth required to generate like this

altcoin rotation like you saw in 2021 like I do think it is coming I just think the majors need to be a they just need to be a lot higher priced for that to happen so I think that's that's your bull case we're just too early in the cycle to your point like when the altcoin runs from 2021 happening how about in 2025 because that's the time frame that would be equivalent like where everybody's like oh is the bull market over in in Mark NOP it's still going up it just started like I I can't remember who had this discussion but you know what ining are we in of of the cycle and it's it's got to be in the first one two maybe the bottom of the second right now but that that's you know like the the max that we're in in

terms of where we are we just discover what the new game is which is institutional flows uh the game has started we've played one inning the the second inning is about to start with ethereum the the other thing too that I will say is I I continue to see this and you know we've we've chased this down in multiple different directions but um the Advent of a third ETF is a long ways away and what will actually have to happen is things will have to be declared Commodities I don't know how many times we have to say this but like yeah Brad garlinghouse suggesting that in 2025 there's going to be an xrp ETF like there's still an ongoing lawsuit with the SEC BR the garlic man garlic

bread and he's just doing his he's just doing his thing you know he's like it's coming I I look I I I am 100% in support and agree that there will be these ETFs but what we have shown what we have been shown so far is that there is a standard process now for how these things become ETFs step one declared commodity step two a Futures Market on a regulated exchange like the CME then wait two years have enough correlation data and then file the applications but anything other than that you know maybe that maybe that changes with a new Administration but you you're you're hoping for a change

as opposed to your you're playing for a strategy so I think that is the biggest difference that could be expected between a democratic versus a GOP Administration like a Trump versus Biden Administration it's like whatever if you know if Trump ends up following through on all these promises hey I love crypto and all these different forms and my nft collection is sick and you know I'm gonna make crypto the or the US the center for crypto again that that's one of the the points that he could attack and say hey people generally love the ETFs CME is throttling the um the ability to expand into other products and like coinbase is trying to launch their own sort of regulated Futures exchange as well and there's no real reason why they couldn't just look at

the coin it's not like but so it's not like we get a new president in the White House on November November 6th or or January 20th and suddenly like all right clean slate let's wash it all off and like rebuild it back up it's you got go through the right proper channels I mean this stuff will take some time that that's kind of generally my only point he everyone wanted to give a big shout out to today's title sponsor SE now I want to talk to you guys a little bit about why I think say is cool from a design standpoint a big problem that it solves for eevs out there and then some cool stuff that se has coming up the reason I like say from an architecture perspective is again it's a very fast blockchain parallelization all of that stuff but say has essentially been

custom building block space which is for Consumer apps and Dees now they have some very cool features which enable that so twin turbo consensus optimistic parallelization say DB all of this stuff allows you to reduce the time to finality make for very very fast transaction so if you're building a consumer app or a decks this is basically the blockchain for you if you've been building in the evm you love the evm but there are some restrictions about it that don't support your app so maybe you can't do fast enough transactions or it's not parallelized whatever it is you can now take all that stuff that you built you don't have to start from scratch and you can build it on say now recently they've launched V2 but also public devet so the way that you can follow that and keep up to date is go and follow say Network on Twitter

all right thanks guys wanted to get your guys take well why do you think also I guess one one final point we haven't made this in macro podcast in a while but you know those are pretty Monster inflows for Bitcoin this week and I I think probably you could look at this sort of uh growing slowdown in in growth as as pointing to the reason why that might be uh expectations around rate cuts are starting to shift people are pricing in uh one more this year three instead of two um the expectation let's what have whisper is that you know people are expecting a doish uh doish fomc's in uh both June and July and yeah the ECB and the Bank of Canada both cut rates this week so I think people are generally starting to see the direction of rates move like

move in the other direction which has taken longer than almost everyone thought but this this is this is what we play for this is going to be the largest rate cutting cycle of our lifetime I don't think rates ever get to five and a half or whatever they're at today and we'll see where they take them but this is going to be the biggest rate cut cycle of our like lifetime this is what we play for you know I don't know how people are bearish right now also I I listen to a ridiculous macro pod with Jeffrey gunlock who is the CEO of double line which is this mutual fund I I love him but he's completely lost the plot he's like my he's like my new thing is that he's so bearish that

he's buying zero coupon US Treasury bonds because he thinks that the US government is going to have to restructure its debt and the zero coupon coupon bonds are like the senior part of the US Treasury capital structure I was just like I was like on a walk and I was listening to this I was like these people have lost their goddamn Minds like you literally just need to buy these coins that's all you need to do and just well I mean let's play it out so like you're 5.25 right now no more rate Hypes let's say you know one to two maybe three 25 basis point Cuts this year maybe another 100 basis points of cuts next year I I I mean I don't know if this is what you mean but like I don't actually see us getting well below two two and a half percent in terms of

interest rates we're not going back to Zer like that's not that's not gonna happen what that does though that I think we could get close we could we could probably go to one in the right economic scenario but it would have to be bad though who knows like my my point is like when they start cutting rates people are going to price in like all the rate cuts at the first like it's like they cut 25 basis points let's price in 250 basis points of cuts and I really don't think you need to get more intellectual than that just like the price of money is going down the price of assets are probably going to go up there's there's a really excellent clip uh I can link it in the show notes here this we we just brought on some Felix uh Jovin who's taking

who's uh starting to be more active on the margin he he quoted this there's this guy Warren pies who it was like a two-minute clip we can share it in the show notes here and he talk he talks about he talks about the sort of dorismond especially on the macro side of things and you know he was like look I was one of these guys in 2008 I thought the world was ending moving all into go blah blah blah and that's just not the right way to make money and he actually used specifically the example of like Stan ducken Miller who he's been making he's been making the rounds and saying look I'm really concerned about the US fiscal situation these things are and you know doing the same sort of historical you know there's a huge problem here but then you look at the

way that he's investing he's buying Nvidia you know like look at what they these guys say and what they do and yeah because he's he's he's a guy who has to make money in the markets and yeah just don't get like infected by this dorismar Ley that dinner we had with him and he was like uh my bearish videos get five times more views than my bullish videos yeah and there's there's always a market like even since like noer Damas for like these like doomsayer calls like this is like not a reason thing um and there's so few just consistently bullish

people that like my macro diet in like 2022 2023 was like all these macro substacks podcasts you know very bearish very dorish and then I had Tom Lee you know email newsletter who's just like buy dips stay bullish stay in the game keep go it's like that and and it's like not as intellectually intriguing as the Dooms you know kind of perspective but Tomley is like the only person who's been right over the past 10 years consistently and he's gotten absolutely shellacked when he's wrong but you're going to be wrong at least part of the time so why not be bullish for the other part it it it's

just a much better strategy so I've got a I've got a buddy who his dad runs the largest bond fund at Fidelity so 100 billion plus in bonds I bet he's pretty barish so I actually remember it December 2022 and I was around uh I was around his place around Christmas and I asked him I was like hey man because I you know same diet right like listen to a bunch of this Doomer stuff right remember 2022 was a horrible year for everything everything was weigh down like 30% and you know I have been I don't even remember what the narrative was back at that point or something about how QT was gonna B like something bad right and I was like is it gonna keep going down like it has to keep going down I asked him I was like so

what do you think about this and you said nasdaq's down 30 per. it's almost never down 30% you should probably buy it and I was like no that's way too simple dude you don't need the heuristics that are like mental gymnastic like you just need to stay bullish like they're only going to print more money yeah it's it's I think it's like the other thing I've noticed now is that I've I've I've noticed that Trad five people are more bullish on crypto than crypto people and I would say the right crypto people are more bullish than Trad five people but like you kind of do have this like passing of the torch of people who can see the long term of the market crypto markets and and general markets versus crypto people who are I don't

know it feels like some of them are burnt out some of them are like struggling to figure out like okay if I'm like a you know defi guy do I have to get into games do I have to get into meme coins like but it's uh it's kind of fitting because trafi is going to take most of the ride in terms of market cap for the crypto industry which is pretty dragic if you think about like you know the people selling their coins to Bankers meme it's pretty interesting so i' I've always had this thought around different mentalities when it comes to investment strategy and if you're an internal Optimist like I think most of us are uh or at least definitely the three of us are um the the you only have to be right you know one out of I don't know three times four times if you have

a venture fund you're going to be wrong more than you're right and that's just the nature of the game but if you're a try person you can be correct in terms of your investment strategy predicting two out of the last you know or predicting five out of the last two recessions and so it's the same kind of thing where you just have to be right a couple of times even if you said it four times that and predicted four times that if you do risk management properly it's it's a very different mentality and and so that's why you know I'm sure it's all the people who who look at the Jack Farley negative uh discussions and know it's like catnb oh great here comes another one I'm G I'm gonna regurgitate this and send it out to my LPS it's like it doesn't it doesn't really make sense

uh and and I think there's just two mental models and the two are just fundamentally different and you're either an optimist or you're you're kind of realist and if you're a realist you have a different strategy than an optimist yeah and I think Jack Jack does a really like Jack produces great content and does a really good job totally ping back on those people just just referencing Jack because we talked about it there there is a pervasive bias in it's it's actually a human nature problem it's not just a finance media problem just look at the news and how negative it is look at the ratio of negative to positive stories on the news this is a this is a human nature problem that's not super fixable for for whatever reason people just choose to consume more negative than positive content it it gets your your amyd

amigdala firing and that's that's just I'm not really sure that you can yeah Meda oada the but in the same way that you have the hero movies like you know the Venture investors and The Social Network you also have the the people in The Big Short and like that's the two mental models of you know how to operate like you're either hitting a Facebook or you're predicting a housing crisis the the big long how Michael and I the big long how Michael and I sat on our hands for five years and absolutely killed it you know what I also don't understand about the people who are like the us is going to have to restructure its debt and it's gonna we got bigger problems with that happens also yeah that's what

wor you're be senior in the capital stack like yeah we were we were talking to an LP this week and and it was it was pretty funny it was like you know why are you guys like doing all this stuff in 2022 and like you know getting lawn getting L like it was it was not but it was like not a typical year and he was like yeah you know we were invested in a couple managers who in like 2008 2009 they were like looking at these dis distressed debt offerings that were 4 cents on the dollar they're like look we're going to buy as much of this as we can because either you know the financial world is ending as we know it or these things are going back to par and those are our two options so might as well might as well be buying this is

this is the old Wall Street saying you never bet on the end of the world because it only happens once which is which is really true you know I like that but but also there there is I feel like we are in well out of un aspect this is outside of my w house and everything but I feel like we are in the end game of this restruct there is a restructuring going on we're inflating the dead away we're in the long slow process of inflating the dead away that's what's happening yeah so I don't think we're at the end of it though no no no definitely not definitely not and it's not going to be super fun there's definitely you know consequences to that happening so because sometimes I think people just say oh that's what's going to happen it's going to be great it's

like I don't know about that either but um nope yeah yeah I I mean like it just feels like if if this is really going to happen like this inflation restructuring recession we take money cost back down to zero or close to it like this is the Overton window for crypto to really work yeah like this is the Overton window for Bitcoin to actually hit 500k to a million you know gold goes up you know all the other crypto assets go up like it just feels like some people have been in crypto for so long now that they're like they just need a little bit of like an energy drink to keep going so also just given the the amount of negativity

just look at the price TR of Bitcoin since March it's just ranging it's like if it's not going up everyone's miserable it's like it has it is ranging at alltime highs there's not that much to up about but also look at funding rates and RSI over that same period of time it's quiet it it is ranging at all-time Highs but it is quiet damn I didn't know you were looking at RSI Michael how are we looking are we oversold on the RSI day trader Michael baby we're not oversold all right let's zoom in I've I've got a uh something I'd love to get your guys opinion on and I think it went a little bit under discussed this week because it wasn't it wasn't a huge story but it made me think so starkware announced

that they're raising a million dollars to scale Bitcoin with zero knowledge proofs so obviously super cool initiative from starkware it's not super influential right now because you know there's a really long timeline around this and they're raising a million dollars but the idea is that uh you know the technical uh structure that's going to support rollups on bitcoin you know if that ends up becoming successful is ZK based and that's based on the reintroduction of this old op code on bitcoin which is op cat um and or opcat and it's it is pretty interesting like I I hadn't really thought about this but it is kind of a match made in heaven actually for some of these ZK rollups on

ethereum especially ones that might be struggling to attract tvl or volume or compete with optimism arbitrum or or whatever to take a look at Bitcoin and like the yeah I'll I'll kind of lay out the the reasons I think it might make sense and then the reasons why I think it'll be an uphill battle for the Stark wees of matter Labs of the world to do this like the pros is that okay if you already have a lead on ZK Tech then it makes a lot of sense for you to leverage that into uh going on to bitcoin as well there's sort of a track record of this working a little bit with uh nft platforms like magic Eden that pivoted over to bitcoin not one to one the same thing at all but like you know

that huge crypto native store wealth of Bitcoin um has worked for infrastructure plays that began on different platforms um and I would have to imagine between like polygon matter labs and starkware that they have the majority of the ZK talent in the space and maybe they could outcompete some of the new teams on bitcoin that are trying to spin up l2s the counterargument to this is that one still a really long ways away so you got the Bitcoin teams have a huge amount of Runway two they've got this new chain like airdrop incentives their ecosystems specific they're leaner and meaner teams probably than some of the the big l2s on ethereum so you've kind of got that U going for it but what do you guys think about this idea of uh a some of the

rollups going more multi-chain and then B sort of the intersection between the ZK rollups on ethereum and uh you know Bitcoin l2s I think this accelerates just the endgame of separating the asset from its consensus layer and thinking around what re aking means and why people would be attracted to one blockchain or the other spoiler alert it's not its TPS or it's not it's virtual machine either nobody gives a about that um yeah you can make the argument that it's the ux slightly but I think it's more so the use of the asset as money and it's community and we've we've talked about this and like if you speedrun the eth

road map and you get to a much worse version of eth in a much shorter period of time at the endgame of it it's not bullish for your ecosystem and so like I I think it's not like Bitcoin you know it's not up to like the Bitcoin CBS but like there's no um it's not like a riskless path to say like okay we're going to build all these l2s we're going to try to build a defos system blah blah blah because if it doesn't pan out and it just looks worth and eath then you kind of have this new Vector of competition for those two to compete against each other and then there's all these other interesting conclusions which are like you know can you secure a blockchain with a memec coin like could you secure it with mother obviously mother doesn't have a consensus uh

mechanism but like you can bootstrap one into it via something like a car or like a reaking protocol um so that's kind of My overall take on it but I I think it's like more the more these ecosystems run towards eth's road map the it's like there is a risk that they don't pull it off and eth just looks way better bu comparison last thing I'll say is um on on salana like kind of similar thing I I think the salana community kind of un misunderstands its success in some ways I think they believe it's because of the ux and TPS I actually don't think that's the case I think it's the community like they have a really Stellar Community

forged in the fires of you know an exchange collapse and the subs going rebound and the blah blah blah and the meme coins um but like would I rather have the best community or the best tech I'd much rather have the best community 10 times over for sure for sure I also think I have a pretty left curve explanation also for why Salon has done well which is that there actually aren't that many tokens to choose from like if you want exposure to that ecosystem it's like you soul is definitely the best bet goo as well JT at like just because of the broad amount that they do in that ecosystem now but ethereum uh you know you have all of these different choices for you know this L2 or that L2 or apps or or whatever I think that's coming for every single blockchain as well or every

single L1 by the way um but I think that's also part of if if you if you modularize in certain ways you you abstract certain values into other asset categories or other assets themselves so I I completely I mean I agree with both takes I I think as we start to get closer and closer to the eth final road map I mean there's an interesting perspective on the Bitcoin side of things which is like why was it that such a fervor around Bitcoin l2s and Bitcoin activity happened uh Bitcoin reaking happened uh from the fund raising perspective post uh post gray scale lawsuit conclusion pre any other e ETF type asset launching it's because you know there was still this even in

like 0.1% chance that Bitcoin was going to become the only you know dominant uh commodity and platform that existed in crypto that's now been drisk but there's an interesting theory around the excitement around Bitcoin based off of the excitement around the the Bitcoin ETF being launched that drove a lot of venture investing into this category I think it remains to be seen we haven't even seen any of these launch like we we have no idea you know whether or not you know there's going to be a Bitcoin L2 or Bitcoin reaking protocol I mean we we have heard and we' we obviously have back Babylon um you know there's a lot of people that are interested in using Bitcoin as an asset within a restating protocol but I think that I think that that is being

fundamentally different from a consensus protocol that has Bitcoin as the mechanism of the asset I have a question for you guys on so do you guys remember back in like 2020 and 2021 where everyone was just trying to launch like the equivalent of Unis Swap and a on different chains so it's like hey look at the success that Unis swap had and a had let's go run that trade back on salana and Avalanche and whatever it's like uber but for cats right exactly so then I look at these very core infrastructure components for different l1s like liquid staking reaking rollups and it's kind of following a somewhat similar pattern it's like and there there are there are

better reasons for it I think this time because a lot of that is core infrastructure to the protocol but it's like okay we've got igen layer for ethereum we're gonna have jto for salana on the reaking front or whatever KAC is probably a a notable exception to this case rollups are like East specific rollups there are a couple salana l2s and they're going to be Bitcoin l2s and it sort of feels like like Lio is for eth and jto for salana whatever and it feels like none of these applications or infrastructure sort of plays have crossed the chasm it's like we're okay this is the ethereum version the salana version or maybe the Bitcoin or Celestia version do you think that's the end there are really good reasons for that we've talked about on this podcast before but do you see that as the end

game or do you see eventually like rollups it makes sense to me that there should be rollups should settle to multiple different L ones I would think but how do you guys see that playing out in the long run you know kind of like who cares yeah like what what where they settle to um what matters is what asset are people holding and transacting with like assume that all this stuff users will never know nor care and you can think about reaking is basically like m&a so like all the protocols that are too small to generate revenue on their own oracles CK proofs maybe even Bridges I would say chain abstraction probably is a a big enough shot that it can be separate but like all those those will

fold into things that are validated by native assets and like the communities that form around these native assets Soul or Bitcoin or eth like those will be the people who are like I'm staking my eth and I'm getting fees from all these different things and I don't care where these rollups settle it's like none of my not my problem like that's like the developer of the app and the developer of the app like what are they going to buy us for probably probably cost on the da layer but like really what they're going to buy us for is like I need to create real big economic value in a digital economy and I can't really do that with usdc I need like you know Soul paired with a meme coin I need eth that's been restake paired with some other asset like that's what they're

concerned about and it's just very it like doesn't really like matter what the what it settles to at the end of the day in our view it's like you can think of the valuation of a crypto asset as okay what's its fee component what's its monetary premium component and I think we're going to go into an era where the monetary premium is like by far away the most important thing um the fees will be they'll come and go like I think we're at the very beginning of like where fees are going to go over the long long term uh and there will be like the J curve it'll be up and down you know like some days it'll be super high fees for ethereum some days it'll be super low but the thing that matters is like do

people know that they're holding eth do people care do people you know use it as money that's like the most important thing and I think that's frankly where Bitcoin is going to have a tough time there's just not enough people who are willing to use it and hold it and borrow against it and denominated it versus eth and I think soul is just starting out on this path like we kind of don't know like the goo and and Phantom partnership came out today we should talk about that but like in my view that's kind of like you look at the goto Soul chart it's just like going up the defi side of salana needs stable coins basically and it needs like probably better reliability on I mean I've around with like Camino but like there's still some some stuff that's a little bit

sketchy versus eth but like that's what salana needs salana doesn't need uh it does need reaking in some ways but like it needs like the base level Primitives first to get going and Bitcoin I think is like kind of in that same journey of getting those Bas level Primitives going but the prognosis I think is like worse than soul for it to be used as money because at least you have like this new and soul that's actually using his money Bitcoin it's like how do we get these Boomers to like start using it it's a it's a much different battle much more uphill I'm also I yeah I've struggled to develop like a really strong thesis around like Bitcoin defi it's just it feels contrary to what has been drilled

into as a Bitcoin holder forever I've got my forever bag don't do anything with it cold storage you know I want to be buried with my Bitcoin and that would be a good life you know life well live uh and you know Mike you can't take it with you yeah well you know tell them that so yeah I think that's I I agree I think that's the challenge I'm just interested to see when some of these infrastructure plays start to be cross cross chain like there are like borrow lend is another good example of that there's the the technical challenges of real genuine cross-chain borrow lend is just tough because you have to take Bridge risk so there are these technical reasons for it not happening but you know at the end of the day to your point

people aren't people don't give a what chain you're on like people just want to borrow lend so maybe when most of the usage moves these l2s and l2s start to be uh settled to multiple different l1s like maybe just a obvious activity ends up there I don't know but I mean here here's the thing it's not going to be the same emology as the as the internet had but you know one thing that also happened this week was the coinbase smart wallet launch or relaunch um this is now like a user ID password with like a pass key toofa it's got all the bells and whistles that you would expect coming out of coinbase you know this is probably the closest thing that we've seen so far to a browser on web 3 in a lot of ways and I know a ton of

people have tried to create like the browser for web three there there's no one that's really had the success of being able to have tens of millions of active customers who are buying crypto assets and now you have an interface that's trusted secured to be able to interact with web 3 so let's just assume that that's the front end on the back end we're kind of in that like '90s phase of building out all the networking components you know the Juniper Networks the infrastructure The Cisco the and even down to like who who is actually the one serving this stuff like the data centers and like all of that infrastructure has to be built out I I consider that to be a lot of the conversations that we're having around what are the execution engines what are the consensus layers what are the settlement layers what are the

cross-chain abstract layers like all of those things are kind of the middleware that enables better and better and easier use cases for internet services the difference here is that to advance this point there is an element of what asset are you using to use those cons to consume those internet services that's where you can cross the chasm and ultimately it won't matter whether or not you're spending a little bit of eth or a little bit of eth is being spent on your behalf to go interface with a and it's settling to you know on optimism but it's you know Celestia back da and like it doesn't matter because you know all you care about is what asset do you have and what asset are you using ultimately we have to kind of like fast

forward a few years and you know maybe squint a little bit but let's assume that the coinbase wallet becomes more and more or or applications like it become more and more like the browser maybe the Netscape equival equivalent all of this infrastructure all of these layers will get more and more abstracted and no one will even know what they're transacting on what they're using they'll say hey what about this like salana thing what about this ethereum thing it'll be like hey what about this database technology what about this network um and and ultimately that's why I see kind of the the emology of web 3 and the consumer INF infrast infrastructure stack stacking up um but we're really early I mean this thing just launched yesterday so and we've been talking about this with you know

people that or framework LPS and and you know having conversations with them like where are we in the cycle um it it is still so early it's like we're we're still at the email has to be done on a command line type experience there aren't even email clients yet is is kind of the analogy that I can give so maybe that's just like a little perspective yeah I think that's right too the we can maybe drop a link in the in the show notes here to the uh smart the smart wallet that coinbase release it's super cool they I did an interview with uh guy will Robinson um on their engineering and product team back at e Denver this year who uh is is works a lot with Jesse on base and has really

led the like engineering and product side of of this smart wallet which is super cool um so definitely go check it out feels very safe and it's super usable as well so yeah other shout out is uh Kane from infinex using passis it feels like this is going to become the new uh Paradigm of how to interface securely with uh web three where you have some sort of biometric Pass key that's T tagged into your account with a username password have you have you used a pass key yet EO I actually haven't really no which is bad INX was the first time I'd ever used it and I was like wait is this like a password that's stored in my iCloud this doesn't feel s

it's it's not it's biometrically driven you have asset recovery you have email recovery it's it's pretty interesting um it it's face ID on an iPhone or it's Touch ID on a Mac computer or or you can switch between the two oh wait a second maybe I do use that then I think for a coinbase they put me yeah they tried to make it default a little while ago I think I've got that set up for coinbase um by the way something someone pointed this out at a dinner that I was at the other week so you guys use I'm assuming like two FAA do you use the Google authenticator for a bunch of stuff so dude it saves that to the cloud the automatic setting is that it just syns your it SNS

that into the CL and I and I know that I was at a for Memorial Day weekend I was um I was with a buddy and we were like tubing down the Hudson like in one of those tubes with like beers and whatnot he had his phone and it fell into the river and he was freaking out because he was like my authenticator is on that phone I haven't like backed it up anywhere and he just bought a new phone and like all of his uh tofa was set up on his new phone it's like wait a second you can turn that setting off by the way can yeah so this is more of a PSA if that setting is turned on the uh the the other nice one is uh in that in that application is export where you can export all of them uh to a new phone and

so you can have a backup nice right lost my two fa codes forever oh man more coins for you yeah yeah that' be a bit of a bummer um well I basically oh yeah the only other thing I would say is that uh trafi and the like are starting to throw out their targets we got we got vanak at 134k full Cas for E by 2030 it's like the the it feels like the crypto native price targets are like we're trying to get to 100K coin yeah just TR is like this is going to

500,000 in 12 months up your up your targets St I think Standard Charter had a Bitcoin at a 100 by the election I mean you just look at like the cryptic that suzu was posting last cycle like you need to literally be twox from your private PR prior cycle high for it to like people start to get that that bullish like you literally need to have your your price Target surpassed and multiplied for the Paradigm Shift type you know bull posting to start I don't know how much you guys knew I have a a theory about suzu as well by the way which is uh I don't know

I don't know how well you guys knew him I didn't know him at all but but he uh no I went back and I listened to these old up only episodes because I think it's instructive to be like how nuts did people really get and I listen to this one in May and in may remember May was when Elon sold his Bitcoin and China banned Bitcoin and we had that M May 21 May 21 you mean May of 21 yeah um when there was that huge dump and suzu had two takeaways he was like depressed like this is the end of the bull market and he also also simultaneously called that dog coins for a new asset class which I think he was ahead of his time on but I think after that remember the market recovered and he was like you know what it's not over and that's when went all

in on The Leverage which is the rookie mistake that you can't do but he was actually I think he was actually right I think his initial instincts were right but then he you know the hubur got the better of him there uh right at the end but I mean the the larger takeaway is that we are at the prior cycle high and if you literally just stayed in the game you'd be fine yeah the the the other takeaways are um it is hard to make trades and have them go in the right direction it is 10 times harder to make late cycle trades and have them go in the direction that you want them to so sometimes it's

okay to take money off the table nobody ever lost money taking profits but it gets 10 times harder and 10 times more dangerous with leverage and doing it at you know the last last inning or two of of a cycle is pretty risky and you know the the the uh the um yeah I mean just thinking about some of the stuff that happened in 2021 we were looking back at this Avalanche got to 104 billion yeah do you remember that yeah like if we think about where we are just in terms of aggregate numbers or excitement or exuberance like why been close just so far off well

also so this episode that I listened to there talking about axi and honestly I never played axi I never you know I didn't know you can play it I guess you've never been to the Philippines but but they they love that and there were you know there was like you raised your different little animal and that allowed you to get another type of animal and you know I remember listening to these guys talking about these different types of animals being like man this is such good Alpha so these guys are such Giga brains and that's not what was happening at all these guys were monkeys throwing darts at a wall and it was working so just remember not to get confused about that CU that's definitely going to happen again well I I I think you know one thing that is also true having seen this

is you know if we if we call this a cycle I I don't know if it's really going to be the same cycle Cadence as we've seen so far but this is this is the fourth time that Vance and I have have been in the show and it every single time gets a little bit more intelligent and a little bit more refined and frankly a little bit more subdued and that's actually a good thing truth to that and and so I I think you know we're not going to see monkeys throwing darts at the wall as much as we saw last time but there's there's going to be some wonky things yes but I think you know things like the institutionalization is gonna bring a just totally different veneer to this cycle I think you're right I think I

mean the Bitcoin and the ETF are seismic changes that just were not here last time and um right yeah all right fellas I think we can call it here also I just want to put it out there I can feel the bullish weekends coming you that was another 2021 feeling when there would be these big bullish weekends and then you'd see the Monday open you'd be like we're back we're so what was the reason behind the weekend it's just low liquidity people playing games this is like another suzu thing where he had a bunch of takes on this where he'd be like like the weekend price action is like like very indicative or he was like there used to be a time where you could fade weekend price action but now it's like very deterministic as to like where the

future week go I think that is kind of true to some extent U because like you know you see this thing go up on the weekends and literally no other markets are open and maybe this changes once all stocks are 247 in the future but like for right now crypto has that Monopoly and with when you have like the onew punch of the ETF inflows which you didn't have in 2021 where it's like the Monday open and it immediately gaps up on the CME it's a it's a it's a hell of a cocktail I can see the fomo I can see the fomo like hitting especially if you're just sitting in Bitcoin ETFs you're just watching a rip and then what are you going to do on the Monday open because like you you look at stocks and like some of them Gap up or down when

they when they open on on Mondays you know based on the prior weekend's action maybe maybe that's a little prediction just thrown out there when we start to see the the first really bullish weekend followed through into the spot flows that'll be a signal I think so too um maybe this weekend we'll see leave it there fingers crossed baby knock on all the wood all right cheers fella later later hey everyone want to give a final shout out to this episode's title sponsor say now there are a whole bunch of really exciting reasons to be building on say V2 outside of just parallelization I want you to head over to say. to looking into build building on their public

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